Venezuela taxes GM... a lot

[Michael Hardner]

http://www.cp24.com/world/gm-ceases-operations-in-venezuela-after-government-seizes-factory-1.3377044

Quote

DETROIT -- General Motors has stopped doing business in Venezuela after authorities took control of its only factory there in what GM called an illegal judicial seizure of its assets.

The plant was confiscated on Wednesday as anti-government protesters clashed with authorities in a country that is roiling in economic troubles such as food shortages and triple-digit inflation.

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

If somebody owned a cure for cancer and was demanding too high a price for the government's taste, could/should they simply suspend patent laws for the cure ?

Does personal morality scale up into local/national/global morality ?

If corporations aren't responsible for all of their actions (ie. limited liability) are we bound to be fair to them ?

------

"Economics Trumps virtue every time" 

When are we following "what works" and when are we following "what is """FAIR""" " ?

[overthere]

Your premise is fatally flawed.  You cannot base judgement of anything that happens in Venezuela on notions like logic, common sense, morality, virtue or fairness.

 

The country is in the grip of an ideology that has zero interest in any of that.  They will do whatever is necessary, and that includes massive amounts of bloodshed to come, to remain in power.  Mass starvation in a relatively wealthy country is certainly a possibility.  Their economy and politics are most closely aligned now with North Korea, they are headed quickly towards the failed state status of Somalia.

Edited April 20, 2017 by overthere

[betsy]

2 hours ago, Michael Hardner said:

http://www.cp24.com/world/gm-ceases-operations-in-venezuela-after-government-seizes-factory-1.3377044

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

If somebody owned a cure for cancer and was demanding too high a price for the government's taste, could/should they simply suspend patent laws for the cure ?

Does personal morality scale up into local/national/global morality ?

If corporations aren't responsible for all of their actions (ie. limited liability) are we bound to be fair to them ?

------

"Economics Trumps virtue every time" 

When are we following "what works" and when are we following "what is """FAIR""" " ?

 

What I see from this scenario - you take a big chance investing in countries like Venezuela.  Things can change fast.

[Argus]

2 hours ago, Michael Hardner said:

http://www.cp24.com/world/gm-ceases-operations-in-venezuela-after-government-seizes-factory-1.3377044

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

If somebody owned a cure for cancer and was demanding too high a price for the government's taste, could/should they simply suspend patent laws for the cure ?\\

We're not talking about a cure for cancer but cars. The Venezuelan government is wholly incompetent to run an economy, except into the ground. They reject the profit motive, and insist retail outlets and manufacturers sell things at a loss. The result is closed down stores, closed down factories, shortages of everything, and growing unrest. Its economy contracted by almost 20% last year and is still going down the tubes. More than a million private sector jobs disappeared last year and the government now refuses to release statistics on the unemployment rate. Inflation is running at 300% It's running out of foreign reserves to make its debt payments and will almost certainly go bankrupt and default on its debt this year.

2 hours ago, Michael Hardner said:

Does personal morality scale up into local/national/global morality ?

If corporations aren't responsible for all of their actions (ie. limited liability) are we bound to be fair to them ?

I really don't see how corporate morality plays into this. The lack of morality is that of a communist government determined to hang onto power at all costs. I expect civil war to break out eventually, because there is no way this government is going to surrender power in an election.

[capricorn]

I vacationed in the mid-eighties in Venezuela. Such a beautiful country, thriving and vibrant. I can't believe what is happening there now. As explained in the following linked article, Venezuela is oil rich but cash poor. They no longer even have the means to get their oil to market.

http://www.dw.com/en/5-things-to-understand-about-oil-rich-cash-poor-venezuela/a-38478166

As Argus said the country on the verge of civil war. It's difficult to ascribe a motive as to why Venezuela's leaders chose to seize the GM plant. I haven't found anything on the web to shed light on said motive other than Venezuela's leaders don't know what they're doing.

It truly is a sad scenario.

[Michael Hardner]

50 minutes ago, Argus said:

1) We're not talking about a cure for cancer but cars.  

