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Rupert Murdoch and Media "Localism, Diversity, and Competition":

Jack Shafer (Slate) opines on the subject, and I think gets it quite right.

Freddy Hill:
It is interesting how often regulators and "regulatees" (what's the right word, anyway?) are often driven by a common interest to raise barriers to entry and create oligopolies.
10.27.2007 12:18am
martinned (mail) (www):
L.S.,

And yet, I think there would be good reason to consider imposing similar rules to those in banking. In banking, no merger or acquisition is allowed if that puts the resulting company over 10% of the market. (Put simply.) The rationale is the extreme importance of the banking industry for the whole market, where you don't really want to imagine what happens if a bank that is responsible for 50% of the market goes bankrupt. Also, of course, you don't really want one person or one company to have that much power over the economy. (Especially if that one company belongs to the Russian or Chinese government.)

Mind you, organic growth is of course not prohibited. Similarly, there is a big difference between Murdoch starting a new company, and making it a success, and him buying up existing papers and networks. A carefully crafted (FCC) rule, that is clear and as narrow as possible, would encourage organic growth while at the same time stopping one person or company from having too much control over the kind of debate that is essential to a free society.
10.27.2007 10:26am
Allen Asch (mail) (www):
I have watched and complained about Fox News for many years, but I would never want to "regulate it" out of its First Amendment rights, certainly not on the basis of lack of diversity. I just wish Rupert Murdoch was honest and called it "conservative news" instead of "fair and balanced." This dishonesty leads to my bigger problem with Fox News (and the possible threat Murdoch represents to the Wall Street Journal) which is that Fox News lowers journalistic standards and trust in journalism (admittedly already pretty low).

Everything involving humans has to include some bias, but Fox News bias is qualitatively different. Most news outlets have a bias toward controversy, sensationalism, and corporatism. Fox News has those plus clear ideological bias demonstrated by many people. If you're interested in my personal evidence of Fox News bias, I was able to put together a YouTube playlist with DOZENS of examples in my free time that you can see at:

Fox News Bias

I most worry that Fox News has this "poison the well" strategy to make people think all journalism is as "fair and balanced" as Fox News. And, without the press as an independent check on government and economic powers, our liberal democracy will suffer.

So, just because Federal Communications Commission member Michael J. Copps made the wrong criticisms of Rupert Murdoch, we shouldn't, therefore, assume that Murdoch does not deserve a lot of legitimate criticism for the negative results of the "diversity" he brings to journalism.
10.27.2007 12:04pm
Ramza:
Yes this company is so fair and balanced. Sending cease and desist letters to McCain about McCain using video clips in ads and on his website from a Republican Debate (which Fox News hosted), while not doing the same thing to Giluanni when "American's Mayor" does the same thing on his website.

Source
10.27.2007 1:17pm
Libertarian1 (mail):
Alan wrote: I just wish Rupert Murdoch was honest and called it "conservative news" instead of "fair and balanced."



Would you similarly favor having the NYT putting "liberal news" on their masthead? Ot CBS "the liberal news with Dan Rather".
10.27.2007 1:48pm
Allen Asch (mail) (www):
Libertarian1 wrote:

Would you similarly favor having the NYT putting "liberal news" on their masthead? Ot CBS "the liberal news with Dan Rather".
I don't think Dan Rather has been on CBS for awhile and, if you forgive the violent analogy, comparing Fox News bias to the bias at those other outlets is like comparing targeting civilians to collateral damage: it's a matter of intent.

