Let’s put people back to work
What would happen if the federal government sent unemployed college grads into the classroom to beef up reading, math and science instruction in elementary, middle and high schools?
What would happen if the federal government helped pay for the construction of new reservoirs or the expansion of existing ones?
What would happen if the federal government boosted worthy transportation projects — roads, bridges, rail and ports?
And what would happen if the federal government spent real money — not relative chump change — investing in solar, wind, geothermal and other forms of renewable energy?
We’d have more jobs and fewer foreclosures, that’s what. We’d also have a better quality of life and a more competitive position in the global economy.
I’m not a complete moron. I know that’s not going to happen. And I know the government has been living beyond its means for decades. More than $14 trillion in debt needs to be cut sharply to prevent robbing our kids and grandkids.
But like many things in life, the question is when? My answer is not now. Coming up with a long-term game plan is fine. But immediately making deep cuts to a fragile economy will do more harm than good.
That’s probably a minority view. And most of the CEOs I’ve interviewed for this column probably disagree with it. But, in my view, too many people have been suffering for too long in this alleged “recovery,” which began more than two years ago. They do not suffer alone. Their situation drags down the entire economy and the future of the very kids we say we want to protect.
Many moons ago, I learned a few important lessons in my economics classes:
– It took World War II to get us out of the Great Depression. It wasn’t because lots of soldiers were killed. It was because the government spent money. Lots.
– FDR understood what Herbert Hoover did not. The government needs to act differently than a family does in a crisis. The family pulls in its financial horns, as it should. The government needs to do the opposite — spend when times are tough and reap the rewards when times are good. Why?
– GDP = C + I + G. Our economy is made up of demand from three sources — consumers, business investment and government. When two of them retrench, as they have, the government needs to act boldly or the pain will last for a long time — especially after a financial meltdown.
Over the past few years, I’ve heard and read the following many times: “The government doesn’t create jobs.”
Nonsense. If the government doesn’t create jobs, then who are the soldiers in Iraq and Afghanistan working for? If the government doesn’t create jobs, who’s funding the Lockheed Martin aerospace plant here? And if the government doesn’t create jobs, why did the unemployment rate rise in June after it cut thousands?
The economy has been sick since December 2007 and it will continue to be sick for several more years.
This country can do better. We can invest in our people, grow the economy and use the revenue to cut the debt over time. Or we can continue to waste our resources by leaving millions of talented people on the unemployment line.
- Henry Unger, The Biz Beat
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99 comments Add your comment
Viet Vet
July 19th, 2011
7:02 am
You’re right about what should be done – government stimulus – and what will be done – nothing. The US economy was on top of the world when Bush was inaugurated in 2001. There was a budget surplus and Ayn Rand’s most accomplished acolyte, Alan Greenspan, said his biggest worry was what to do with all the money once the US deficit was paid off. Instead of finishing the job, Bush and the Republican House and Senate voted for two enormous tax cuts that overwhelming benefited the most wealthy Americans. And then started two wars without making any provisions to pay for them, the first time in US history that was done. When the economy crashed in 2007 and revenues dwindled to Eisenhower era levels, the already-too-high deficit skyrocketed. The smart thing to do would be to recognize what got us here was excessive government spending in the good years, and lack of government spending in the lean years. Remember the Biblical story of Joseph and the Pharaoh? Unfortunately, our Pharaohs today don’t want to hear Joseph’s message and will oppose any sensible attempt to stimulate our way back to economic health. Save in prosperity, spend in famine.
You got that right
July 19th, 2011
7:03 am
Jobs, jobs, jobs! This has been the worst recession since the Great Depression. The employment numbers are still horrible. We should do now what Obama and congress should have done in early 2009, jobs programs.
Because of Obama’s half measures (sorry tea party, he’s actually a conservative) the economy has been mostly stalled and employment is actually slipping backward.
These programs would make our country a better place to live, it would employ people who previously had been working and want desperately to be able to pay their bills again and rebuild their savings.
But as usual, congress is focused on something else.
Viet Vet
July 19th, 2011
7:29 am
To “You got that right,” well, you got it half right. Certainly the 2009 stimulus package should have been larger, but don’t forget that the Republicans and some conservative Democrats fought it tooth and nail. Obama compromised with them by making 1/3 of it tax cuts, which had less of a stimulus effect. So it’s not right to call out the lesser fool while ignoring the greater fool.
RGB
July 19th, 2011
7:46 am
Wow. So a government that is bordering on default needs to spend much, much more money for make-work jobs so we can reach economic heaven.
In doing so, you would dry up the available capital for business expansion thus hurting employment even more. Taxes would increase dramatically causing more unemployment and fewer revenues to the Treasury widening our deficit–causing politicians to increases again and so the cycle starts over.
We’ve spent $4 trillion more than we produced during the last 3 years. How much would you recommend that we spend? $20 trillion? $100 trillion? GDP is only about $14 trillion.
Friendly recommendation: The next time you are at odds with the CEOs with whom you’ve spoken–listen to them. They know how to balance a budget.
It would be nice for the AJC to have a pro-business business columnist to balance the pro-state one authoring this column. Is that too much to ask?
RGB
July 19th, 2011
7:49 am
Will the last capitalist please turn out the lights?
Wait–they’ve already been turned off because we can’t pay our bills.
A.S.Mathew
July 19th, 2011
8:01 am
Both the government and the private companies are cutting corners and
more people are forced to be out of work. On the other hand, everybody
is very tight in spedning their money. Not even a single CEO has said so far;
I am going to take a huge salary cut in the millions to create more
jobs in the company. Now, we are faced with a spiritual dilemma of
total selfishness-tight spending-lack of mutual trust and ruthless
political fight in Washington. How, any miracle can be expected? But,
every day, it is getting worse to the worst for the average American.
RGB
July 19th, 2011
8:10 am
Bush and the Republican House and Senate voted for two enormous tax cuts that overwhelming benefited the most wealthy Americans.
Facts and truth don’t matter, apparently, anymore. But with the confidence that accompanies ignorance, here goes….
SOURCE: CNN Money on “Bush Tax Cuts”
“The bulk of that cost — $463 billion — is for the extension of cuts for families making less than $250,000, including two years of relief for 2010 and 2011 for the middle class from the Alternative Minimum Tax.
The rest — $81.5 billion — is attributable to the extension of cuts that apply to the highest income families.”
——————–
83% of the “Bush Tax Cuts” went to folks making less than $250k/yr. Now that you know that, will you change your tune next time you have a strong desire to pound “the rich”.
Key Point: If President Obama and the Democrats rescinded the “Bush Tax Cuts for The Rich” and collected that revenue for 10 (count ‘em ten) years, the amount collected would scarcely pay for HALF of Obama’s deficit for ONE YEAR. Read that sentence again.
So if pounding the “rich” (pronounced “job creators”) doesn’t close our budget gap, then maybe we should try to encourage business people to expand rather than threatening their very existence. Do you think that might have a chance to work?
Here’s my source for the CNN article:
http://money.cnn.com/2010/12/07/news/economy/tax_cut_deal_obama/index.htm
williebkind
July 19th, 2011
8:30 am
Dear Henry,
Dont forget to renew your ACLU membership! In Obama’s ecnonomy you may not have any income in the near future. Relax, dont worry, the progressive liberals will provide you with all sorts of government beneftis. You will make it just fine but you may not have the lame stream media to spout our your garbage.
Uncle Billy
July 19th, 2011
8:38 am
RGB-The government can and is paying its bills and it will unless the Republicans prevent the raising of the debt ceiling. In fact, the US Treasury is borrowing for 10 years at less than 3% which is unprecedented in recent times. Why would not borrowing at low very low rates to fund worthy projects not make sense? The federal debt is a long term problem, not a short term one. Severe cuts in spending will lead to layoffs, decreased tax revenues and increased spending on unemployment insurance. It is a lose/lose proposition. Britain started down the austerity path a year ago. It is not working there and it will not work here. There is no shortage of investable funds for business expansion. There is inadequate demand for the goods and services being produced. Major corporations have $2 trillion in cash on their balance sheets. The way to a lower deficit is the induce greater economic growth. That is what happened in the late 90’s.-Mr. Unger is entirely correct on this one.
