posted
I'm not sure exactly how to phrase this, but it seems to me that the conversation about the deficit that we're having right now as the primary economic concern is wrong-headed and likely politically motivated.
Sure, banks and the stock market are doing fine, but our economy is still suffering from at least two major crises, unemployment and the housing market. I don't think that the latter is something that we can do all that much about, other than make it worse, but the former seems like something that we really should be focusing on. And yet, at least to me, it seems like it has slid right off the radar.
It seems to me like the Democrats have, on the whole, failed in their attempts at job creation and the smart Republicans are seeing that giving companies more money, absent demand to fuel them hiring people to me it, leads to those companies keeping that money. Neither side wants to talk about unemployment, because then people would expect them to do something about it. Thus, isn't it great that they have the deficit and ways to reduce it to fight over?
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This feels more like a blog post than a discussion starter. Sorry about that.
Posts: 10177 | Registered: Apr 2001
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posted
Politicians are like magicians, "Look over here!" while the truth escapes behind a false door, never to be revealed, and the audience gasps, and says, where are our results?
Personally, I don't find it reasonable to expect help from our "representatives", but then again, I'm not a big fan.
I mean, they vote for laws that they don't read, when they vote at all, that is. We can't get a line item veto passed, and special interest groups openly bribe them.
Their fighting over ideology is the flash of light they need to distract us, and blame each other for their lack of actual progress.
Posts: 6683 | Registered: Jun 2005
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posted
Jobs are a trailing indicator, so they already tend to lag other parts of the economy.
Add to that how entrepreneurs are the biggest source of jobs in the economy, combined with how many of the efforts to "fix" problems with "wall street" also squash the growth of new companies (SarbOx, the more recent financial reform bill, some of the possible up and coming tax code changes that are causing uncertainty, along with the general air of "we haven't stuck it to the companies enough"), and you've got a recipe for stagnant job growth. Companies aren't going for IPO until they're much larger, nowadays, and a lot of startup companies that would formerly be eager to begin in the US for the networking possibilities are now choosing to launch outside the US.
Posts: 15770 | Registered: Dec 2001
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posted
Is there a way to really fix the job market without forcing Americans to take a hit to the wallet? We've lost a lot of manufacturing jobs because it's so expensive to make things here in the US.
Posts: 14554 | Registered: Dec 1999
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quote:Is there a way to really fix the job market without forcing Americans to take a hit to the wallet? We've lost a lot of manufacturing jobs because it's so expensive to make things here in the US.
Things being made more cheaply elsewhere means they're also available more cheaply here, effectively increasing the income of Americans. There is no limited stock of jobs that gets depleted; as we become better at doing something and automate it more, fewer people are involved in that endeavor (assuming there's still demand). This frees up people to be involved in other endeavors. That's what happened with making toothpicks, that's what happened with washing clothes, that's what happened with making lightbulbs, and that's what happened with industrial manufacturing. We're still the most productive manufacturing nation in the world per manufacturing job and per capita, and we're just barely not the largest by output (China's first, just barely, and they have rather more workers). What's more, a large portion of the value add from manufacturing that's being done in SE Asia is being captured by the US firms that are driving it -- that is, when a factory makes a lot of iPhones, that gets counted as manufacturing income for them . . . but it's a heck of a lot more income for Apple.
Trying to "fix" the job market by somehow forcing or enticing jobs that it doesn't make sense for Americans to do any more back to the US would make Americans take a hit to the wallet. Then there's the downside of how it wouldn't work. Luckily, there are much easier ways to improve the job market: simplify the legal situation for new businesses; lower corporate income taxes; subsidize effective, cheap vocational education.
Posts: 15770 | Registered: Dec 2001
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quote:Things being made more cheaply elsewhere means they're also available more cheaply here, effectively increasing the income of Americans.
I'm not sure that really holds true, fugu. Detroit is a ghost town now because automobile manufacturing was moved overseas (and other reasons, sure); at least that's how it looks to me. If jobs that we had are gone, it doesn't matter how much goods cost because we don't have the money to buy them.
quote:simplify the legal situation for new businesses; lower corporate income taxes; subsidize effective, cheap vocational education
Well...I grant you two of three. Are corporate income taxes so high that they're greatly burdening companies' ability to hire and expand their workforce?
