“Job creators” is not limited to rich individuals. It can apply to any group or organization that wants to start new businesses, and the desire to reform and limit regulation is something we wish to apply at every level of government. We’re happy to encourage small business loans as much as offering tax breaks to aggressive start-ups. The plain fact is that we have too many, and too complex, regulations. And I deeply doubt that they’re being made in an honest spirit of public good - more likely based on friendships and who has the political juice.
What does get our goat, however, is the politically-convenient demonization of the rich. I’ve never been rich, don’t know anyone who is, and may not much care about their troubles. But I don’t have to empathize to sympathize - they’re not especially greedy, and the most dangerous rich are also usually the ones being lauded by politicians for their generous public-minded spirit. I also find, for that matter, that an awful lot of the soak-the-rich rhetoric seems to be driven by a combination of jealously and a desperate desire to somehow save broken government budgets of late. And it’s amazing how the Left somehow never actually does anything about their big voting blocks of rich people; financiers and bankers don’t vote Republican.
Yes and no. GE isn’t on the leading edge of jack squat; it cuts both ways, and this has been going on for quite a while now. However, it’s limited and isn’t going to lead to a massive on-shoring of factories. And frankly, I don’t think we really want them to; Americans are not rushing to work in them. Some businesses decided to “on-shore” because time constraints, or transportation costs, were getting higher than expected and becuase they were hard to control. But that’s fundamentally a limited market.
Why make them do busy work at all? Why not just give them cash to live on until they can get a real job that actually contributes to the economy?
Evil Captor, I see where you’re coming from, I really do. However, I think you’d be better off creating a government funded safety net rather than punishing companies by forcing them to pay living wages and hire in the US. We should be decoupling our livelihoods from international corporations, not hitching our sail to them. Let them pay cheap workers to make nick knacks in China while we train our kids to be engineers and scientists.
In other words, let the free market be free, and let the government focus on keeping people fed, educated and healthy. In my opinion, that gives us the economic benefits of free market capitalism while giving poor people a non-criminal way out of their misfortunes. It also gives us the economic and social benefits of a strong middle class.
First, you are assuming that every penny of wage increase would go directly into price increases. This clearly isn’t true - many products have very low labor content, wage increases can drive efficiency through hiring better workers or by making it worthwhile to invest in more productive machines, and there is ample room to take some off of the top. As I’ve mentioned before, major companies have found that engineering improvements are not worth doing in low wage countries. As I’ve also said, wage increases should be funded from improvements in productivity. If there had been none, then opposing wage increases would make sense, but there have been, and the money has been going to the top, clearly causing a lack of demand and increased inequality.
Supply side economics makes sense if there is a lack of investment capital, which I think actually happened in the late '70s. More money to the rich means more needed investment. Today we’re awash with investment capital and no good place to put it. Also, our tax rates are so low that cutting them further is unlikely to do any good at all - top rates, that is.
When you say “we”, and “our”, who are you referring to?
I favor reasonable regulations that are done with the broadest public interest in mind, and not just to appease the “job creators” (whatever their income level). But that really doesn’t address the portion of my post that you quoted. Do you really think the government needs to create extra incentives to turn a profit, or is the profit a sufficient encouragement on its own?
As to demonizing the rich, it does happen, but it’s not the only argument being made. There are emotional debates, in places like this message board, but I think most of the people who are actually in a position to get things done are more pragmatic. Not every call to raise taxes on upper incomes is class warfare.
Well, sometimes it is, and sometimes it is not, as evidenced by the fact that many, many people still have job and have not been replaced by robots. When was it ever otherwise?
You’re trying to shoot a moose and aiming at a chicken. If you want the middle class to be better off, you need more international trade, not less, and then you need to start addressing things like single-payer health insurance, the shitty tax system, and the outrageous cost of post-secondary education. You also need to acknowledge that the best way to help America in the aggregate is to help the POOR, not the middle class - there’s more and more poor folks around.
I’m not saying these are easily solved things, but blaming the foreigners isn’t going to help.
So your idea to grow the economy is:
Increase labor costs
Stifle technological advancement
Abolish the health care industry (which is admittedly broken)
Enforce arbitrary salary caps on our highest payed business leaders
Reduce the flexibility of our workforce (do 1099 contractors making $200k a year and paying for their own healthcare count as “temps”)
?
I think the OP’s basic understanding is flawed and biased. Evil “Job Creators” are not rich people but middle class business owners. I’m by no means conservative, but this vocabulary flub suggest you don’t really understand what the other side is arguing.
Wealth does not trickle down, up, or sideways. Wealth is created by production and trade. The wealthy are rich because they are the most productive. The way to get people more wealthy is for them to become more productive.
An economy is not designed and rich people are not given money by an economy designer. They earn it by producing something of value to their fellow man. The rich do not hide money in mattresses, they spend most and invest the rest. Investment is what allows new ideas and new innovations to be produced. Those are what drive economic growth.
Real wages and productivity are not as decoupled as many people assume. Much of the increase in worker compensation has been taken as more expensive employer provided health insurance. Because health insurance costs have increased so much if you only look at wages and not total compensation it gives a misleading picture.
