Tuesday, August 30, 2016

Apple Computer: EU / Ireland Taxation and Jobs in 2016

European Commission orders Apple to Pay €13 billion ($14.5 billion) in back taxes

This is certainly one of the bigger financial news stories today.  And, Apple's official response to this EU judgement is rather predictable.  As Business Insider (BI) reports:
"Apple's official statement on the EU ruling against its Irish tax arrangements tells you all you need to know about what is at stake: You can have taxes, or you can have jobs, but Apple is in no mood to deliver both."
Really?,.. can Ireland, or any other jurisdiction, truly choose between jobs and taxes?
If so, let's do the math and make the right choice: take the TAXES!

Jobs or Taxes: Taxes Win!


According to that same BI article:
"In the 15 years since [the 1991 tax deal with Ireland], Apple has created thousands of jobs in Ireland. By 2015 it had 5,000 employees in the country [Ireland]."
OK, now the math, people:
What is $14.5 Billion divided by the number of current employees [i.e., apparently circa 5,000 employees] (never mind the fact that Apple didn't carry this many employees for the entirety of the 15 years in question) divided by that 15 years?  Well, it is a staggering $193,330 Dollars [173,333 Euros] per employee per year for 15 years, and again, this assumes that same headcount for all that time, which was not truly the case.

So, forget the jobs and take the taxes! According to 2014 statistics, the average Irish worker only earned 34,465.85 Euros per year.  The Irish government could apply the €13 billion in taxes levied upon Apple toward, essentially, full career-length payouts to each and every one of those 5,000 current Apple workers, as this is enough money to pay each current worker nearly 87,000 Euros per year for the next 30 years!

The numbers are simply staggering!  Sure, you can argue that the periphery businesses built up around the Apple offices and such wouldn't get the same amount of business, but then again, with those 5,000 people having an income that is well over double the average annual Irish wage, they would have a lot of money to spend on all sorts of things. Periphery businesses, around larger business, make quite a bit of their revenue from what employees spend, and these employees would still have a lot of income to spend, though perhaps not in the exact same neighborhoods.  As for any effect of building offices / facilities, well, those same people are probably likely to build homes and/or start businesses of their own (at least, the ones that don't simply want to do nothing for 30 years), and Ireland has a housing shortage currently too.

Update: I just decided that it may be easier for people to understand the magnitude of this Irish Apple computer company tax if I were to show how much tax €13 billion is if it were spread equally among every man, woman, and child in Ireland: it is still huge!  Ireland's population is approximately 6.4 million persons.  So, the math is quite easy, and it works out to just over €2,000 for each and every Irish Citizen... so a family of 4 would get €8000 in direct benefit from this proposed Apple tax settlement if it were simply distributed to the citizens equally.  That is extraordinary, and really demonstrates the size of the settlement, and how much tax has been saved, by Apple, at the apparent cost of the average citizen over the past decade or more.

US Tax Policy to Blame

The bottom line is: this type of tax situation exists for the simple reason that the United States government, for the simple fact that it is owned by and beholden to corporations and wealthy elites that can abuse existing tax law through shell companies and the like, refuses to simply implement a corporate tax on foreign-earned income that is instantly accrued and owed just like domestically-earned taxes are.  I.e., the USA needs to get rid of this ridiculous offshore zero-tax perpetual "holding-ground" for US Corporation profits.

As a United States individual, you cannot simply park your earnings overseas and not pay taxes!  In fact, it is the extreme opposite.  Thanks to legislation like FATCA, you are instead burdened by extraordinary reporting requirements on any foreign income, and failure by an individual to declare their income and/or pay taxes upon any income recognized from offshore holdings/investments during a calendar year will lead to truly massive penalties and fines in addition to the tax owed.  So, why have corporations, and individuals that are able to use corporations and partnerships and the like to hold massive portions of their wealth overseas, been able to get such preferential treatment whereby their income is not taxable until they physically move it back into the Unites States?

Therein lies the obvious problem and the obvious reason that was already illuminated earlier: the US government tax-policy has been hijacked by powerful multinationals and ultra-wealthy individuals.

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Monday, August 22, 2016

Tim Worstall : Master of Delusive Prattle tries to Redefine Wealth


I may be mistaken with this first assumption:  I assume Tim Worstall is, at least moderately, intelligent.  Whether he is or not, Tim Worstall epitomizes the practice of using one's intelligence as a tool for developing and deploying subterfuge, to justify any and all nonsense one can come up with.