Posts: 14554 | Registered: Dec 1999
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quote:when a factory makes a lot of iPhones, that gets counted as manufacturing income for them . . . but it's a heck of a lot more income for Apple.
Does that income necessarily translate into more American jobs, though? Granted, its more capital for the owners of the company.
Posts: 14554 | Registered: Dec 1999
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quote:Originally posted by MrSquicky: ... at least two major crises, unemployment and the housing market. I don't think that the latter is something that we can do all that much about, other than make it worse, but the former seems like something that we really should be focusing on.
Personally, I wouldn't really think of the latter as a problem, rather an opportunity Posts: 7593 | Registered: Sep 2006
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quote:We're still the most productive manufacturing nation in the world per manufacturing job and per capita, and we're just barely not the largest by output (China's first, just barely, and they have rather more workers).
How are we the highest per manufacturing job and they have rather more workers? That seems to me to be a very conflicted statement. Please explain?
Posts: 6683 | Registered: Jun 2005
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posted
My narrative is somewhat different to fugu's. While regulatory burden and uncertainty presumably have some effect, by far the major factor behind the slow fall of unemployment is a lack of demand. This is especially true in the housing market, and there is an associated extremely high unemployment rate among construction workers.
With US bond prices what they are and unemployment what it is, one might expect talk of more government stimulus. However, the deficit and public opinion being what it is, this option is unfeasible. As the government is not going to do anything about unemployment, it makes no sense to talk about unemployment (beyond pointing out things the other side is advocating that might worsen the situation).
MrS, the numbers I've seen indicate that the Dems were basically on the money in terms of number of jobs created by the stimulus. Where they failed at was predicting how bad unemployment would actually be.
Posts: 644 | Registered: Sep 2008
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posted
On a personal experience level, my dad's company has hired almost 25 people in the last year.
On a national level, the unemployment rate in March fell to the lowest point in two years.
In other words, whence the headline? It is getting less attention because it is, in fact, getting better, and as fugu said, it is a trailing indicator.
Posts: 26077 | Registered: Mar 2000
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posted
The reason it is still important to talk about is that we are in danger of stopping the things that are working. People tend, when things don't work immediately, to think that they don't work at all and stop doing them too soon. This is still the wrong time to make drastic spending cuts.
Posts: 11187 | Registered: Sep 2005
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posted
It is still a huge problem. Consider the following: - by historical standards the current unemployment rate is extremely high. It is almost mind-boggling that the rate can be so high and it not be at the center of every conversation. - the drop in unemployment rate is partially aided by people simply giving up looking for a job. If things improve they will try again, so the scale of improvements seen is somewhat illusory. - even with the improvements in employment being overstated as just described, at the current rate it will take ages to return to a "healthy" unemployment rate.
Posts: 644 | Registered: Sep 2008
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posted
As someone who associates with teachers and NASA workers, the economy still seems to be in the gutter. Just about everyone I know is terrified. Many are unemployed or waiting for the news. For me, it seems like the unemployment rate is all that is talked about.
Posts: 2223 | Registered: Mar 2008
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Blayne Bradley
unregistered
posted
quote:Originally posted by Stone_Wolf_:
quote:We're still the most productive manufacturing nation in the world per manufacturing job and per capita, and we're just barely not the largest by output (China's first, just barely, and they have rather more workers).
How are we the highest per manufacturing job and they have rather more workers? That seems to me to be a very conflicted statement. Please explain?
Because a per capita basis takes into account things like efficiency, productivity, management techniques, training, education and the equipment in the factories and how things are produced. Also services.
Thus China is more inefficient on a per capita basis because precisely becausse they employ more workers for the same output, if they could produce more for less like the USA than its a different story.
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quote:Originally posted by natural_mystic: - the drop in unemployment rate is partially aided by people simply giving up looking for a job. If things improve they will try again, so the scale of improvements seen is somewhat illusory. - even with the improvements in employment being overstated as just described, at the current rate it will take ages to return to a "healthy" unemployment rate.
These two, especially the former (the way we measure the unemployment rate is only slightly less bollocks than the way we measure the poverty rate)
Posts: 15421 | Registered: Aug 2005
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quote:Things being made more cheaply elsewhere means they're also available more cheaply here, effectively increasing the income of Americans.
