Rich People Don't Create Jobs...

1) 401ks are not taxed
2) Few middle class folks have significant investment income that would amount to any great amount of tax.

But I share your concern for the middle class. Such taxes should be progressive as well.

"Draconian" taxation? What decade are you living in? Top marginal tax rate were 50% most of the years Reagan was in office, and 70-90% in the decades before.

Of course not. But for those whose sight isn't shrouded by the blinders of RW propaganda, it will increase revenues that can reduce the deficient and ultimately help pay for things like boomers' medicare. We could also reverse a bit of "trickle down" economics and cut the FICA taxes the middle class mostly pay.

 

Production itself is a bit different. Tax rates in general have less to do with weak production than do regulations. If you want to expand manufacturing, which was what first came to mind when you said production, then a close look at regulations should be done to see which ones provide the least public benefit for the costs they add to production. But even with other kinds of production this is true, to a lesser extent. We have less control over demand side because we live in an international market. The majority of goods we produce are for export, and the majority we consume are inports. In a closed society a lower to middle income tax cut might work (a tax credit would to a lesser extent), but the utility of such measures are greatly reduced (at least comparatively) in a global economy.

 

Power to the People, Jurgis Rudkis!!!

 

I appreciate that "the regulations" is a standard RW talking point, but your are addressing a solution to a problem that doesn't exist.

We don't have a problem of lack of production because regulations are holding down production. We don't have bare shelves and people waiting to buy because of regulations. We don't have lack of goods and services available for consumption because regulations have shut businesses down.

If businesses were shutting down production, and we had empty shelves and long lines of people waiting for goods and services, you might have a point.

But we don't. We have plenty of inventory and plenty of production capacity. Businesses are available to expand production. The shelves are stocked full of goods.

The problem isn't on the supply side, it is on the demand side. There isn't enough spending going on. Compare:


Year - % chng real personal expenditures
1982 1.4
1983 5.7
1984 5.3
1985 5.3
Average: 4.4

1992 3.7
1993 3.5
1994 3.9
1995 3.0
Average 3.5

2002 2.5
2003 3.1
2004 3.8
2005 3.5
Average 3.2

2010 2.0
2011 2.5
2012 2.2
2013 2.0
Average 2.2

Source data: http://bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=1&isuri=1
Table 2.3.1. Percent Change From Preceding Period in Real Personal Consumption Expenditures by Major Type of Product

Spending growth is half of what it was in the 1980s. That's not a problem of regulation holding back production. That is a problem of the great engine of spending, the middle classes, not having the purchasing power to spend and drive demand for more production.

We've gutted our middle classes with 30 years of "trickle down" economics that has redistributed more and more of the nation's income and wealth away from the middle classes and to the wealthy. And on top of that, we've had austerity over the past 5 years, including the elimination of over half a million government jobs.

Consequentially, the great engine of spending doesn't have the purchasing power to drive a robust economy like it did in the past.

It's right there in the numbers, black and white.

 

There are several things we could be doing to put more money and income in the pockets of the middle classes. I've spelled them out numerous times.

I've never heard that and don't believe it is true. Do you have a source for this assertion?

 

Until the govt needs more of your money, that is... =)

 

They get you when you pull the money out.

 

A middle and lower class gutted by the presence of tens of millions of illegal aliens who lower wages, take jobs and create a demand for higher taxes to pay for schools, public health, and criminal justice systems is part of the problem. Couple that with an economy burdened by the high and rising costs of Obamacare (did you see the news that premiums and deductibles for the average family did not go down but went up, WAY UP?), regulations that stifle businesses and imposed costs that create no profits have led to the slowest economic recovery since the Great Depression.

With an uncertain regulatory environment, a hugely costly federal health care program that has thousands of pages of ill defined and costly regulations attached, and a government that demonizes and punishes success, no business will use its retained capital to make any but the safest of investments.

Pay for anyone isn't going to go up with an oversupply of labor and slow economic growth and growth isn't going to occur with the heavy hand of government imposing costs and reducing incentives. .

 

That doesn't mean that what they're doing is okay. 9/11 took balls and brains for the terrorists that killed themselves and thousands of others, but that wasn't okay either. My point is that risk is not in any way tied to ethics.

I don't believe that food, shelter, and clean water are things that people should have to earn. Every human being deserves them. Capitalism, however, requires an underclass of people who are given the choice between either being exploited by business or not having any necessities. It's effectively a "work or die" situation. It's a mugging.

Why would I help them? That's like giving first aid to someone that tried to kill me.

