• Welcome to OGBoards 10.0, keep in mind that we will be making LOTS of changes to smooth out the experience here and make it as close as possible functionally to the old software, but feel free to drop suggestions or requests in the Tech Support subforum!

The Lasting Legacy of the Last Decade: A Shrinking Middle Class

Would you give us one example where a Republican congressman said he was willing to support a tax increase of any kind if he was first assured of definite spending cuts?

ETA: And it's "Bob" Knight or "Coach" Knight.....not "Bobby" Knight.

Apologies. I certainly meant no disrespect to Coach Knight. Kinda wish he would consider coming out of retirement...

An example you asked for.. though I feel this is a trap.. your challenge was too easy....

http://www.cbsnews.com/8301-250_162-57325587/boehner-backs-supercommittee-tax-hikes/
 
Wrong again. The Pope was the reason for the Soviet demise not Reagan.The Cheney/Bush defense cuts eliminated tons of jobs. If not for the internet revolution unemployment would have been much higher.

I'd argue that it was the combination of the Pope, Reagan, and Thatcher, along with Lech Walesa and the Solidarity movement that was the beginning to the end of the Iron Curtain.
 
I'd argue that it was the combination of the Pope, Reagan, and Thatcher, along with Lech Walesa and the Solidarity movement that was the beginning to the end of the Iron Curtain.

Not to mention the fundamental unworkability of Soviet Communism
 
I must have missed it. Refresh my memory.

Basically, that the American worker isn't just competing with overseas workers for the investment dollars of businesses and corporations. They're competing with financial services. It's safer and easier to park X million dollars in investments for a 5-10% return rather than use that money to create jobs. If we really wanted to make American workers more attractive, then we need to make the pencil pushers less attractive.

I'll add that lowering capital gains taxes and not stemming rising health care costs (or keeping health care attached to employment in the first place) is going in the opposite direction.

sailor, I'll try to search for some other posts I've made on this issue. bkf is right. I have made this point about 50 times. Guess one more won't hurt.
 
Last edited:
Here's one bkf is probably thinking about:
http://www.ogboards.com/forums/showthread.php?11164-Unions&p=748456&highlight=invest#post748456

Trickle down makes no sense. Why would rich people want their money to trickle down? Trickle down is a problem, not a solution. For the most part, the rich have fixed the trickle. They have more options to invest with each other instead of by creating jobs. They've made taxes lower so there is less trickle down into governments. It's a flawed strategy to run a country.

http://www.ogboards.com/forums/show...this-bad&p=718918&highlight=invest#post718918

bacon, that's a fine post. It describes the root of the problem and the point of the thread, particularly this point:

"The first option is the cheapest, but it would require more of my time....my time that I would probably be better off focusing on my widgets. The second option, with varying degrees of expense/expected outcomes, but I wouldn't have to do much thinking and could focus more time on my widgets. "

The first option is job creation in that sector either directly by hiring more people to work at the widget plant and indirectly by acquiring resources manufactured at other plants that require more workers. This is particularly essential to the "unskilled" labor force.

I've been making this point for awhile now and your post brings it home. There is too much competition for job creation. You outline why it's more beneficial for the widget maker to just put his money on the sidelines rather than invest in his widget business. Lowering corporate rates or the marginal income tax rate isn't going to make job creation a more competitive alternative.

http://www.ogboards.com/forums/show...ty-in-NC&p=612762&highlight=invest#post612762

But that's the problem. Our system is slanted toward investment instead of work. Taxes are lower for investment. Investors earn profits from others work and then when the profits aren't high enough workers lose their jobs. There's got to be some happy medium between "workers unite" and our version of capitalism that enables people to make loads of money without working at all.

From last August:
http://www.ogboards.com/forums/show...-1pm-EDT&p=242350&highlight=invest#post242350

DeacMan, I'm not just talking about hiring overseas. I'm talking about all the different ways someone can invest money besides hiring an American worker. If an employer believes he can get a better return by putting $50K in the bank rather than hiring somebody, he should do it. The challenge is how make it more profitable to hire an American worker than other investment options.

Last June:

http://www.ogboards.com/forums/show...ains-tax&p=167207&highlight=invest#post167207

mike, you've got to admit that it's pretty messed up that someone gets taxed less for giving their money to the pencil pushers than they do for a honest day's hard work. Let's invest in the American worker.

We're not going to solve unemployment with people just investing in the same old companies. Take that money and start new businesses.

OK. I'm done looking for now. I just found those using the search engine keyword: invest.
 
Basically, that the American worker isn't just competing with overseas workers for the investment dollars of businesses and corporations. They're competing with financial services. It's safer and easier to park X million dollars in investments for a 5-10% return rather than use that money to create jobs. If we really wanted to make American workers more attractive, then we need to make the pencil pushers less attractive.

I'll add that lowering capital gains taxes and not stemming rising health care costs (or keeping health care attached to employment in the first place) is going in the opposite direction.

sailor, I'll try to search for some other posts I've made on this issue. bkf is right. I have made this point about 50 times. Guess one more won't hurt.

No need to look it up PH. This is pretty much my point, and one which I have made repeatedly before. I guess bkf simply misunderstood. The problem with the economy is structural. If the flawed structure - favoring investments into currency speculation and other forms of financial manipulation, over the production of goods and services used by ordinary people - is not solved, then cutting taxes is not likely to help job creation much. What good does it do to cut taxes, if the proceeds are then simply shuttled into overseas financial markets. The key point is that this structural problem needs to be addressed because otherwise most tax plans are unlikely to produce more jobs, or much economic improvement. Indeed, this structural flaw will probably lead to an even greater gulf between the rich and the poor, resulting in greater social tensions. Unfortunately, I don't see anybody addressing it, not in the US, not anywhere in the Western world. And I think it is the most important economic problem we have.
 