Truth Hurts
July 19th, 2011
9:08 am
Viet Vet
July 19th, 2011
7:02 am
The US economy was on top of the world when Bush was inaugurated in 2001.
Thanks for your service. If you believe what you said you are an uninformed. If you argue about it you are an idiot. Which is it?
itsme
July 19th, 2011
9:12 am
Well, finally someone who makes sense. Thanks, Mr. Unger. I do hope you are wrong about nothing getting done. If deep cuts are made, the economy will only get even worse because more people will be laid off. More people laid off equals even less tax revenue.
Truth Hurts
July 19th, 2011
9:13 am
I know this post has a lot of big words in it. See if the libruls can understand it. ROTFLMAO at you idiots…
In August 2009, on a visit to Elkhart, Indiana to tout his stimulus plan, Obama sat down for an interview with NBC’s Chuck Todd, and was conveyed a simple request from Elkhart resident Scott Ferguson: “Explain how raising taxes on anyone during a deep recession is going to help with the economy.”
Obama agreed with Ferguson’s premise – raising taxes in a recession is a bad idea. “First of all, he’s right. Normally, you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to Scott is – his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”
When Obama warned about the consequences of raising taxes, the economy was moving away from recession—growth in the fourth quarter of 2009 was nearly 6 percent. Today, however, economic growth has slowed to less than 2 percent. Even before the horrible June jobs report, economists were warning about the “substantial” possibility of a double-dip recession. Many others agreed after the news last week. “In addition to the shock value…we need to seriously question whether a double-dip is there,” David Ader, chief treasury strategist at CRT Capital, told CNBC. “I would say it’s back on the table.”
If raising taxes in a recession would be “the last thing you want to do,” wouldn’t raising taxes in a struggling economy teetering on a double-dip be the second last thing you’d want to do?
RGB
July 19th, 2011
9:19 am
Uncle Billy,
We spent $4 trillion more than we took in during the last 3 years and unemployment climbed. If not $4 trillion, how much should we spend on this experiment that has failed everywhere it was tried? What’s the magic number? How would you service the debt? On whom would you raise taxes? Does raising taxes spur economic growth? Should we double taxes on everyone to really make the economy grow?
Both you and Henry want to launch make-work programs seemingly while not increasing debt and not raising taxes. How does that work? Are we going to borrow the money, extend the debt ceiling, but not actually pay it back until the economy gets hot (as the result of our borrowing)? Can I borrow money from you and Henry under those terms?
Under Bush, debt grew from $5.7 trillion to $10.6 trillion and economic growth slowed as the debt grew. This was terrible. But we are doubling down on this past mistake.
Economists say that when debt as a percentage of GDP exceeds 90%, economic growth slows significantly. Obama’s budget states that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30, the end of the fiscal year. That equals 102.6% of GDP. Obama will create as much debt in 3 years as Bush did in 8. Both were wrong.
Hasn’t our growth slowed? Wouldn’t a growing economy dramatically help our debt problem? Do you want the economy to grow?
Truth Hurts
July 19th, 2011
9:19 am
Question for the libtards, why did Obama pass a tax cut at the end of 2010? Is he about doing what is right or is he just another politician who is worried about his legacy more than he is about the US economy. If you claim he is focused on the economy, what has he done to show it?
Fletch
July 19th, 2011
9:24 am
Truth – “why did Obama pass a tax cut at the end of 2010?”
Because he caved in to the opposing party which threatened to default on Americas debt obligation. Same thing they are doing now. Had Obama allowed the tax reductions to expire as they were meant to then, there would be no need for the current pissing contest we are seeing now. Politicians are politicians whether it’s Obama or Boehner, makes no difference. Neither will ever truly represent your interests.
Fletch
July 19th, 2011
9:33 am
I’m not a big fan of Obama, but I will give him credit for standing his ground this time. Had he drawn the line in the sand in 2010 and allowed the Bush tax cuts to expire across the board, he would be in a much better bargaining position. Hopefully politicians on BOTH sides will learn not to make campaign promises that can hinder their ability to do what’s right for the country as a whole and not just for their faithful followers.
RGB
July 19th, 2011
9:39 am
Had Obama allowed the tax reductions to expire as they were meant to then, there would be no need for the current [ ] contest we are seeing now.
That’s incorrect. The Bush Tax cuts are for about $272 billion/yr. for everyone–including the hated job-creating rich. That’s about one-sixth the size of this year’s deficit.
N
July 19th, 2011
9:39 am
Wow — We borrow 40% of our money every month to pay our bills (the government) but you think now is the time to keep borrowing — What about Greece??
Sure government creates jobs just like everyone else but they don’t multiply like jobs can in the private sector from growth.
RGB
July 19th, 2011
9:45 am
Over the past few years, I’ve heard and read the following many times: “The government doesn’t create jobs.”
Nonsense. If the government doesn’t create jobs, then who are the soldiers in Iraq and Afghanistan working for? If the government doesn’t create jobs, who’s funding the Lockheed Martin aerospace plant here? And if the government doesn’t create jobs, why did the unemployment rate rise in June after it cut thousands?
Some fellow named Steve Forbes (in “Capitalism Will Save Us”) writes: “It’s easy to see why so many people believe that government-created jobs are a solution to a down economy. Job programs sound like a swift and decisive response to high unemployment. Why not put people to work expanding and repairing the nation’s infrastructure or working on “green” projects?”
He continues: “The only problem is that in the Real World, public-works programs—contrary to what many believe—have rarely, if ever, been shown to be an effective solution to economic recession or even depression.”
Forbes cites French economist Bastiat’s example of the “broken window fallacy” where a boy breaks the glass in a bakery window—shattering glass over the cakes and pies. Bystanders tell the owner to look on the bright side—that the kid has actually created jobs for the glazier who will spend the money with suppliers and other businesses. So, instead of an act of destruction, the kid has “created jobs”.
The example is, of course, illustrates fallacious thinking. Forbes quotes John Stossel:
“Creating jobs is not difficult for government. What is difficult for government is creating jobs that produce wealth. Pyramids, holes in the ground, and war do not produce wealth. They destroy wealth. They take valuable resources and convert them into something less valuable.”
MrLiberty
July 19th, 2011
9:46 am
And what would happen if armchair economist know-nothings like you got a real education in economics? Just think of how much better informed the general public would be.
What you are proposing is Keynesian economics. This philosophy has already been shown to be a complete failure. Government spending crowds out the private sector, steals from the private sectore, is unsustainable, and outcompetes the private sector for labor and other resources. It is based on the belief that the central planners in government know better than the private sector what is needed. This economic situation is already the result of too much government central planning. From the Federal Reserve and its loose money policies to wasteful government spending on the foreign empire, government has cause this problem. More government can only make things worse.
Sorry Henry, you are wrong. I suggest you go to www(dot)mises(dot)org to find out the details or your mistakes. I suggest everyone go there and check out all the free reading on the Austrian School of economics that correctly explains how we got here (and the first Depression too) and how to get out – hint, more government wasteful spending ISN”T the way.
Grayson Mom
July 19th, 2011
9:50 am
I would much rather see jobs in the private sector! How about a cut in the tax rates and let’s see if that spurs spending? Increasted spending means more hiring. More hiring means more people paying taxes. Once the economy is booming, and money is flowing to the government, THEN we can look at that tax money going to other things than debt.
MrLiberty
July 19th, 2011
9:54 am
RGB – Your economic ignorance is beyond belief. But then the federal government, the government-controlled media, and the government school system are probably your sources of education on economics.