Bankruptcy is caused by Capitalism.

I feel no sympathy for people who tried to exploit the proletariat but failed.

The best way to help those workers is to destroy capitalism.

Yet you still fail to understand it.

In some cases, it's not pretending.

It's unrealistic to expect a complete social paradigm shift to go flawlessly. With the USSR and PRC, we learned that authoritarianism isn't the way to go. We also learned that going back to capitalism isn't going to make things better, because Eastern Europe is in worse shape than ever before and China has turned into the most bourgeois state on earth ever since Deng Xiaoping betrayed the revolution by allowing Capitalist elements to exploit Chinese workers.

Greed? Like the system designed to concentrate wealth into the hands of the few?

Spite? Like the system that uses the material force of ideology to make the workers turn on one another in order to protect capitalist interests?

Jealousy? Like a system that uses jealousy as a tool to suppress class consciousness?

Laziness? Like the system that allows the parasitic bourgeoisie to feed off of the labor of the proletariat?

Violence? Like the system that caused mass murders under Hitler, Leopold II, and Augustus Pinochet, as well as the genocide of the Native Americans, genocide of Australian Aborigines, and the continued death and suffering of every country crippled by colonialism?

I'm no tankie. I loathe authoritarian communism. I don't like the government at all. But the crimes of Stalin and Mao, while horrific, pale in comparison to the sheer evil of capitalism.

 

Those numbers show that the Reagan solution of low regulation and low taxes worked better than the opposite solution for putting money in people's pockets. An economy that grows at 7% (as it did at various times during the Reagan years) creates demand for labor, higher wages. The lowering of regulations and burdens on business increases certainty for business and a greater desire to put capital to work creating growth.

Huge government spending, higher taxes, and oppressive regulation impede growth, lower labor demand, and creates the growth of the income gap. Absolutely nothing will change that except much higher economic growth and deficit spending and massive regulation and government imposed costs won't produce sustainable economic growth. Even Russia and China found that out.

What exactly was the mechanism whereby income was re-distributed upward in the past few decades? Did you take into account changes in the demographics in which we brought in millions of low wage illegal aliens? How about family formation wherein a young CPA marries a newly graduated doctor and in thirty years they have a combined income of $400,000 rather than the 50's and 60's model wherein a CPA or doctor would support a family on his salary of $200,000 alone? Or how about the rise in the percentage of children born to single moms who will be virtually guaranteed to be raised in virtual poverty vs the days past when people had more social pressure to marry and stay together to raise kids?

There are a lot more factors that have created the modern economic problems than government policies that favor the evil 1% and don't confiscate more of their earnings to be siphoned through an innefficient and wasteful government and re-gurgitated at a far smaller volume to lower income people.

 

Assuming that were true, it wouldn't be a reason that spending growth is half of what it was in the early 80s. Illegal aliens spend money too.

The problem is clear as day:

Bottom 90%

1% and 10%

The bottom 90% is now getting about 50% of the nation's income. In 1979 that figure was about 65%.

15 percentage points of 15 trillion in gross national income equates to about $2.2 trillion less of the nation's income going to the bottom 90% of Americans relative to 35 years ago. That is a *huge* decrease in purchasing power, and dwarfs the size of the Stimulus in its effect in the economy.

Now it is true that that money, which is going to the top 10% (and mostly to the top 1%, which saw a 10 percentage point rise in the portion of the national income it gets) is partially being spent. But the top 10%, and top 1%, don't spend virtually all of their income like the middle classes do.

Here's some figures:


The average American saves about 5% of his or her income; among the wealthiest, the savings rate exceeds 50%.
http://www.forbes.com/sites/forbesl.../22/the-hidden-taxation-of-wealthy-americans/

The top 1 percent of families now save about 35 percent of their income, and the bottom 90 percent save nothing, according to research from economists Emmanuel Saez and Gabriel Zucman.
http://www.cbsnews.com/media/10-reasons-americans-are-down-on-the-economy/7/

According to research from American Express Publishing and Harrison Group, the savings rate of the wealthiest 1 percent soared to 37 percent in the second quarter. That's up from 34 percent in the second quarter of 2012—and more than three times their savings rate in 2007.
http://www.cnbc.com/id/100935856

So even if you figure the richest who are getting that income instead of the middle class spend 2/3 of it, that still leaves a $400 billion hole in spending in the economy. It's about like two stimulus packages in spending. every year.

Spending on insurance premiums would count as spending. The reason the middle class isn't spending is because it's income hasn't gone up with GDP, not what it spends the money on.

