FedEx's CEO on McCain, free trade and the tax bias against capital-intensive industries.

http://online.wsj.com/article/SB122488966230768509.html

by anthonyrubin • 18 years ago

26 83 18 years ago

online.wsj.com

anthonyrubin• 18 years ago

I apologize for the political content, but the article actually contains very little commentary on the election.

newaccountname2• 18 years ago

>We absolutely have to cut the corporate tax. Our current tax rate is about 38%. Even Germany has a 25% rate.

This is so disingenuous; Germany also has a 19% VAT, and also has stronger regulations on industry.

>If we had a lower corporate tax rate with the ability to expense capital expenditures, guess what? We'd buy more triple sevens.

He wants to be able to write off the purchase of planes as expenses? What? They already get to write off depreciation on planes, but you can't write off the whole plane because you can sell the damn thing after you buy it.

vaksel3• 18 years ago

yeah regulation in europe is insane. You fire someone in Europe you have to continue paying their full salary for a whole year or until they get a new job.

Here its wham bam thank you mam, don't forget your box and enjoy living on $1500 a month that you get from unemployment.

maurycy• 18 years ago

In what country you have to continue paying full salary of a fired employee?

netcan12• 18 years ago

reference?

vaksel3• 18 years ago

here is the reference http://www.economist.com/research/articlesBySubject/displays...

if links doesn't work the main pic: http://media.economist.com/images/na/2008w39/Sacking.jpg

WTF with all the downvoting? First it was +5 now its 0. If you don't believe the post...google to find out if its true or not

davidw5• 18 years ago

The reason I hate seeing politics here is that it's usually not up to the usual standards of discourse about hacking and startups.

To use your post as an example, in a few brief lines, you sum up something where there is a glimmer of truth, but there is so much more to be said on the subject that what you have written is basically inaccurate. There are, in reality, three broad models in 'Europe'. The 'southern' model: Spain, and Italy (which I know quite well) don't give you a lot of government unemployment benefits, but it's very difficult to fire someone. France and Germany give you lots of benefits if you're fired, and it's also difficult. In Denmark, it's easier to fire people, but the obligation to care for fired employees is viewed as a collective one, payed for with taxes, rather than a burden that falls exclusively on the employer in question.

cperciva• 18 years ago

Germany also has a 19% VAT

Companies don't pay VAT -- people do.

joubert3• 18 years ago

Of course companies pay VAT, it is the input tax.

anamax• 18 years ago

> He wants to be able to write off the purchase of planes as expenses? What? They already get to write off depreciation on planes,

Expenses are now, depreciation is later. And, if you get one, you don't get the other.

I don't know how all the numbers work out, but it could easily be that the tax code encourages borrowing by corporations for things subject to significant depreciation terms. (Interest paid is an expense.)

> but you can't write off the whole plane because you can sell the damn thing after you buy it.

You just record such a sale against expenses, that is, "net everything".

I do think that expenses should be tied to cash expenditures. So, if a company borrows to buy something, it should only be able to expense what it actually paid in any given year. Such treatment would make all expenditures "equal" in some sense.

joubert3• 18 years ago

No, there is a distinction between cash flows, and income & expenses. An income or an expense does not require a cash flow, and a cash flow is not necessarily an income or an expense.

Expenses should not be tied to cash layouts, because: (a) purchases are not necessarily expenses, but may be the buying of income-generating assets (i.e. expense is allocated over the life of the asset in the form of depreciation). (b) You can have an expense without laying out cash (e.g. an asset loses value such as a debtor defaulting).

Prrometheus8• 18 years ago

That's pretty much the case against Barack Obama: Trade (BIG BIG BIG win for McCain), Taxes (small win for McCain), Subsidies (big win for McCain), Healthcare (big win for McCain: got to address cost, not access), and Energy (slight win for McCain).

Barack on the other hand is better on avoiding World War III, Big Brother, and Theocracy.

It's a depressing choice.

lutorm• 18 years ago

Really? Trade: small win for Obama. Taxes: small win for Obama. Subsidies: small win for Obama. Healthcare: big win for Obama. Energy: insanely large win for Obama. Foreign policy: insanely large win for Obama. Civil rights: big win for Obama.

In fact, I seriously doubt the mental state of any intelligent person thinking of voting for McCain.... but then again, that's just my opinion. Not fact.

Prrometheus8• 18 years ago

Most economists (~90%) think free trade is a huge net positive for the world. Paul Krugman, the most prominent living left-wing economist, is a unabashed supporter of trade. Obama demonizes it. Krugman is much closer to McCain than Obama on free trade.

Obama wants to raise taxes because there is no place to cut a $3 trillion budget. In fact, he wants to add many new expenditures to that budget. Many smart people seem to have gotten caught up in his class-warrior socialist rhetoric, but the truth is we all lose when government punishes the productive sectors of society through taxation.

Subsidies? Every economist I know and most environmentalists are against corn and ethanol subsidies. McCain had the balls to make a stand against them at a debate IN IOWA, a notorious corn state. Obama realizes that handouts win votes, and spinelessly sticks by them.

Healthcare? The big healthcare problem in the United States is cost, not access. See http://www.realclearpolitics.com/articles/2008/09/getting_re... . McCain wants to address the cost of healthcare. Obama is all about access. I think Obama is wrong on the issue.