I'm not sure that really holds true, fugu. Detroit is a ghost town now because automobile manufacturing was moved overseas (and other reasons, sure); at least that's how it looks to me. If jobs that we had are gone, it doesn't matter how much goods cost because we don't have the money to buy them.
quote:simplify the legal situation for new businesses; lower corporate income taxes; subsidize effective, cheap vocational education
Well...I grant you two of three. Are corporate income taxes so high that they're greatly burdening companies' ability to hire and expand their workforce?
Re: Detroit, it doesn't work that way at a local city level, certainly. But I think you'll find that for a large proportion of Detroit's population it did work that way -- after the automobile jobs declined, they moved (there are some serious social justice issues relating to who is able to move, but at a macro scale the narrative's fairly accurate). Again, this has happened before. Take a tour through the upstate New York area sometime and peruse the many formerly much larger cities involved in industries like film photography.
I'm not saying there's no pain associated with the creative destruction of changing industries. I'm saying that's ultimately the path of least pain, and that people really do find jobs (or rather, the periods of unemployment are largely uncorrelated with whether there's an industry losing jobs or not; unemployment was quite low during most of Detroit's decline). The history of this country (and the world) is a history of entire industries being devastated over and over again, and that's always going to happen. Acting like jobs that no longer make sense can somehow be "protected" in a way that isn't a net loss is misunderstanding history.
Regarding the second, our corporate income taxes are a bit high (compared to international norms), and more importantly, corporate income taxes don't really make much sense (from an economic standpoint). Corporations deal with vast sums of money, but almost entirely as a mechanism to distribute it among people working for them and making things they use and so forth. There's a huge industry dedicated to avoiding corporate income taxes because the question of how to arrange them is so complicated, creating a big barrier to entry (if you aren't as good with tax structuring as a competitor, you could go out of business, despite being better at your manufacturing of the same product), lots of lobbying opportunities, and a bunch of other things that don't make much sense. The main reason corporate income taxes exist is because taxing corporations makes people feel like they're hitting "somebody else", even though the impact of corporate income taxes falls disproportionately on the poor and middle class, and is felt by the population as a whole. The money needs to be raised, but it could be raised much more efficiently and with fewer negative externalities through personal income taxes (without actually costing anyone money in the equilibrium state; I think corporate income taxes should be phased out gradually over a decade).
quote:Does that income necessarily translate into more American jobs, though? Granted, its more capital for the owners of the company.
Certainly; Apple employs tens of thousands in the US, many of them related to the iPhone (half their revenue comes from the iPhone and closely related things), with pretty good wages even at their retail stores (which aren't that high a percentage of the employees).
quote:My narrative is somewhat different to fugu's. While regulatory burden and uncertainty presumably have some effect, by far the major factor behind the slow fall of unemployment is a lack of demand. This is especially true in the housing market, and there is an associated extremely high unemployment rate among construction workers.
The housing market was drastically overheated by a things like the mortgage interest deduction and overly low interest rates. It isn't surprising that construction is one of the worst job markets. There just isn't call for that many construction workers in the US, generally speaking. Many will have to (and are) go into other industries.
Low demand is definitely a factor, though demand's picking up a lot in many industries. Not much in construction, but that's because we have a heck of a lot of houses on and waiting to go on the market.
Posts: 15770 | Registered: Dec 2001
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quote:This frees up people to be involved in other endeavors.
I'm not sure which sectors are currently hurting for employees right now. Which ones did you have in mind?
Posts: 37449 | Registered: May 1999
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Fears of head hunting Software giant Microsoft is starting to boost its employee's salaries in a bid to stop a huge brain drain.
Apparently competition from younger businesses like Google and Facebook has prompted the firm to significantly improve salary deals for many junior and mid-level workers. Some this included shifting some of their compensation from shares to wages.
Silicon Valley outfits are starting a huge hiring spree. Lots of young talent is being tempted by corporate head hunters. Chief executive Steve Ballmer has apparently told employees compensation will be increased for staff 'where the market has moved the most.' This is junior and mid-level workers in research and development, and all mid-level employees in certain areas.
quote:This frees up people to be involved in other endeavors.
I'm not sure which sectors are currently hurting for employees right now. Which ones did you have in mind?