His latest article on Forbes, from 2016-Aug-19, is entitled: "CBO's Very Bad Report - It's Complete Nonsense That The Top 10% Hold 76% Of All US Wealth", and the title itself characteristically reflects Mr. Worstall's desire to employ his intelligence for the purpose of misleading readers.  His aim is quite clear: create uncertainty about any statistics that lend validity to positions that run contrary to his own personal socio-economic and political ideals.

I typically try to ignore Worstall's garbage, but I found myself so annoyed by the ridiculous assertions in his current article that I had to respond — though unlike Worstall, I don't have the advantage of the asymmetric media exposure which confers columnists like him an incredible advantage when it comes to readership / reach.  But, I have to try...

Worstall's Insane Assertion: Wealth is Not Counted Properly

Worstall states:
"It is true that they [the top 10% of people] have 76% of the wealth as it is being counted. But that’s the very problem, the manner in which the wealth is being counted." 
Why does Worstall assert that wealth is measured wrong? In summary, he contends that this 76% of wealth held by the few is not defined accurately because it is financial wealth and it does not include a couple things: the value of human capital and, to a lesser degree, the (assumed future) value of pensions and retiree benefit plans.

When most people are asked to define wealth, they typically arrive at a definition that sure sounds like financial wealth, and this will almost invariably include the assets an individual currently holds and, when enumerated, this wealth will include things like: cash, cash equivalents (instantly accessible holdings at a bank, etc), physical property (the unencumbered portion of cars, homes, etc), stocks and bonds, and most anything they feel can be reasonably quickly converted into cash.  These are core components of material prosperity, or, that is, being "rich" by way of having accumulated assets that can readily be converted to cash, traded for other items of value, or pledged as collateral against loans.

Redefining Wealth

Now, according to Worstall's view of reality, financial wealth doesn't properly reflect true wealth and its distribution throughout society.  In order to market his absurd concepts and realize his agenda, he needs to convince people that "wealth" is not what most people consider it to be (i.e., financial wealth), but rather that it should additionally include unrealized-potential, of which, per his conjecture, there is a meaningful and measurable net-present-value (NPV) that will somehow dramatically alter the data and thus the statistical view of wealth distribution — and of course, he wants his proposed definition of wealth to somehow show that the "top" doesn't hold such a large proportion of all wealth.

There are so many holes in his proposed redefinition of wealth that I hardly know where to begin my analysis. Mr. Worstall apparently has an incredible ability to suddenly forget basic accounting and now confuse income-statement items with balance-sheet items. That is, within the foundation of his ideal new wealth-accounting mathematics there will be a ridiculous new condition where income is intentionally contorted into an asset.  Income and wealth (assets) are two completely different things, Tim.  I learned this very, very early on in life, as I am sure you did.

Even if you have a very high income, you may not be at all wealthy, depending on your spending habits.  Wealth is what remains of your accumulate income, as assets, after you have made your expenditures and offset your liabilities.  Assuming that you have started life with a zero balance, wealth is accumulated by retaining, repeatedly, a portion of your disposable income, and having overcome a propensity to consume, instead opting to fortify your personal balance sheet (i.e., your assets / wealth).

Unemployment Insurance = A Component of Wealth? Yeah, sure!

In making his pitch for a new definition of wealth, Tim even hurls this incredibly weak profession:
"Unemployment insurance has a value – all insurance policies have a value. That if I get fired I have an income is a source of wealth to me. But that’s not counted."
Well, duh, Tim... unemployment insurance is not counted as wealth because it is income, when actually collected, and this income is realized only upon becoming unemployed. This is further from being any part of wealth than the number of discarded aluminum cans laying beside a street when you walk or drive by: at least those cans can be collected and recycled for cash, without the need to be unemployed as a precondition to realizing that gain. Seriously, who falls for your baloney, Tim? If you are unemployed, and even if you are collecting unemployment insurance, it is not very likely that you are accumulating wealth; just ask all the long-term unemployed during the recent great recession that were lucky just to be able to keep their house!

