The Tech Industrial Complex

Oligarchy unchained

Joe Biden has just delivered his farewell address. Having not have been a supporter of most of what his administration did, I confess it was a pleasant surprise. In particular he recalled and renewed the warning from Eisenhower’s farewell address, updating it to the “tech industrial complex”. I could quibble with details, but in broad strokes it was on point.

We have been growing a new oligarchy, Our biggest and most powerful corporations are bigger and more powerful in real terms than ever. It’s a product of years of artificially low interest rates. It’s no accident that this oligarchy has flourished since 2008. Artificially low rates forced savers out of savings and into the stock market, providing subsidized capital to those with the best access to the capital markets. Other factors such as lowered tax rates even for trillion dollar corporations made a secondary contribution.

A complete analysis is beyond the scope of this post, but the problem didn’t start with freedom of speech in social media, and social media fact checkers didn’t end it. It started with the excesses of easy money and low interest rates. The cure starts with reversing these ills. It can continue with higher tax rates for the biggest and richest corporations, paired with a deduction for dividends paid. If a graduated rate structure is good enough for people, it’s good enough for corporations. Bond interest is deductible, and dividends are the analogous cost of equity capital.

These measures would help discourage the runaway accumulation and bottling up of capital in corporations, and render a lot of otherwise piecemeal and unwieldy antitrust action moot. The undue concentration of wealth and power the president warns of was produced by misguided policies and can be solved by sound ones.

27 thoughts on “The Tech Industrial Complex

  1. Finster says:

    Gold is solidly back above the $2700 level. I’m sticking with my earlier calls for a $2600-$2800 trading range.

    https://financology.net/2024/09/24/gold-is-relentless/#comment-3857

    https://financology.net/2024/11/11/market-update-4/#comment-4005

    For now. If the Fed follows through on speculation about further rate cuts, this area will be a launching pad for further upside. To the extent the Trump administration makes any progress on getting deficits under control, it could persist. But in the longer run it’s hard to see anything but runaway Federal debt and Fed monetization thereof; so gold looks like essential insurance for the foreseeable future.

  2. Finster says:

    Oh the humanity!

    https://www.cnbc.com/2025/01/17/vanguard-fined-more-than-100-million-by-sec-over-violations-involving-target-date-retirement-funds.html

    Exactly what horrible thing did Vanguard do wrong here? Looks to me like a flaw in the tax system, and the government passing the buck. Pending fixing the tax regulations, the possibility of the IRS excusing the artificial tax liability appears not to have been considered.

    Vanguard is owned by the investors in its funds. Those investors, the ones the SEC is supposedly trying to protect, will pay the fine. There is no separate entity out there from whom to assess the cost.

    1. Finster says:

      You betcha … and we’re in for some big changes. The business news is swimming with predictions as to what policies will be proposed, what will be implemented, etc. I don’t think it’s that complicated. For better or worse, Trump has been telling us what he wants. So what policies will be proposed is an open book. What will be implemented will be less … we know he starts at the extreme and works towards the middle.

      Despite for example all the apocalyptic predictions around tariffs, they will come out lower. That’s a good thing … tariffs will be net beneficial but only as long as they’re moderate. We went too far with aggressive globalism; we don’t need the pendulum to swing to the opposite extreme. Expect illegal immigration to collapse, but deportations, while they will happen, will focus most intently on those who have broken other laws as well.

      The front where least progress seems likely is federal deficits. It’s encouraging that finally there is serious talk at the highest levels about getting it under control, but a lot of damage has already been done and it’s not easily going to be repaired. Deregulation is a given.

      I don’t know much about foreign policy. I can only say I hope he succeeds in winding down war and particularly US involvement in war. It’s time to retire the notion that it’s the US’s job to rule the world.

      https://dailyreckoning.com/ron-pauls-2025-new-years-resolutions/

  3. Mega says:

    mega mum update
    Mum is vastly better, she made so far 80/90% recovery.
    To think that 2-3 weeks ago i was sitting along side her bed holding her hand as i thought (& had been medically advised that she had ZERO immune system) that it was going to be her last night on this earth.

    Bit by bit, step by step she fought back bravely & we doing vastly better. I am still awaiting blood results but she seems much better. She is also far more mobile, she no longer needs her walker but i stil guide her up/down stairs.

    Still needs nappy, although more “predictability” is now coming to when she might need the loo……so far we getting back to normal…..ish
    My Thanks for the personal requests for divine intervention.
    Cheers
    Mike

  4. Mega says:

    100 years ago america started down the path to empire, now its on the path walking away back to what the US should always been. The City of London will get chopped up!