I've read a lot of reports that say that we're at the very beginning of what is going to be a talent shortage over the next couple decades. Many employers who are hiring are looking for high tech workers, and simply can't find them, and that's increasingly going to be the case in the decades to come unless we start graduating more computer programmers and the like from colleges.
My own field is so damned specific and glutted with excess qualified workers that I'm not exactly holding my breath on finding my dream job, but, I think I'll be fine when push comes to shove. Too many humanities graduates out there.
Posts: 21898 | Registered: Nov 2004
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quote:Many employers who are hiring are looking for high tech workers, and simply can't find them...
Call me cynical, but when I see this particular headline when Republicans are in charge of Congress, I immediately assume that Silicon Valley wants more cheap labor through H1 visas again.
Posts: 37449 | Registered: May 1999
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posted
Cheap overseas manufacturing and the tech infrastructure to allow many jobs to be performed overseas is great for transferring wealth across borders and making money for the top one percent, but ultimately it's crushing us. No matter how cheap manufactured goods get, they're still too expensive for someone without income. The American economy is in the process of destroying the consumer base that drives it.
In the long run, we may have new consumer bases as income levels even out and new markets emerge in the places they're now drawing labor. Whether there will be something identifiable as a strong base of American business still existant when such a thing comes about is another matter.
Posts: 3826 | Registered: May 2005
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quote:I'm not sure which sectors are currently hurting for employees right now. Which ones did you have in mind?
If you'll check out the rest of the post, you'll see I note that at times employment might be worse -- but that it doesn't have anything in particular to do with industry shifts (which often happen during times of low unemployment, too), but with larger economic factors.
I'm only arguing the movement into other jobs happens at least long term, even if at some times it happens short term.
Of course, some of the jobs are in the companies that would be going public if recent regulations hadn't made companies not want to go public until they were several times larger .
quote:Cheap overseas manufacturing and the tech infrastructure to allow many jobs to be performed overseas is great for transferring wealth across borders and making money for the top one percent, but ultimately it's crushing us. No matter how cheap manufactured goods get, they're still too expensive for someone without income. The American economy is in the process of destroying the consumer base that drives it.
In the long run, we may have new consumer bases as income levels even out and new markets emerge in the places they're now drawing labor. Whether there will be something identifiable as a strong base of American business still existant when such a thing comes about is another matter.
Strangely, this basic assertion been levied at the US job market since our founding as our dependence on agriculture was starting to decline. It is based on the extremely faulty assumption that some subset of jobs is somehow the "base" of the economy, without understanding that the core of the economy constantly changes. Just like someone from 300 years ago thought the idea of an economy founded on manufacturing was poppycock and was wrong, this view is wrong.
quote:No matter how cheap manufactured goods get, they're still too expensive for someone without income. The American economy is in the process of destroying the consumer base that drives it.
In particular, this at worst silly fearmongering, and at best a badly phrased argument for an increase in social safety nets (which, I note, I support greatly). We can measure the impact of cheaper goods on effective income, and it is dramatic. Cheaper food, clothing and manufactured goods of other kinds (and by cheaper we're talking about decreases in price of 50%, 90%, or more in many cases) have made poor people much, much better off even when there have been slight drops in income as figured by CPI adjustment (which generally does not give much weight to those goods, despite the high percentage of income they take up for poor people).
Posts: 15770 | Registered: Dec 2001
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posted
I can not speak as well or likely as knowledgeably on the topic as fugu but I can say how this particular aspect, sending tech jobs overseas, affected me.
I am drafter, I got a temporary job with a semiconductor corporation to make drawings of possible new layouts of their test floor. I completed the task set before me in about two weeks. I was taken under the wing of a mechanical engineer, in charge of care and upgrading the testers. From time to time I was pulled from his tasks to modify plans so big wigs could decide if reconfiguring slightly differently would effect cost efficiency.
In my time there I got two engineers, two supervisors and a manager all excited about my joining their team.
I was let go. A corporate VP had told my supporters in no uncertain terms that "I don't care if he is amazing, and does a job that is needed and works well in the team, there is no position to be had."
Two months later the entire operation was shut down and sent overseas. I guess my drawings showed that modernization would be more expensive then simply packing everything up and shipping halfway around the world.
I guess the American people can now purchase semiconductors at a slightly less expensive price, but to me personally and my friends who lost their jobs, this was hardly a good thing.
