I oppose protectionism. I support tax incentives to hire Americans. I see no contradiction.
These two paragraphs are all I need to make me want to sign on to this idea.
Let the 2014 Midterms be known as the LOLCats Election Cycle! 
The latter won’t go anywhere. There are basic economic constraints that make it a complete waste of time.
Sure, don’t encourage outsourcing. I’d go further and get rid of all corporate welfare, letting the jobs fall where they may. It’s unfortunate that a lot the “evils” of capitalism are caused by cronyism, corporate subsidies and regulatory capture. It would go a long way towards fixing our problems if we made companies compete with each other for customers rather than for government favors. And protectionism is definitely in the category of harmful government favors/corporate welfare.
Tax incentives aren’t going to turn a worker whose hiring makes no economic sense into one whose hiring does. All it does is to have the taxpayers subsidize jobs which would have been created anyway.
It is the same thing as states giving tax incentives for businesses to relocate. They spend more on more on nothing more, and when the business folds anyway they are left holding the bag.
The “Bush decade” huh? How about the Bush, Clinton, Reagan and Carter years. Real wages have been stagnant since before 1975 while productivity has soared. Care to blame supply side economics for that? Or GWB?
See here the section household income over time.
Your link says real wages of goods producing workers - I don’t know what that means. In looking for a good table I found lots of links with odd views.
The problem isn’t supply side economics. (That has plenty of problems itself.) It is loss of worker power except in times of severe labor shortages, so that management can take most of the productivity gains.
What is your solution to the problem of expecting growth through increased demand at the same time cutting or freezing the wages that drive that demand?
Oh, I understand Economics just fine. But your 2nd and 3rd sentences there make no sense whatsoever. They are exactly the same thing. Maybe you can flesh that argument out better. If you are going to argue that a tax break, after the fact, is not the same as money up front, then you need to brush up on, well, money. Sure, there is a time value to money, but not so much as to make a difference here.
I know that raising wages above the market level will only drive prices higher, offsetting any gains in wage increases, leaving purchasing power unchanged. Isn’t that kind of what Hoover attempted by begging managers to keep wages high after the depression set in? And a few weeks ago Japan tried the same approach, I doubt it will turn out better this time.
Could you elaborate on the first paragraph I quoted here?
Wherever did I say I was anti-business? Middle Out economics predicts that businesses will do well, because there will be demand for their goods and services via a healthy middle class. Unless you think a yacht-based economy will do the trick …
Employers presently hire workers because they HAVE to. Individually most employers would PREFER to automate workers of all types out of existence, or pay them slave wages because automation is cheaper than people, but as you say, marketplace forces prevent slave wages, though you have to wonder if a person making less than a living wage is really a free person in any meaningful sense.
Employers HAVE succeeded in keeping wages stagnant while productivity rises, which has CRIPPLED the demand for their goods from US consumers because, you know, no money. So individual employers acting in their own best interests have, as an aggregate, done great harm to their own economy. So government needs to step in and sort things out. The marketplace can’t and won’t handle it, that’s not how the marketplace works.
Au contraire. It appeals to people who understand how capitalism works better than you … because they don’t have any illusions about how capitalism will solve all problems.
I think there are a lot of Americans who would happily work in a factory if it paid a good wage. Why are WE giving Mexicans and Chinese these jobs? We built these jobs with our infrastructure and now we let our wealthy elite give them to others because it saves them a buck an hour after all the transport and so forth is taken in to account. Fuck them. They just don’t want to pay the social costs of their company’s success.
Maybe not sweatshops, but factory jobs can be decent.
I’m down with not putting students under a crushing burden to get an education.
Much better than Middle Out, but kind of stiff. It needs to be a term that people might reasonably yell “Fuck Yeah!” after saying it. Middle Growth! Fuck Yeah! Demand Side Economics … nope, don’t get it.
Meh. Based on this thread, and many others, it doesn’t seem like you know how anything works. These issues that you’re having with capitalism? It’s what happens when government is corrupted by rich business people. Your solution to it? Give government more power over rich business people because, y’know, power never corrupted anybody. The government that rules over capitalism has been tried. Many times, in many places. It has always failed spectacularly, not least in my country (India). Benevolent, omniscient and omnipotent social planners don’t exist unfortunately. The problem you should be trying to solve is governance, not capitalism.