2) I really don't see how corporate morality plays into this. The lack of morality is that of a communist government determined to hang onto power at all costs. 

1) Right, but the morality is the same: government takes something away from a private owner for what it perceives as the greater good.

2) See 1).  Is it ok or not ?

[Wilber]

GM shares were up so the market likes the idea of not doing business in Venezuela. I have some and like it as well.

The Venezualan government is going to be the proud owner of a bunch of derelict factories.

If you consider that to be the greater good, then I guess it is OK.

[Michael Hardner]

3 hours ago, overthere said:

Your premise is fatally flawed.  You cannot base judgement of anything that happens in Venezuela on notions like logic, common sense, morality, virtue or fairness.

 

2 hours ago, betsy said:

What I see from this scenario - you take a big chance investing in countries like Venezuela. 

 

2 hours ago, Argus said:

The Venezuelan government is wholly incompetent to run an economy, 

 

2 hours ago, capricorn said:

I vacationed in the mid-eighties in Venezuela

 

21 minutes ago, Wilber said:

 

GM shares were up so the market likes the idea of not doing business in Venezuela. I have some and like it as well.

 

0 for 5 on understanding the OP.  Once again:

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

Can there be any principle here, or is it just a contextual weighing of what works vs what is right ?

[overthere]

So you don't want any comments on what happens in Venezuela?

[Argus]

2 hours ago, Michael Hardner said:

1) Right, but the morality is the same: government takes something away from a private owner for what it perceives as the greater good.

2) See 1).  Is it ok or not ?

Your question cannot be answered logically.

To answer it logically or even morally we'd have to know the mentality of the government and the reasons it gave to take something away. Then we could analyze the honesty/integrity of the government and and how reasonable the excuse was. In this case you have a communist government which cannot be believed about anything, which has thoroughly demonstrated its incompetence, and which has taken over (stole) numerous private sector manufacturing facilities and retail outlets.

[Hal 9000]

Another successful socialism story.  

[Wilber]

Taking something without proper compensation is theft.

[Bob Macadoo]

9 minutes ago, Wilber said:

Taking something without proper compensation is theft.

"Proper" is subjective.  I would think GM not being expected to continue paying taxes.....was proper compensation.

[Wilber]

35 minutes ago, Bob Macadoo said:

"Proper" is subjective.  I would think GM not being expected to continue paying taxes.....was proper compensation.

I guess that's the way the Venezuelan government looks at it. We'll see how good they are  at building knock off Chevs and who will buy them.

[cannuck]

8 hours ago, Michael Hardner said:

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

If somebody owned a cure for cancer and was demanding too high a price for the government's taste, could/should they simply suspend patent laws for the cure ?

Does personal morality scale up into local/national/global morality ?

If corporations aren't responsible for all of their actions (ie. limited liability) are we bound to be fair to them ?

------

"Economics Trumps virtue every time" 

When are we following "what works" and when are we following "what is """FAIR""" " ?

there are a lot of questions/issue here, so let's try to deal with them one at a time.

Personally, I abhor the idea of government simply stealing the assets of an individual or company outside of through legitimate taxation, but that is the view of someone who lives in a democratic society that respect such concepts.  But, Venezuela today is NOT that kind of state, but a "Bolivarian republic" - which is to say a Marxist style of socialism.  Within that frame of reference, all assets should belong to the state, so it is open season on all property.   Just so happens, that Chavez used the USA as the ultimate foil for his megalomaniacal rampage.

The "cure for cancer" analogy is completely out of context.  Sick care is (or SHOULD be) a social service, not a business.  This is what defines the very difference between the USA and the rest of the G7.  While in the rest of world it would be perfectly acceptable to intervene, it would not fly in the USA.  It would meet some resistance in Canada, but IMHO would be done.  BUT:  GM cars are hardly a social service,  There is simply no way outside of a genuine Marxist country that you can justify such a thing as "for the public good".  This marks another milestone in the loss of rule of any kind of law in Venezuela.

Personal morality DOES scale up - in a genuinely democratic society.  Well, in most anyhow.  Venezuela long ago ceased to be such a state.

