Research by a fellow at the Harvard Business School finds that beginning in 1978 the rate of business start ups has consistently fallen, other than a brief rise in 1983-88 and 2003 to 2008. In 1978 business start up rates stood at about 15%, by 2011 the start up rate was about 8%. Since 2008 the start up rate has been below the business failure rate - more businesses have died than have been started.
A fellow at the Harvard Business School suggests the cause may in part be the rise of big box and on line retailers that have killed local retailing.
What does it mean for our future that our business diversity is shrinking? That more and more of our life is controlled by fewer and fewer Corporate CEO's? Is this related to the increasing gap between most of us the the very wealthy? Is this related to the overarching monetary muscle that now controls our politics?
Economist May 10, 2014, page 27 - Citing research by the Brookings Institute
Tuesday, June 17, 2014
Wednesday, June 11, 2014
Things that could make one a Republican
I had an employee who left my employ some time ago. She got pregnant and, according to my other employee's, announced around the office for some period of time she was going to take the pregnancy as an opportunity to not work for awhile. (We are a tiny business so exempt from the family leave act - she had no right to family leave).
At some point as her due date got closer (paraphrasing her sworn testimony) she started investigating all the ways she could get money from the government. At one point before she left her supervisor reported to me she was soliciting another employee to pretend they were me so they could lie for her so she could qualify for some state benefit for expectant mothers that she was not in fact qualified for. The supervisor and other employee reported to me that when they refused to help her commit fraud, she got irritated and said she would get a google voice account, give the agency that number and when they called to verify the facts she needed to qualify for the benefit she would pretend to be me herself.
As she got closer to her due date she stopped talking about what she was going to do after the baby was born. Her supervisor repeatedly asked her if she planned on coming back to work, she would never answer, telling the supervisor "I will let you know."
Then a couple weeks before the baby was due she reported her doctor has said she had some problems with her pregnancy, so she was going out on disability leave. We never heard a word from her about her job after she left until over a year later we got a notice she had filed for unemployment and listed us as her last employer. She never contacted us to say she was ready or wanted to come back, the only contact with her was when she showed up one day at the office to show the new baby to other employees (I did not work out of that office)
Since both her immediate supervisor and I believed, and still believe, she never intended to come back to work, I appealed the decision, since I understand the law to be one is not entitled to unemployment benefits when you voluntarily leave the work force. Her benefits are charged against my business reserve account - not a huge deal, but I believe in unemployment insurance as a protection against events beyond your control, and it irritated me to have someone - evidently - using it to fund a vacation from work. The fact that we had to go through the trouble of sending a part of her paycheck every month to the government under a garnishment order almost the entire time she worked for us, because she been doing her best to avoid paying her student loans, didn't help her credibility with us.
While awaiting the appeal hearing I got to wondering about the other state benefits my employees said she tried to get them to help her fraudulently procure so called the agency. I went through the usual lengthy period of going from one phone menu to another, finally got someone on the phone who then referred me to the "program integrity" unit (or some such politically correct name for fraud). At the "program integrity" unit I got voice mail instead of a person. I left a brief message along with my contact information and that I had information about possible fraud. Never heard a word back. Evidently they are to busy giving out money to worry about possible fraud.
In the end the administrative law judge decided in her favor. She (the employee) did have complications from her pregnancy, so it sounds like her disability benefits were legitimate - she did leave work earlier than she had planned. But in the end her testimony made it apparent she had made a deliberate effort in her last months at work, even though she had no intention of coming back to work, to avoid saying she would not come back, despite regularly being asked. After she left she never contacted us about coming back to work then filed for unemployment a year later.
The administrative law judge's decision made it sound like we had talked about whether she would come back but no decision had been made. It was pretty clear to me his findings were aimed more at justifying awarding unemployment. My testimony, which she did not dispute, was that we asked regularly about her intentions, she refused to answer, and she never contacted us after we left prior to filing the unemployment claim a year later. I suspect she had learned that by not saying anything she could claim unemployment, and it seems pretty clear if you are the employee you have to do something pretty stupid or pretty outrageous to not get unemployment.