Just answer one question. What good does the government produce that consumers purchase voluntarily? Answer – They don’t produce ANYTHING. Every penny they have to spend has been taken involuntaryily from the private productive sector. If is wasn’t taken directly through taxation, it was taken through the creation of debt obligations that must be repaid sometime in the future through taxation. If it isn’t taken through either of those means then it is printed out of thin air, thus diluting the value of money we all have to spend, save, etc. and drives up the price of everything. That is the hidden inflation tax.
In contrast, the private, voluntary sector turns raw materials or human labor into products or services that are purchased voluntarily.
Econ 101 – presented in a fashion that is being HONEST about the true nature of government versus the private sector.
MrLiberty
July 19th, 2011
9:57 am
So in other words, government DOESN’T CREAT JOBS. It takes money from the productive sector and pays people to work. That is theft combined with a make-work program. No matter how noble the outcome.
Truth Hurts
July 19th, 2011
10:00 am
“Fletch
July 19th, 2011
9:24 am
Truth – “why did Obama pass a tax cut at the end of 2010?”
Because he caved in to the opposing party which threatened to default on Americas debt obligation. Same thing they are doing now.”
Wrong bong head. Obama’s only concern was the election, same as it is now. Funny stuff. So the “leader” of the free world says “They made me do it.”, which is the reply I remember from 6-7 year olds. And the left portrays the GOP as acting childish. ROTFLMAO at you clowns.
Fletch
July 19th, 2011
10:22 am
Truth – “Wrong bong head.”
“And the left portrays the GOP as acting childish. ROTFLMAO at you clowns.
Nice way to engage. 1st, I don’t vote along party lines. It’s been my experience that neither party is worth much, which is why it still amazes me that sheep like you will continue to fall in lock step behind them.
2nd, I’m not sure who you are referring to in regards to “The Left”. I know it couldn’t be me, as I took no position either pro or con for either party.
3rd, my statement was accurate. Rather than waste time endlessly debating the debt ceiling, Obama did in fact cave in to the GOP in order to move forward. The tax cuts should have expired FOR EVERYBODY. Not just the “evil rich”(which I guess makes one since I fall into the 2% category). If he had stood his ground and made the GOP make good on their promise back in 2010 to sgut down the government, they would not have taken the posture they did this time around.
By the way Truth, you are aware that the debt ceiling applies to money already spent right? Basically we’ve already bought the stuff, and the creditors expect to be paid back. Oh, that and the fact that it is mandated in the constitution that America pay it’s creditors.
Or, are you one of the leeches that thinks it’s okay to max out your credit card and then declare bankruptcy?
Truth Hurts
July 19th, 2011
10:40 am
Fletch, your posts are as funny as your movie. BTW, do you look like the ‘airplane inspector’ from the movie…”It’s all about ball bearings”. This summarizes your posts….
I have no doubt the debt ceiling will be increased. But before passing, deep cuts should be made in future spending.
How is it Obama can submit a budget that relies 40% on borrowed money and this is considered normal and gets 15 secs on CNN. Yet CNN spends 15 minutes in prime time talking about ‘phone hacking’ in Europe in an attempt to discredit the GOP by tying it to FOX and Rupert.
Based on the wiki leaks espionage case, I thought the left loved hackers..
Economist
July 19th, 2011
10:46 am
Government should create jobs during times like this. Unfortunately, dogmatic conservatives say we should cut back because the constitution doesn’t say the government can create a jobs program. Why not just do what works?
Road Scholar
July 19th, 2011
10:51 am
RGB: Are you including in Pres Obama’s deficit numbers putting Bush’s two wars and the bailout (which Bush signed) on budget?
Grayson Mom: Where have you been? We have had tax cuts and to no avail. Trickle down is NOT working.
All I know from history (I know that getting History correct is a challenge for some) is that when we had spending programs related to infrastructure, we created jobs, the wages turned over 7 times to suppliers, stores, etc., we had something to show for it in new bridges, roads, sewers, etc (unlike giving someone welfare…what do we get as a lasting benefit?), and tax receipts went up. Where is the new transportation bill? Pass a new 2 year appropriation w/o earmarks, new programs/projects,etc. based on projected gas tax revenues. Then reexamine the spending/budget in one year and develop a new bill to create jobs further.
RGB
July 19th, 2011
10:55 am
MrLiberty,
Did you actually readmy posts? Nope.
As to my education–I’m not the smartest guy in the world and occasionally make typos, etc.
But I do know that “involuntaryily” is not a word.
Your writings are torturous to read and it pains me to say so because your thinking is essentially congruent with mine. [I just wrote that I agree with you.]
But, if it makes you feel better to pound someone with whom you agree, go for it my friend.
Truth Hurts
July 19th, 2011
11:03 am
Economist
July 19th, 2011
10:46 am
Government should create jobs during times like this. Unfortunately, dogmatic conservatives say we should cut back because the constitution doesn’t say the government can create a jobs program. Why not just do what works?
Obama said his trillion dollar stimulus would produce jobs from ’shovel ready’ projects. In reality, he only saved jobs at the local/state government level. What will happen when that money runs out?
Truth Hurts
July 19th, 2011
11:07 am
Road Scholar
July 19th, 2011
10:51 am
RGB: Are you including in Pres Obama’s deficit numbers putting Bush’s two wars and the bailout (which Bush signed) on budget?
The TARP money was dispensed under the Obama administrations eye and chosen Treasury Sec. Obama could have not spent the money.
Funny to hear Obama supporters claiming the GOP is acting childish on the debt issue and then claim “they made him do it” on TARP, Stimulus and Obama’s 2010 tax cut.
RGB
July 19th, 2011
11:14 am
Road Scholar:
Folks who study such things often write in peer reviewed publications that the multiplier effect of government spending ranges from 0.4 to 0.7.
Given that $4 trillion in excess spending over revenues (past 3 years) has us in the bind we are now in, I’m suggesting there is evidence to support that view.
Uncle Billy
July 19th, 2011
11:32 am
RGB-Henry Unger cites the clearest case of Federal spending inducing a boom, i.e. WWII when spending increased at rates which were unimaginable before that and the economy boomed. Marginal income tax rates were raised to levels far above where they are now and the boom continued. So high levels of debt are not inconsistent with rapid economic growth. And income tax rates were raised in 1993 and we had rapid economic growth which brought the budget into surplus.
The debt to GDP ratio can be brought down by having the GDP grow faster than the debt. And, as the British experiment in austerity shows, cutting spending does not always reduce the budget deficit. So your claim that “the experiment” has failed wherever it has been tried is false.
My principal point is our government can pay its bills and borrow money at unprecedentedly low rates. And Japan whose debt to GDP ratio is more than 200% borrows even more cheaply than the US Treasury.
The problem with the stimulus bill of 2009 is that it was not nearly large enough. But the CBO reckoned that it kept unemployment from going even higher. Now the stimulus has almost ended and employment statistics have been flagging. Unemployment decreased after the stimulus and now is increasing once the stimulus has been exhausted. Can we draw any conclusion from that?
As for you quote from John Stoessel (who is he?), can we deny that better roads do not produce more wealth? Would you say that the money spent on the interstate highway system was wasted? Is money spent on water and sewer systems wasted? Is money spent on airports and the air traffic control system wasted? Is money spent on fire and police protection wasted? Etc. etc. Mr. Stoessel’s claim is absurd on its face and was clearly designed to mislead. It would be an argument for not having a government. For that option you can go to Somalia.
Barackisha
July 19th, 2011
12:05 pm
“I’m not a complete moron.”
No, only a partial moron. Re-read the first four parapgraphs of your blog. Your solution is more social engineering, more spending and more government intrusion into our lives. The Great Society mentality that you love got us to where we’re at today.
When Rupert Murdoch buys the AJC I hope you’re one of the first to get the axe.
