Trying to understand what’s going on in the economy is not intuitively obvious. Particularly when there’s football to watch three or four days a week, with the associated play/player analysis, and bet-making. Who even has time to understand “Supply Side Economics”, “Trickle Down Economics”, or even what the not-screamed alternative might be called?
The indiscriminate emphasis on “Jobs”, without a modifier before it, like “good”, “globally competitive”, or “stable”, could end up meaning 18 million competitors for minimum wage jobs. And if we would only get rid of the minimum wage those people could compete to work for free! Good globally competitive stable jobs don’t come easy, and aren’t mixed up in a soup the same day for evening consumption. They require long term development.
We went through this “jobs” problem last decade, when 3 years after election GWB was looking at no net job growth following the Internet Recession. So they kicked into high gear everything involving subdivision construction; fast food, strip malls, curved street tract homes, real estate agents, mortgages, mortgage bundling, and securitization. As it has turned out, all those jobs had no staying power. They were all a mirage that in the end conveniently transferred a lot of wealth to the wealthy and left almost everyone else with increased debt.
Here’s a great little semi-techinical (Oh no! Math?) analysis of why the two common GOP “jobs creation” talking points of low corporate taxes and less regulation are balderdash. This emphasis means in the bigger picture that they either have no real ideas, or no interest in participating in a solution for the intractable near-term earnings and wealth problems of the bottom 80% of US citizens. But they might try someday in the future if they get to play with all the marbles. Right now few people seem to be challenging them.
As the above data indicate, supply side policies are not needed in the current environment. Businesses have ample cash on their balance sheets and yet are still not hiring people. Neither businesses nor individuals are overtaxed; in fact, taxes as a percent of GDP are near their lowest in over 60 years. And finally, there is no evidence that regulation is in fact the job killer many tout it to be.
There may be a time when supply side economics will be an appropriate policy response. But now is not such a time.
And there’s this about tax policy, which I joke about in my post here.
This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:
Federal taxes are the lowest in 60 years, which gives you a pretty good idea of why America’s long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke.
Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
Employment taxes, by contrast—the regressive bit of the fiscal structure—are bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor don’t pay income tax, point them to this chart. Income taxes are just one part of the pie, and everybody with a job pays employment taxes.
There aren’t any wealth taxes, but the closest thing we’ve got—estate and gift taxes—have shrunk to zero, after contributing a non-negligible amount to the public fisc in earlier decade
And given twenty five years in my own businesses, I particularly personalize this rebuke of the over-regulation hype, and its clear refocus on the primary bloodsucker of our business ecosphere, insurance companies. But you won’t hear the GOP talking about that for obvious reasons. And since almost all journalists, media talking-heads, working stiffs, or politicians have no fight-the-daily-battles type business experience, they won’t bother to talk about it either. On the one hand new small business is where job growth can occur. Major corporations have been net job exporters. On the other hand, the biggest nightmare of an existing major corporation is another Apple Computer type category killer. Properly placed laws and insurance rents are a primary means of excluding new possibly threatening competition.
McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business.
Their response was surprising.
None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath
Then there’s Rip Daniels. He owns four businesses in Gulfport, Miss.: real estate ventures, a radio station and a boutique hotel/bistro. He said his problem wasn’t regulation.
“Absolutely, positively not. What is choking my business is insurance. What’s choking all business is insurance. You cannot go into business, any business — small business or large business — unless you can afford insurance,” he told Biloxi’s Sun Herald.
These GOP alleged solutions are not real. They are fantasies at best, and professional wrestling type prestidigitation at worst. Combined with the controlling morality of a minority, this is the platform of the political opposition.