I wonder if the corporation had been owned by a single flesh and blood person instead of nameless faceless shareholders that thousands of people loosing their jobs would not have been preferred to saving a bit on production costs.
I know if they had asked us, we would all have taken a pay cut.
Posts: 6683 | Registered: Jun 2005
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quote:simplify the legal situation for new businesses; lower corporate income taxes; subsidize effective, cheap vocational education
Well...I grant you two of three. Are corporate income taxes so high that they're greatly burdening companies' ability to hire and expand their workforce?
Not from what information I've seen. Tax planning and loopholes mean that at least the larger corporations, for example Microsoft, pay something like 1%. Effectively nothing.
Posts: 9912 | Registered: Nov 2005
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Thanks for a well-reasoned and informed argument. I may not always agree with your conclusions, but it's never a trial talking with you about them.
Posts: 14554 | Registered: Dec 1999
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quote:simplify the legal situation for new businesses; lower corporate income taxes; subsidize effective, cheap vocational education
Well...I grant you two of three. Are corporate income taxes so high that they're greatly burdening companies' ability to hire and expand their workforce?
Not from what information I've seen. Tax planning and loopholes mean that at least the larger corporations, for example Microsoft, pay something like 1%. Effectively nothing.
From what I understand, that is part of the problem. There's an enormous difference between the nominal corporate tax rates and what many companies pay. The corporate tax code is full of exemptions, deductions, credits, etc.
This constitutes a large barrier to entry for new businesses that are not as able to take advantage of them and so pay a comparatively much higher tax rate.
Posts: 10177 | Registered: Apr 2001
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quote:On a national level, the unemployment rate in March fell to the lowest point in two years.
In other words, whence the headline? It is getting less attention because it is, in fact, getting better, and as fugu said, it is a trailing indicator.
The Bureau of Labor Statistics unemployment numbers have dropped, but several measures of real unemployment and especially underemployment that I'm aware of don't show anything like this corresponding drop.
Jobs are a trailing indicator, no question about that. Historically, it can take many months for it to reflect the upward swing in the economy. Right now, we're talking about almost 2 years. There's a reason we've been talking about a jobless recovery for the part two years.
If the Democrats had good reason to expect that the unemployment numbers are going to make huge improvements soon, they've have very little to worry about come 2012 and I'd expect them to be setting themselves up to reap the benefits of "saving" the economy. As I said in my initial post, I find it very troubling that instead of them trying to milk that biggest of political cows for all it is worth, they're not talking about it at all.
Posts: 10177 | Registered: Apr 2001
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quote:This frees up people to be involved in other endeavors.
I'm not sure which sectors are currently hurting for employees right now. Which ones did you have in mind?
From my personal experience the high tech job market is absolutely warming up. And I'm not talking about development and support jobs that can be performed in India.
We're looking to hire 5 or 6 people on both coasts and in EMEA and are having a tough time finding them. Plenty of folks with a pulse, but many of the highly qualified people seem to be happily employed. I'm not claiming this is statistically relevant by any stretch, but I am hearing the same thing from many of my peers as well.
Posts: 135 | Registered: Apr 2006
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posted
Fugu--you offer a fine Macroeconomic argument why unemployment is not to be scared of at this time.
However, it is in the Micro-economic realm that politically, the noise will be made.
Sure, losing 10,000 jobs here may result in 7,000, or 10,000 or even 12,000 jobs somewhere else, but that somewhere else requires a person to pick up and move to that somewhere else.
More importantly, it requires that person to be trained on how to perform that job.
But job training is being cut in all this budget balancing fever.
And if Joe-Co needs 10,000 new employees, it will get them locally, or its almost the same to ship them in from overseas if they work cheaper, than it is to pay moving expenses from another state.
The new jobs being created have so far been in one of two fields--High Tech requiring specialized degrees that take years to master, and thousands of dollars to pay for, or by minimum wage/part time service jobs which leave one in the realm of poverty.
Trading down in income is common from people forced to trade jobs.
Before in this country we had a way of handling Macro-economic shifts with a maximum of efficiency and a minimum of pain. It was the safety net. Yet as we are in the midst of this economic downturn we continue to cut at those strands of the safety net.
I am not talking a Welfare-State where people remain asking for money for life. I am referring to the welfare programs that help people get from one place in their lives to another--to leave when their 10,000 jobs disappear, and be prepared and on site where the new 10,000 jobs appear.