LawDawg
July 19th, 2011
12:11 pm
What would happen is the wingers (even the unemployed ones who could use the work) would cry SOCIALISM!! SOCIALISM!!, the cry of the poor and downtrodden protecting the interests of the rich and powerful.
See, e.g., the post above. (also, is Rupert Murdoch in a position to be buying anything right now? Pretty sure I saw something about his businesses in the news recently).
Viet Cong
July 19th, 2011
12:12 pm
We have work in rice paddies, send your peasants to our country, we will teach them to work!
Fred
July 19th, 2011
12:13 pm
How ’bout we elect a new President in November 2012 that isn’t a socialist/marxist and wants the US economy to completely fall apart? Obama is completly over his head and clueless in what needs to be done. I bet Jimmy Carter thanks God each night that Obama came along to take away the crown of “Worst President in modern times.”
Ellen Fix
July 19th, 2011
12:18 pm
I’m so sick of people talking in huge, vague generalities about “big cuts in the economy” and the like. All these giant platitudes and grandiose political statements don’t meant squat. One can derive a simple, modest yet powerful means of reducing governmental debt by following the lead of companies that have been cutting their budgets for the last few years: CUT PAYROLL BY LAYING OFF STAFF. Why should the government be any different than a privately-held business? And… Whatever happened to the General Accounting Office (GAO) in terms of pinpointing areas of waste and recommending job cuts? Isn’t that part of the GAO’s job? Sure, it would be entirely UNPOPULAR and any president who suggested laying off governmental employees would NOT GET RE-ELECTED. But these are trying times, and we need someone who has the fortitude to do what is right, not what is popular. Just the other day, my husband visited a governmental office where an entire row of clerks were simply STAPLING PAPERS. These folks probably get paid way more than they would in private industry (plus benefits, pensions, etc.!); whereas, if they were stapling papers in private industry, they would probably be earning minimum wage and would be in high school teens. There are countless ways for government to cut needless and redundant positions, from the top down, and streamline processes in doing so. Or, at the least, CUT WAGES by a certain percentage – again, just like private companies have been doing for the last several years. This alone would probably cut the deficit significantly. Why must we always look at cutting teachers, fire and police … Medicare and Medicaid … Social Security … when the answer can be found in simply reducing payroll expenses?
RGB
July 19th, 2011
12:26 pm
“So high levels of debt are not inconsistent with rapid economic growth.”
Post-WWII was characterized by pent-up demand. During the war, manufacturing efforts were directed toward the war machine. After the war the private economy zoomed because consumers weren’t able to buy many things–especially durable goods. And government spending as a percentage of GDP went down. Obama, on July 15th, said he was willing to reduce government spending as a % of GDP to Eisenhower era levels. The average of Ike’s terms was 17.9% while Obama has us at nearly 25%. Where are the president’s recommended cuts? Where is his budget? Or does he just say “no” or vote “present”?
Regarding the stimulus being too small: Shouldn’t there be at least some evidence that spending $900 billion we don’t have moves the needle in a positive direction before choosing to spend much more? I see the opposite: unemployment is higher that the administration promised. Workforce participation rate is lower than in many years. Home values are down. If this is what $900 B gets us, I can’t stand any more “help” from the government. Key point: Government intervention in markets distorts them and makes them inefficient. Inefficiency means fewer transactions and a lower standard of living.
Based on your opinion, we’d all be better off to hire people to break windows and then hire other people to come along behind them to replace the windows. That’s government thinking and I don’t agree with it.
Regarding who is John Stossel–you’ll have to do your own leg work on that one. John probably doesn’t know who Henry is either. You said about John’s thesis: “It would be an argument for not having a government.” So your position is that we must either have no government (anarchy)–or unbridled, unchecked, unfettered government that unilaterally decides how much it takes from its citizens. We did that in the 1860’s and it’s called “slavery” and I’m opposed to it. When you drive an automobile, do you drive either at zero miles per hour or 120?
Your argument that “do you think money is wasted on the interstate highway system”, etc. is one of those statist arguments that if you agree with any government spending then you must agree with all of it. Isn’t that a textbook example of extremism?
Your Japan example is interesting. Their GDP is about what it was in the early 1990’s. They’ve already stimulated themselves into a corner. Want to swap places with them? How about Greece, Italy, Ireland, or Spain? Like their prospects?
You folks who advocate wildly excessive government spending support it because you think you’ll benefit from it but will never have to pay for it. If you had to write your share of the money spent from your checkbook, you wouldn’t do it.
As Herman Talmadge (he was a Georgia politician Uncle Billy, but he’s dead now) supposedly said:
“Don’t tax you, don’t tax me. Tax that man behind the tree.”
Robert Green
July 19th, 2011
12:27 pm
George Will is fond of saying “FDR didn’t end the depression, World War II did.” Mr. Unger makes the very valid point that the thing about the war that ended the depression was the spending. Not the casualties or lives lost, not the exchanges of territory. It was the spending. In fairness, it is far easier to get a consensus for massive government spending for something like World War II than for almost anything else.
Don Nelson
July 19th, 2011
12:28 pm
Welcome to the new normal. Jobs that left in droves probably are not coming back. Our tax laws helped to create this by not stimulating business to stay, and our leaders have failed to lead for decades. Until we get some dramatic changes and some real leaders who lead, and not just talk, it is going to be a long hard slug. It has profoundly changed the lives of many, and for us Boomers, altered our retirements and has created an atmosphere for our children the likes of we have not seen in our lifetimes. Time for accepting the new reality, get some leaders and make the required changes essential to get this nation back on track.
Rl
July 19th, 2011
12:29 pm
We can see why Henry is a journalist and not an economist, or a business owner.
anita
July 19th, 2011
12:31 pm
Neither Dem or Repub, but can’t you all see the writing on the wall? The business community (Repubs) and those who run it do not like O’bama. In order to ruin his presidency the banks and its cronies are not giving loans to small businesses so that the businesses won’t expand/hire. This hurts the small businesses which are most responsible for making this economy run. The big businesses layoff so that the executives can continue to live in the lap of luxury and the people they layoff are stuck. The only way the Repubs can take back the White House is to ruin our great nation and the lives of out of work people and blame it all on O’Bama. Now mind you he and his lawmakers and Bush are responsible for this mess.
Um
July 19th, 2011
12:37 pm
Anita,
That “business community” is responsible for most jobs in this nation of ours.
JMM
July 19th, 2011
12:41 pm
Business don’t hire people just because they have the money to hire. They hire people where there is a large-enough demand for their product/service to require more workers to produce the product or provide the service. The reason the stock market has been so robust is because many companies are sitting on vast amounts of cash. They’re still not hiring.
We went from a budget surplus 12 years ago to the current situation. Historically (or at least the conventional wisdom says), one party wanted to slash taxes and slash spending, while the other party wanted to raise taxes and raise spending. Either one of those options is preferable to the course we’ve been on since 2001. We cut taxes and increase spending. This ain’t rocket surgery. That just won’t work.
Personal income tax and corporate tax rates are at historic lows. Clearly, that’s not helping. Let’s try the other way.
doh
July 19th, 2011
12:42 pm
Job growth of course is created by the private sector not the government. I won’t get into what got us into this mess. However, government can not force companies to create jobs, they have to want to create them on their own. Companies take their profits and reinvest it back and when demand increases they create jobs. That’s the way it used to work, that’s the way it supposed to work.
What is happening is defying history and baffling economists is that demand is rising for US goods. GE was just awarded 3 huge foreign contracts, Gulf Stream got an order for 50 new jets, and in the retail sector luxury demands are up 8%, demand for everything from adiddas shoes to the latest technology has increased in the past 6-12 months. Yet jobs are not being created. One asks why?
Two answers. One, corporations are squeezing productivity out of the workers they already have to the limit. A GE plant operator was asked in an interview how his plant was operating, he said to the reporter great. We are doing three times the work with half the people. This would have been unheard of 20 years ago when unions were around. Now with unions gone, thanks to you know which party, workers have no choice but to work longer hours for the same pay. That’s a fact, vacation time for Americans is lower, and we lag behind the rest of the world.