I could have filed an appeal with a real court, but it's not worth my time. I was probably tilting at windmills to pursue it as far as I did. But the integrity of the unemployment insurance program is important to me and this just seems wrong.
This women worked for me for three years. She was very bright, but was never a particularly good employee. I learned things when I started making inquiries that made me realize she seems to have found the challenge of manipulating to minimize the amount of work she did much more interesting than her job. If she spent as much time and energy on doing her job as she spent on figuring out how to be a freeloader she could be very successful (and could make a lot more than I was paying her).
It aggravates me people like her provide so much ammunition for those who dislike the idea of safety nets.
At some point as her due date got closer (paraphrasing her sworn testimony) she started investigating all the ways she could get money from the government. At one point before she left her supervisor reported to me she was soliciting another employee to pretend they were me so they could lie for her so she could qualify for some state benefit for expectant mothers that she was not in fact qualified for. The supervisor and other employee reported to me that when they refused to help her commit fraud, she got irritated and said she would get a google voice account, give the agency that number and when they called to verify the facts she needed to qualify for the benefit she would pretend to be me herself.
As she got closer to her due date she stopped talking about what she was going to do after the baby was born. Her supervisor repeatedly asked her if she planned on coming back to work, she would never answer, telling the supervisor "I will let you know."
Then a couple weeks before the baby was due she reported her doctor has said she had some problems with her pregnancy, so she was going out on disability leave. We never heard a word from her about her job after she left until over a year later we got a notice she had filed for unemployment and listed us as her last employer. She never contacted us to say she was ready or wanted to come back, the only contact with her was when she showed up one day at the office to show the new baby to other employees (I did not work out of that office)
Since both her immediate supervisor and I believed, and still believe, she never intended to come back to work, I appealed the decision, since I understand the law to be one is not entitled to unemployment benefits when you voluntarily leave the work force. Her benefits are charged against my business reserve account - not a huge deal, but I believe in unemployment insurance as a protection against events beyond your control, and it irritated me to have someone - evidently - using it to fund a vacation from work. The fact that we had to go through the trouble of sending a part of her paycheck every month to the government under a garnishment order almost the entire time she worked for us, because she been doing her best to avoid paying her student loans, didn't help her credibility with us.
While awaiting the appeal hearing I got to wondering about the other state benefits my employees said she tried to get them to help her fraudulently procure so called the agency. I went through the usual lengthy period of going from one phone menu to another, finally got someone on the phone who then referred me to the "program integrity" unit (or some such politically correct name for fraud). At the "program integrity" unit I got voice mail instead of a person. I left a brief message along with my contact information and that I had information about possible fraud. Never heard a word back. Evidently they are to busy giving out money to worry about possible fraud.
In the end the administrative law judge decided in her favor. She (the employee) did have complications from her pregnancy, so it sounds like her disability benefits were legitimate - she did leave work earlier than she had planned. But in the end her testimony made it apparent she had made a deliberate effort in her last months at work, even though she had no intention of coming back to work, to avoid saying she would not come back, despite regularly being asked. After she left she never contacted us about coming back to work then filed for unemployment a year later.
The administrative law judge's decision made it sound like we had talked about whether she would come back but no decision had been made. It was pretty clear to me his findings were aimed more at justifying awarding unemployment. My testimony, which she did not dispute, was that we asked regularly about her intentions, she refused to answer, and she never contacted us after we left prior to filing the unemployment claim a year later. I suspect she had learned that by not saying anything she could claim unemployment, and it seems pretty clear if you are the employee you have to do something pretty stupid or pretty outrageous to not get unemployment.
I could have filed an appeal with a real court, but it's not worth my time. I was probably tilting at windmills to pursue it as far as I did. But the integrity of the unemployment insurance program is important to me and this just seems wrong.
This women worked for me for three years. She was very bright, but was never a particularly good employee. I learned things when I started making inquiries that made me realize she seems to have found the challenge of manipulating to minimize the amount of work she did much more interesting than her job. If she spent as much time and energy on doing her job as she spent on figuring out how to be a freeloader she could be very successful (and could make a lot more than I was paying her).
It aggravates me people like her provide so much ammunition for those who dislike the idea of safety nets.