    WE going for multi-powers…………..& those European/Limey assholes will NOT be part of it!
    Mike

    1. Finster says:

      Trump’s rhetoric has suggested he’s less imperially inclined, but some of his appointments suggest a hawkish foreign policy bent. First time around he didn’t appear to be a big NATO booster, and he’s promised to wind down the Ukraine war. The establishment – the MIC, deep state, etc – aren’t just going to fold up their tents and go home though, and he will be under a lot of the same pressures as his predecessor. His “America First” base pulls the other way; less interventionistic. All told, it’s just too early to tell. My read is he will be less outwardly oriented and more focused on domestic priorities, but how much so remains to be seen.

    1. Mega says:

      its a bit “Alex Jones”………but i think i deal was broke.
      Syria is dumped by Russia…a trade for ending the ukraine war.
      other deals are in play, the MIC will carry on just fine without Ukraine as trump makes euro-scum to re arm.

      Any way, we see………………….now what about silver?
      Mike

      1. Finster says:

        I don’t follow silver closely, but it does tend to trade like a cross between copper and gold. For its part, gold has reclaimed the $2750 level. Back to the races? Probably not. It still looks solid, but a repeat of 2024’s sparkling performance in 2025 is unlikely.

  5. Finster says:

    The opening salvo from Trump II is less than impressive. His solid performance on the border crisis is being diluted by his involvement with the likes of TikTok and SoftBank. There is still a war in Ukraine going on and the US is still supporting it. Wasn’t that supposed to end on Day 1? Trump was elected President of the USA, not CEO of USA Inc.

    The last thing this economy needs is more government involvement. Government’s job is to support a free, fair and level playing field, not play favorites.

  6. Mega says:

    Yyyeeesss
    I not seen anything like this since the 1970s

    Rachel Reeves is planning to water down her tax raid on ultra-wealthy non-doms after an exodus of millionaires from Britain.

    The Chancellor has prepared an amendment to the Finance Bill that will make it easier for non-doms to bring money instantly to the UK following growing fears that the super-rich will quit the UK en masse.

    Asked at a fringe event at the World Economic Forum about the surge in high-end taxpayers leaving Britain, Ms Reeves told Emma Tucker, the editor of The Wall Street Journal: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”

    1. Finster says:

      IMO there’s too much emphasis on taxing wealthy individuals and not enough on taxing wealthy corporations. Here in the US trillion dollar corporations are taxed at lower rates than many individuals. Yet they’re controlled by individuals, effectively doing an end run around the intent of progressive taxation, and wealthy corporations have the most influence in government and get the most benefit from it. I’m no fan of high taxes, but am hard pressed to think of a justification for those who get more benefit from government to pay less. Add this to the easy money subsidy from the Fed and you have a foolproof recipe for oligarchy.

  7. Finster says:

    So now Trump is hectoring the Fed for lower interest rates. Kinda like begging an arsonist to set more fires.

  8. Finster says:

    Gold continuing its advance, now breaking $2775, near its Halloween Eve record. Copper and silver following suit.

    1. Finster says:

      Looks like inflation as far as the eye can see. We just had an epic burst of easy money in 2020+, on top of years of easy money in 2008+. A busted federal budget is the hangover. Not clear how a hair of the dog cure is going to work.

      Trump apparently thinks that drill baby drill is going to offset it. Sure, energy is a big input cost. Deregulation will help, as would winding down war. But inflation is a monetary phenomenon, and lowering real prices would only help cover up the symptoms while leaving the underlying disease process to fester away. He wants stocks prices to surge too, when they’re already sky high. Some element of benefit of the doubt is in order, but so is healthy skepticism. It just feels like something’s gotta give.

  9. Finster says:

    From the Fourteenth Amendment:

    All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

    Does this mean that if you sneak into the country and give birth here illegally, the child is automatically a citizen and that you are entitled by extension? Did the framers of the Constitution intend to create a system of rewards for breaking the law? I suspect the Supreme Court will ultimately have to rule on this. But I think this means that children legally born under the jurisdiction of the United States are automatically citizens.

  10. Mega says:

    Trump star fade already………..he needs to weaken the $ for growth… FED not keen on the idea…….
    Mike

    1. Finster says:

      It might turn out that what Trump is doing wrong turns out to be just what it takes to get the Fed to do right. Just not the way Trump had in mind. The patently political Fed cut rates last fall when it had no business doing so; now that Trump is in office the Fed seems not so eager.

      The Fed is an establishment organ and Trump is not. If it seems implausible, remember how former NY Fed President Bill Dudley publicly urged the Fed to tighten in order to harm him politically last time around.

      The irony is that easy money wouldn’t really help Trump this time anyway. The public is vexed about inflation and the last thing Trump needs right now, whether he realizes it or not, is more easy money.

Leave a Reply

Your email address will not be published. Required fields are marked *