Posts: 1941 | Registered: Feb 2003
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posted
I said nothing about not being scared of the lack of jobs, I simply explained some of the aspects of the current lack of jobs. Seeing emotions seems to have clouded your reading of what I said (which included several statements about how the federal government was acting in ways that I felt should be changed to improve job growth).
I find my own current lack of job somewhat scary, even though I'm doing pretty well with the social safety net of unemployment (btw, anyone hiring in Seattle?).
Most of the rest of the post you're just making up things that aren't actually true, because they feel true to you. And to an extent that's fine, but it isn't fine to the extent you're mistaking them for actual facts.
quote:And if Joe-Co needs 10,000 new employees, it will get them locally, or its almost the same to ship them in from overseas if they work cheaper, than it is to pay moving expenses from another state.
In the large majority of cases false. Very few jobs are balanced on that cusp.
quote:The new jobs being created have so far been in one of two fields--High Tech requiring specialized degrees that take years to master, and thousands of dollars to pay for, or by minimum wage/part time service jobs which leave one in the realm of poverty.
Ridiculously false. Even if the current change in distribution is worrying to you, it makes this nowhere near a reality.
quote:Before in this country we had a way of handling Macro-economic shifts with a maximum of efficiency and a minimum of pain. It was the safety net. Yet as we are in the midst of this economic downturn we continue to cut at those strands of the safety net.
Nonsense. The biggest shifts have always been extremely painful, and often made a lot more painful by government intervention (including a lot of attempts to use government intervention to "help", like gasoline quotas in the oil crises).
As for welfare programs that help people between jobs going away, I think you'll find that the amount of government investment in such programs per person unemployed was considerably expanded during the past few years. Unemployment was extended for many months, lots of money has been funneled to retraining of (among others) autoworkers, et cetera. You're saying the support system went away, but that's directly opposed by the facts.
That said, I'm generally supportive of extensive retraining support; I think that would work nicely with efforts to revitalize the community college program.
posted
Fugu, there's a question I've been meaning to ask you that relates to some of this stuff.
I tend to agree with your view (as I understand it) that the best way to construct a welfare state is to tax top earners and pay something like a guaranteed income to those below the poverty line. Just straightforwardly redistribute wealth. But that sort of thing is politically impossible in the present-day environment. What do you think is the next best alternative that could actually be implemented in America?
FWIW, I agree with Scott that you tend to strike an admirable balance of substance and civility.
Posts: 4600 | Registered: Mar 2000
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posted
The housing problem feeds into the job problem. When you are upside down on the house, it is hard to move to were the jobs are.
Posts: 2223 | Registered: Mar 2008
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quote:I tend to agree with your view (as I understand it) that the best way to construct a welfare state is to tax top earners and pay something like a guaranteed income to those below the poverty line. Just straightforwardly redistribute wealth. But that sort of thing is politically impossible in the present-day environment. What do you think is the next best alternative that could actually be implemented in America?
It isn't quite as infeasible as it might seem, though I agree no politician will get anywhere framing it as directly or approaching it as wholeheartedly as I'd like; we already pay especially poor people for no other reason than their being poor and having a job, through what's called the Earned Income Credit (which is increased for things like having kids). So, one of my preferred steps would be expanding that to whatever extent is politically feasible (and I think at least some expansion would be considered reasonable).
I view simplification of the tax code as one of the other most important steps towards reform. Right now, interactions between different provisions of tax law are extreme and result in very disparate tax rates between people at similar true income levels. It also makes it much harder to estimate the effects of other tax moves, and causes far too much kerfluffle for a month or so a year. I'd start by removing almost all deductions in the tax code and reducing the stated rates so that the actual overall rate is revenue neutral. That's a starting point to moving in other directions with a tax code. Then I'd probably try for a VAT (or rough equivalent; not a sales tax, as sales taxes cause severe collection problems).
Then I'd tweak the tax rates upwards some, a little more on the high end, and reduce spending in a number of places in ways that I don't have the knowledge to fully assess. Some military cuts, definitely, but nowhere near the extent many would like; our military is a far more important asset in my opinion than many rate it (including some who don't want its funding cut for other reasons). Many of those cuts would be in programs that are providing valuable services to people, but that is unavoidable. I would replace all parts of cut programs providing social safety nets to the poorest with increases in the most direct programs available, hopefully the EIC. I think that could be done (though not at all that it would be easy).