Sunday, May 18, 2014
Yin and Yang in Economics
Selfishness or selflessness. People who are to selfish sometimes create great things, but more often create misery and conflict. People who are selfless can create harmony and cooperative action, but usually in the end get trampled by the selfish.
The dichotomy is a function, probably, of the chemistry of our brain. We have a selflessness brain neurotransmitter (Oxytocin) and we have a bunch of neurotransmitters that focus on our own well-being, so we can survive in a the natural world where it is often literally kill or be killed. Some people have lots of Oxytocin, the selflessness neurotransmitter, some people don't have very much of it.
There is no question what nuerotransmitter Jesus sought to emphasize, but Jesus wasn't talking economics.
Economic theories tend to be very bad at harmonizing this dichotomy in our own brain chemistry. The result is the theories tend to focus on one way of thinking as bad, and the other as good. Capitalism v. Socialism. Competition is the natural order, cooperation is unnatural v.cooperation is the natural order, competion is unnatural.
In politics, unfortunately, the loudest voices come from the folks at the two ends of the spectrum. The people whose nuerotransmitter mix is most unbalanced tend to be adament that only one way can be right. They are the ones who most directly threaten the careers of politicians, so they cultivate disproportionate influence for their point of view. Unfortunately for the cooperative folk, the competitors tend to have more money.
If those who recognize the value of both influences in shaping our government policies stop paying attention government becomes a tug of war between to two extremes, where the best possible solution to a problem is not even on the table.
In theory, in a Democracy, the Yin balances the Yang. It does work, sort of. But if the folks in the middle ground became more conciously aware of the advantages and disadvantages of these two capabilities in our thought we could have an economy, and a society, that was a lot more stable, productive and harmonious.
The dichotomy is a function, probably, of the chemistry of our brain. We have a selflessness brain neurotransmitter (Oxytocin) and we have a bunch of neurotransmitters that focus on our own well-being, so we can survive in a the natural world where it is often literally kill or be killed. Some people have lots of Oxytocin, the selflessness neurotransmitter, some people don't have very much of it.
There is no question what nuerotransmitter Jesus sought to emphasize, but Jesus wasn't talking economics.
Economic theories tend to be very bad at harmonizing this dichotomy in our own brain chemistry. The result is the theories tend to focus on one way of thinking as bad, and the other as good. Capitalism v. Socialism. Competition is the natural order, cooperation is unnatural v.cooperation is the natural order, competion is unnatural.
In politics, unfortunately, the loudest voices come from the folks at the two ends of the spectrum. The people whose nuerotransmitter mix is most unbalanced tend to be adament that only one way can be right. They are the ones who most directly threaten the careers of politicians, so they cultivate disproportionate influence for their point of view. Unfortunately for the cooperative folk, the competitors tend to have more money.
If those who recognize the value of both influences in shaping our government policies stop paying attention government becomes a tug of war between to two extremes, where the best possible solution to a problem is not even on the table.
In theory, in a Democracy, the Yin balances the Yang. It does work, sort of. But if the folks in the middle ground became more conciously aware of the advantages and disadvantages of these two capabilities in our thought we could have an economy, and a society, that was a lot more stable, productive and harmonious.
Sunday, May 11, 2014
American Exceptionalism
In reading Economic media one hears a lot about "American exceptionalism". The context is usually some author bemoaning why the rest of the world should be like America. It rankles me a bit.
It is not that we in the United States don't have much to be grateful for. Despite the often crass dysfunction of our politics and hyper chattiness of our media, we have freedoms difficult to obtain in many parts of the world, we have many of the most dynamic businesses and our overall standard of living, although it has slipped a little bit, is still one of the worlds highest, and is certainly the highest for a country of our size and population.
What rankles me is that usually the people touting "American Exceptionalism" do so in support of their notion that if people work hard they will be successful, so all the poor folks of the world (and the US) need to do is just work hard and they will be successful. Certainly success without hard work is difficult. But who works harder than slaves? Who works harder than garment workers making pennies a day in Bangladesh? Who works harder than the migrant farm workers traveling from low wage job to low wage job.