There’s a bit more to the conservative approach than just businesses trying to make money. For years I’ve been hearing how “job creators” need incentives from the government, in the form of lower taxes and less regulation (compared to current rates and levels) as a form of encouragement. They seem to ignore that turning a profit already has an incentive built in, namely, the profit itself.
I ran across this article (also in The Atlantic, from December of last year) a while ago which describes just such an occurrence. It describes General Electric’s move to bring some appliance manufacturing back to its in-house facility in Kentucky. The collaboration between engineering and manufacturing, and streamlined design and turnaround times make it economically sound to bring those jobs back to the U.S. I hope it’s the beginning of a trend.
Considering that the term “supply-side economics” was coined in 1975, and it has influenced policy since early in Reagan’s first term, I have no problem blaming it for most of what has happened since then.
Of course the fact that, according to the graph, productivity was decoupled from real wages well before Reagan wouldn’t cause you to hesitate.
And if we just give it another fifty years, we should start seeing the predicted results.
The OP’s ideas actually make more sense. Wealth doesn’t trickle down, it trickles up. This even matches conservative dogma - the rich have wealth because they’re good at accumulating wealth, not just because they’re lucky. And if the rich are the people who are best at accumulating wealth, why should we think that the wealth they have will go anywhere? It’ll tend to stay in the hands of the rich.
So if you design an economic system that gives money to the rich right from the beginning, you have a stagnant economy with no wealth circulating. A better plan is to work on getting wealth to the non-rich. That money will circulate through the economy before it ends up in the possession of the rich.
Not significantly. The 1970s saw a lot of economic turmoil (for lack of a better word) in the U.S. There were (roughly in order) an oil shortage, a recession, and high unemployment and inflation. I think the economy is far too complex to point to any one thing and say that it, and it alone, caused everything that followed. But trickle-down seems to have been the predominant government philosophy for more than 30 years.[sup]*[/sup] Oil prices, unemployment, and inflation have come back to more normal levels (with fluctuations, of course), but the stagnating wages have continued.
Do you have an alternate hypothesis? Is there something that you think happened to decouple real wages from productivity, and that policies influenced by the trickle-down theory had nothing to do with it?
- It could certainly be debated exactly how much influence the government really has on the economy, but I think that’s a topic for another thread.
Yeah, like Mitt Romney invested his money in those oh, so productive Cayman Islands!
Stop signing all these dumbass “free trade agreements” where all we do is export jobs to Third World countries that do thinks like peg their currency to the value of ours to artificially maintain an imbalance of trade. Give tax breaks to companies that build new facilities inside the U.S., give tax penalties to companies that export jobs.
Well given that productivity has been decoupled from wages, I think it can be argued that wages in the US are artificially depressed. And with people making enough money to buy things, economic growth will occur, creating more demand for workers, perhaps leading to further increases in wages.
As for the specter of inflation … how to put this nicely? … so many of the things that economists have been predicting of late (or not predicting, most missed the housing bubble) have been … so WRONG … that I don’t have much faith in your predictions. Well .. any faith. I suspect that there may be some price hikes, but not huge ones. In any case, the candle may well be worth the game.
The idea behind tax breaks for buying equipment is that it encourages economic growth. Right now, we need companies to hire people to encourage economic growth, not buy machinery. So give tax breaks to companies for hiring people. It’s not rocket science, dude.
Agreed, devil will be in the details.
Oh, take the average multiple of CEO pay in some other successful economy, like, say, Japan or Germany, and make it our standard, too.
Yeah, ending gross exploitation, disastrous! Not buying it, dude.
So, you are willing to throw unskilled workers under the bus but not temp workers. Gotcha. How about this: some economists have said that in times of very low employment, it’s acceptable to hire some workers to dig holes and other workers to fill them in, in order to keep the economy going. Why not take the same approach to minimum wage? Take the hit in terms of economic efficiency in order to give people at the bottom a decent standard of living and create a new class of consumers?
I definitely think coupling Middle Out economics with reform of investment banking to encourage that it produces financial instruments that lead to Real World economic growth instead of phony paper growth would be an excellent idea.