As I pointed out, everything involving humans includes some bias, but Fox News bias is qualitatively different. Most news outlets have a bias toward controversy, sensationalism, and corporatism. Again, Fox News has those PLUS such clear ideological bias I was able to put together a YouTube playlist with DOZENS of examples just in my free time that you can see at:

Fox News Bias

Do you have similar evidence of a pattern of ideological bias at other news outlets?
10.27.2007 2:19pm
eric (mail):
So intentional bais is better than unintentional bais pe se. That cannot be correct. Bias is bias. The degree of bias is largely a matter of opinion. Just because you hold a strong opinion about Fox News bias versus CBS bias does not make Fox more biased than CBS. Your opinion that big three bias is towards "controversy, sensationalism, and corporatism" may misaccount for certain bias. Take the Jena 6 or the Duke Rape scandal. You might account for the awful reporting from network news on these events with sensationalism. However, it can certainly be argued that there is a systematic bias towards reporting biased towards so called "civil rights activists." It seems to me to be a strong case. I also believe that Killian documents controversy is particularly reveiling regarding CBS.

The intelligent watcher will notice the bias and take the news accordingly. I like Fox News' Brit Hume program. I recognize his bias and watch accordingly.
10.27.2007 2:40pm
Smokey:
Allen Asch:

I do not watch Fox News. Nor CNN, C-BS, NBC, ABC or the rest of the spinmeisters' news. In fact, I don't watch TV. Therefore, I'm reading your critique of Fox with some objective amusement. Pot/kettle, and all that:
I just wish Rupert Murdoch was honest and called it "conservative news" instead of "fair and balanced."
Really? And you unquestioningly accept that CNN is "News you can trust"??

If CNN and most of the mainstream media had the honesty you demand of Fox, they would inform viewers that they broadcast from the extreme Left point of view. Otherwise, why would their nutroot cronies at the DU, DailyKos, etc., jump up and down shouting "Yippee!" when a so-called 'debate' is hosted by one of their own propaganda organs?

And...
Fox News has those plus clear ideological bias demonstrated by many people.
So do the others - and to a greater degree. After all, they've been practicing their uberlib bias for a lot longer than Fox.

Fox News must be giving viewers what they want, because Fox is eating their competitors' lunch. Aren't they? It's called the "free market," Allen. Viewers tune in to watch whatever they want.
10.27.2007 2:48pm
Murmur:
Otherwise, why would their nutroot cronies at the DU, DailyKos, etc., jump up and down shouting "Yippee!" when a so-called 'debate' is hosted by one of their own propaganda organs?

Can you explain what the heck this means? People shout (not speak, "jump up and down and shout") "Yippie!" when some network hosts a debate? What are you talking about? Who has ever done such a thing?
10.27.2007 3:01pm
Brian K (mail):
objective amusement
HAHAHAHA...you!? objective?

So do the others - and to a greater degree. After all, they've been practicing their uberlib bias for a lot longer than Fox.
if the "but clinton did it too" defense didn't work then, why would it work now?
10.27.2007 3:10pm
Libertarian1 (mail):
Alan, apparently bias lies in the eye of the beholder, Even the NYT's own omnisman said that of course the NYT is a liberal newspaper. If you don't actually see or believe that than than I am afraid your objectivity is seriously compromised. I see nothing wrong with political bias by the media. It is just frustrating to read over and over again that Fox is biased but the NYT, Wash Post, CBS, NBC, ABC, Time and Newsweek are not.

That the bias is designed to be subtle doesn't make it less so. It usually lies in what the editor deems to be news and to therefore empahsize. As an example ripped from today's news. The fire in San Diego. There is enough new rapidly developing material there to fill any paper. But have you read and heard of the comparison between the response in California and the response years ago in Louisiana after Katrina. Different state, different tragedy, different political party in local control and several years in which to learn. Choosing what to emphasize is by definition a bias. The MSM consistenly chooses the liberal slant to emphasize.
10.27.2007 3:16pm
Smokey:
Brian K:
HAHAHAHA...you!? objective?
HAHAHAHA...you!? objective, Brian??

Thanx for [unwittingly] supporting my contention that they're all biased. But some folks only want Fox News to go away.

