USA Inc Criticism

  • I like the infographics.
  • Stating that you are “non-partisan” is hard to believe. She really means that she will take a centrist or independent position as opposed to the extreme partisanship that characterizes US politics? Everyone has a set of experiences that informs their understanding.
  • Mary Meeker, a Venture Capitalist, is concerned about a new business plan for the USA, so she is extrapolating business and family finance into government. This is a common analogy to simplify a complicated entity like the US Federal Government.
  • I don’t think balanced-budgets is a silver bullet solution to America’s whoas. Debt is about loaning out for investment, spending forward. What has changed is that the US is less confident about it’s future. Like the UK in the 1950s onward, there is this sense of a managed decline.
  • There are more fundamental problems with the US that aren’t related to the size of the US debt, like it’s trade in balance with China, it’s penchant to assist Morgan Stanley and other investment banks to behave without moral hazard, it’s service-based bubble economy, it’s mediocre manufacturing, it’s expensive wars in Iraq and Afghanistan, it’s aging population that are living longer and producing less value. Get them back to work?
  • If the debt to GDP ratio was such a problem then why didn’t the US have a financial crisis in the mid 1990s when debt to GDP was already bad enough? Japan has a huge debt to GDP and it’s been cruising along for a decade plus since it’s financial crisis. The debt is not the core fiscal problem in the US.
  • Spending beyond ones means as individuals or as companies is very bad, but a country is not analogous because that simply gets passed forward.

Problem: Raising Taxes Hurts Mary Meeker therefore She Opposes Any Tax Hikes.

  • If government were a business then it should surely increase revenue in the short-term by either cutting costs or raising prices. An obvious area for creating short-term revenue is through price discrimination against affluent customers.  These high tax payers have limited substitution possibilities i.e. they are unlikely to leave the US so increasing prices is wise for USA Inc. Of course, anyone in business knows that it is easier to cut costs (in the funnel) then increase prices (at the top of the funnel).
  • Why doesn’t she advocate tax hikes? Of course, higher taxes for the highest income earners harms her interest group and she can argue that higher taxes “lead to slower growth, less consumer spending” with less room to innovate and invest. Many democrats do not believe this is actually true. Most universities are filled with academics who say that “trickle down does not work.”
  • Increasing taxes will increase the power and size of the USA Inc to actually address the debt issue she is worried about. That solution doesn’t work for her because she wants to reduce the size of government, and restrict its influence. She never mentions the financial sector’s economic crisis but focuses a lot on government spending being too high for long-term obligations to Medicare and Medicaid and other “Entitlements.”
  • For Meeker, entitlements = waste. The very term Entitlement is a conservative spin on social spending. It implies that those who receive entitlements are literally entitled to being given money while being lazy. While some if not most are seniors, disabled or soliders.
  • Government is not analogous to a business. It’s an oversimplification to meet a value-laden hypothesis about what a prosperous country requires. Debt is an important part of investing in the USA’s future growth.

Conclusion: Meeker’s Hypothesis was probably exactly what her conclusions were. All the data was used to clarify what she wanted to believe in the first place. Notice that her recommendations do not effect her or her friends in any substantial way.

  • Babyboomers, Medicare, and Medicaid are the problem.
  • “The War in Iraq wasn’t even that big of deal compared to percentage of GDP”….except for the fact that it didn’t need to occur at all, and many of the costs are not measured by her metrics!
  • There has been a lot of evidence that the babyboomer retirement is not going to happen the way they would like. And we can’t afford to take care of the babyboomers, that’s agreed. But USA Inc cannot pull a GM restructuring.
  • Debt isn’t such a big deal. This is only a problem now that the economy is stagnant and the jobs of the future have actually been too efficient and have cut out people from making money.
  • Meekers is not willing to harm anyone that she values: 1) Private healthcare, 2) billionaires taxation, 3) financial institutions
  • Meekers is willing to harm anyone that is not of value to her: 1) Spending cuts on “Entitlements”, 2) Cuts to social programs for the least well off, 3) Extending retirement age since she loves her work and will likely die working at her VC fund.
  • It’s all very complicated, laden with value judgements. I think the US needs ambitious new goals!