What separates us from the rest of the world is the extraordinary head start we gained when our ancestors populated a continent depopulated by the diseases they brought with us, and by our ability to push aside native populations with overwhelming technical superiority and use the oceans that insulate our continent from opposition or aggression from the old world that match our technical development.
For 200 years we spread across the country, the government giving free land to any citizen willing to live on the land and improve it. We have had it so easy. We never experienced the situation where there is not enough land to feed our population. We never experienced having most of the population dependant upon landlords who owned all the land and forced us to work for what they chose to pay us. As a result we have never been seriously tempted by the desperation that drove revolution in France or Russia or China. Then within the last 100 years virtually all of the Eastern Hemisphere suffered massive damage and dislocation from World Wars that, while they cost us some money and the lives of many young men, left our infrastructure and homeland largely untouched.
What I hear when someone start using the term "American exceptionalism" is usually a combination of arrogance and complacency. The context always seems to suggest we are special people, smarter and more hard working, than all those less successful people than the world. It is usually in the context of disdain for social safety nets - they are a nuisance at best and probably un-American. That pundits and leaders of big Corporations that have scrambled to the top of their field must be wiser than the rest of us so we should do what they think is best.
Its only a phrase, but to me, when someone starts talking about 'American Exceptionalism" I am immediately suspicious the persons view of the world is infected by the complacency of personal success, and their notions of what we need to do for a stable, free and prosperous society are probably more likely to lead us down the road toward a society that is just an updated version of feudalism.
It is not that we in the United States don't have much to be grateful for. Despite the often crass dysfunction of our politics and hyper chattiness of our media, we have freedoms difficult to obtain in many parts of the world, we have many of the most dynamic businesses and our overall standard of living, although it has slipped a little bit, is still one of the worlds highest, and is certainly the highest for a country of our size and population.
What rankles me is that usually the people touting "American Exceptionalism" do so in support of their notion that if people work hard they will be successful, so all the poor folks of the world (and the US) need to do is just work hard and they will be successful. Certainly success without hard work is difficult. But who works harder than slaves? Who works harder than garment workers making pennies a day in Bangladesh? Who works harder than the migrant farm workers traveling from low wage job to low wage job.
What separates us from the rest of the world is the extraordinary head start we gained when our ancestors populated a continent depopulated by the diseases they brought with us, and by our ability to push aside native populations with overwhelming technical superiority and use the oceans that insulate our continent from opposition or aggression from the old world that match our technical development.
For 200 years we spread across the country, the government giving free land to any citizen willing to live on the land and improve it. We have had it so easy. We never experienced the situation where there is not enough land to feed our population. We never experienced having most of the population dependant upon landlords who owned all the land and forced us to work for what they chose to pay us. As a result we have never been seriously tempted by the desperation that drove revolution in France or Russia or China. Then within the last 100 years virtually all of the Eastern Hemisphere suffered massive damage and dislocation from World Wars that, while they cost us some money and the lives of many young men, left our infrastructure and homeland largely untouched.
What I hear when someone start using the term "American exceptionalism" is usually a combination of arrogance and complacency. The context always seems to suggest we are special people, smarter and more hard working, than all those less successful people than the world. It is usually in the context of disdain for social safety nets - they are a nuisance at best and probably un-American. That pundits and leaders of big Corporations that have scrambled to the top of their field must be wiser than the rest of us so we should do what they think is best.
Its only a phrase, but to me, when someone starts talking about 'American Exceptionalism" I am immediately suspicious the persons view of the world is infected by the complacency of personal success, and their notions of what we need to do for a stable, free and prosperous society are probably more likely to lead us down the road toward a society that is just an updated version of feudalism.
Wednesday, May 7, 2014
Why do Organizations Become Bureacracy's
The most valuable organizations are begun to solve a problem.
Ideally governments organize agencies to solve perceived problems.
Ideally businesses are created because the organizer percieves a need in society and moves to fill that need.
In reality some organizations solve nothing other than the organizers desire to extract money from others to his benefit.
However, even the most valuable organizations, organized for all the right reasons, tend to gradually decay into inefficient bureacracy's.
Decaying government organizations take up space and suck up money while providing little benefit.