But the market has already decided: viewers prefer Fox News over the others. It probably has never crossed your mind that most folks might want conservative news. Do you think they're the imbeciles, and you're Einstein?
10.27.2007 3:35pm
Randy R. (mail):
There may be bias in the media, but it certainly isn't extreme liberalism. Sure, much can be liberal, but the mainstream media has been very slow to criticize the Bush Ad on just about anything, but were very quick to criticize the Clinton Ad on just about everything.

I hardly think the cheerleading they did in the runup for the Iraq war was liberal. In fact, they refused to cover the many protests that were held in major cities.

I know for a fact that the NY Times didn't stop the anti-gay slant until certain editors retired in the 1980s, and even then they were hardly pro-gay.
10.27.2007 3:37pm
taney71:
My main problem with news channels or news programs is when they get to their "round table" segment. For most of my life these programs/channels would have any number of talking heads on (5, 6, 7) and try to debate the issues. Well, most of the time what we got was a liberal moderator and 3 or 4 liberals debating and maybe one token "conservative." Much the same today with Chris Matthews and George Stephanopoulous (spelling?) former-Democratic staffers as moderators. On This Week (ABC) the regular panelists include George Will (conservative), Cokie Roberts(liberal), Sam Donaldson (liberal), Fareed Zakaria (moderate), Martha Raddatz (no idea-guessing moderate), Torie Clarke (conservative), Donna Brazile (liberal), Jay Carney (moderate), Clarie Shipman (no idea-guessing moderate), E.J. Dionee (libera), Robert Reich (liberal), David Corn (liberal), Kathrina vanden Heuvel (liberal), Mark Halperin (liberal...remember the 04 memo affair?), Joe Klein (liberal), and David Brooks (conservative).

So out of the line up of people who regularly appear in this one show got:

3 conservatives
9 liberals
4 moderates

Not very scientific but it does present an alarming picture. Even if you combine the "moderate" with the "conservatives" you don't get the number of liberals that appear on the show. One might argue that the 3 conservatives appear regularly and the liberals not so often. I tend to agree somewhat with this argument. However, only George Will is a series regular and he is often set against at least two liberals. Most of the time the "moderate" in the group is arguing a "liberal" position (generally the only time that doesn't occur is on the issue of Islam/terrorism when Fareed Zakaria is on).

It's a bit more balanced on some of these shows than it was but not by much. The McLaughlin Group I believe has Pat Buchanan and some other conservative guy but still generally tilts way left primarily because of the windbag McLaughlin (although Buchanan is to blame for some of this cause he often sides with the liberal element on foreign policy).

Fox News largely changed this one-sided debate. Instead of putting a bunch of liberal talking heads on they put conservatives. Still they do a much better job on the Sunday program of dividing ideology. For instance, the NPR women and Juan Williams always appear along with Bill Kristol and Britt Hume.

With that said, I still watch/listen to all the shows. Mostly though I make sure I catch the Sunday talk shows (ipod has made this much easier).
10.27.2007 3:49pm
taney71:
Oh, I might add that ALL the talk shows do a good job of interviewing politicians (and by good I am saying they don't show a political bias that I can tell). The news segments tend to be the same just different focus on what is covered.
10.27.2007 3:54pm
Brian K (mail):
Thanx for [unwittingly] supporting my contention that they're all biased.
i just found it hilarious that you thought you were somehow free from bias even though everyone else is biased.

(i also never claimed i was objective...but you did in a post using "uberlibs". how's that for irony?)

"It probably has never crossed your mind that most folks might want conservative news. Do you think they're the imbeciles, and you're Einstein?"
nice strawman. is this more of your objectivity?
10.27.2007 3:54pm
Murmur:
But the market has already decided: viewers prefer Fox News over the others.

Yes, of the tiny, virtually insignificant portion of the U.S. that watches cable news (<1% of the population), Fox has a greater share. This is cause for triumphalism? Why? People also prefer Coke to water, but that doesn't mean Coke is good for you.
10.27.2007 3:55pm
Brian K (mail):
But the market has already decided: viewers prefer Fox News over the others.