Secondly, productivity and wages have different levels of inflation built into them so that the comparison is not apples to apples. If you use the same measure of inflation then productivity and wage growth are more closely matched.
Here is a paper by the president of the National Bureau of Economic Research, Martin Feldstein. (pdf)
In it he shows how to reconcile the two different measures of inflation to get more accurate version of what is happening. He also shows that in the 1960s labor compensation was 62% of national income, it increased shortly to 66% in 1970 and is around 64% today. This shows that the returns from labor have not been decreasing but have remained almost steady for over 40 years.
I’m more economically conservative than most on this board. But I hate how the conservative working middle class has been led to believe that billionare CEOs, hedge fund managers, investment bankers and super-celebrities are “job creators”. It’s like every other corporate middle manager and lawyer I know thinks they are Hank Rearden.
A simplistic view. The economy is designed through the laws, policies and institutions we create to support it. The Fed, the fractional reserve banking system, the stock market, the SEC, Sorbanes Oxley, Wall Street, the S and C corporation and so on didn’t just spring out of thin air. These are all part of the design of our modern economic system that evolved over the centuries.
And even if it were true that a person’s wealth is a direct correlation of their contribution to the economy, how did that come to mean that the tax burden should fall on the middle and working classes? Their “reward” is having more money to buy stuff, even under a progressive tax structure. Let’s not pretend that the economy would suffer if Derek Jeter or Tom Cruise or even top CEOs had to pay a bit more in taxes.
Milton Friedman was visiting some third-world pisshole with strong government control of the economy and lots of meddling bureaucrats. One of the bureaucrats, in order to demonstrate the advantages of their economic system, showed Friedman a site where workers were undertaking a huge construction project with shovels, jackhammers, wheelbarrows and so forth. The bureaucrat invited Friedman to admire how many jobs were being created. Friedman asked why there weren’t using backhoes, bulldozers, trucks, and other machinery. The bureaucrat responded that if they used machinery, they’d create fewer jobs than if they did the digging with shovels.
Friedman responded: “Then why not dig with spoons?”
Annecdotal obviously. But I have a number of right leaning friends who think that way. They believe because they had the wherewithall to go to decent college (being from white, upper middle class suburban homes), landed jobs in some large corporation and have worked their way up to middle management and earn a six figure income, they are the embodiment of Ayn Rand’s philosophy on entrepreneurship and personal achievement. As opposed to just some well functioning cog in a giant corporate aparatus.
Not to pick on Rand Rover, but I don’t think Ms. Rand had being a tax attorney in mind when she wrote Atlas Shrugged.
We’re talking tax policy here not basic economics.
The argument that’s been made by people like you for the last thirty years is the government should have a tax policy which lowers taxes on the wealthy. The claimed justification for this has been that the wealthy will use this extra money to create jobs.
What we’re discussing here is the possibility of a new direction. Instead of having a tax policy that favors the people who do the hiring, how about a tax policy that favors the people who get hired?
If you think tax policy shouldn’t show favoritism or be used as a means of influencing the economy, then explain why conservatives have been demanding such a tax policy for the last three decades.
It’s a good story. OT, but it wasn’t Friedman, and in fact nobody knows for sure who said it first. It appears at least as early as 1935, when Friedman was a research assistant and nobody would have much remembered him saying anything.
You are not understanding how the conservative tax policies relate to the economy as a whole. If you tax something there will be less of it. In England a couple hundred years ago they taxed windows and as a result houses had windows bricked up and new homes were built with fewer window. It is estimated that for every ten percent increase in cigarette prices taxes add youth smoking goes down seven percent. This is true for income as well. None of this is controversial and is probably intuitive for most people.
Raising taxes on income discourages people from working, shrinking the economy. Since basic economics shows that the wealthy are the most productive, high taxes on the wealthy discourages the most productive citizens from working and contributing to the economy, those taxes hurt the economy the most. An economy that is not growing makes it hard for people to get jobs. Thus conservatives want low taxes on the rich because we want a vibrant economy with lots of jobs, not because we like rich people. (Although there are some rich people we like)
Despite the idea that supply siders have been in control of the tax policy for the last thirty years, the reality is that America has the most progressive national income tax policy in the world. The bottom fifth of income pays 1.9% tax rate, the 2nd fifth pay 9.5%, the middle fifth pays 15.6% the second highest pays 19%, and the richest pays 28.1%. If you factor in transfers the bottom 60% is a net recipient of government money. Cite
So if the idea is to use the income tax system to benefit the middle and lower classes that is what is occuring now.
That is clearly not the case. Nobody quits their $250,000 a year job because their taxes went up a bit.
Raising taxes decreases purchasing power which in terms decreases demand for goods and services.
Welfare discourages people from working because the marginal income from taking a low-wage job over just collecting a check isn’t worth the time and labor. Moral hazard and all that.
That is overly simplistic though. We recognize as a society that there is a value to having social safety nets to allow people to get back on their feet rather then allowing temporary setbacks to become permenant disasters.