The second factor, is two part. One, companies are taking more profits and keeping them instead of investing them. That boosts companies bottom lines, and raises stock prices. With less money in circulation because companies are keeping profits they are doing the exact same thing government does, except were government takes money and spends it, companies are taking money and pocketing it. It hurts the economy when more and more money is taken out of circulation.
Secondly, there is a conspiracy. Wynn got a conference call and stated it. Jobs will be created out of thin air on the Wed., after the first Monday in November of 2012. Companies are holding off creating jobs, hurting the economy and holding the American worker hostage hoping that Americans will blame Obama for the election. It certainly isn’t about taxes that is causing this. Consider this scenario:
GE last year paid NO taxes. GE last year made a $15 billion profit, AND demand for GE goods rose last year. It is perfect receipe for job growth. No taxes, high profit and good demand. What did GE do…
They cut their workforce by 5.5%.
The economy will come back, we just have to wait 16 months until Corporations force us to vote the Democrats out of office.
MS
July 19th, 2011
12:43 pm
I’m a married 34 year old with no children. I get slaughtered by taxes and these are my prime earning years. However, I would not mind paying higher taxes in return for better services from my government. I wish our government would invest more on it’s citizens. I am nervous that the social security and medicare tax witheld from my income will pay for my parents and grandparents but not for me.
RGB
July 19th, 2011
12:57 pm
anita,
You are a true Kool-Aid drinker and Obama supporters everywhere must be smiling with you.
You think that all banks (which are ALL owned by Republicans, because as everyone knows shareholders don’t own banks, Republicans do–and even if shareholders owned banks, they’d all be Republicans) hurt themselves by not loaning money to businesses who want it. I wish Republicans were that disciplined to where they could execute a plan even if it were wrong.
But one thing is nagging at me anita (present company excluded), and that is how are Republicans able to destroy the country’s economy when Democrats had control of both houses of Congress and the Presidency until recently? And they had control of both houses of Congress for the last 2 Bush years. And they still hold 2 out of 3.
Could it be mind control? ESP? Or even ESPN?
To JMM:
“The U.S. has one of the highest corporate tax rates in the world. Only Brazil, Uzbekistan, Chad and Argentina have higher corporate tax rates than the U.S. According to a research study by the Cato Institute, the effective U.S. corporate tax on new investment was 34.6% in 2010. This was higher than the average OECD rate of 18.6% and the average rate for 83 countries at 17.7%…”
So you recommend we raise corporate tax rates so we can have a Chad-like economy??
Jmax
July 19th, 2011
1:00 pm
Common sense says do what’s best for the majority of the people, which means end tax cuts for the wealthy, and cut programs as needed. A majority of our population is not wealthy. We have to do something and anything is bad, but make it easier for the majority. Don’t protect only the wealthy who are not feeling the pinch as bad as the lower and middle classes. Why should we only protect the wealthy in this crisis? Seems pretty simple to me.
Subroto Sarkar
July 19th, 2011
1:04 pm
Well my dear American Brothers and sisters this is not the time for comments but to find a solution to the problem. Sometime in 2010 when I was in USA I wrote a detailed comment which was successfully ignored me cat called as I am from India and that time was also a tourist and proposal sent to a trash bin.
Any way let me repeat as I have long 30 years experience in generating self employment in India. I surveyed the market and still find there are ways to generate self employment there by not only arrest the increase but wipe it away. There is a good market for almost 400 product not only in USA but also in export horizon. I painfully prepared a project report and an action plan and submitted it to the Government and NGO’s.However it was dumbed into the trash bin by US government and NGO. While US government official refused to read my proposal as I was not an US citizen and NGO’s expressed inability as they have no spare time. I was rather advised to set up my own NGO. Some intelligent US officials enquired about my credentials to India Govt there by I was promptly called back to India and projects offered. Now I have been entrusted with the work of uplifting the poor tribals in Hills of Himalaya as well as plains of Eastern India. I hope to show a positivre result within a few months. So brothers and sisters start action without waiting for government help.
As regards idea increase in Government expenditure govt needs either a tax hike or print notes. Both are harmful. So I feel generating home,cottage and small scale industries is the only solution.
RGB
July 19th, 2011
1:08 pm
doh,
You raised 2 interesting examples.
Gulfstream, of course, is headquartered in Savannah and its largest manufacturing plant is located there. It’s unfortunate that the President has lambasted business jet owners recently as if they were contributory to his overspending. And it was Obama’s own stimulus package that accelerated depreciation of business jets from 7 to 5 years. So Obama creates the plan and then criticizes it a couple of years later.
Regarding GE, Rush Limbaugh expressed it very well:
“Since 2009, GE has reduced its payroll by 36,000 employees. While paying no taxes on $5 billion of income, its CEO tells businesses at the US Chamber of Commerce to stop complaining about government and start hiring people while he is firing people.”
CEO Immelt is, of course, Obama’s business council job czar.
Obama knows what he’s doing: destroying the U.S. economy purposely and incrementally–a little bit every day–to punish us for our colonial ways and to instill “fairness”.
He just wants us all to be equal. Equally poor.
A dad
July 19th, 2011
1:08 pm
Typical Keynesian economics, which has been shown time and time again to fail. Look at the mess our government, both R’s and D’s, have put this country into, and you want to make them responsible for all economic development? Hmm, Microsoft, Apple, GM, Ford, Johnson & Johnson, etc. (all Fortune 500 companies). Interestingly enough, none of them were started or run by the federal gov’t.
No thanks Mr. Unger. I’d prefer to work hard (a key ingredient to success), produce something people want, sell it for a profit, and then build from there. What does the gov’t produce? Oh yeah, services. Services which need to be paid for. Bet you’re for rasing the debt ceiling too.
Danny O
July 19th, 2011
1:11 pm
Back in the late 90’s, I learned in Macroeconomics 1001 at Georgia Tech about the formula Mr. Unger cites (GDP = C + I + G). Anyone with a basic understanding of economics knows that when the government spends, it boosts the economy. And if the government spends on durable assets, such as infrastructure, we can get a boost to the economy now as well as a long term advantage of efficiency.
When we build a bridge, extend a transit line, add a runway, or fix a leaky water system we are putting folks to work now for benefits that we will all reap later. Sure, we have to pay for it over time. But that’s how you get things done, whether you’re a business, a family, or a nation.
doh
July 19th, 2011
1:12 pm
Obama’s government stimulus bill is NO different then our overbloated military budgets we have had for years. Think about it. What happened after WWI? Three Republican presidents..Harding, Coolidge and Hoover, the three most conservative presidents cut the military budget. The Washington Naval Conference cut American military spending, we promised to scrap 30 battleships and not make a new one for 10 years. That was true conservative thinking.
After WWII AND Korea, what did Truman do. Balanced the budget, cut military spending. He was the only president to ever lower the debt ceiling, truly balance a budget while lowering our deficit.
Then IKE comes into office. He, the great general and true conservative, cut military spending by 27%, and what is amazing about IKE is while he cut the military budget he didn’t cut R&D. Military technology increased during the cut.
Nixon comes to office, he cut the military budget even further, by 29%.
What is most interesting is Reagan. He comes into office and he starts spending the military budget because Carter didn’t increase it. He increases spending for the first 5 years of his presidency and then he realizes that he is hurting the economy and turns around in his 6th year and starts cutting spending. The military budget goes from 440 million in 1980 to a high of 580 million and then drops back down to 523 million.
Every Republican president has Lowered the military budget, every president that is except for one….
