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Monday, September 5, 2011

The Corporate Mindset vs. Survival -- by Silence DoGood

Has anyone paused or stopped to consider how, exactly, Washington can create jobs? By that I mean, while perhaps well intentioned, how can the President or Congress force/encourage/cajole companies to hire new employees? I’m giving both the benefit of the doubt at present with the “well intentioned”.

The direct method is that Washington has the ability to create jobs through expansion of its own labor force. You can interpret that as new Federal civilian employees and the military. However well intentioned that concept might be, how can the nation sustain such a hiring blitz on the basis of reduced revenues and a lack of productivity in the private sector? The more optimistic of you might think that would have been a better use of the money used to stabilize the financial institutions and support any number of other programs used to support an idle labor force and it gets people at least working. The pessimistic among you will think this is just another way of increasing the size of government, increase the tax burden, or social engineering. So how many people could the Federal Government put to work? Well, a few actually. I’m sure there is a new program that needs administering or a new place with lots of sand or jungle that we haven’t fought over yet. They could even trickle money down to the States and Local Governments to drive them forward… for a while. The big stimulus is getting ready to run out of funding. When that happens, projects started or continued and people hired are going to be eliminated because recovery and sustainability has not been what or where it should be.

The indirect method is instituted by lowering the corporate tax rate or offering tax breaks to companies relieving part of the income tax burden as a means of generating hiring. Does it work? There is really no direct answer for that question. It can work low scale, but what happens after the tax breaks run out? Why would companies hire new employees with no prospects for sales or market for their products? According to the last numbers I saw, recession recovery is being done without hiring. Jobless recovery is the term used today. Technology is replacing some of those positions, others have been outsourced, and some just simply aren’t coming back. In this new paradigm of jobless recovery, the numbers are estimated at 2.2 million jobs lost that will never be recovered. Gone, ain’t coming back, wave good-bye. With the tax breaks option, the optimistic number of jobs that could be generated is in the range of 700,000 on the top, 250,000 on the bottom. The total number unemployed at present hovers around 10 million.

So in the interest of listening closely to what is being said, how precisely, is government or any politician going to create new jobs? And an even better question to ask is, what kind of jobs are going to be created if they can, in fact, accomplish this feat? Politicians and Presidential hopefuls like to cite their records on job creation. What they don’t tell you is what kind of jobs they are bringing in, since they don’t really create job one unless they hire someone themselves. They create environments or make conditions suitable to Corporate America to hire people. Basically, Government is willing to eat a loss of revenue across time to bring a large corporate monolith to your area, in addition to sweetening the pot with promises of cheap labor, why, corporate America is all ears. So again, what kind of job is it that is being fostered through tax incentive?

It’s true the economy is growing so it’s not all doom and gloom I suppose, but the growth is at the top of the economic scale. The Koch brothers each saw their earning increase by $15 billion each this year alone and we’re just into the 3rd quarter. Corporations have seen their profits grow, and the top earners come mostly from Wall Street. Millions and millions of dollars are pumped into political causes in an effort to maintain control and perpetuate economic growth at the top of the scale. And these people and corporations pay that money to ensure that the rules stay in place so that they continue to amass wealth.

Now can someone explain to me why it is that the people, all of these millions of people that are out of work and looking or trying to find work, are supposed to do more with less, but why can't the Koch brothers and corporate America do the same? Why can’t they take $7.5 billion and invest it in something viable to help America? Why can’t GE, or Glaxo, or pick-a-corporation reduce the size of their lobby budget they use to buy influence and use that money instead to inject growth in the American economy? Why can’t Exxon-Mobil take half the profit they’ll make per quarter and reduce fuel to an affordable level in an effort to help everyone and reduce the negative effects of recession, since we’re all in this, allegedly, together? They’re still making money hand over fist compared to the rest of us, how about giving the rest of us a chance just to make it at least.

Why not, indeed! There is nothing to be gained by Corporate America or the dandies of Wall Street or those on the Billionaire list to do any of that. They know that compliance and docility comes from having those you seek to control in a state of weakness; economic, nutritional, and educational. Which is why they pay the money they do to the lobbyists they hire in order to get the legislation passed that makes practically everything they do legal, or at least legitimate.

There is nothing legal or moral about starving, in a literal or figurative sense, millions of people into submission. You can color it, twist it, package it, or spin it any way you feel the need to. It doesn’t change the bottom line of what is. There have only been two other times in our history that so much was owned by so few. The aftermath of those times brought Federal regulations with one and a global depression with the other. Don’t you think that there was a really good reason that Woodrow Wilson instituted a progressive tax on the wealthy and that it was allowed to remain in place as long as it did until Reagan abolished it? That reason was that Wilson knew the dangers of concentrating so much wealth at the top.

