Heres the problem with the economy in my opinion.
Globalism and Technology are causing deflation in alot
of the sectors Americans work , mostly the discretionary
sectors, Vehicles.Electronics etc etc. but the essential products like healthcare
and energy prices are going up as a result of an aging population and a energy demand from the developing country depleting Americans real income.
Then you have an education system that is not educating people for the new technology jobs which leads even more deflation of wages and dislocation of workers.
Soloutions make energy more affordable,by subsidizing natural gas now
and subsidizing solar panels in about seven years when engineers say it will be
competitive with coal.
Heatlcare abolish medicaid put everybody in medicare with premiums
based on income,and people who want to opt out can get a tax rebate
or voucher to purchase a private plan. pay for with 1 or 2% sales or bank tax.
Everybody pays.
Education-hold all universities accountable for sky rocketing tuition
cost,use video conferncing and internet classes to keep cost low,and the
government should only pay for useful degree’s and not pay for sports recreation degrees
Privatize social security for everybody under 35 give them most of their money
bank and let them put it in their 401K’'s tax free. for like 15 yrs.
Corporate Tax’s allow corporations to repatriate their cash
from oversea’s but they give up most of their tax beaks in the U.S
and we use that money to lower the deficit and lower small business tax.
Personal Income tax abolish for everybody under 500K
500K and up you get tax 25% abolish most payroll tax;s and AMT for everybody
under 100K and replace it all with a 2% bank transaction tax that includes
stock deposit transactions and eliminate the capital gains tax.
I once saw a joke dating back to the Thirties or so about two unemoployed ditchdiggers sadly watching the steamshovel that had replaced them.
One said to the other “if it wasn’t for that steamshovel, there could be a thousand of us with shovels.”
And the other replied “and if it wasn’t for our shovels, there could be a million of us here with spoons.”
That’s just a result of high unemployment. If the job market turns around, then this aspect too will change, as employees leave these jobs for other jobs with easier work conditions.
One of the big culprits here is the US Federal Tax system. Basically, you pay NO tax on profits abroad, but are heavily taxed at home.
That is why Obama’s best buddy (CEO of GE) Immelt is moving GE’s X-Ray business to China.
The second culprit is tariffs-we have eliminated all tariffs from most of the world. Take Korea-they are exporting cars, appl,iances, electronics to the USA, at effectively zero tariff. US exports to Korea pay 11.5% duty. You think the Koreans would ever give this up?
Korea pays lobbyists in Congress very well, and they get their money’s worth!
Unless they’re an investment bank, insurance company, automobile manufacturer, or any other large corporation that has captured a large segment of the government. Then they not only exist, but have the right to demand huge piles of cash from the rest of us when their own bad decisions threaten to set off the economic powder keg they created.
You could have manufacturing jobs tomorrow with a renewed government push for infrastructure projects–yes you can create jobs by fiat. If the government is willing to save the jobs of finance dunderheads whose “skill” is basically pressing a button at the right time ($800 billion and counting), it can afford a few million $50,000 a year jobs which will result in actual, tangible assets.
You point assumes there is a true worldwide free market for labor; that is not at all true, and corporations have the resources to exploit massive inefficiencies in this supposed “free” market.
This is at best an armchair rationalization based on a simplified theory of economics larded with the usual right-wing trickle-down bullet points. The OMB has published periodic cost/benefit analysis of federal regulation; here’s one I quickly googled from 2005. Even if you dismiss their benefits conclusion, the cost figure is in the $30-40 billion range, and even if you think they underestimated by a factor of 3, that’s less than 1% of GDP. Whatever the reason for a higher cost of living, it ain’t because regulation is putting an oversized cost on business.
I work in a law firm and sometimes we have to bring in contract attorneys for large projects. Usually to review documents to determine if they’re relevant prior to production to other parties.
We pay about $45/hr for contract attorneys with no increase in rate for overtime. These people go through a recruiter who is surely taking a piece of that $45. So they’re likely making around $20-30/hr.