I'd remove the cap on social security and medicare taxes and lower the rates to be revenue neutral, and I'd means test benefits recipients.
While I'd prefer another system, I'd throw up my hands and implement single payer insurance, which I feel is both within political reach in the near future and a darn sight better than the current system or the system coming in (keeping insurance tied to employers is a disaster).
I'd take a long, hard look at federal education loan programs. Right now, they're funding a gigantic expansion that's actually creating a large burden on the middle class (and, in a disturbingly increasing number of cases, many poorer people). Some loan programs are important to making school affordable, but the system we have now is doing more to funnel large sums into the coffers of universities. I would definitely focus on expanding community college programs (in forms of encouragement to states; I think the federal government should stay out of many parts of educational policy, at least beyond loose encouragement).
I should emphasize that it wouldn't just be the rich paying in my ideal system (note: the rest of the post isn't talking about my ideal system, but my at least vaguely realistic initial moves in the current system). The upper middle class would bear a fairly severe tax burden as well; there's really no way to do it by just taxing the rich to an extreme degree without having an extremely counterproductive system. However, I think the upper middle class's ability to pay is very tolerable. Of course, there'd also be the higher gasoline tax (I vaguely suspect somewhere in an extra $3/gallon range, based on estimates of gas's many externalities, though phased in very gradually), which would hopefully start the long, slow process of reshaping the middle class to a category of city residents rather than suburb residents (the vast expansion of suburbs being one of America's biggest mistakes). Of course, part of that gasoline "tax" (though not the majority, since most of gasoline's externalities aren't from carbon) would be due to carbon permits from cap and trade.
Posts: 15770 | Registered: Dec 2001
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quote:Originally posted by fugu13: Strangely, this basic assertion been levied at the US job market since our founding as our dependence on agriculture was starting to decline. It is based on the extremely faulty assumption that some subset of jobs is somehow the "base" of the economy, without understanding that the core of the economy constantly changes. Just like someone from 300 years ago thought the idea of an economy founded on manufacturing was poppycock and was wrong, this view is wrong.
Equally surprising, saying something is wrong, no matter how patronizing the tone, is not an argument.
Of course the economy changes. This is somewhat like saying that the tides go in and out. But sometimes the tides go in and out and make nice little waves, and sometimes the tides come in and when they leave the house is gone. On a global scale economy will probably equal out in time, but when it does, there's no compelling argument- certainly no argument in anything you say- that what remains will be anything like the relative prosperity we see in America today.
So, all right, three hundred years ago, the economic base was agriculture. Today, individual farmers are all but gone. It's a lousy time to be a farmer.
But there was a transition. After World War II, the United States had some of the best manufacturing infrastructure in the world, a host of wartime products ready to be repurposed, and a whole lot of people ready to seek training and education in manufacturing.
Now manufacturing is going everywhere it's cheaper. So are a lot of the call-center and technical jobs, the ones that suggested that the Internet was going to be our salvation.
The suggestions I've heard as to where employment is going to be growing now are laughable. The service industry? How many people do the top 20% need to "serve" them?
Even between the relatively short period between 1983 and 2007, the top 20% of the United States have gone from having about 81% of the net worth to 85%.
The "faulty assumption" here is that there can be something out of nothing: that the lack of financial solvency can be made up for by making things cheaper, even while those who sell those goods pocket much of the difference.
If there is no income, there is no consumer. That is the problem. Fail to address that problem, you have nothing.
quote:In particular, this at worst silly fearmongering, and at best a badly phrased argument for an increase in social safety nets (which, I note, I support greatly). We can measure the impact of cheaper goods on effective income, and it is dramatic. Cheaper food, clothing and manufactured goods of other kinds (and by cheaper we're talking about decreases in price of 50%, 90%, or more in many cases) have made poor people much, much better off even when there have been slight drops in income as figured by CPI adjustment (which generally does not give much weight to those goods, despite the high percentage of income they take up for poor people).
Unless the cost of goods can be brought below zero, they remain too expensive for someone with an income of zero. One can shell-game it out with welfare programs, but those programs don't describe income in any real way.