Even though you consider nbc, cbs, abc, etc. as all liberal news sources, then you don't you compare fox news ratings to the sum of all of the liberal news sources? fox is number one in the average viewership, but it doesn't beat out the sum of the liberal sources. so i'd say the market has decided that viewers prefer liberal news.

haha...that's not even the whole picture. as this article describes, cnn beats out fox in several important ratings.
10.27.2007 4:22pm
Michael B (mail):
"I don't think Dan Rather has been on CBS for awhile and, if you forgive the violent analogy, comparing Fox News bias to the bias at those other outlets is like comparing targeting civilians to collateral damage: it's a matter of intent."

Wow. Firstly, Rather was only the successor to Uncle Walter himself, and then held that position for over 20 years. More importantly, he's but the tip of the tip of the iceberg, a reflection of the broader set of problems and issues. Too, his more renown episodes are merely the most blatant instances of commentary being forwarded as news. Or if you'll forgive a violent analogy, it would be like accepting Uncle Walter's opinings on Tet as "objective journalism" or like accepting the many, many reporters who echoed - in their "news" pieces - the political sentiments of Kerry, Kennedy and others who assurred the country the Sandinistas were the voice of the people, or the North Vietnamese had "no interest" in any type of violent reprisals against "their people," their "fellow countrymen," in the South. Then, when we pulled the plug on our earlier promises, somewhere between 400,000 and 800,000 former South Vietnamese were variously murdered, and that only accounts for the dead, not the lives otherwise oppressed and destroyed.

Such historic examples, from two and three decades ago and more, reflect the broader reality; such examples are not anomalies. Of course that is to transcend any mere violent analogy. Reductive news-speak is a powerful presence and the manifestly rich and telling irony is that in castigating Fox's "fair and balanced" advertising you are tacitly, or not so tacitly, accepting the idea that others are "fair and balanced." Irony is one applicable word, concerns with intellectual and moral myopia come to mind, willful blindness as well, yet other benighted themes as well.
10.27.2007 4:37pm
Murmur:
Such historic examples, from two and three decades ago and more, reflect the broader reality

Yeah, it's not like anything has happened in the media in the last 30 years. Why are you relying on decades-old examples to prove a point about today? What relevance does a newscaster who retired 25 years ago have to today's media landscape?

Reductive news-speak is a powerful presence and the manifestly rich and telling irony is that in castigating Fox's "fair and balanced" advertising you are tacitly, or not so tacitly, accepting the idea that others are "fair and balanced."

Simply because someone recognizes that Fox's "fair and balanced" slogan is just that, a slogan, doesn't mean that they uncritically accept every other news source as fair and balanced.

Irony is one applicable word, concerns with intellectual and moral myopia come to mind, willful blindness as well, yet other benighted themes as well.

You realize this nonsense relies on a fallacious argument, right? Just making sure you're aware, you don't seem to know.
10.27.2007 4:51pm
Michael B (mail):
"Why are you relying on decades-old examples to prove a point about today?"

In a word, relevancy. The reason is because they were such decidedly prominent, and in point of fact genuinely historic examples, examples that additionally helped to forward murderous reprisals. If you don't comprehend the relevance of that, for example to the current crop of talking heads and attendant casts and crews of reporters, etc., or likewise the relevance of Dan Rather, or Uncle Walter - then you don't understand much. There are ample other reasons as well, e.g., removing the argument away from present social/political animosities.

And you do realize you're sneering, and nothing more, right? Here's the deal, if you're going to forward something as "fallacious," you actually need to argue the point you're seemingly attempting. Simply pontificating, as if it's to be accepted via fiat from on high, is not a form of non-fallacious argumentation.