So, first, it was a ludicrous claim about overpaid lawyers and how they don’t follow supply/demand constraints on their pay (since thoroughly debunked).
Now, it’s tariffs and corporate taxes? Make up your mind!
Those corporations DO pay taxes abroad, but they may pay lower rates than they would here. I wouldn’t use China as an example. There’s incentives involved in relocating manufacturing to China, but there’s no benefit to headquartering there. Many companies used Ireland in the recent past. So, I’m not even sure what the China thing was supposed to be about. Cheaper labor? No doubt, but the corporation itself is taxed in a 3rd country.
Tariffs? So, I guess that’s why we were working a Korea free trade agreement? It looks exactly like Koreans gave it up.
Yet they say production is very high with a lot less workers. That is not laying a foundation for saying American workers are lazy. It suggests the opposite.
That joke either originated with Milton Friedman, or he reused it. In one of his books he relates a story about traveling to a country (Chile?) to advise them on economic matters. They drove past a work gang with shovels working on a road bed, and Friedman asked, “Why don’t you buy machinery for this? It would be much more efficient.”
His Chilean guide said, “Yes, but this way we create more jobs.” To which Friedman instantly responded, “Then why don’t you give them all spoons?”
A Keynesian might actually nod and say, “Yes… Spoons! We’ll employ more people, and the economy will improve. Perhaps we should give them tweezers. Then we’ll all be rich.”
This highlights the essential folly of trying to prop up jobs artificially through government action: What ultimately matters is productivity. Creating bad jobs just to employ people will, in the long run, weaken the economy and make the situation worse.
To be more specific: Every recession follows this pattern: As the economy slows, demand for corporate goods and services falls. That lowers worker productivity. Corporations respond by laying off all the zero-marginal-productivity workers. Then, as the economy picks up, the demand for goods and services comes back, but the workforce is smaller. That causes profits to rise and per-worker productivity to increase. But that new productivity isn’t permanent - eventually you need to grow, to build up inventory, to take the pressure off the overworked staff. So hiring begins, unemployment drops, demand goes up even more, and you get a robust recovery.
So you have to ask yourself what’s different this time.
First, demand is staying down, because this recession is the result of a major correction that governments have been putting off for a decade through various schemes to keep the economy stimulated. The recession of 2001 was short and shallow because the Bush administration pulled out the stops to flood money into the economy - borrowed money. The fed kept interest rates artificially low. So a lot of money flowed into places it shouldn’t have gone - real estate construction, for example. That helped avert a deeper recession then, at the expense of a deeper, longer recession now.
Second, the government keeps intervening to prop up industries in which demand is going to remain low for a long time, preventing those investments from being freed up for more productive use.
Third, the current administration has driven up the price of labor at exactly the wrong time. Businesses are about to be hit with over 200 billion dollars in new costs that are directly related to the size of their workforces, thanks to the new health care bill. New regulations and threats of even more are choking off re-investment. The threat of new corporate and personal taxes for high-income people is changing the equations for risk-reward and killing investments on the margin.
Fourth, the new minimum wage law signed in 2007 became law in 2009, raising the minimum wage from $5.85 to $7.25. This is a bad move in a recession, when you really want wages to come down a bit. I’m sure this is contributing to high unemployment amount young people and new entrants to the work force.
Fifth, the rest of the world has seen dramatic productivity gains, and is more competitive than ever. This could mean that American labor is pricing itself out of the market, or that the cost of doing business in America has to be lowered so that labor is still competitive. Unfortunately, the trends are in the other direction.
This is pretty much bullshit; even a Keynesian can calculate ROI.
Investing in needed infrastructure improvements when labor costs are at all time lows because of supply and demand and money is cheap (BTW, did you see that the yield of the 10 year treasury was down at 2.09% yesterday - People are almost throwing their money at the US government!) can be a smart decision, and if there is a slight stimulating effect of doing so then so much the better!