Little Bushy inherited a military budget of 412 billion. Clinton’s last budget allocated the least amount of money the Federal Government spends on the military, since the end of WWII. By the end of Bush’s term he leaves office spending the MOST amount of money ever on the military 718 billion. He defies history and his own party, and that is just in the military. He did the same thing in every major category in the budget. Before Bush, the highest the military budget had ever been was under Reagan…580 billion, and I remember everyone complaining that was too high, and Reagan even admitted it.
That is what Obama got. Obama received a military budget that was the highest every in recorded human history on top of an economy that was already in collapse, an unemployment rate of 7.7% and a rising debt. Obama has cut the military budget down from 717 billion down to 676 billion and it is still going down but it is nowhere near earlier levels set by Reagan, Nixon and Eisenhower of an average of 450 billion.
Here is the sad part….Bush wasn’t alone. He did this with the help of a Republican House and Senate.
So excuse me if I do not believe Republicans who say they are for small government, when take a budget that was lowest since Nixon left the White House and in just 8 years skyrocket it to the highest level it has ever been. This wasn’t just Bush’s doing, there are still Congressmen sitting in the Capital today who voted for all this, and who are now attacking Obama for not fixing the mess they helped to create.
Somewhere in the Middle
July 19th, 2011
1:32 pm
As neither a Democrat nor Republican, but an actual economist (or, as actual as that term can be applied, I guess), I thought I’d jump in. Firstly, while not disputing your theorems, I’d recommend not quoting the Cato Institute on corporate tax rates. The Cato Institute, while very skilled at promoting their agenda, is quite considerably focused on limiting government regulation on business. Which, is not necessarily a bad thing, but the view you quote them on for corporate tax rates is one slice of a view. You could break it into effective rates on equity or debt-financed investments, on new machinery or skilled labor, you would need to adjust for actual inflation, depreciation deductions, et al. The general rule of thumb, or at least as my bosses tell me, is to look at effective corporate tax rates (in total) relative to GDP (relative = as a %). Under that guideline, the U.S. has always had, and continues to have, very favorable corporate tax rates. Yet, I think your point on the effective rate against new investments was that investment is where job growth occurs. And that is, for the most part, very true. Economic cycles spike when demand is in place (demand = capital/cash in the market). From increased government spending in the 30s and 40s, to the new manufacturing capability that came out of WWII and lasted into the 1950s, to dramatic defense spending in the 1960s through the 1980s, some inorganic financial engineering in the 1980s, the internet boom of the late 1990s, through the real estate and financial services bubbles of the late 1990s and 2000s, there are key cash mechanisms that have spurred economic growth. The issues today (no spiking cash mechanism, labor arbitrage = jobs leaving the country, deficit obligations for existing programs like Medicaid and Social Security) are keeping the economy from growth. The idea of increased government spending is essentially the inorganic implementation of a cash mechanism. Private sectors grow jobs not because wealthy people have a lot of money (my apologies, no need to offend, but there is zero evidence that having more, and wealthier, wealthy people, creates jobs in any way), but because corporations have an area where they can grow. Tax breaks help there, subsidies, but most of all, demand is the key. With a reversal in the cash mechanisms in place, that demand is just not there. So, government infusion of capital into jobs would create that demand. Artificially, no argument there, but it would (or, at least, has historically) achieve that goal. The problem with government infusion is sustainability. The government infusion must be matched with a plan to move the cash mechanism into the private sector, and support the continued growth in that sector.
So, all in all, and I apologize for a rather helter skelter manner of “speaking”, economically we would (again, historically speaking) benefit from the creation of a cash/resource bubble through government spending. But it would come back to harm us (bubble bursting, just like the internet and housing) if it is not carefully evolved and migrated to the private sector.
EJ Moosa
July 19th, 2011
1:42 pm
“Private sectors grow jobs not because wealthy people have a lot of money (my apologies, no need to offend, but there is zero evidence that having more, and wealthier, wealthy people, creates jobs in any way), but because corporations have an area where they can grow.”
The private sector generates job growth when year over year profit growth rises above 6:5 %. The jobs follow four to five quarters later.
When year over year profit growth falls below this mark, the economy sheds jobs in the same fashion.
It’s not rocket science. It’s simple cause and effect. Unfortunately, too many economists and politicians have made it difficult to discern the truth.
Politicians use economists as they try to cherry pick who gets the subsidies and tax advantages and who does not. It’s pretty obvious to every one but the politicians and economists that they have been a big failure.
Stinger
July 19th, 2011
1:45 pm
Mr. Unger, the problem is we have already spent to much…we can’t add more on top of it…have you done the numbers…do you realize how much 14+ trillion is? These rewards in good times, you are referring to..do you know how many years of good times(defined by the government collecting more than it needs to spend) we would need to pay off that much debt? You know as good as I if the politicians see that we aren’t spending all of the money being collected that they will surely find somewhere to spend it.
Somewhere in the Middle
July 19th, 2011
1:51 pm
EJ Moosa – You captured the historical truth accurately: job growth is related to profit growth (i.e. demand creating revenue), job growth does not follow individual wealth. Coporate profits can indirectly make people wealthier, but it’s the health of the profit for a company, not individuals, that create jobs.
RGB Supporter
July 19th, 2011
1:55 pm
You go RGB! America needs more people just like you to speak up. I’d like to point out to the author of this article. Why is there such limited focus by our politicians on the “C” and “I” portions of the GDP equation you describe (GDP = C + I + G). I’ll tell you this we can either take our lumps now or our children and their children’s children will take them later. We have to get ourselves off of this credit driven economy! It’s really fundemental; Don’t live beyond your means. Do we want to be known as the generation that paid for what we bought or the generation that defaulted on our debt at the expense of future generations? My answer is affirmed every time I look into the eyes of my six year old. People and the government have to get themselves on the correct financial footing or we are just doomed to repeat these cycles of failure. I will say that next time we may not survive the “crash”…truthfully the jury is still out if we have survived this one.
MM
July 19th, 2011
1:58 pm
I have not yet heard anyone talk about an approach to putting people to work that involves prioritizing jobs for US citizens. For instance: 1) not renew the work visas for those in this country, taking good white-collar jobs from our citizens, and 2) implement some pain for those who export jobs overseas. I have seen way too many jobs in telecommunications, IT, and customer support either outsourced to India or filled with foreign workers here on a work visa. We should be taking care of our own FIRST and if there are still jobs unfilled, then offer them up to those wanting to come to the US and work. I personally know of several people displaced from their jobs by non-citizen workers and it’s just not right!
shaggy
July 19th, 2011
1:58 pm
Easy Fix 101:
Penalize the companies that take jobs offshore. Reward those that instead of taking jobs offshore, keep jobs in America.
Provide incentives for foreign companies to open shop here and hire American workers.
Create a business environment for stability and success. They WILL come.
mdee
July 19th, 2011
2:03 pm
The only thing that will create jobs (and resolve the many other ills in this world) is a return to God. These current problems are the product of a humanistic ideaology that turned hearts and souls away from God. We are now experincing the ‘flower’ of that mentality. We are wise, capable and intelligent yet, cannot correct, solve and/or improve these predicaments. The solutions are above our human vision, capabilites and understanding, in another realm.
Most have no desire to include God in the equation and most likely will be offended at the suggestion or anything of the sort, not my desire. The peace, abundance and security we once had and now desire can only be achieved by acknowleding we’re off course and return to the foundation, basics, simplicity and Source of life.
We’re all to blame, it is not Democrats/Republicians, rich/poor, black/white, etc… it’s a condition of our hearts being distant, distracted and tuned towards ourselves, tuned away from God. It is no easy but literally possible… will we choose Life? Where or what else can we turn to, we’ve got nothing to lose by considering and giving it a whirl.
Checkers
July 19th, 2011
2:09 pm
I bet Jimmy Carter thanks God each night that Obama came along to take away the crown of “Worst President in modern times.”
W took that title for eternity a few years back.
Inherited a balanced budget and blew that in about ten days then started an endless war in Iraq he had no idea how to get out of.