To imagine so is to imagine a type of pure and unmitigated: non-sense.
10.27.2007 5:42pm
Murmur:
In a word, relevancy. The reason is because they were such decidedly prominent, and in point of fact genuinely historic examples, examples that additionally helped to forward murderous reprisals.

And the relevance of these examples to today's media landscape is what, exactly? You act as if nothing has changed in the last 30 years--why?

Here's the deal, if you're going to forward something as "fallacious," you actually need to argue the point you're seemingly attempting. Simply pontificating, as if it's to be accepted via fiat from on high, is not a form of non-fallacious argumentation.

That someone thinks "X is not Y" does not imply they also believe "not X is Y." Simply because someone recognizes Fox's "fair and balanced" for what it is, an advertising slogan, doesn't mean they automatically believe CNN is fair and balanced, though I understand how grasping such an idea could be difficult for someone who lives within a "with us or against us" binary.
10.27.2007 6:09pm
Michael B (mail):
Ok, a final response.

Firstly, no, I didn't so much as come close to "acting as if nothing has changed." (And you're the one pontificating about binaries and nuance!) What I did was note that some prominent aspects of the situations are (tellingly) similar - and very nearly parallel - both in terms of the partisanship, the presumption concerning which side has a better grasp of the truth and facts (as viewed both from short and longer term perspectives), and in terms of the real-world risks involved, though this time the risks have more domestic import whereas previously the risks were geographically and tactically/strategically remote, at least in the more immediate aftermath of April, 1975. Other factors as well come to mind.

"That someone thinks "X is not Y" does not imply they also believe "not X is Y.""

I'll walk you through it. The formal logic is right as such (as formal logic), but the application herein and everything else is either wrong or bias dressed up as fact. The other commenter I had responded to, in terms of the fuller quote, stated the following, emphasis now added:

"I don't think Dan Rather has been on CBS for awhile and, if you forgive the violent analogy, comparing Fox News bias to the bias at those other outlets is like comparing targeting civilians to collateral damage: it's a matter of intent.

"As I pointed out, everything involving humans includes some bias, but Fox News bias is qualitatively different."

Iow, in attempting to forward the notion of such a stark contrast, represented in alleged "intent" and the yet more preposterous allegation, via analogy, of "targeting civilians" vs. "collateral damage," the result is to cast a binary scenario, a nearly manichean script, despite the allusion to "everything involving humans includes some bias."

So, you're not so "fair and balanced" yourself. Indeed, even the simplest and most basic comprehensions have eluded you. Which fact has not stopped your demonstrated bias from posing as fair and balanced commentary.

That hole you're in? You dug it yourself. Keep digging.
10.27.2007 7:04pm
Smokey:
To add to taney71's post above, another major problem with the alphabet news spoon-feeders is that the 'conservatives' that are carefully pre-selected by lib news directors - who are then certain to be safe from any really major attack on their boss's leftist viewpoints.

Those putative conservatives hand-picked by the liberal media are also highly paid by the same media - and they are unlikely to risk those hefty paychecks by biting the hand that feeds them.

Certainly there are methods available to get true conservative viewpoints on these shows. The first requirement is to have conservative organizations select the spokespeople for their point of view, rather than allowing the liberal media to select them; that corrupts their message.

Is there any nationally-known conservative in the mainstream media who continually raises the issue of who represents the average taxpayer??

But there is never ending, constant hand-wringing over the assumed plight of union members, racial minorities [every group but caucasian - can't have that], gays, prison inmates, misunderstood terrorists, illegal immigrant scofflaws, people who deliberately refuse to buy health insurance for their children, Islamist whiners, and every other special-interest group imaginable.

Who represents the working people who are expected to pay the freight? Congress overspends like drunken sailors, then eyes the ordinary taxpayer like a ravenous wolf looks at a free-range lamb. Where is our spokesperson?? It certainly isn't our congressional "Representative," who has long since been bought and paid for. As Ronald Reagan commented, "Republicans think every day is the Fourth of July, and Democrats think every day is April Fifteenth.