In 2011, the US Department of Agriculture predicts our use corn, soybeans, and wheat will exceed our production. In the wake of rising petroleum prices, cheap imports are unlikely to provide a simple panacea.
Cheap goods are not wealth. Like credit (a point worth mentioning as the bottom 90% is also shelving about three-quarters of the debt), they provide an illusion of affluence. The foundations of those illusions are giving way.
Now if I dress up these comments with a few more aspersions about "silly fear mongering" and "poppycock", will it make it more convincing?
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quote:Originally posted by Sterling: One can shell-game it out with welfare programs, but those programs don't describe income in any real way.
Generally, income from welfare programs isn't taxable. But it is income and has to be reported to the CRA/IRS just like any other income.
The fact of the matter is, if welfare recipients were forced to buy domestically produced goods, it would be a massive increase in prices and in hardship.
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quote:Unless the cost of goods can be brought below zero, they remain too expensive for someone with an income of zero. One can shell-game it out with welfare programs, but those programs don't describe income in any real way.
Is this supposed to be the argument?
(1) Unless goods cost nothing, they're too expensive for someone with zero income.
(2) Welfare recipients have zero "real" income.
(3) So even cheap goods are too expensive for welfare recipients.
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posted
Lowering the price of goods (in and of itself) does not help our lack of jobs problem. Welfare/unemployment are a stop gap, and while cheaper goods stretch those dollars further, if part of the price of those inexpensive goods is a lack of jobs, it is self defeating.
I'm sure the owners of companies who ship jobs overseas are enjoying increased profits, but that doesn't help most people.
quote:In the United States at the end of 2001, 10% of the population owned 71% of the wealth and the top 1% owned 38%. On the other hand, the bottom 40% owned less than 1% of the nation's wealth.[13]
posted
I think it's important to separate the two problems, since it is the case that as you point out that the richest 1% of Americans are picking up most of the gains from overseas employment (as opposed to Chinese people), then thats an increase in American income.
So America doesn't actually have an income problem, real or not. Your GDP is still growing.
What you're highlighting with your statistics is a distribution problem, as in the lower classes aren't getting a fair share of that growth in income.
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posted
I never said anything about an "American income problem", I'm saying outsourcing jobs is causing a lack of jobs here, which contributes to "a distribution problem", instead of helping us poor folk by giving us cheap wears as you said.
Posts: 6683 | Registered: Jun 2005
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posted
Outsourcing isn't causing a lack of jobs in the US. If anything, it's supporting whatever growth of jobs there are in the US. Take one of the recent major growth stories in the US, Apple. Imagine if Apple had to make every iPad it sold in the US.
The price of the iPad would soar and Samsung, RIM, HTC, or any number of competitors would undercut them dramatically. Apple would go out of business and their American workers would be totally out of luck.
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quote:Lowering the price of goods (in and of itself) does not help our lack of jobs problem. Welfare/unemployment are a stop gap, and while cheaper goods stretch those dollars further, if part of the price of those inexpensive goods is a lack of jobs, it is self defeating.
Why does it have to be a stopgap? Aside from anti-"welfare mom" sloganeering, what's wrong with people being on welfare or unemployment for long periods of time?
Posts: 4600 | Registered: Mar 2000
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posted
Mucus...there is an assumption in your post, that to manufacture things here in America must drive the end price of the products up.
A company which operates with a lower profit margin (that is, to it's shareholders), or who pays its executives less (as well as other cuts) can still produce cost effective products in the US.
Destineer...nothing is implicitly wrong with it (I am on unemployment) but it is hardly a long term solution to a lack of quality jobs in this country.
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quote:what's wrong with people being on welfare or unemployment for long periods of time?
Because it's bad for their children. Unless raising kids to be dependent and poor is a goal. Parents on welfare are more likely to have their children grown up to do the same. The cycle of poverty is not something to voluntarily perpetuate.
Maybe it has to be said: it sucks to be poor. It's bad for health, it's bad for relationships, it's bad for longevity, it's bad for education, and it's bad for reported happiness. Welfare, in all its forms, can keep body and soul together, but it isn't a good place to stay. It is a totally understandable resting place sometimes - life happens. But the goal should always be to get out of it when you can.
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posted
Wrong. Medicaid alone is orders of magnitude larger than the cost at even the height of the bailouts.
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