Genius. Pure Genius
HistoryLesson
July 19th, 2011
2:13 pm
Actually, the great depression and ensuing recession was not ended by WWII, as you suggest. The depression ended in the early 1930s, but a double-dip recession continued on until around 1938, when FDR put some different policies into place, after creating social security, Federal Reserve, etc – and spending lots of $ to do so. Because Congress switched hands and the country was tiring of policies that didn’t seem to be working to fix the economy, FDR implemented a number of pro-business, lower tax, lower regulation bills that got the economy moving. THE US entered the war 3-4 years later, which certainly created jobs, but it didn’t end the recession.
History facts are easy to find, if you look. And if you’re going to be columnist and purport to inform people, you should try using facts instead of what you heard on the playground (or wherever).
RGB
July 19th, 2011
2:14 pm
“Private sectors grow jobs not because wealthy people have a lot of money….. but most of all, demand is the key.”
Pardon my chopping your sentences, but it sounds like you are suggesting that poor people drive demand?
Separately, you say that “government infusion of capital into jobs would create that demand”. So only government infusion of capital drives demand but people creating wealth for themselves won’t?
.And you didn’t want me to rely on Cato for data?
Don’t healthy companies, job growth, and wealthy people occur together–even simultaneously?
HistoryLesson
July 19th, 2011
2:19 pm
Here’s another problem with your plan. While you’re correct that government can create jobs – I have many friends who work for federal, state, or local govs – the money brought into the government is much lower than if the job is created by the private sector. Why? Because the government pays a salary and then gets back only a percentage of that in taxes. If we all worked for the government, the government couldn’t exist. So the best solution is for people to work in the private sector and for the government to create as few jobs as possible.
Fletch
July 19th, 2011
2:22 pm
RGB – “So you recommend we raise corporate tax rates so we can have a Chad-like economy??”
Not at all, all we need to do is get the American worker to accept the wages of their foreign counterparts. i.e. the manufacturing employee must concede to $9.00 a day (which is on par with his counterpart in China) immediately. The I.T. professional currently demanding $60,000 a year plus benefits should be willing to take $15,000 and no bennies for the same job. After all, that’s what his counterpart in India is willing to work for. taxes are a moot point when the biggest expense any company has is PAYROLL. There’s nothing made overseas that can’t be made here. As soon as all you patriots step up and agree to these pay cuts, the sooner everyone can go back to work. I think it was Michelle Bachmann who said it best, and I quoute ” If we could just get rid of the minimum wage, and let companies pay what they want, we would have plenty of jobs”
Rc_K2
July 19th, 2011
2:23 pm
Listen I hate to be the bearer of bad news, but your food for thought is truly hogwash and the only way we the citizens of the United States are going to get out of this situation is to work our way out. It means no unnecessary spending. Government gets smaller, and if you want a job and want to make money, start by applying your complete skill set to something new. Whether one starts a neighborhood fruit stand, a garage seamstress, or newly minted baby sitter. These are new starter jobs, or you can be on the government dole an be burden to everyone. Last weekend I cleaned two condos for a friend and earned 230.00. It is a pathetic sum, but I needed the money.
RGB
July 19th, 2011
2:29 pm
Saxby has a plan that raises taxes by $1 trillion and is endorsed by Kent Conrad and Kay Bailey Hutchison.
Run for your lives.
Somewhere in the Middle
July 19th, 2011
2:29 pm
No, I did not say that only poor people drive demand. Demand drives demand. Demand can come from rich people, middle-class people, poor people, et al. But the idea that having more, or wealthier, wealthy people creates jobs is not supported by the data. The historical data actually shows that most inorganic demand comes with a larger middle class.
Also, government infusion of capital is not the only way to increase demand, it is a way to increase cash/jobs to drive demand. I can’t say that people creating wealth for themselves would not create demand, what I can say is that demand (capital) in a system creates areas for economies (companies) to grow.
You can rely on Cato as you choose, but I’d recommend if you’re going to provide U.S. corporate tax rates for comparison against other countries, you might be well-served to look at the taxes as % of GDP. That tends to be the standard. But, don’t trust me on it, I think the CBO would tell you the same thing. Cato is, if I’m not mistaken, run by Koch Industries, the 2nd largest privately held firm in the U.S., and they are noted to be conservative-leaning.
And yes, healthy companies and job growth occur together, even simultaneously, when there is a healthy economy. Healthy economies will create wealth. But taxes on individuals don’t correspond to healthy companies and job growth. Many of the ‘healthiest’ (defining as continued growth, cycle over cycle) companies and economies are in tightly regulated systems/models that don’t derive nearly what the U.S. economy can in individual wealth.
hobby
July 19th, 2011
2:31 pm
” most of the CEOs I’ve interviewed for this column probably disagree with it. But, in my view, too many people have been suffering for too long in this alleged “recovery,” which began more than two years ago.”
They are CEO’s and you are a writer. Who do you think knows more about how business works?
You live in the “everything should be fair” la la land of liberals
They live in reality
Henry Unger
July 19th, 2011
2:32 pm
HistoryLesson:
There is more than one view of World War II and recovery from the Great Depression. Here is how one source describes it:
“The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression. However, some consider that it did not play a very large role in the recovery, although it did help in reducing unemployment.”
yo mama
July 19th, 2011
2:39 pm
the oil industry, and the banksters have created a blockade for new energy. my friend who was in sacramento pitching hrydrogen in 2005 had his life threatened at his hotel by the oil folks. blame it on old USA not wanting the new USA.
Rc_K2
July 19th, 2011
2:47 pm
Henry, when one is so hungry that one thinks hard work is a blessing from God, is when the recession will be over. And that is actually how the Great Depression ended.
yuzeyurbrane
July 19th, 2011
3:09 pm
Amen! Common sense and straight talk at last.
usjobs
July 19th, 2011
3:29 pm
How about the government not just require a US headquarters but US employees on all contracts! I worked for a major tech company with a US headquarters and a major presence with the us govt but, like many of my US counterparts was layed off, not for lack of work but to move job overseas.
joe
July 19th, 2011
3:31 pm
The only way to put people back to work is vote out Obama Nov 2012…simple as that. Read what Vegas Casino Mogul Wynn had to say about Obama in Kyle’s blog from this morning…that pretty much sums it up…
fpl
July 19th, 2011
3:45 pm
It is widely believed today that FDR’s policies actually prolonged the depression. More government spending will have no effect on creating more jobs. Removing Obama in 2012 will do wonders for creating more jobs. Wealthy people with capital to invest are sitting on the sidelines. Check out Steve Wynn’s comments about what people with capital are doing. They are sitting on their thumbs fearful of what else Obama has up his sleeve.
dave
July 19th, 2011
3:56 pm
The greedy rich are the one’s that caused the problems and they are the only ones who can fix it.
We need salary and bonus limits and higher taxes on the rich
EJ Moosa
July 19th, 2011
4:06 pm
The solution is simple, as is the problem.
Are government programs and regulations making it harder or easier for companies to earn a profit?
Has it not been the clearly stated goal of this President’s administration to reduce profits of business(such as the oil industry with average profits of 6%)?
Do you believe all the rules and regulations that have been passed over the last two and one half years enhance or reduce the bottom line?
If government wants the private sector to increase hiring, then they should do what they can to improve those chances WITHOUT trying to pick the winners and losers.
And when a company has to compete with others that are being subsidized by the government, everyone loses.
None of you go to work to a job where after adjusting for day care, transportation and other costs, that you break even.
Don’t expect businesses to do what you do not do privately.
RGB
July 19th, 2011
4:12 pm
Somewhere (perhaps not In The Middle):
I appreciate your reply but the idea that wealthy people having money in excess of their needs not driving demand is counter-intuitive. No, I don’t have a double-blind, prospective, randomized trial to support that but it doesn’t make sense. People with excess wealth either buy things or invest it–and either way that has to have a positive effect on demand.
