I try to stay pretty up to date on economic issues but I don't recall that I ever have seen this question posed - or indeed any suggestion that anything other than tax cuts of any kind can stimulate job growth.
This seems fundamentally wrong to me. It assumes people are always willing to invest in building businesses that create jobs anytime they get a little lower taxes despite the state of the economy. I think the opposite is probably true in the present economy. Lower taxes make it easier for people who have money to take no risks, to park their money in a safe place to make sure they don't lose it. (Anybody out there know of any studies looking at this subject?)
Right now politicians are beating each other up about "job creation" but I am hearing no solutions that will hurdle the basic problem the US economy is more unstable than it has been in generations.
Where would you park your money if you had a bunch of it you wanted to protect? Right now when taxes on corporate dividends are low dividends from safe secure established companies provide a safe haven for capital that might otherwise be expanding businesses, or starting new businesses. That seems the likely explanation for the fact the stock market seems disconnected from the economy. Despite a continuing stream of gloomy reports on the housing market and the job market the stock market is up 30% over the last year.
Part of the reason is also probably the relatively low levels of taxation on short term Capital Gain. It allows people to play in the security or commodity markets rather than tie money up in a long term business venture. Seems like the haven for minimizing taxes ought to be long term Capital Gain, where building a business is rewarded.
It seems to me we ought to be increasing the tax rate on dividends and short term capital gain, and coupling that stick with a carrot - generous job creation credits to be applied against income taxes.
Thursday, July 21, 2011
Tuesday, July 19, 2011
Republicans want small government
I wish they could be more specific. It seems to be almost the only goal they are able to articulate these days. It is the reason they provide for their singleminded effort to hack away at government programs.
I never hear them talk about more efficient government. I certainly wouldn't argue with the notion that government isn't always very efficient at accomplishing their objectives - just like almost every other human institution with complex goals. I am aware of lots of government programs that in my estimation are a waste of money or aren't accomplishing much. But Republicans don't seem concerned with toning up government, trimming the fat to make programs more efficient and cost effective. They have expressed no particular interest in digging into the details of, for example, defense spending, which sucks up 1/2 of Federal discretionary spending. They just want a smaller - and I presume - a simpler government.
There is a movie out right now about people who always think life was better a generation or two ago. That romantic emotion based notion seems to be the source of all Republican ideology at the moment. They long to go back to the 1950's because in their memory or mythology it was a much better time.
If they were building a new house they wouldn't build a 1950's design. Modern houses are vastly more comfortable and livable, because they are vastly more complex. Most the Republicans I know buy SUV's, Minivans or Sedans that are light years more complex, comfortable and safe than cars from the 1950's. I doubt that many Republicans are ready to give up their cell phones for a 1950's phone system. Do they want to go to a Doctor who practices 1950's medicine? Go back to the pharmaceuticals of the 1950's? Dump their big screen TV for a tiny black and white screen?
They don't seem to have grasped the direct connection between progress and complexity. I long to just once hear a Republican say "lets look at how this program can be made more cost efficient".
I never hear them talk about more efficient government. I certainly wouldn't argue with the notion that government isn't always very efficient at accomplishing their objectives - just like almost every other human institution with complex goals. I am aware of lots of government programs that in my estimation are a waste of money or aren't accomplishing much. But Republicans don't seem concerned with toning up government, trimming the fat to make programs more efficient and cost effective. They have expressed no particular interest in digging into the details of, for example, defense spending, which sucks up 1/2 of Federal discretionary spending. They just want a smaller - and I presume - a simpler government.
There is a movie out right now about people who always think life was better a generation or two ago. That romantic emotion based notion seems to be the source of all Republican ideology at the moment. They long to go back to the 1950's because in their memory or mythology it was a much better time.
If they were building a new house they wouldn't build a 1950's design. Modern houses are vastly more comfortable and livable, because they are vastly more complex. Most the Republicans I know buy SUV's, Minivans or Sedans that are light years more complex, comfortable and safe than cars from the 1950's. I doubt that many Republicans are ready to give up their cell phones for a 1950's phone system. Do they want to go to a Doctor who practices 1950's medicine? Go back to the pharmaceuticals of the 1950's? Dump their big screen TV for a tiny black and white screen?
They don't seem to have grasped the direct connection between progress and complexity. I long to just once hear a Republican say "lets look at how this program can be made more cost efficient".
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