Let's face it: the liberal mainstream media sets the agenda, and they will never allow a strong voice representing the taxpayers to do so. Taxpayers are expected to just understand why each group must have more and more of their income, and then shut up and open their wallets. Any sentiment to the contrary is kept out of the broadcast commentary.


Oh, and Brian K,: It may be that you were misreading my response to Allan A, and assuming that I claimed to be objective on everything. If you re-read it, you'll see that I was not saying that. I'm a conservative, it's true, and proud of it. And that, of course, makes me Right!

We still friends, aren't we?
10.27.2007 7:52pm
Libertarian1 (mail):
Murmur wote: That someone thinks "X is not Y" does not imply they also believe "not X is Y." Simply because someone recognizes Fox's "fair and balanced" for what it is, an advertising slogan, doesn't mean they automatically believe CNN is fair and balanced


If one challenges Fox as not being fair and balanced and then fails to add "of course the other MSM are also not fair and balanced" it strongly implies you think Fox is the only exception. if not why not say so.

I would imagine you would reply they are the only ones who use that phrase in advertising. But equally erroneous is "all the news that's fit to print". Why don't you attack that?

In my mind when I read news articles, not op-ed, and say to myself either good point or why did they bring that up, it is reflective of the bias of the writer. Most of the time when I read the NYT I wonder why they chose that aspect to emphasize. Almost always it is in line with their liberal philosohy. IMHO, the news should be fact oriented not opinion oriented.

As a matter of interest all Fox had to say was "Fair and Balanced" not we are conservative. Everyone who was a news junkie instantaneously knew they were placing themselves in opposition to the liberal alternatives.
10.27.2007 8:14pm
Brian K (mail):
It may be that you were misreading my response to Allan A, and assuming that I claimed to be objective on everything.
I'm only doing that if you equally mischaracterize my statement into something outside of the topic of this post. I think your biased in a lot of things...but I would say in everything.

We still friends, aren't we?
haha...sure...you can never have too many.
10.27.2007 9:05pm
Brian K (mail):
but I would not say in everything.

that's a pretty crucial typo on my part.
10.27.2007 9:14pm
J. F. Thomas (mail):


OMG, in what bizarro far right world is Cokie Roberts a liberal?
10.27.2007 10:51pm
Dave N (mail):
OMG, in what bizarro far right world is Cokie Roberts a liberal?
I do not know her views but her father did not become House Majority Leader nor was her mother given a seat on the House Rules Committee because either of them was conservative.
10.27.2007 11:02pm
J. F. Thomas (mail):
Is there any nationally-known conservative in the mainstream media who continually raises the issue of who represents the average taxpayer??

And who smokey, do you consider the "average taxpayer". I think I am a pretty average taxpayer and I think the problem with the tax system is that all income, regardless of its source, is not taxed at the same rate (I have never understood why capital gains should be taxed at a lower rate than earnings from actual work). I also think that that the marginal rate on high incomes should at be higher (at least to make up for the fact that they don't have to pay FICA and medicaid taxes on those higher incomes).

I also think that if people looked at the health insurance premiums pay at work as a tax, they would look on "socialized" medicine a lot more kindly.

Oh yeah, and I will believe in the myth of the liberal MSM when the "labor" news gets as much air time or ink as "business" news.
10.27.2007 11:03pm
Montie:

The rationale is the extreme importance of the banking industry for the whole market, where you don't really want to imagine what happens if a bank that is responsible for 50% of the market goes bankrupt. Also, of course, you don't really want one person or one company to have that much power over the economy.


