Wednesday, July 4, 2012

Our Economy: Recession Depression Repression Suppression What’s Your Impression?

In a nutshell our economy needs to have money flowing through it to survive.
Money is the economy’s life blood and without it it will suffocate and die.

There are many ways for money to hit the economy but basically our political parties have boiled it down to a choice of two ideologies. Money flows from the top or money is spent from below. 

While both appear to agree that jobs for Americans, in America are important the Republican Party feels that we must appease the so-called job creators to provide those. And therefore the business environment must be made safe and friendly for these providers to do so. They say that government must incentivize these philanthropic humans with tax breaks for new hires and tax abatements to produce more products for sale.
They seem to feel that just making a product that sells and produces profits for the corporation is no longer enough of an incentive for them to exist.

We must truly look no further than this to understand the inherent flaw in their reasoning, to wit no business is going to produce more products for sale no matter the tax abatement or incentive when there is no demand or customer for same.
So perhaps we should turn this ideology around, or on its head if you will and see if the opposite camp has a better idea.

The Democratic Party is of the belief that in order to increase demand for any product the consumer must have enough disposable income or certainly some cash with which to purchase it! This should elicit a response of, “Duh.” 

If the consumer has the wherewithal to buy then he or she will. And then the normal reaction takes place and no matter what field a company is in if they buy it business will produce it! If businesses see demand growing they will ramp up production and eventually find the need to hire more workers or be left behind.

Decades ago Chainsaw Al took over Sunbeam and made millions by cutting the work force in a Pre-Romney Romney way until, as he called it Sunbeam was lean and mean. But when business picked up Sunbeam was unable to ramp up production due to a lack of skilled, trained workers and they went under for good. Al however walked away with a huge golden parachute that sadly did not fail to open. But I digress.

There will naturally be a lag in the time frame between increased demand for a corporation’s product and the hiring of more people to produce it since the current business environment created by the economic disaster of the Bush era has made workers afraid of losing their jobs. This fear has created a workforce that is literally burning itself out with longer hours and eschewed vacations in order to please an ever increasingly greedy boss or board of directors.

However if demand returns from consumers with what business calls ‘open to buy’ money businesses will have to grudgingly hire more workers to fill orders. But rather than dig into their profits to pay the new hires they will most likely lower benefits for all to make room on the balance sheet.

So how do we get more money into the hands of the average American and thereby stimulate the economy? I know the word now has a stigma created by right wingers as being a liberal plot to give money to free-loaders at the expense of the poor put-upon wealthy people who are the only job creators of America but stimulus can come in many ways.

For one thing we can jump start the economy by priming the engine as it were. We do so by leveling the playing field just a bit. If we can understand that a society should look to the needs of the many and that those need should outweigh the needs of the few, or the one then we are at least headed in the right direction.

Taxes are a great way to level the field but they must be wielded properly and with intelligence. Lowering them on the lower classes while raising them on the higher wealthier people would actually be a great way to go!

If $1,000 in cash was to be given to a wealthy person, say a billionaire or even a mere millionaire what would be done with the money? The odds are it would be lost in the ocean of other large bills and not spent. It would certainly not trigger an impulse buy. I do not believe the recipient would run out to the mall or even ask his chauffeur or masseuse to do something special for him. In fact if $1,000 were to be taken away from these people I am not even sure they’d notice.

But if the windfall were to be given to an ordinary working class person who has been playing by the rules his entire life without much hope of getting out of the rut that was caused by circumstances beyond his control the odds are he will spend it! And even if he only spends it to pay down the debt he has accumulated due to the bailout of the banks or by his own careless behavior at least he will putting the money back in circulation and not in a mattress or worse, the Cayman Islands.

Now politicians, especially on one side of the proverbial aisle are dead set against merely handing money over to the public as a stimulus or otherwise. They have no problem taking credit for authorizing tax breaks for all and especially for the uber wealthy but that does more harm than good in the long run as the tax breaks are small for those low in the income scale and non-existent for the masses that are unemployed.

What the lower or no income set need is jobs. And government can and has in the past produced plenty of them. And many of them have proven important to the health and well-being of the country. In fact some of those jobs were vital to that health and well-being.

Just as a doctor attempts to keep a person’s arteries clear of any dangerous plaque so too does a construction team repair a city’s main arteries or infrastructure. And all across America our arteries are decaying at an alarming rate.

If both sides of our Congressional aisle were really honest about their desire to see this country get healthy again they wouldn’t play political chess with the lives and livelihood of the people who use those roads.

One might ask how we would pay for this massive yet massively needed fix and that word stimulus might rear its head again. Or worse, we might suggest taxing the wealthy and hear a chorus of “class warfare” from the conservative set. But in light of the fact that the wealthy are now taxed at the lowest rate since taxes began and that tremendously profitable corporations, who are not people no matter what anyone says, are paying even less taxes I believe we can tap some of that without doing much damage to either group. And once the funding is in place the country and the economy would really start moving.  And it stands to reason that when the economy is doing well everyone benefits!

By the way when it comes to taxes of any kind I believe Grover of   Sesame Street to be far smarter and better for America than   Grover of K Street

Many bills have been introduced in Congress seeking to get construction teams on the road to recovery and all of them have been filibustered out of existence.

Actions speak way louder than words, especially when those words are more rhetoric filled empty promises made by the same stuffed shirts who have been fooling the country for years.

People may be angry with one president or another but at least when they try to get things done and they are blocked by special interest groups (PAC) whose tentacles reach far into the once hallowed halls of Congress the blame must be placed on the proper shoulders. And many of those in Congress seem to listen to their favorite PAC while turning a deaf ear to their constituency or even what’s right! This not only stops progress but pushes us back for the sake of political theater.

The bottom line is simply that if we as a nation are to get back on our feet and reassume the slot as the best and most admired country in the world we must stop the stagnation in Congress.

We must make a concerted effort toward rebuilding our middle class. And when that middle class is the thriving healthy backbone of the country as it has been in the past our economy will once again be the envy of the world.

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