Going further, Tim even mentions food stamps as a source of wealth, stating that if he had no other income, perhaps he'd collect some $300 a month in food stamps or such, and that looked at over a long time (he seems to ponder 20-years or so) the accumulated capital-value would be some $60-70K, of which some portion of this potential future income should be somehow considered "wealth" now.  But, if that's the case Tim, per this imbecilic logic, we would all accrue the exact same potential amount if we each have the same 20 years in which to potentially collect it!  

This logic is so transparently flawed and clearly designed to evoke a response from those who are against the concept of food stamps, welfare, etc.  That emotional response aside, just think his nonsense through a bit.  In Tim's world, even a newborn has a considerable chunk of "wealth" to be counted in the wealth-distribution curve statistics, as that baby is potentially entitled to an entire long life of future benefits — be it Social Security in the USA, food stamps, or whatever — and, there is certainly human capital lying there in a newborn's crib, which we need to also assign a NPV to according to Tim. This is simply a fantasy view of reality and certainly not remotely coupled to any financial reality.

Let's look at Tim's next major alleged uncounted "wealth" item as while further deconstructing his absurdity...

Human Capital = Wealth?

At a corporate or business level, human capital definitely contributes something to intangible assets, though most often it is the resultant IP (Intellectual Property) and proprietary methods and processes derived or implemented by the employees that is the true asset.  This is out of scope here anyways, since Tim is talking about personal wealth. So, what is the true value of human capital when calculating personal wealth? 

Mr. Worstall cites a British Office for National Statistics (ONS) report that dared to mention the term "human capital" along with some proposed value of that capital, in such a way that it could apparently be bent to his liking:
"The ONS also produced figures for “human capital”, putting a monetary value on a person’s qualifications, age, health, personality and skills.
The value of the UK’s human capital increased by £890billion to £19.2 trillion last year"
Seeing that giant number (£19.2 trillion) must have immediately worked Tim into a frenzy... as he then deduces that "human capital is vastly more important as an economic number [compared to household financial wealth]", but the CBO (Congressional Budget Office) study —  which shows 76% of family wealth being held by the top 10% — didn't somehow allocate this giant human capital figure within their analysis of wealth distribution.  

Temporarily ignoring the fact that you cannot simply quickly exchange your lifetime human capital potential for financial wealth, let's contemplate its place in Tim's new definition of wealth.  Presumably, you are to arrive at an affirmative response to this question: if this human capital figure were somehow apportioned to every citizen correctly, would it change the financial wealth distribution curve? 

Valuing Human Capital

Make no mistake, there are noteworthy correlations between various aspects of individual humans and their human capital and their likely income production and their eventual wealth accumulation.  As mentioned in his article, via citation, differences in education lead to a differing degrees of financial wealth, not that it should be any real news that families headed by college educated individuals end up with nearly four times the wealth of families headed by individuals with only a high-school education.  We should have all heard the well known statistics by now, that, e.g., acquiring a college degree leads to better pay. And, with a higher income, you have a much better chance of accumulating and retaining some of that income, beyond your propensity to spend, in assets, in your wealth.

But, having a college degree does not make you wealthy. I know plenty of people with college degrees that have near-zero wealth for the simple fact they do not earn a high wage and/or they may spend whatever income they receive, no matter how much they receive.  Income and wealth are two completely different things, and trying to somehow state that human capital, assessed by way of applying some net present value calculation based on attributes like your education (which imply potential earnings) to capture your true "wealth" is again just an incredible misconception.

If you believe that your wealth is higher just because you have a college degree, due to the statistics of income potential associated with that degree, you might as well consider other less-equitable income correlation statistics, and the implications.  It has been shown that your physical appearance will affect your earnings potential (just search google for various studies / results).  Furthermore, your gender will dictate to some degree your potential earnings (the stats are clear: women earn less for the same role), and your race will predict your earnings potential too here's a link to a 2016 Washington Post article that should help you get started with the underlying data behind these varied statements.  These types of study results are typical, and such data can be found everywhere. 

Apparently, human capital "wealth", calculated as some proposed net-present-value amount, is going to depend on all sorts of truly sad statistics. Never mind this whole human-capital current "wealth" misconstruction is absurd.  But, if the idea were to be taken seriously, we'd all have to really get into the gutters and extract all the relevant actuarial filth... we'd even have to look at each persons genetics to see who has the longest or shortest life expectancy, contemplate all social behavior and pay attention to personal health. Why?  Because when calculating an NPV, we need to know over what period our income assumptions apply, and how much risk there is in those assumptions changing, etc.  This is all just nuts!  And, the end result will be a statistical caste system of sorts. 

