Joe Nocera

  • Aired:  01/18/12
  •  | Views: 14,548

New York Times business columnist Joe Nocera appreciates the attention that Republican infighting has brought to private equity taxation issues. (6:29)

>> Jon: WELCOME BACK MY GUEST

TONIGHT.

HE'S A BUSINESS COLUMNIST FOR

THE ANY

"THE NEW YORK TIMES" AND HE'S

THE COAUTHOR OF THE BEST SELLING

BOOK "ALL THE DEVILS ARE HERE."

PLEASE WELCOME BACK JOE NOCERA.

NICE TO SEE YOU AGAIN.

>> NICE TO SEE YOU.

[CHEERING AND APPLAUSE]

>> HOW ARE YOU?

>> I'M GOOD.

I'M GOOD.

>> YOU ARE HERE ON A FINE NIGHT.

AS IT TURNS OUT, WE'RE HERE TO

DISCUSS THIS MITT ROMNEY ISSUE.

IT'S COME TO LIGHT THAT HIS TAX

RATE IS AROUND 15% NOT INCLUDING

A LITTLE BIT, A TRIFLE THAT HE

MAKES FROM SPEAKING FEES.

>> I SAW THAT.

>> IT SPEAKS TO THE DISTINCTION

IN OUR ECONOMY BETWEEN CAPITAL

AND INVESTMENT AND WORK.

>> THAT IT DOES.

>> AND I MAINTAIN THAT WORK IS

NOT AS VALUED SOMEHOW.

SOMEHOW INVESTMENT IN CAPITAL

HAS TAKEN THE LEAD IN OUR

ECONOMY FROM WORK.

IS THAT CORRECT?

>> YES, IN A WORD.

>> THANK YOU, YOU CAN GO.

>> I PASS.

FINANCIAL ENGINEERING IS AT THE

HEART OF WHAT WALL STREET NOW

DOES, WHAT IT HAS BECOME, AND

PRIVATE EQUITY FIRMS OF WHICH

MR. ROMNEY RAN FOR QUITE A WHILE

ARE AT THE HEART OF THAT.

YOU KNOW, THEY BUY UP COMPANIES.

THAT'S THE INVESTMENT.

THEY FIDDLE AROUND WITH THEM.

THEY BORROW AGAINST THEM.

THEY LAY OFF WORKERS QUITE

OFTEN.

THEY PULL OUT MONEY FOR THEIR

FEES, AND THEN THEY BRING THEM

BACK TO THE PUBLIC MARKET AND,

IF EVERYTHING GOES WELL, THEY

MAKE A FORTUNE, IF EVERYTHING

DOESN'T GO WELL, THEY STILL MAKE

A FORTUNE BECAUSE THEY'VE TAKEN

OUT ALL THE FEES.

AND BECAUSE THE MONEY THEY

INVESTED IS INVESTMENT CAPITAL,

WHAT THEY PAY THEMES IS A

CAPITAL GAIN.

>> Jon: CAPITAL GAIN IS TAXED

AT...

>> 15%.

>> Jon: NO MATTER HOW MANY

MILLIONS IT GETS TO?

>> YEAH, THAT'S, THAT'S... YES.

THAT IS WHY, YOU KNOW, EVERYBODY

WHO IS IN PRIVATE EQUITY IS

REALLY MAD AT MITT ROMNEY RIGHT

NOW.

THEY'RE FURIOUS.

>> Jon: BECAUSE HE'S SHINING A

LIGHT?

>> THIS HAD BEEN AN ISSUE EARLY

IN THE OBAMA ADMINISTRATION,

SHOULD THESE GUYS BE TAXED LIKE

EVERYBODY ELSE, LIKE WARREN

BUFFETT'S SECRETARY.

THE ISSUE THEN FADED, KIND OF

WENT AWAY.

AND NOW, HEY, IT'S BACK ON THE

FRONT PAGE AGAIN.

AND IT'S, GOSH, IT'S SUCH A

POLITICAL ISSUE THAT NEWT ROMNEY

THINKS... JON NEWT ROMNEY?

NEWT ROMNEY IS SOMETHING THAT'S

BEEN MADE IN A LAB.

>> A PRODUCT OF PRIVATE EQUITY.

IMAGINING THE NEXT HORROR MOVIE

SERIES.

>> Jon: HERE'S WHAT MAKES ME

UPSET, AND I'M NOT QUITE SURE

TO, QUESTION WHETHER OR NOT

THESE GROWTH AND CAPITAL GAINS

HAVE METASTASIZED AND GOT OUT OF

BALANCE WITH THEIR VALUE TO THE

ECONOMY, BECAUSE THERE IS A

VALUE TO CAPITAL AND INVESTMENT

AND RISK AND THE ECONOMY.

BUT TO QUESTION THAT IS SOMEHOW

CONFLATED WITH TO QUESTION THE

BASIC UNDERPINNINGS OF

CAPITALISM.

TO SUGGEST THAT WHAT THEY'RE

DOING IS JUST VERY FAIR, LAISSEZ

FAIRE, IT'S JUST SIMPLE RULES OF

THE ROAD AS THEY GOSH, IT

DOESN'T SEEM CORRECT THAT THAT

IS THE CASE, BUT TO QUESTION

THAT, YOU'RE SUDDENLY CALLED A

SOCIALIST FOR EVEN BRINGING IT

UP.