Compare:

Family median income 2012 dollars
http://www.census.gov/hhes/www/income/data/historical/families/2012/F06AR_2012.xls

Year - income
2012 62,241
1979 57,734
1953 31,929

In the 26 years from 1953 to 1979, real median family income (in inflation adjusted terms) grew by 81%.

In the 33 years from 1979 to 2012, real median family income (in inflation adjusted terms) grew by 8%.


http://bea.gov/national/nipaweb/SelectTable.asp?Selected=N

In the 26 years from 1953 to 1979, real GDP (in inflation adjusted terms) grew by 126.4%

In the 33 years from 1979 to 2012, real GDP (in inflation adjusted terms) grew by 137.9%

http://bea.gov/national/xls/gdplev.xls

The middle classes have not shared in the economy growth of the country since the Reagan "trickle down" revolution.

That's why they are not spending money. They just don't have it.

Addressed above. We don't have a supply problem that over regulation might cause. We have plenty of production capacity and goods on the shelves and capacity to produce and expand. The problem isn't in supply. It's in demand.

Pay for anyone isn't going to go up with an oversupply of labor and slow economic growth and growth isn't going to occur with the heavy hand of government imposing costs and reducing incentives. .[/QUOTE]

 

Your posts are intriguing to me. After the disasters of Socialism, the millions of deaths at the hand of Mao, Pol Pot, Stalin, and other Marxists and all the failed states that have tried to adopt it, I had thought that logical people would recognize that no system in which individuals are to be subjected to the state, that the competent and hard working would have no greater reward than the lazy and indolent is doomed to failure.

But then, like a religion, the ideology just keeps being re-cycled - someone will pick it up after its latest disastrous failure, polish the graven image and march it to the church of government. Always with the naive belief that if we just had the right people to run it we can make individual human beings give up their personhood to be workers in a hive with all voluntarily sharing equally and all producing at the maximum of their capabilities.

And all will be unicorns, and little girls dancing in green meadows.

 

Hard to objectively refute this. So we need subjectivity in order to refute it, expressed of course, as objectivity.

When it comes to adding jobs, with existing businesses, you need demand. You need for demand to increase. I owned a small manufacturing biz for almost 50 years. I only hired new workers when the demand for what I was making, increased, beyond the point that my existing workforce could handle the increase. Businesses that use human beings to make what is being sold, never have extra people on payroll, for labor cost is your highest cost, period. And so demand has to increase in order that employers add additional jobs. When I got those tax breaks, I was not gonna hire extra people just because of a tax break. And no one else does either. And that is the way reality works folks.

We need a large prosperous middle class. This is optimum for our economy, not to mention very good for the American people who work for their living. And so gov't policy must be friendly to helping a large middle class to exist and to be sustained. This cannot happen when the elites buy policy that insures we will not have a middle class, in that they suck off the income that would have gone to the middle if the policy was correct.

Capitalism left to its own devices, and because of human nature, will only create a sliver of a middle, a small upper class, and a large working poor class. In order to turn capitalism into a model that builds large middle classes and speads out the income pie more fairly requires gov't getting involved, in herding into a beneficial model to the greater number of people in a nation. If we have not leaned this by now, we are not paying a bit of attention to our own history. We know what works already. Neoliberalism has to go first though.

 

Explain your theory on how supposedly low regulation results in greater spending by consumers.

As far as taxes, taxes are lower today than they were for the first 6 years of the Reagan administration. Never mind that Reagan raised taxes several times.

Do you suppose this had something to do with it?

Reagan
Federal Spending increase, 1981-1986: +46.0%.
Total government employment, 1981-1986: +879,000

Obama
Federal Spending increase, 2009-2014: -0.53%
Total government employment, 2009-2014: -540,000

source data
Expenditures: http://cbo.gov/sites/default/files/cbofiles/attachments/45249-2014-04-HistoricalBudgetData.xlsx
Employment: http://www.bls.gov/webapps/legacy/cesbtab1.htm

See my post above. You're talking about a problem that doesn't exist. We don't have a supply problem; we have a demand problem.

Taxing and spending relative to GDP were higher when Reagan was president than they are now. So much for that RW talking point.

Increasing the FICA taxes the middle class pay while slashing the income, estate and investment taxes the wealthy mostly pay, demonizing and impeding union representation so employees don't have representation to leverage better wages, minimum wages that haven't kept up with inflation, FLSA overtime laws that were not updated and languished so fewer employees were getting overtime, reduced bankruptcy protection.