Given the history of banking regulation in the U.S., I am skeptical of any claim that any banking regulation was written to ensure (a) the stability of the banking system and (b) competition within the banking system.
10.27.2007 11:47pm
David M. Nieporent (www):
I also think that that the marginal rate on high incomes should at be higher (at least to make up for the fact that they don't have to pay FICA and medicaid taxes on those higher incomes).
There is no "medicaid tax" -- presumably you mean "medicare" -- and they do have to pay medicare tax on those higher incomes. The cap on medicare taxes was eliminated long ago, back in 1993.
I also think that if people looked at the health insurance premiums pay at work as a tax, they would look on "socialized" medicine a lot more kindly.
I think that if people looked at politicians as terrorists, they would look on socialized medicine a lot less kindly, as long as we're making up fake hypotheticals. Since the essence of taxation is that it is money forcibly taken by the government, "health insurance premiums paid at work" are not a tax. They're salary, given in non-cash form because the government distorts the market with tax breaks.

Oh yeah, and I will believe in the myth of the liberal MSM when the "labor" news gets as much air time or ink as "business" news.
This is the nonsenscial gibberish left-wing cliche you're parroting. No left-winger who says this has ever been able to explain what on earth "labor news" is, or how it differs from "business news."

It doesn't make sense in any context, even if there were a difference; the amount of time given to a story is orthogonal to ideology. A media outlet could spend all its time on "business news" by only covering stories which make "business" look bad. Would the lack of "equal time" for anti-labor stories demonstrate that this outlet was conservative? Obviously not. It's the slant of a story, not just the time spent on it, which evinces bias.
10.28.2007 9:00am
A. Zarkov (mail):
J. F. Thomas

"(I have never understood why capital gains should be taxed at a lower rate than earnings from actual work)."

Here is the theory. A long-term capital investment is inherently risky, that's why we have theories like Capital Asset Pricing Model. The lower tax rate is supposed to compensate you for the risk. We want this to encourage capital investment so an economy can grow and new products invented. Some countries don't tax long-term capital gains at all, for example Germany. Here is a table of international capital gain tax rates. Note from the table that the US has a high rate compared to most other countries in the table.

Another problem with the capital gains tax is that in the US it's not adjusted for inflation. Thus you could be taxed for holding an asset that has not increased in real value. Taxing nominal gains at the full income rate would make many investments unattractive.

Now you might not agree with this theory, but that's the explanation of why capital gains taxes are lower that taxes on income. Note also that when risk is removed as with a zero-coupon bond, the holder is taxed every year on the basis of an "imputed income," making the effective tax on this kind of asset very high. With inflation you could end up worse off. But this shows that risk an important element in tax policy.
10.28.2007 10:16am
LN (mail):
Wait, don't you get compensated for the greater risk of long-term capital investments with, um, higher returns??

I agree with you on the issue of taxing nominal gains versus real gains, and that tax policy can encourage society as a whole to either invest more/consume more... but the government doesn't need to compensate people for risk.
10.28.2007 10:58am
A. Zarkov (mail):
"Wait, don't you get compensated for the greater risk of long-term capital investments with, um, higher returns??"

If by "return" you mean total expected return (as distinguished from rate of return) then the answer is yes. But the same is true for a fixed income investment with no risk, the longer you hold it, the greater your accumulation. If we tax both equally, then we increase the attractiveness of a fixed income investment over a risky capital investment.

"… but the government doesn't need to compensate people for risk."

It sure does if it wants people to make long-term capital investments. Like I said, a zero coupon bond with a fixed rate of return is taxed a lot more than, say, a stock with the same expected rate of return held for the same period. Now you could argue that we should have a holding period of more than one year to qualify as a long-term capital return. That's another story.
10.28.2007 1:32pm
Smokey:
LN:
Wait, don't you get compensated for the greater risk of long-term capital investments with, um, higher returns??
Something needs to be clarified here: the government is not trying to 'compensate' investors for anything. Rather, the government is trying to encourage investors to put their money into sectors of the economy that it perceives are essential to growth.

And the one-year holding period was originally proposed to keep short term traders from benefitting. Most politicians don't really understand markets, you see.
10.28.2007 5:16pm