5 thoughts on “Atlas Is Shrugging”

  1. It’s not (only) the tax rates, but also the unfathomable regulations.


    “For all of this, we can first thank Sarbanes-Oxley. … it has essentially killed the creation of new public companies in America.

    Meanwhile, FASB has fiddled with the accounting rules so much that, as one of America’s most dynamic business executives, T.J. Rodgers of Cypress Semiconductor, recently blogged: “My financial statements are a mystery, even to me.” …

    But FASB’s biggest crime against the economy and the American people came when it decided to measure the impossible: options expensing. Given that most stock options in new start-up companies are never worth anything, this would seem a fool’s errand. But FASB went ahead — thereby drying up options as an incentive for people to take the risk of joining a young company and guaranteeing that the legendary millionaire secretaries would never be seen again.”

  2. Goodness, why should they (the Obama Administration) follow them? The purpose of government is (from its own point of view) to extend and enlarge the power of government. Improving the private economy is going in the opposite direction. The best situation for government is a prostrated, ineffective, thoroughly compromised private sector. In that situation, government is the only functioning social organization, and has all the power, all the prestige, all the goodies.

    Anyone who expects government to act altruistically, to reduce its power by increasing the power, wealth and prestige of private capital, is not thinking clearly, or exceedingly naive.

    Which is why sensible people treat government as a leech or slavering rabid pit bull. Useful, if deployed in limited circumstances, and on a short leash.

  3. Here’s how I see it. The problem isn’t rigorous accounting, but rather that all publically listed companies have to meet the same regulations and that these regulations are stiffer than those of other developed world countries.

    I think auditing should be optional. Companies should be able to list on a US stock market without even the pretense of an audit of their finances or they could follow the hardcore Sarbones-Oxley and current FASB rules. There should be penalties for a company that claims a certain accounting level and fails to meet that level.

    Government would simply help enforce accounting standards and related contracts.

  4. Phoo, if there were zero government accounting rules, then by now there’d be the equivalent of Equifax for corporations, a private firm that rated companies on their accounting practises and how honest they were about their liabilities blah blah. Investors don’t want to lose money — and, contra the Democratic populist crap, they are the most exposed when a company gronks — and reputable companies who wanted to attact money would readily go for that “UL listing” mark of approval.

    Instead, we get this dumb compromise, where government hasn’t the money and single-mindedness to preventatively monitor accounting practises, but relies on sanctioning wrongdoers long after the investors have lost their money, and where we are forced to accept a one size fits all solution. There’s a place for firms with absent or flimsy accounting practises, and people who like high-risk, high-return investments will send them their capital. Others prefer a tightly-audited checkbooks balanced to the penny firm for their very secure low reward investment. Each should get his wish.

    Each would get his wish, in a rational world, free of populist nostrums like SOX.

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