Illegals earning money here would spend it too. Having a two earner household should give greater income and spending power, not less. Single moms spend virtually all the money the get.

Fair enough. Greater international competition and automation have hammered the working class too. But given that, why on earth would we want to continue "trickle down" policies that further hurt the middle class to pamper the richest?

We should be cutting their taxes, expanding organized representation in stores like Walmart, increasing the minimum wage, expanding overtime laws, and expanding health care to empower the middle classes against these other factors your speak of.

 

False dichotomy. No one including me is suggesting 100% state ownership of production and a command economy.

What are you yammering about? Whose talking about "making individual human beings give up their personhood"? Good lord.

 

Only a Marxist would equate starting a business with the 9/11 attacks. Hard to take anything you say seriously when this is the level you're operating on.

That's how societies function and how the amazing technological and societal advances happened over the past several centuries. "Work", as scary a concept as it may be to some, is what has allowed you to type your Marxist screeds over the internet. A lot of people working for a living - is responsible for that. I doubt this medium of communication would exist if everyone just sat on their ass every day eating Cheetos (or the organic vegan equivalent).

If you believe you're in a position to take what they've earned for themselves, you should be willing to help them when they fall, since you're apparently so invested in their endeavors to begin with. But don't worry, I wasn't expecting consistency.

Tell that to the Soviet Union.

My point is that Marxists like you want to share in the wealth that profit-seeking businesses create for themselves, but you don't want to share in any of their losses. That's hypocrisy.

Nice way to cover up the hypocrisy I just referred to.

Which of these are you? A high income earner benefitting from some level of "privilege", or a poor minority who didn't make anything of yourself who now fights for a "cause" instead of accepting failure?

It's been tried before, and has failed every time. Even the Scandinavian societies you've previously cited as "successes" have not destroyed capitalism.

Not at all.

Almost exclusively. Many on the left go to extreme lengths to convince themselves how intellectual superior they are, even when they are not.

What's amazing is that you glance over the fact that living conditions in China have improved dramatically over the years as more and more capitalism has been introduced. The same can be said in certain South American and African countries, as well.

No, like the system where people grow up with a sense of entitlement and demand the money earned by others, using the power of Government to get their way.

No, like the system that seeks to "destroy capitalism" simply because the jealous workers don't have as much as they would like, even though they haven't earned it.

No, like the system that tries to make workers jealous of those who are smarter and work harder and have more possessions.

No, like the system that allows a 25 year old unemployed loser sitting on mom's couch to feel like he deserves money, for nothing.

No, like the system that created high death counts by the likes of Lenin, Trotsky, Stalin, Pol Pot, Mao, Castro, and others.

I disagree. Capitalism has led more people out of poverty and expanded humanity's potential more than any other system on Earth. There are winners and losers in every game, and it sucks for the losers in the game of capitalism, but the potential for winning is there. Unlike in socialism, where everyone eventually ends up a loser, except for the small cabal of masterminds at the top.

 

Good post.

Henry Ford increased the salary of his workers because he new that if workers' salaries increased, more people would be able to buy his cars. And he was right.

A growing middle class expands demand and production and that creates more revenues and ultimately higher profits. Everyone wins. Not just the top.

We need more people with the foresight of Henry Ford and less only concerned about grabbing more and more of the pie for themselves.

 

I was giving a reductio ad absurdum argument. I'm well aware that the two are not comparable. I was simply proving that the reasoning of "If it takes balls, it must be good" falls apart if taken to the extreme.

I don't advocate for a system of laziness, I advocate for a system where everyone works for themselves and the community rather than private individuals who seek to exploit them to gain power.

The very act of exploiting labor is worthy of punishment through appropriation of their gains. When they're punished by chance instead, I can't complain.

The USSR fell because of pressure from capitalist nations and because Brezhnev wasn't just an authoritarian, he was also an incompetent authoritarian. Capitalist countries go bankrupt in a regular cycle and nobody ever thinks to point out that's an inherent feature of capitalism.

What you don't realize is that those two seemingly opposed actions are the result of a single principle and how it must be applied in different contexts. That principle being that the exploitation of the proletariat through wage slavery is unethical.

Who am I? I'm a faceless voice on the internet. Let my words stand on their own.

I've since grown more critical towards the Scandinavian societies. They're bourgeois and only apply a temporary bandage to the sucking chest wound of capitalism.

There's nothing really interesting to form a reply to here, but I'm going to acknowledge that you said this so I don't get the inevitable "You failed to respond to part of my post, therefore you're wrong" spiel.