What did bkf misunderstand? I have made that point many times before as I show in the post above yours. He took issue with you saying nobody is addressing it by saying that I have. We're on the same page here. So is bkf. Unfortunately, there are no takers in our current political environment. Too many people believe or at least sell the idea that people who are making good money in the markets would put fewer dollars into the markets and into jobs if only the taxes on money made in the markets was lower. That makes absolutely no sense.
 
What bkf seems to have misunderstood is the meaning of addressing a problem. What I meant by addressing the problem was not just noting that the problem exists but also trying some way to resolve it. And that's what I'm missing from our politicians. You can implement all kinds of tax policies, you can debate about them all you want, if we don't try to solve our structural problem in the economy, none of them is likely to do much good, and it makes little difference if the tax plan suits Republican or Democrat tastes. Neither raising the taxes on the rich, nor cutting the taxes for anyone will solve the structural problem by itself. And doing either, without trying to resolve the structural problem, will not help the economy much, or create many jobs.
 
So what's your idea on how to address this structural problem?
 
That is the interesting thing about politicians versus business people. In business you define a problem and you develop a plan to deal with the problem. In doing this you define how you are going to measure success and then you determine at what point of time you expect to see results, at that point you evaluate your strategy and start all over again.

Politicians see an issue, write a bill, hope for the best, blame everyone else when it doesn't work, have no time frame of metric to measure success or failure and when it never changes a thing they start their stupid process all over again.
 
That is the interesting thing about politicians versus business people. In business you define a problem and you develop a plan to deal with the problem. In doing this you define how you are going to measure success and then you determine at what point of time you expect to see results, at that point you evaluate your strategy and start all over again.

Politicians see an issue, write a bill, hope for the best, blame everyone else when it doesn't work, have no time frame of metric to measure success or failure and when it never changes a thing they start their stupid process all over again.

Great assessment. This is why government is the answer to so few problems.
 
So what's your idea on how to address this structural problem?

First of all I am not an economist or a financial expert, just a layman trying to grapple with a serious difficulty. Obviously, this is not an easy problem to address because if it was easy to correct, then it would not have become a serious problem and could have been dealt with long ago. Thirty years ago, it probably wasn't, or at least not nearly as serious as it is now. The question is how do we encourage investment into job producing activities, and not just jobs in the financial sector. How do we begin to shift investment from some sort of financial business to businesses that provide products and services that ordinary people use and create jobs in America in manufacturing and services?

What could you do? Here are a few possibilities, although there must be others. 1. Levy a tax on financial services to discourage more investment into that area? 2. Lessen the tax on manufacturing and non-financial service businesses? 3. President and civic leaders could encourage investors to invest in areas that create more jobs in America? 4. Reduce workers benefits and relax environmental regulations in the manufacturing sector in order to make these types of businesses more profitable, and thereby encourage investment into this area? 5. Build tariff walls to protect and encourage domestic manufacturing? 6. Put an end to the off-shore tax loophole?

Of these, 3 is a nice idea but unlikely to produce much result, 4 would raise such resistance that there is little likelihood that it could be successfully implemented, 5 would probably be impossible under the current international trade system. I am all for 6 but it wont necessarily create any jobs in the US.

That leaves us with 1 and 2. Unfortunately neither would probably be very successful alone. So, my suggestion would be a combination of the two. All financial services would be assessed a 0.1 of 1% (one tenth of one percent) tax on all financial transactions. The tax to be paid by the recipient of the money. In the case of international transference of money, the tax would be paid in the US by either the US payer - in case of transferring money abroad - or by the US recipient of the funds in case they were arriving here from elsewhere. The money collected from this tax on financial transactions would be put aside in a separate fund, somewhat like Social Security or the Highway Fund, which would then be used to assist new firms in the manufacturing and non-financial services sector by reducing the taxes and obligations of the new firms enough to make investment in them become competitive with investment in financial services.

Potential problems:

1. I have no idea what international agreements might get in the way of such a scheme.

2. Financial services businesses would scream bloody murder. But if you want money, you have to go to the places where the money is, and right now that's often financial services. These businesses are rather powerful though, and they will resist. I would point out that the tax is not very large, less than what banks often charge their clients for financial transactions.

3. Flight of capital would be encouraged. Maybe? On the other hand you might not be in such a hurry to take your investment money out of the country if you had to pay a tax when you did, and even worse, you had to pay a tax when you brought it back. You might be encouraged to invest domestically, if you have new opportunities available in the US that due their reduced tax burden offer returns competitive with investment opportunities abroad.

4. It might not be so easy to separate financial services from other business activities. I think, however, that one could certainly try, and the task is not entirely impossible.

I'm sure such a scheme could be much better fine tuned by economists and financial experts. And, I am certain that many additional criticisms could also be raised.

I do think that we have a very serious structural problem in the Western economies. I also believe that the politicians are reluctant to face it, and therefore, they often content themselves with non-solutions such as raising the taxes on the rich, which does little to create jobs but might make poor people feel better, or cutting taxes to encourage investment, which does little to strengthen the economy through job creation, if the current imbalance between investment in financial services and manufacturing and other services is not somehow simultaneously alleviated. We need to find a way to get our politicians to start addressing this structural problem in the Western economy.
 
Sounds like a problem with politicians and not government.

This is the way all politicians wind up acting. Whether their intentions are good or bad, in practice this is what happens. Limit their ability to screw things up.
 
Back
Top