Then again,... while computing earnings potential, perhaps we should consider that America has become a country with very low economic mobility (CNN report) whereby if you are born poor you are likely to stay poor, and if born into wealth you are much more likely to remain in wealth. I.e., in the United States the economic class you are born into is likely the one in which you will stay... worse than many other developed countries. The stats are unreal (NYTimes, 2012 article), so much so that they even bear quoting here:


"... 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.
Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes.

Despite frequent references to the United States as a classless society, about 6percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths."

No matter how any sane person looks at it, income and wealth are two completely different things, and any argument for how < future-earnings-potential = wealth(today) > is simply asinine, aside from perhaps assuming that real financial-wealth-disparity will only increase over time, as borne out by existing statistics and socio-economic trends.  As such, I posit that if we assigned a "wealth" value to human capital, when constructing wealth-distribution-statistics, that the end breakdown of this "wealth" would still be essentially identical as financial-wealth, or perhaps even more concentrated (to the top few). The data to justify this hypothesis is clear, as demonstrated above.

Proof of Human-Capital Value in the Present (or lack of it)

Sure, human capital is considered when applying for a loan, but make no mistake, it is not being accepted, at a personal level, as any type of "wealth" against which a loan is being granted. The fact you have a college degree may make a bit of a difference as to whether you get a loan, but what is really going to matter most to any banker/lender is your current financial wealth, current cash-flow, your income, and the demonstrated stability or trends in that income and your financial wealth.  The bankers may accept as collateral some of your other financial assets, but they are not going to simply let you get by on the fact you have future potential for income, outside of specialized discrete products like student loans.  

Perhaps the unsecured credit market, Credit card companies and similar firms, care about your human capital?  This is highly unlikely, and I'd argue that they actually demonstrate the fallacy of any current "wealth" attributable to human capital.  These firms grant credit based on current income, and they will instantly raise your rates if you lose your job and that income... you are now a credit risk.  This is not for some giant shift in your "human capital" wealth, it is because they are not in the least bit concerned with that... they only care about your instantaneous cash-flow, and whether you have any real financial wealth (i.e., assets that can provide you the cash you need to right now pay your bills).  

And, nowadays, even insurance companies (like car insurance) will raise your rates if you lose your income: your human capital didn't change, just your instantaneous income-production abilities, and thus your credit rating, and somehow your perceived "risk" as a driver.  To argue that your human capital "wealth" truly changed upon unemployment, would one first have to admit that there exists a true stigma, or bias, against the unemployed, in such a way as to have a huge affect on your future income production prospects, and thus your supposed "wealth" when bringing forward a net-present-value of that income? 

And, I can almost guarantee that your landlord, if you rent, couldn't care less about any supposed future-production-potential-valued-in-present-"wealth", but only about whether you can pay your rent right now in that universally accepted bit of wealth that truly matters: cash on hand.

Human Capital and Taxes

Next, if human capital is so important, why does the USA federal tax-code punish income resulting from the application of your human capital (i.e., you working) so much more than it punishes income resulting from putting existing financial wealth into play (i.e., investments)?  Regular income  —  wages earned from working at a typical job  —  is taxed at a much higher rate than income, within the same total earnings bracket, produced from dividends or capital gains. Well, aside from the most egregious example of a tax that exempts a select few, via the "carried interest" tax treatment, that is.

If Worstall can somehow distort income and the possibility of future income into a form of current wealth, then shouldn't that wage income also be treated just like the financial wealth income when it is employed in investments? Wealth is wealth, according to Tim.  So, why not lower the ordinary income tax rates for a married couple filing jointly, and making under $75K/year, from their current 15% down to where they match the zero percent tax that would accompany the same income if it were all produced from long-term capital gains [see table here]?

The simple fact is that there is a huge tax-code preference (favor; i.e., lower tax rate) for financial wealth derived from existing financial wealth as compared to income produced from human capital. Clearly the US tax code considers income from human capital to be something totally different from income produced from existing financial wealth.  The tax code is clearly telling us all that it is better, more advantageous by far, to have financial wealth upon which income can be derived than to produce income from wages.  That entire mess is a topic for another day, because it is almost certainly to blame for a large part of the real financial wealth-distribution issue, whereby most wealth is incredibly concentrated among the top few percent.