Decaying business entities either die or find new ways to extract money from customers, or government that provide no real benefit to society.
Here are some things I think are true:
The longer an organization exists the more resistant it becomes to new ideas. This is a reflection of a fact nueroscience is validating that people become more resistant to change as they get older, unless they conciously work at rethinking their beliefs, or some event occurs that causes massive emotional trauma that relates directly to what they do in the organization. The more successful an organization becomes, the more likely it is to allow that success to validate and harden ideas of what the organization should do.
New people who are hired into existing organizations tend to be hired, not for their problem solving ability, but for their rote learning ability - their ability to adopt the existing procedures they learn as new hires. New hires that are problem solvers will self select themselves out of the company after a time to go find a place that allows them to solve problems. But the rote learners are comfortable with the company. So over time the company roster fills from the bottom up with rote learners who may be uncomfortable with trying out new ideas, or who are more focused on their own position in the company than the success of the company.
Ideally governments organize agencies to solve perceived problems.
Ideally businesses are created because the organizer percieves a need in society and moves to fill that need.
In reality some organizations solve nothing other than the organizers desire to extract money from others to his benefit.
However, even the most valuable organizations, organized for all the right reasons, tend to gradually decay into inefficient bureacracy's.
Decaying government organizations take up space and suck up money while providing little benefit.
Decaying business entities either die or find new ways to extract money from customers, or government that provide no real benefit to society.
Here are some things I think are true:
The longer an organization exists the more resistant it becomes to new ideas. This is a reflection of a fact nueroscience is validating that people become more resistant to change as they get older, unless they conciously work at rethinking their beliefs, or some event occurs that causes massive emotional trauma that relates directly to what they do in the organization. The more successful an organization becomes, the more likely it is to allow that success to validate and harden ideas of what the organization should do.
New people who are hired into existing organizations tend to be hired, not for their problem solving ability, but for their rote learning ability - their ability to adopt the existing procedures they learn as new hires. New hires that are problem solvers will self select themselves out of the company after a time to go find a place that allows them to solve problems. But the rote learners are comfortable with the company. So over time the company roster fills from the bottom up with rote learners who may be uncomfortable with trying out new ideas, or who are more focused on their own position in the company than the success of the company.
Friday, May 2, 2014
Money and Politics - Koch Brothers
The large part of the stratagey of the Democrats for the coming mid-term elections seems to be to focus on the Koch brothers, the Texas billionaires who are pouring tens of millions of dollars into funding various conservative causes.
The Democrats argue that vast sums of money coming from a few candidates undermines democracy, particularly when coupled with the Supreme Court decision that Corporate campaign contributions cannot be regulated by Congress.
Republicans (and the Republican dominated Supreme Court) argue this is a freedom issue. People who work hard to gather wealth should be able to use their money to advance their political goals in a free society.
There is some validity to both positions of course. But both positions also mask fundamentally wrong principals.
The Democratic position, that rich folk should be banned from spending beyond certain minimal limits (or that longtime liberal notion that Government should finance campaigns) has a couple of serious policy flaws:
1. It unquestionably undermines the freedom of rich folk. It is in essence discrimination by government against a class of citizens (the folks who value money above all else),
2. It also is the lazy solution that has characterized totalitarian thinking down through history. If you don't like something, or want to increase your power at the expense of others, limit their ability to participate in politics.
On the other hand, the Republican position focusing on individual freedom ignores a fundamental requirement of a functioning democracy. Honesty. Rich folk who want to support various political causes have a dizzying array of ways to hide where the money is coming from. The can use corporations they control. Or set up shell corporations and run the money through a whole string of them to hide where the money is coming from. They can set up organizations with names designed to suggest they are supporting exactly the opposite of what they are in fact trying to accomplish.
In an ideal world, we should ban an organization that is created under an authorization of government granting special priviliges, such as Corporations, from contributing funds to politics, but we should not ban individuals from contributing as much as they want to political causes, as long as contributions are publicly disclosed in a timely manner.
For those of us who are not rich our power to counter money from rich folk depends on our willingness to factor who gave that money, and why they are doing it, into our decision making when we go to vote. If we do our homework rich folks money should not be able to sell us on something we don't really want.