I think you fail to realize what a "corporation" is and what "limited liability" in that sense means.  A corporation is a "virtual person" and is indeed completely responsible for everything it, and its employees have done.  The limits of the virtual person's liability is the assets of the company, not its shareholders.  Directors are a different thing, and while not liable for commercial things, are indeed generally personally liable for environmental, legal, criminal and payroll obligations of the corporation they direct.  If you are thinking of the the term LLC, that is far more of a tax construction than anything else.  It allows a company to behave differently, more like a partnership or owner-operator, but in no way limits the company's liability for its actions.  It does set up a veil over the assets of the shareholders, as does any other corporation.

[Michael Hardner]

5 minutes ago, cannuck said:

 

1) Personal morality DOES scale up - in a genuinely democratic society.  Well, in most anyhow.  Venezuela long ago ceased to be such a state.

2)I think you fail to realize what a "corporation" is and what "limited liability" in that sense means.  A corporation is a "virtual person" and is indeed completely responsible for everything it, and its employees have done.  The limits of the virtual person's liability is the assets of the company, not its shareholders.  Directors are a different thing, and while not liable for commercial things, are indeed generally personally liable for environmental, legal, criminal and payroll obligations of the corporation they direct.  If you are thinking of the the term LLC, that is far more of a tax construction than anything else.  It allows a company to behave differently, more like a partnership or owner-operator, but in no way limits the company's liability for its actions.  It does set up a veil over the assets of the shareholders, as does any other corporation.

You have given the best answer.

1) Well, if I OWN a patent, is it morally ok for the government to take it away for any reason ?

2) Ok on my limited knowledge, but a corporation can pay out profits to owners, and those same owners can walk away if that corporation causes billions of dollars in damage to the environment.

[cannuck]

Just now, Michael Hardner said:

You have given the best answer.

1) Well, if I OWN a patent, is it morally ok for the government to take it away for any reason ?

2) Ok on my limited knowledge, but a corporation can pay out profits to owners, and those same owners can walk away if that corporation causes billions of dollars in damage to the environment.

I have my own opinions of the whole matter of IP, but let me just say if the situation you identified was the case, yes, it is perfectly fine IMHO to violate that privilege granted by law - as long as it is done under the rule of law.

I can tell you about the Canadian situation, but not the US one (in spite of being director of a few US companies).   Here, environmental law easily pierces the corporate veil, and directors can be held liable for environmental damage, as I posted.   You are right, though, once dividends are paid to shareholders, that money is "gone" from the company's balance sheet.

[Michael Hardner]

6 minutes ago, cannuck said:

1) I have my own opinions of the whole matter of IP, but let me just say if the situation you identified was the case, yes, it is perfectly fine IMHO to violate that privilege granted by law - as long as it is done under the rule of law.

2) I can tell you about the Canadian situation, but not the US one (in spite of being director of a few US companies).   Here, environmental law easily pierces the corporate veil, and directors can be held liable for environmental damage, as I posted.   You are right, though, once dividends are paid to shareholders, that money is "gone" from the company's balance sheet.

1) So if a governing official issues a lawful order then it's fine ?

2) I know that they can be but it's still a special case as I understand.  And anyway, there is a special kind of one-way morality there.

I think we're both saying that this is a "what works" type of situation.  Corporations overall are great for the economy, even if there are individual cases where bad things happen.

[cannuck]

1 minute ago, Michael Hardner said:

1) So if a governing official issues a lawful order then it's fine ?

2) I know that they can be but it's still a special case as I understand.  And anyway, there is a special kind of one-way morality there.

I think we're both saying that this is a "what works" type of situation.  Corporations overall are great for the economy, even if there are individual cases where bad things happen.

1)  that pretty much defines what IS the rule of law - even if that law doesn't fit OUR idea of morality, sovereign states are just that, sovereign states and have the right to do whatever the government in power wishes to do.  In the case of Venezuela, though, Maduro is operation what as I understand it is OUTSIDE of the rule of Venezuelan law - but has the courts all of the way to supreme level do his bidding, no doubt due to the benefits conferred upon justices.