Whether you agree or disagree with me, in whole or in part, we all know that something has to be done. It’s the how of it that is presently in contention. But I’ll leave you with this observation. As long as the bulk of capital remains located at the top, those with it will only use it to gain more and to enhance their control of everything they can. Until that money starts flowing down, in the form of loans for houses, cars, and durable goods that serves to put people to work, things will not change. Until the rules that allow money to be off-shored and that allow goods to be imported and take advantage of cheap labor in other markets, things will not change. Billions have been spent to foment the creation of those rules. Words and votes must be fomented to bring about their elimination. What we have to understand and grasp the concept of is, it is a better use of capital for millions of American workers to buy a house, a car, or furniture than it is for a couple of billionaires to buy a mansion for $35 million, a painting for $10 million, a Ferrari for $500,000, or Congress for a bunch of meals at five star restaurants or some plane rides around the country, or hiring the Congress member’s kid into their corporation with a do nothing job and a big salary.

It’s time we reasserted the notion that merely because you have money doesn’t give you title, benefit, or privilege beyond anyone else that may not have the assets you enjoy... That owning a successful business makes you good at business and a bit lucky, not a Demi-God of economic prowess... That with greatness comes greater responsibility and not just to yourself, but mankind as a whole... Because how is it you have been successful in the first place? What good is the product or gadget if there isn’t someone who purchases it? It's time Corporate America took stock of that second word in the title; America.


James Thomas Shell said...

What the "Economic Gurus" won't address is the issue of offshoring. Every time we stimulate the economy, we are only printing up more dollars to but products that are now manufactured overseas.

Harry Hipps talked about this. Stimulus worked. It stimulated China, Singapore, South Korea, etc.

The only way to address this issue is addressing wage equilibrium, which is business's number one cost and another issue is adding a Tobin tax, which would curb electronic trading, carry trades, and other short term trading that is making money on the margins. We need to encourage long term capital investment. Glorified day trading does not encourage stable capital markets.

harryhipps said...

I think much of our current problem stems from the Reagan statement that "A government that is big enough to give you everything you want is big enough to take everything you've got." The Dems and GOP both push for government involvement, with only the libertarians and tea party being serious about shrinking it. Everyone wants to get the rules bent to their favor and it shouldn't surprise us that the big, powerful and well connected people and entities get their way.
We have bent the Constitution so far that the laws don't even resemble the Constitution anymore and we have become a nation of men, not of laws.
Since we have a government that knows no boundaries and is not attached to any rules or principles, other than the most basic, we now have a large, powerful controller with no real restraints. Is there any wonder there is so much uncertainty?
The irony is that the uncertainty leads some to ask for more intervention from the same gov't that is stomping around like the proverbial bull in the china shop. Until we have a system where we have equality under law, freedom from unelected bureaucrats, limited and restricted gov't and the freedom to unleash the creative and hard working aspirations of people we won't reach our potential. More and more we will just hope the nanny state will guarantee us our basic needs and the government will be more important than the free market, the individual, and for some people even God. In the end, the moral and cultural rot we have embraced will cause us to suffer until we are forced to reexamine what the world is really all about.

James Thomas Shell said...

I can't disagree Harry and a huge colossal government is not my desire. I think what I have awoken to is the middle class squeeze created by the mess we now have.

Currently there is no free market and to argue about the desire for one while they are tied in knots is not going to solve the problems we face.

The system that is in place now is set to help the monetarily wealthiest of this nation (and world) consolidate walth like a game of Monopoly. The progressive system allows the poor to pay no taxes and the rich, with their lawyers and accountants, to essentially pay minimal taxes.

In the mean time, our jobs have been offshored leaving tens of millions of people unemployed or underemployed, which further reduces the tax base and results in more people having to be taken care of by the nanny state.

The Wall Streeters will point to cheaper products, but people can't buy even cheaper products if they don't have any disposable income. In the meantime, the Fed in conjunction with the treasury is printing all of this money, which is causing staple commodities, such as food and energy, to explode and is causing tension with nations and other entities who have purchased Treasuries and other U.S. agency securities.

Yes, I am for getting government back under control. Maybe we should quit bickering and focusing on the regulation of private industry and start focusing on how we are going to regulate the government. If we get our unregulated government back under control, then hopefully we can move towards properly regulating (streamlining) the regulations in the private marketplace. Because what I am seeing from Corporate America/ The Too Big Too Fails is that they definitely need to be regulated.

Silence DoGood said...

I had this nice long reply all written, but after reading what you two have said, the only thing that I can add is this. Government doesn't have small to be limited nor large to be overbearing. I know, tendencies. But we will not see a return of government to the people until we remove the ability of lobbyists to buy and peddle influence in the halls of Congress. And we wouldn't need Lobbyists if all were given access to government. Which means that a majority doesn't translate into being right.

harryhipps said...

One sad irony is that, with the internet, transparency in gov't, getting detailed info to the people and getting popular feedback has never been easier. Despite the potential for the greatest democratic participation since 5th century BC Athens we have been sold out. If we have a "velvet" revolution we will be fortunate.