It’s About Jobs, Stupid

September 8, 2011

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My timing might be off on the article subject this month, as people might think I’m talking about the often controversial, usually brilliant former Apple Computer CEO.  I’m not.  Everywhere I tune in people are talking about how this economy boils down to jobs.  Too many people are unemployed, which leads to too few people paying taxes and spending money, which leads to layoffs in the public sector, which leads to more people being unemployed, which leads to more people not paying taxes and spending money, which leads to … well, you get the idea.

Back in the 1980’s “Trickle Down” was the term for how Republicans wanted to run the economy.  Their theory is that if you give tax breaks to the richest people those people will turn around and hire some non-rich folk.  Think of it like watering your plant, you pour the water on the plant and the water dribbles all down, into the soil, and makes everything in the area go to varying degrees of wetness – it “trickles down” over the whole area.  Trouble is, the economic theory doesn’t work like that.  It doesn’t really work at all, actually, so much so that Republicans have taken to calling it “Supply-Side Economics.”  Trickle down has that whole male urination connotation, “Supply-Side” sounds so much more business-like, so much more professional.  Too bad over 70% of the money that factors into GDP is because of consumers. The economy is consumer driven, so the real-world theory should be “Consumer-Side Economics.”

What does consumer driven mean?  Well, it means that the people who buy the bulk of stuff – everything from houses and cars to televisions and appliances to diapers and toys – are running 70% of the economy.  70% of the money that factors into GDP is because consumers – the bulk of which are everyday Americans – bought stuff after getting paid by their job.

One of the favorite current conservative talking points is that businesses aren’t hiring because they’re stifled by regulation and taxes.  As far as taxes are concerned, theoretically, that’s true.  Reality has a different view, however.  Using loopholes and tax breaks the richest of corporations can often avoid paying no taxes at all – GM didn’t pay a dime in taxes in 2010 despite having over 14.2 billion in profits.  The truth of the matter is businesses aren’t hiring because people aren’t buying.  People aren’t buying because so many are unemployed or underemployed, and the media has scared many into saving rather than spending.  While that’s not a bad thing, everything needs to be in moderation.  Saving for the future is fine, but not at the cost of the now.

So is government regulation the problem?  The 2008 Wall Street crash was because of a lack of regulation.  The 2011 Fukushima Nuclear disaster was because of a lack of regulation enforcement.  Bankers taking home billions in profits after getting billions in bailouts while the middle class saw nothing was because of a lack of regulation.  Say what you want about the government, but at least in theory I trust profit-driven corporations a lot less than I trust government.  I say “in theory” only because the current campaign finance laws and political atmosphere allow corporations to essentially buy politicians.  In addition, if government regulation is the problem, why are big oil, the finance sector and many other important economic players reporting record profits the past few years?  I don’t think Reagan making deregulation one of his biggest issues and the start of economic disparity in the US is a coincidence.  Corporations have proven time and time again that they will put profit ahead of anything, including the well-being of people.  You can argue that corporate charity does exist, it often does so only because tax breaks and good publicity make it economically practical to do so.

So jobs are the problem, what’s the solution?  I’m going to put one forward that all you right-wingers out there will completely balk at:  Government spending.  This flies in the face of the debt reduction debate this past Summer, but our country has faced bigger debt before and we spent our way out of it.  The power grid and transportation networks in the US are laughable, at best, compared to many other nations.  A government-wide sponsored program to rebuild/replace either of those two would employ millions for years – millions of people who would start spending again.  I’m sure conservatives will ask how can we possibly pay this off?  Well, eliminating the outsourcing of our wars would help.  It was recently reported that as much as 60 billion dollars was wasted or defrauded thanks to so-called “private military contractors.”  As far as the big-picture is concerned, take a look at any finance news the past few months – US debt is selling faster than ever.  The yield on treasury bills is at an all-time low, which means anyone with money is still scrambling to buy US debt.  If we had a debt problem, doesn’t free-market economics dictate that T-bills would be a bad buy?

Tonight President Obama is going to present a jobs bill, and no matter what he says Republicans will oppose it out of partisanship.  The number one way Republicans will take control of the White House in 2012 is for the economy to suck, so why is it in their interest to help the economy get better?  Like drooling, greedy shareholders they are slaves to short-term profit, and creating jobs just doesn’t mesh with their current goals.

One Comment (+add yours?)

  1. kosmo
    Sep 09, 2011 @ 11:11:12

    You wrote your article before the President’s speech, so you of course did not have his plan details.

    I’m not crazy about the plan to reduce FICA taxes. Cutting taxes sounds great … but FICA is what funds Social Security and Medicare. Do we really want to borrow from that piggy bank again?

    On the other hand, a $4000 credit for businesses that hire an unemployed person would seem to have some merit, simply because it reduced the payouts for unemployment. In theory, FUTA is supposed to be self-supporting, but I doubt that it supports the current 99 week unemployment program (I’d have to check to be sure, but the dramatic increase in the FUTA rates that would have been necessary to support this would surely have made some news),


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