2)  I think we are both on the same page as far as the function and value of corporate structure in North America in general.

[Michael Hardner]

1) Agreed.  It will probably be legal, it may not be "right", but it won't work.

2) Sure.  And the laws basically work the same way, constitution or no.  

[Ash74]

I have no doubt that the government in Venezuela will claim GM was doing something to justify their actions but how will it help the people of Venezuela? 

The issue was parts according to GM and it was not able to produce cars. Where will the plant get parts now? 

Venezuela is on the brink of collapse and has very little money to pay up front. Their oil industry is not doing well right now and their fleet of tankers are falling apart.

The government is trying to by time hoping something will happen that will save them but I think it is likely the country will collapse under the failure of socialism.

[cannuck]

35 minutes ago, Ash74 said:

I have no doubt that the government in Venezuela will claim GM was doing something to justify their actions but how will it help the people of Venezuela? 

The issue was parts according to GM and it was not able to produce cars. Where will the plant get parts now? 

Venezuela is on the brink of collapse and has very little money to pay up front. Their oil industry is not doing well right now and their fleet of tankers are falling apart.

The government is trying to by time hoping something will happen that will save them but I think it is likely the country will collapse under the failure of socialism.

It is a lot worse then Maduro buying time and hoping something works out to keep Chavez's Bolivarian republic dream alive.  The outgoing band of thieves are busy looting what little remains of Venezuela's liquid (both figurative and literal) assets directly into their own back pockets.  Bolivars are supposedly worth the published exchange price, but in the real world, they are nearly worthless - and anyone holding them will do ANYTHING to dump them before the final and full collapse that is inevitable.  PDVSA invested a large fortune upgrading the Puerto la Cruz refinery, that is now up in full operation, but the products are simply being stolen by the Generals and bureaucrats loyal to Maduro.  Sadly, there is a cadre of people genuinely concerned for the future of Venezuela trying very hard to restore order to their #1 business (crude mostly, but some refined) who are routinely thwarted by the "bad guys".   Doing business there is extremely difficult right now.

[eyeball]

2 hours ago, Michael Hardner said:

You have given the best answer.

1) Well, if I OWN a patent, is it morally ok for the government to take it away for any reason ?

 

On occasion it might be morally okay for a government to do that, assuming that government has the moral and ethical background such an obviously loaded action requires.

Quote

2) Ok on my limited knowledge, but a corporation can pay out profits to owners, and those same owners can walk away if that corporation causes billions of dollars in damage to the environment.

In this case it would be morally ok to take their profits away from them for remediation of the damaged environment and reparations/compensation to people affected by the damage.

[betsy]

11 hours ago, Michael Hardner said:

 

 

 

 

0 for 5 on understanding the OP.  Once again:

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

Can there be any principle here, or is it just a contextual weighing of what works vs what is right ?

 

Do you know the reason why Venezuela seized the GM plant?

[betsy]

19 hours ago, Michael Hardner said:

http://www.cp24.com/world/gm-ceases-operations-in-venezuela-after-government-seizes-factory-1.3377044

Is there a generalized sentiment about this action, with regards to your moral stance on government intervention/taxation/theft ?

If somebody owned a cure for cancer and was demanding too high a price for the government's taste, could/should they simply suspend patent laws for the cure ?

Does personal morality scale up into local/national/global morality ?

If corporations aren't responsible for all of their actions (ie. limited liability) are we bound to be fair to them ?

------

"Economics Trumps virtue every time" 

When are we following "what works" and when are we following "what is """FAIR""" " ?

 

When government takes over and controls businesses - we've officially become socialists.

 

Who says everything in life is fair?   What's the point of trying to invest time, money and energy in finding cancer cure if the person who finds the cure cannot have any say in his property?  Is it fair to him to have his property stolen?

A nation has to have sufficient laws to avoid exploitation by greedy entrepreneurs, and to ensure that the laws are being followed.

 

Edited April 21, 2017 by betsy