Pensions

Tim did mention one interesting bit regarding the measurement of wealth: how the funds held in a 401K are counted towards wealth, but how a defined pension future annual payout is not counted... again, my initial reaction is to simply say "duh, Tim"... as a 401K, in theory, can be reasonably quickly converted into cash in the present (less a huge tax-penalty) whereas the defined pension cannot (generally, to my knowledge).  Again, Tim confuses (intentionally) future income with what can be attributed to current wealth.

I would argue that, when counting 401K values in financial wealth, that to be counted fairly in the present towards financial wealth, one would have to reduce the value of the 401K balance by the amount of any applicable taxes and penalties. Aside from that, the 401K can be a current cash-equivalent asset whereas the defined pension plan cannot, unless some corporation wants to buy the rights to your pension (if even assignable) and cut you a check right now.  I am not sure about the logistics or legality of that... I will look into it more.

Conclusion

Perhaps in an upcoming blog or two I will dive deeper into thoughts on some of these topics. Worstall has clearly manipulated and distorted reality by way of his latest absurd assertions, surely in hopes of countering the widespread discussion surrounding the unfairness of the current tax and financial system, a system that has led to this massive redistribution of wealth from the masses to the top few.  Things will only get worse if people allow such nonsense to gain credibility.


Wednesday, August 17, 2016

Joe Kernen (CNBC) and his Private Sector Dreamland

This morning I was watching one of CNBC’s Squawk Box episodes where Joe Kernen (a co-host, nicknamed "The Kahuna" or such) was trying to debate with Mohamed El-Erian the merits of private sector vs. public sector when it came to capital investment effectivenessThis particular episode has to do with Mohamed El-Erian's view that the US had better take 3 actions soon to avoid recession, of which one such action includes embarking on large-scale infrastructure fixes to the nation's roads, bridges and transportation systems, especially since the government borrowing cost for any required capital is near zero now. El-Erian's other ideas include tax-reform and over-indebtedness (especially in things like student loans now), but that's another issue.

I want to focus on the infrastructure investment topic and some of what Joe Kernan said during this episode that I take some issue with, specifically his statements about how wonderful and efficient the private sector is at deploying capital, as opposed to the government (aka, public) sector.  Readers remember: don't confuse public-sector with publicly-traded private companies in this upcoming discussion.

Joe said [as closely as I could type it while watching the video] the following:
If you have a [private sector] business, ... whether you exist depends on you watching your P's and Q's and watching every penny, and not overpaying for things, ... you go out of business if you don't do that.... [a private sector business] treats capital frugally like it should be treated.  
Joe was telling Mr. El-Erian something along the lines of "... I'm just talking about a theoretical argument about whether government is as effective at deploying capital as much a the private sector.", and the fact that Joe clearly believes that the private sector is fantastically effective at deploying capital.

Private-Sector Capital Deployment Efficiency and Effectiveness? Sure...

Joe, you must be joking!
What world are you living in?  Surely you are not referring to the private businesses whose stocks adorn the Dow Jones, S&P or Nasdaq indices.  You need only look to any of your guests, El-Erian included, to quickly see how insane your bit about "treating capital frugally" is in this modern private-sector world, especially among the publicly-traded private sector businesses.   You are simply living in a dream land.

For starters, IF private sector firms were at all concerned about the effective or efficient deployment of capital, you wouldn't see them issuing pay packages worth tens or even hundreds of millions of dollars to senior executives (like, e.g., Mr. El-Erian reportedly received at Pimco, a subsidiary of Allianz).  And, I am waiting for someone to tell me how it is effective deployment of capital to secure such awesome talent that can only be had for these enormous sums, and how their superhuman management abilities deserve such pay — you know, their super-human ability to pay the average person in the organization one-three-hundredth of what they make, while laying off masses of those average persons because employees are just a terrible waste of capital when that money can go to their pay instead.  But, this insane executive-pay is just the starting point in a long list of inefficient deployment of capital in private firms.

How about all the cash parked overseas now by major companies?  Trillions!  And, even if it is sitting in negative-yielding government bonds, or otherwise near-zero-yield instruments, somehow that is effective or efficient use of all that capital?  Go ahead... make the obvious arguments over how it is more effective to park such massive sums overseas than to pay taxes on it in the USA, yada, yada...  well, the tax-code is certainly partially to blame, but then again, it ended up this way because these same corporations lobbied elected officials in order to write the tax law as it stands.  This needs to end.  Total ineffective deployment of capital on a grand scale.