>> WELL, THAT'S WHAT'S SO GREAT

ABOUT THIS REPUBLICAN PRIMARY

AND THESE FIGHTS.

I MEAN, THAT USED TO BE

COMPLETELY RIGHT.

THE QUESTION THAT WAS TO BE

SAID, OH, WELL, YOU DON'T

UNDERSTAND HOW CAPITALISM WORKS,

YOU DON'T UNDERSTAND HOW WALL

STREET WORKS.

YOU DON'T UNDERSTAND HOW WE FEED

THE ECONOMY WITH OUR CAPITAL.

NOW YOU HAVE A SITUATION WHERE

IT'S NOT THE OBAMA

ADMINISTRATION THAT'S SAYING,

HEY, MITT ROMNEY DESTROYS

COMPANIES, IT'S HIS BRETHREN IN

THE REPUBLICAN PARTY.

>> Jon: RIGHT.

>> AND SO THE QUESTION OF

WHETHER YOU CAN QUESTION THIS

ANYMORE I THINK HAS CHANGED.

>> Jon: IT SEEMS LIKE IT'S ALL

FAIR UNTIL THE SYSTEM IS GAMED

ON YOU, AND THEN SUDDENLY...

THAT'S THE PROBLEM I HAVE WITH A

LOT OF POLITICAL THEORIES.

I DON'T LIKE GAY MARRIAGE UNTIL

SUDDENLY YOU HAVE A GAY CHILD.

OH, WELL I GUESS THEY ARE

PEOPLE.

JUST BECAUSE THEY HAVE PERSONAL

EXPERIENCE, YEAH, THIS IS

UNFAIR, WHAT'S GOING ON AROUND

HERE.

IT BRINGS US TO THE SECOND

POINT, WHICH IS SOMETHING YOU

WROTE ABOUT, REGULATION.

TO SUGGEST YOU WANT REGULATION

SUDDENLY MEANS YOU WANT TO

STRANGLE AND CHOKE OFF

CAPITALISM.

COMPLEX REGULATION IS ACTUALLY A

PROBLEM.

IT NEEDS TO BE SIMPLE.

CAN THE GOVERNMENTñr SIMPLY

REGULATE THESE BUSINESSES OR ARE

THEY JUST OUTCLASSED?

>> WELL, THEY ARE OUTCLASSED

TODAY.

THE ANALOGY I ALWAYS MAKE IS TO

THE 1930s.

IS THERE ANY SIMPLER REGULATION

THAN GOING TO J.P.M. MORGAN AS

WE DID IN THE 1930s AND SAID,

FELLAS, I KNOW HOW TO FIX YOUR

PROBLEM.

WE'LL CUT YOU IN TWO.

COMMERCIAL WEST BANK GOES OVER

HERE, INVESTMENT BANK, WHICH WE

DON'T CARE IF YOU GO OUT OF

BUSINESS, THAT'S ONLY

REGULATION, ONE REGULATION,

BOOM, SOLVED.

>>

>> Jon: THAT WOULD BE YOUR

GLASS BEAGLE.

>> THAT WOULD BE YOUR BASIC.

>> Jon: AND WE SAID LET'S STOP

DOING THIS.

>> TODAY WE HAVE FINANCIAL

CRISIS, THREE YEARS AGO, BUT

HEAVEN FORBID ANYONE SAY

ANYTHING AS RADICAL OR DRASTIC

AS HEY, LET'S CUT THEM IN TWO.

THAT WILL SOLVE THE PROBLEM.

>> THE MORE COMPLEX IT IS, THE

MORE PEOPLE YOU NEED TO FIGURE

IT OUT AND THE MORE EASILY YOU

CAN FIT INTO NOOKS AND CRANNIES,

AND ISN'T IT COMPLEX BECAUSE THE

BUSINESSES THEMSELVES CREATE AN

ALMOST PURPOSEFUL COMPLEXITY.

>> YES, THAT'S TRUE.

THERE'S AT'S SPECT.

YOU SAID NOOKS AND CRANNIES

WHICH IS BEING WAY TOO NICE.

>> Jon: I LIKE THE YOU THE

THOMASES ENGLISH MUFFIN THING

WHEN I CAN.

>> IT ALLOWS THEM TO GAIN THE

SYSTEM.

THEY HIRE SMART PEOPLE AND PAY

THEM A LOT OF MONEY AND RUN

RINGS AROUND THE REGULATORS.

THAT'S THE WHOLE DEAL.

THAT'S HOW IT WORKS.

OF COURSE, YOU KNOW THAT.

I KNOW YOU KNOW THAT.

>> Jon: I AM AWARE OF THAT.

I LIVE RIGHT NEAR THERE.

CAN YOU STICK AROUND FOR A

LITTLE BIT?

I WANT TO TALK ABOUT BAIN

CAPITAL BEFORE WE GO ON THE

THING.

MORE WITH JOE NOCERA ON THE

WEBBY WEB.

IF IT'S STILL UP.

I DON'T KNOW IF WE'LL BE ABLE TO

SEE THIS OR PORN OR ANYTHING.

WE'LL BE RIGHT BACK.

JO

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