In an ideal world.
The Democrats argue that vast sums of money coming from a few candidates undermines democracy, particularly when coupled with the Supreme Court decision that Corporate campaign contributions cannot be regulated by Congress.
Republicans (and the Republican dominated Supreme Court) argue this is a freedom issue. People who work hard to gather wealth should be able to use their money to advance their political goals in a free society.
There is some validity to both positions of course. But both positions also mask fundamentally wrong principals.
The Democratic position, that rich folk should be banned from spending beyond certain minimal limits (or that longtime liberal notion that Government should finance campaigns) has a couple of serious policy flaws:
1. It unquestionably undermines the freedom of rich folk. It is in essence discrimination by government against a class of citizens (the folks who value money above all else),
2. It also is the lazy solution that has characterized totalitarian thinking down through history. If you don't like something, or want to increase your power at the expense of others, limit their ability to participate in politics.
On the other hand, the Republican position focusing on individual freedom ignores a fundamental requirement of a functioning democracy. Honesty. Rich folk who want to support various political causes have a dizzying array of ways to hide where the money is coming from. The can use corporations they control. Or set up shell corporations and run the money through a whole string of them to hide where the money is coming from. They can set up organizations with names designed to suggest they are supporting exactly the opposite of what they are in fact trying to accomplish.
In an ideal world, we should ban an organization that is created under an authorization of government granting special priviliges, such as Corporations, from contributing funds to politics, but we should not ban individuals from contributing as much as they want to political causes, as long as contributions are publicly disclosed in a timely manner.
For those of us who are not rich our power to counter money from rich folk depends on our willingness to factor who gave that money, and why they are doing it, into our decision making when we go to vote. If we do our homework rich folks money should not be able to sell us on something we don't really want.
In an ideal world.
Wednesday, April 30, 2014
Finite and Infinate Assets
One of the oddities about the Federal system of taxation is the way it treats assets that are fundementally different exactly the same.
Stocks are an infinite asset. They are created at the whim of people with something of value they want to sell. Although a person can in theory lock up the stock of some particular company, there is always an opportunity for some new person with an idea for something else to sell, or another version of the same item to create their own company and sell interests in that company. Free market theories work pretty well with stocks, even though the people whose power is based on ownership of companies will always have a tendency to seek monopolies to undermine market forces. We have had laws on the books for a hundred years to deal with monopolies, and although from time to time the laws get undermined for period of time when the public isn't paying attention, in the longer term we are pretty good at dealing with monopolies.
Land, on the other hand, is a finite asset. There is only so much of it. In the United States that fact has received very little attention because we arrived on what we viewed as an empty continent (ignoring the native populations). Government policy was to give land away to whoever wanted to move onto it and improve it. But there is not much land left for the Government to give away, and as the population of the United States continues to grow land is becoming monopolized in a different way. Land is becoming more expensive in comparison to individual incomes. In the most economically successful cities the average family already can't afford to buy a home despite extremely low interest rates. When interest rates start going up it is going to aggravate the problem, since the loan the average family will qualify for will be even lower. (The source of the next big housing downturn). For the last half a decade a bigger and bigger percentage of single family homes have been bought up by speculators, often with cash, who turn around and rent them to the folks who, in prior decades would have bought a home. Bare land on the margins of town is being snapped up by development companies with cash.
Much of the war and uproar in the last 2 millenia, and most memorably the revolutions in China and Russia early in the last century that led to a century marked by tens of millions of people being exterminated, were a direct result of ordinary people being shut out of access to land - they lived at the mercy of the landlords. That disparity in wealth distribution gave the wealthy disproportionate influence that contributed to a string of wars over the centuries by powerful people seeking to expand their power using rootless, powerless, young men as cannon fodder.
Why do we allow people to speculate in land cheaply through our low capital gains taxes and big exemptions? We are a long way from being a Feudal society, but it seems to me we are drifting in that direction.