Then come all the share buybacks that are being done to further enrich top insiders that have incredible pay deals tied to stock price.  Share buybacks are truly saying that a company has nothing better to do with excess funds than buy back their own shares, if you believe they really have nothing better to do with it.

But, therein lies the problem, the stats clearly show that corporations DO have better things to do with their capital and they are obviously not treating it frugally, as they should per Joe K's commentary. Stock prices are soaring, yet they do stock buybacks while their stocks are already at very high values (hmmm.... that sounds a bit like "overpaying" to me), but the internal core business capital investment is now at an astonishing low — things like investments in machinery and equipment  — the lack of which is contributing to overall productivity slowdowns in the USA economy.  As this article on SeekingAlpha pointed out, courtesy of the National Bank of Canada's Economics and Strategy economist:
"Borrowing by corporations for the purposes of stock buybacks instead of investment in machinery and equipment does little to enhance an economy's capacity for growth. We're getting more evidence of that in the US where the average age of fixed assets is the highest in half a century and productivity growth is the weakest on records."
Gee, that sure sounds like truly effective use of capital, Joe!  I think otherwise. Surely we can do better.

Corporations are sitting on mounds of cash, but yet instead of investing in core business assets (CAPEX), they waste their cash on stock buybacks, over-inflated executive compensation packages, and other unconscionably conspicuous deployment of their capital in ways aimed at self-enrichment and short-term stock price over long-term productivity and sustainable long-term returns to the average shareholder.

Somewhere along the line it has even become an accepted norm, apparently, that a full 10% (or more) of all corporate profits will go to just the few top C-level employees.  Seriously. Just pull up Google Finance and look at a few companies' total net profit values and compare it with what the top insiders are taking in compensation.  It is truly appalling.  Need some examples?  You can choose nearly any company... they all look similar (thus, I am not saying any of these companies are worse than any others... most all are terrible these days in this sense):

  • Try Lifeway Foods on Google Finance, which shows 16.16 million shares outstanding, EPS of 12 cents per share (thus making total earnings of just under $2 million USD).  Now, go to Reuters and look at some of the top player's pay packages and share sales... a mere 3 individuals took home $3.3 million in basic compensation according to Reuters.  Wow!  Great use of capital guys!  Ever heard of the average shareholder?  If you directed two thirds of your inflated executive pay towards the corporate bottom line, your entire business would be in the black! And, presumably the share-price would go up quickly if a profit was attributed to shareholders and not just the entitled few insiders. And, you all own shares, which makes it even more crazy that you are unwilling to risk your cash pay for just share appreciation. What makes you all worth such great pay when your average shareholder has lost 50% in the past year?  If you have so much capital that paying such salaries is the only efficient thing to do, perhaps you should consider the average shareholder first, or maybe some capital improvements for expansion or productivity improvements?
  • Gee, let's look at Capstone Turbine on Google Finance,... wow... Reuters shows 4 guys pulling $2.2 million in basic compensation from a firm that loses money in a big way (net income: -$25 million annual).  Unreal.  Again, don't any of you overpaid self-rewarding insiders see anything even slightly wrong with this situation?  Don't worry: Joe K. thinks you private sector guys are doing wonderful with your precious capital, if he truly includes you in his statement today.
  • And, as to not leave out some big players, how about the likes of Chevron (G-finance site),... Google shows them losing 40 cents/share over past 4 quarters, or roughly $760 million dollars.  But, as you might now expect, the top insiders are doing wonders with that precious capital: there is a nice $50 million dollars in otherwise useless capital that just had to be handed out to the five people that Reuters lists Chevron executive compensation for.  Couldn't $50 million do anything at all to otherwise improve efficiency, even if it were R&D looking into efficiency gains?

There are so many examples of poor use of capital in private organizations, and their "overpaying for things" (something Joe claimed they can't do and survive), that I could go on for weeks (and not only regarding excessive pay packages).  But, clearly Joe Kernen's appreciation of the private sector, and it's alleged ability to so effectively deploy capital, is due to some fantasy view he holds of modern corporate America versus a completely different reality.  Is the public sector really so terrible at capital deployment compared to all this? Maybe. But the bar set by the private sector doesn't really seem terribly high.