Living conditions are better in china for the rich. There's an underclass of exploited workers making pennies an hour who kill themselves because they cannot take their awful labor conditions. Late capitalism does not alleviate suffering, it only hides it.

Exactly. The bourgeoisie are not entitled to the money they earn by exploiting workers, no matter how much they use the framework of law to protect their interests.

Having fun hitting that straw man?

The bourgeoisie aren't at the top because they deserve it. They're at the top because the dice rolled in their favor. You can work your entire life without getting rich and you can get rich without lifting a finger.

Ah, the mythical welfare leech. I was wondering when I'd see that one brought up again.

Lenin did some unethical things. Trotsky was a leader of an army, so naturally he's got blood on his hands. Stalin was a truly monstrous man. Pol Pot was deranged and his ideas were primitivist rather than marxist. Mao was basically Stalin multiplied by 1.5. Castro did some wrong in the past, but he's taking steps to improve the world and atone for them now.

Granted, all of them established a state, which is also a thing I'm not fond of.

My point is: I don't necessarily like all of these people. Some of them were horrible mass murderers. That doesn't mean that every one of their ideas is bad.

In 1400, you would be telling me that Feudalism has done the same. Each new system is more efficient and less cruel than the last.

I think that we should put the board away. Maybe get out an easel and paint instead, or put on an amateur shadowcast of the Rocky Horror Picture Show.

I don't know, some metaphor about entertainment that doesn't involve competition.

Once again, you misrepresent my views. You must remember that I am an anarchist.

- - - Updated - - -

I've made it abundantly clear that I'm anti-authoritarian. I'm an anarcho-communist. I advocate for the horizontal organization of society through communal means rather than a hierarchical and violent state.

 

This reply wasn't to you, it was to Casualty Breakdown who seems to have some really extreme vision of what a socialistic society is.

He has said every human should be guaranteed things like food, housing, and healthcare. That guarantee imposes an obligation on others to PRODUCE food, housing and healthcare to deliver it to those who don't produce it for themselves or who produce nothing at all. He has postulated that the worker should be given the full value of his work, with none taken by the employer. He has not said, however, why the employer would hire an employee when there was no benefit to the employer. In order to have such a system wherein all are guaranteed an equal share of the goods and services produced by an economy, individuals would have to lose their individual personhood to the collective. They would be REQUIRED to produce more than they would receive rewards for, unlike the employer/employee relationship where each can choose to associate or not with the other and both agree on what will be done for compensation received.

Only the losers would voluntarily join that type of system. Some coercive force would be required to make producers produce. Individuals would not be able to choose how to lose their lives. I.e. they would lose their personhood.

How is that not clear? Good Lord.

 

OK, my bad.

 

No, the taxes are deferred until withdrawal.

That wasn't my point.

Taxes are already progressive.

The U.S. has one of the highest corporate tax rates in the free world.

No it won't. There is not enough revenue to make a significant difference. Taxes are largely paid by the middle class because there are more of them. That, however, depends on a good economy where people can GET jobs. When government over regulates and over-taxes job creators those jobs are less available.

Anytime we can reduce taxes I agree.

 

But the investment and strategy is worthless without a consumer to buy the product. Our economy is a complex system that strives for balance between investors, producers, and consumers. The only one of these than can drive growth in the others is the consumer.

 

That's up to the consumers to be valuable enough to society to be able to purchase something. If they can't, then... too bad. Starve, die, or whatever. Nobody cares. Plenty of people that are valuable enough to be able to walk into a store with money they earned through their own hard work and be able to buy something with their own money.

and plenty that can't. For those that can't, let Darwin take care of them. Better for the species if they end up being an evolutionary cul de sac.

 

Your point was that "if you start taxing investment income then the vast majority of the working middle class will have their 401K accounts suffer." I was explaining why that point is wrong.

When you look at total taxes, they are barely progressive.



http://ctj.org/ctjreports/2014/04/who_pays_taxes_in_america_in_2014.php#.Vc0wofn-XKZ

And one of the lowest rates of taxes collected.

The top 10% now get about 50% of the nation's income. Total national income is about $15 trillion. The top 10% thus get about $7.5 trillion. That's just the top 10%.

How is that not enough to reduce the deficit and pay for Medicare?

Republicans won't support that.

- - - Updated - - -

Thanks for the post, you sum up conservatives' views very well, in my experience.

 

Actually, if you live in a society then by definition someone does care.