Becoming more efficient is all well and good but while corporate profit grows to record levels employee compensation is flat at best.
It’d be like me hiring you as a staff attorney in my company and paying you $X. Next year I expect more work from you but I am still paying you $X. I fire your secretary so you have to do more work. I save the money. My company is making record profits but you get none of it despite you doing more work and being more productive.
Now, you might say you’ll quit and go somewhere else. Problem is this trend is nationwide. There is nowhere “better” for you to go and there will be a pile of attorneys out there who will be happy to take your job for less (I know not all attorneys are created equal but some will be as good at the job as you). You may say you are awesome so can stay ahead of it but thing is this sooner or later this catches up to everyone.
I think you’re possibly being misled by your own use of the word “investing”.
[I think it may have been Bill Clinton who seized on the clever use of the term “invest” to refer to all government spending. And around that same time, my wife did the same, as in “I think it’s time to invest in a new refrigerator”.]
An investment is something that pays itself back, plus some. Infrastructure spending may have a positive impact in many ways, and if they stimulate the economy, they may even produce additional tax revenue, but it’s not as if they pay for themselves plus profit, as a true investment would.
Which leads to your point about low interest rates. If this spending would be a true investment your point would be valid. The government would borrow the money at current low interest rates, and if when the time came to pay it back the rates were higher - hey no problem - just pay back with the return from the “investment”. But that’s not reality. In reality, the money will have to be paid back with more borrowed money. And if interest rates have gone up in the interim, then that money will be borrowed at a much higher rate.
As others have noted, one thing that makes the deficit and debt seem less dangerous than it is is the fact that current rates are so low. People point to the recession and say, well if the economy recovers, we’ll grow out of the deficit. That’s wrong for a number of reasons, but one of them is that if the economy recovers, rates will increase, and interest payments on the debt will increase with them.
Not entirely true. Any debt in the form of long term US Treasury Notes/Bonds will have the current historically low interest rates. Older debt and new debt we incur later might have higher interest rates, but the stuff from right now won’t.
But the government is constantly issuing new debt, to pay for the old debt. The Treasury holds constant auctions. (That was my point about how government spending differs from investing.)
And if you read the link, Romney points out that corporations are made of people, that investors are people as well.
I don’t agree with the Supreme Court recognition of Corporations as rights holding organizations, but heckling Romney about corporations typically shows someone who is clueless about how business works.
That small sandwich shop? It is a corporation. The dry cleaner? A corporation. Slight chance of being an LLC or something, but typically you pay Delaware or Nevada a couple of bucks and you incorporate. You can do it online. It protects your personal assets from losses if they are not invested in the corporation.
This is true of any social organization, yet I suspect Romney won’t be saying “Governments are people” anytime soon.
Yes, and the words “b—h” and “f----t” technically refer to a female dog and a bundle of twigs. But that’s not the way they’re commonly understood. Most folks use “corporation” as a stand-in for a large, publically-traded corproation.
So much for these ex post facto rationalizations. We all know what the comment reveals about Romney’s priorities, and it is by no means unfair to point that out by playing it over and over and over again on the cable news (hey, it was good enough for Jeremiah Wright, wasn’t it?).
It seems to come down to the value of human life. We pretend we value that highly, and so you can’t just go around murdering, raping, bombing and generally looting and pillaging to your heart’s content.
But then, we create business, and capitalism, and market forces, and labor, and corporations, and investors and stock markets.
All of a sudden, these unliving, amoral corporations that exist solely for profit, are also in charge of placing value on human life. Then we have people saying things like “Americans are overvalued” and “Americans are going to have to accept they aren’t as valuable as they thought, and adapt.”
Adapt to what? Living like poor Mexicans, Indians and Chinese? That’s not how it’s supposed to work. Poor Mexicans, Indians and Chinese are supposed to be working so they can be more like the US.
There is no lack of wealth in the world, as I understand it. If most of it is swirling around corporate pools, then yes by all means let’s start draining off some of those pools.