Because Stocks are an infinite asset low capital gains rates on stocks are not a big problem. We can argue about the fairness of working folks paying higher taxes on their income than folks just selling stock, or collecting dividends or rents, but collapses in the value of those kinds of investments don't threaten the fundamental stability of society. The Great Depression and the Great Recession weren't caused by the stock market crash, it was the accompanying crash in the housing markets that had been destabilized by tax laws that encouraged speculation in real property that crippled the country. (Legislation pushed through by Republican Congress's in 1919 and 1995 created the impetus for speculation that resulted in housing market crashes about a decade later)
After the Great Depression Congress recognized the harm speculators in real estate could do. They didn't ban speculation, but they created a distinction between taxation on speculation in the real estate market and people buying homes to live in. Everyone was entitled to a tax sheltered haven for their their own home, and people trading up to bigger homes as their family grew, or down to smaller homes as they went into retirement were able to do so largely without a tax burden.
If we really want to bring back stability to our economic system for the future, we need to recreate that distinction. Don't provide a big tax break to speculators and create a tax haven for everyone to own a piece of property of their own. The housing market is a different animal than the stock market, we shouldn't treat them both as equal in terms of opportunities for speculation.
Stocks are an infinite asset. They are created at the whim of people with something of value they want to sell. Although a person can in theory lock up the stock of some particular company, there is always an opportunity for some new person with an idea for something else to sell, or another version of the same item to create their own company and sell interests in that company. Free market theories work pretty well with stocks, even though the people whose power is based on ownership of companies will always have a tendency to seek monopolies to undermine market forces. We have had laws on the books for a hundred years to deal with monopolies, and although from time to time the laws get undermined for period of time when the public isn't paying attention, in the longer term we are pretty good at dealing with monopolies.
Land, on the other hand, is a finite asset. There is only so much of it. In the United States that fact has received very little attention because we arrived on what we viewed as an empty continent (ignoring the native populations). Government policy was to give land away to whoever wanted to move onto it and improve it. But there is not much land left for the Government to give away, and as the population of the United States continues to grow land is becoming monopolized in a different way. Land is becoming more expensive in comparison to individual incomes. In the most economically successful cities the average family already can't afford to buy a home despite extremely low interest rates. When interest rates start going up it is going to aggravate the problem, since the loan the average family will qualify for will be even lower. (The source of the next big housing downturn). For the last half a decade a bigger and bigger percentage of single family homes have been bought up by speculators, often with cash, who turn around and rent them to the folks who, in prior decades would have bought a home. Bare land on the margins of town is being snapped up by development companies with cash.
Much of the war and uproar in the last 2 millenia, and most memorably the revolutions in China and Russia early in the last century that led to a century marked by tens of millions of people being exterminated, were a direct result of ordinary people being shut out of access to land - they lived at the mercy of the landlords. That disparity in wealth distribution gave the wealthy disproportionate influence that contributed to a string of wars over the centuries by powerful people seeking to expand their power using rootless, powerless, young men as cannon fodder.
Why do we allow people to speculate in land cheaply through our low capital gains taxes and big exemptions? We are a long way from being a Feudal society, but it seems to me we are drifting in that direction.
Because Stocks are an infinite asset low capital gains rates on stocks are not a big problem. We can argue about the fairness of working folks paying higher taxes on their income than folks just selling stock, or collecting dividends or rents, but collapses in the value of those kinds of investments don't threaten the fundamental stability of society. The Great Depression and the Great Recession weren't caused by the stock market crash, it was the accompanying crash in the housing markets that had been destabilized by tax laws that encouraged speculation in real property that crippled the country. (Legislation pushed through by Republican Congress's in 1919 and 1995 created the impetus for speculation that resulted in housing market crashes about a decade later)
After the Great Depression Congress recognized the harm speculators in real estate could do. They didn't ban speculation, but they created a distinction between taxation on speculation in the real estate market and people buying homes to live in. Everyone was entitled to a tax sheltered haven for their their own home, and people trading up to bigger homes as their family grew, or down to smaller homes as they went into retirement were able to do so largely without a tax burden.
If we really want to bring back stability to our economic system for the future, we need to recreate that distinction. Don't provide a big tax break to speculators and create a tax haven for everyone to own a piece of property of their own. The housing market is a different animal than the stock market, we shouldn't treat them both as equal in terms of opportunities for speculation.
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