Energy: Obama promises to subsidize various technologies out the wazoo, but we have seen little return from previous billion-dollar efforts.

Your last sentence illustrates the religion-like fervor that has developed around Obama and the intellectual bankruptcy of his movement. I won't be voting for McCain, but I have no illusions that Saunt Obama is going to save the world.

I'm sorry I stated the case against your savior. I hadn't realized that Hacker News had turned into reddit, and that any comment against the one with the Kennedy smile was worthy of downvotes.

colinplamondon• 18 years ago

Energy: "Drill baby drill"?

mattmaroon14• 18 years ago

Most economists disagree with your assertions.

mattmaroon14• 18 years ago

For proof of that btw: http://www.cnn.com/2008/POLITICS/09/16/dilbert.economy/index...

http://www.economist.com/world/unitedstates/displaystory.cfm...

"Even among Republican [economist]s Mr Obama has the edge: 46% versus 23% say Mr Obama has the better grasp of the subject

netcan12• 18 years ago

Question.

As a non American, I wonder what brings US to a (relatively) extreme position on Health. Technicalities aside, most places consider health as part of the suite of public responsibilities.

Does a significant portion of the opposition to the public assuming responsibility for health also oppose the public assuming responsibility for education? I ask because it seems a close parallel.

yummyfajitas2• 18 years ago

The parallel is pretty weak. Publicly funded education is for children, while publicly funded health care would be delivered to adults.

We also consider preventing sex with children to be a legitimate function of the government, while preventing sex with adults is a matter of personal privacy.

mattmaroon14• 18 years ago

We believe that health care is not a right but a privilege. The Constitution does not ensure the right to "life, liberty, the pursuit of happiness, and $10 copays."

Moreover, we believe that almost everything the government does, it does poorly. Schools would be a great case in point.

DanielBMarkham10• 18 years ago

In general, the idea of "public responsibilities" is controversial. The country was founded so that the government would do the minimal amount necessary to insure the maximum amount of freedom. Freedoms don't mean anything unless they involve the ability to fail. As an example, any American can build their own airplane and attempt to fly it (in the right areas, such as a desert). Freedom to form a startup and make a lot of money is the same as freedom to form a startup and fail.

So governmental power is used to insure freedoms. Traditionally, civic organizations are used to fulfill "public responsibilities" We have groups dedicated to local infrastructure improvement, fostering leadership skills in children, making sure people have eye care, giving healthcare to the poor -- the list goes on and on.

This is changing as more and more politicians and voters want the government to do the good things that civic organizations used to do. But we still have a long way to go to the point where we view government as the tool to handle all of our moral civic duties for us. There is a strong feeling that centralized governmental planning leads to waste, corruption, inefficiencies and the politicization of service delivery.

Education, I was told, was institutionalized after WWI as a way to make sure that soldiers had basic literacy and math skills. So this movement was a part of national defense, not some collective civic duty. (I understand education has a much more storied background. I abbreviate here)

walterk4• 18 years ago

I compare public responsibility for health to public responsibility for fire control.

Fires can wreak havoc upon many beyond the fire's point of origin. It's also unprofitable to run a fire department, so given the public benefit, the public foots the bill for keeping a fire department.

Health care isn't the same in that it can be a very profitable business, but because profits are tied to consumption of goods (e.g., medicine) and services (e.g., operations), the industry has incentives to promote overconsumption of both. Meanwhile, the health insurance industry has incentives to deny coverage as much as possible in the name of profit. You might think this would cause the health care industry to operate efficiently, but health care is complex and not easily overseen, and even if the health care industry ran efficiently, the health insurance industry would still have incentives to deny coverage past the efficient rate.

But the effects of letting people who genuinely need treatment go untreated are nevertheless much like fires. Not only does it stand an excellent chance of reducing their productivity and overall employment prospects, the consequences it can have for a family can likewise be disastrous. That doesn't do them any good and it certainly doesn't do our economy any good. So while the health industries might be quite profitable, the net benefit to society is considerably less than if the profit incentives were properly aligned to maximize health instead of consumption and lack of coverage.

But, you know, some folks just have to be sacrificed on the altar of the completely free market, in the name of their own good.

logjam• 18 years ago

I did consulting work for FedEx.

Instead of asking America to bail him out like we've bailed out banks, Fred might want to look at his company. I've never actually encountered a more inbred group of incompetents. They, like Microsoft, happened to become lottery winners....and like Microsoft, they will watch themselves slowly lose to more agile organizations. He (and McCain) are completely backwards looking.

Prrometheus8• 18 years ago

He's not asking the government to "bail him out". He's asking them to get out of his way.

comatose_kid2• 18 years ago

right - exactly what do you think he's doing by asking for a write off on a fleet of 777s?

DanielBMarkham10• 18 years ago

I mailed a FedEx letter once.

I don't believe that running successful business is like winning the lottery. If I did, I wouldn't spend so much time learning about how to form and run startups.

FedEx is a tremendous success story. Created an entire business niche where none existed before. You can either have more of that or less of it. I know where I stand.

timr• 18 years ago

I agree. We should promote entrepreneurship by doing things like funding universal health coverage -- with the money we save from rolling back the corporate welfare state.

Giving more money to companies that are already successful doesn't encourage innovation; it encourages hoarding.

joubert3• 18 years ago

I will never use FedEx again.

FedEx's CEO on McCain, free trade and the tax bias against capital-intensive industries.

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