Further, wealthy people have done nothing to deserve tax code punishment. Making them poor won’t make me rich. That thinking is contrary to people who seethe with jealousy at their neighbors who have more material possessions. I’m not wired to want to punish people simply because they have excelled to a greater degree than me by working hard, putting their capital at risk, etc. Liberals live for the opportunity which explains why Mr. Obama wants increased taxes to promote “fairness” even though he admits higher tax rates often don’t produce more revenue.
Your views would, in my mind anyway, be characterized as Leftist-Statist as you seem to relish government intervention, transfer payments, and the like. I see no future in that approach and believe people will be retiring later, poorer, and sicker as a result of these failed government policies.
And for you folks who want to “keep U.S.” jobs by making “exporting jobs” illegal by fining companies, arresting people, etc–you are simply killing me and are choking the life out of our economic engine. Ever hear of “comparative advantage”?
I read it as I see it
July 19th, 2011
4:20 pm
It is NOT the government’s job to use taxpayer dollars to put people to work. If a business can’t succeed, then if it’s a good idea somone else will take over. No tax breaks, PERIOD!
I read it as I see it
July 19th, 2011
4:27 pm
who IS serious about a balanced budget? More waste of tax payer money!
“Birth Control May Become Free Under All Health Insurance Plans” drom AOL
Le Bourgeois
July 19th, 2011
4:42 pm
It is impossible to recreate the type of Civilian Conservation Corps, TVA, or other direct government jobs program in this day and age of mile thick bureaucracy and regulation. In FDR’s day, pretty much every dollar allocated from the treasury for public works projects and infrastructure ended up in the workers hands or in the material on the ground. Today, only a fraction of the allocated dollar actually makes it to the worker or project. Instead it is mired in red tape and duplicitous federal, state, and local agencies. We cannot have proper government stimulus like FDR had until we gut the federal bureaucracy. Trust me. I’m a local government “bureaucrat”.
HistoryLesson
July 19th, 2011
4:58 pm
It’s true that your economic theory of the 1938 recession has been written about, Mr. Unger. But instead of looking at a particular ‘view’ of history, you can look at facts. The recession ended in 1939/1940, before the US entered WWII. While economies are particularly hard to explain and our economy certainly rose rapidly after we entered the war in the early 1940s, your premise includes assumptions not in play, i.e. that the uptick in the economy would not have continued had we not become embroiled in the war. There’s nothing to back up that up. I’d be right with you, if you had said that WWII enhanced our economy in the 1940s, but that wouldn’t go to the points you want to make in your article, would it? Because WWII did not get us ‘out of the Great Depression.’ And since the great depression ended in the early 1930s, this statement is an especially agregious error.
And while I’m at it, you might want to refresh your memory on the Hoover/FDR era, too. While Hoover’s actions weren’t responsible for the Great Depression – he came into office only 8 months before – he was responsible for worsening it, initially by raising tariffs on foreign products, which other countries then raised on us, in retaliation, slowing down US production drastically. Later in his presidency, Congress raised income taxes, to 65% for highest earners (after reducing them earlier, from 70% to 25%), along with hefty estate, corp, and other taxes. FDR’s campaign attacked Hoover for ’spending and taxing too much.’ They even called him a socialist! Why? Hoover actually started the public works program (FDR continued it, but it had minimal impact on the depression), along with trying to implement many other social programs. Which is why most historians write that much of FDR’s New Deal came from programs Hoover started – or tried to start.
This isn’t an argument on the pros/cons of the New Deal or tax cuts/increases, though I certainly have my opinions. But if you’re going to write columns giving your opinion on these issues, you should bone up on those important lessons you learned in economics class (and history class?) before you pick up that laptop and start writing.
Somewhere in the Middle
July 19th, 2011
5:01 pm
RGB- I did not state that government spending was the wise option, or optimal option, what I said was that it was an option. And, if that were the chosen option, it would only be successful long-term if it were supported by a move to privatization. Nor did I say that rich people should be made poor. I’d be honored if you could pinpoint in any of my comments where I made either of these types of statements. If you want to further support your arguments by stating what you believe I have said, as opposed to what they actually were, have at it. It’s a successful debate mechanism if your audience doesn’t pay attention. What I said was that having more, or wealthier, wealthy people does not translate to a healthy economy. You are currently living in the best example of that ever. There are currently more, and wealthier, wealthy people in the U.S. than at any time, in any country, in documented history. Has that translated into a healthy economy? Income tax rates are lower than they have ever been. Has that translated into a healthy economy? The corporate tax rate is third lowest (relative to GDP) of any industrialized country. Has that translated into a healthy economy? My point earlier was that economies grow when there is a growth in demand. A growth in demand can come from a new technology (the internet), inorganic growth (financial deregulation), or capital infusion (spending, be it from the government or the boy scouts).
You can play the ‘don’t hate me because I’m successful’ game, it’s a great sociological ploy to create a common enemy (the poor are poor because they just don’t work as hard as everyone who is better off than them), but the economical facts are the facts. And the economical facts are that we’ve never had a greater disparity between the upper wealthy (bravo for them, I think there should be more of them!) and everyone else. That level of wealth disparity is not, nor has ever been, healthy for an economy. Having a portion of the population being wealthy drives demand only if that segment of the population can drive demand enough to maintain a healthy economy for everyone in it. If you’re still struggling with that being counter-intuitive, let me know and I’ll try and explain it without a random-sample, double-blind test. Which, by the way, was a pretty funny comment. I’ll presume that fell into the ‘let me ostracize this person by calling them out as an elitist’ remark. Pretty good stuff.
Somewhere in the Middle
July 19th, 2011
5:06 pm
RGB- By the way, I’m raising my hand. I’ve heard of ‘comparative advantage’. Do I get a t-shirt? A car wash? My name spray painted on the 17th Street overpass?
Uncle Billy
July 19th, 2011
5:26 pm
RGB-Why not deal with the arguments I make rather than the ones you wish I had made?
I assume you do not dispute that the interstate highways have created some value as have the technology for launching satellites, the internet and GPS and other government projects. I was responding to John Stossel who seems to believe the government never produces wealth. But he is with Fox News, enough said.
Explaining how WWII produced a large debt and a booming economy does not refute the claim that a booming economy is not inconsistent with rapidly increasing federal debt. It happened. Spending on more productive assets could do the same thing.
The CBO has studied the stimulus and concluding that it created or saved many jobs, perhaps as many as 3.3 million. See
http://www.cbo.gov/ftpdocs/117xx/doc11706/08-24-ARRA.pdf.
I never said all government spending is good. I would, for instance, eliminate entirely ethanol subsidies which are harmful to everyone not receiving them. You need to get over the all or nothing approach. For instance, I did not say that there should be no government. It is the logic of the position of Stossel, Ron Paul and other libertarians.
Breaking windows was not a proposal raised by me, so why would you assume that I would hold that position? Is it because you wish I held that position? I wonder if Bastiat story was based on an actual proposal or if it was something he thought up to try to discredit his opponents because he could not deal with their actual arguments. I find it hard to get people to deal with what I actually said, do you? For instance, I find people saying that I advocate “wildly excessive government spending” when I have never advocated such a thing. It is easy to win an argument if you state your opponents case for him.
We will never get spending to the level under Eisenhower because the population is aging and spending on Social Security, Medicare etc. will be hard to hold down. However, if we got health care spending to the level of the average of other highly industrialized countries, we could have a surplus. That, however, would be a gargantuan task.
I voted for Herman Talmadge a few times but he did not produce the quote you cite. That was Russell Long, Senator from Louisiana.
Read more, write less.
Tay Tay
July 19th, 2011
5:55 pm
shaggy
July 19th, 2011
1:58 pm
Easy Fix 101:
Penalize the companies that take jobs offshore.
What an idiotic comment. Here’s a better fix: if you want to work for a company that moved its jobs to India, move your sorry butt to India. The problem with that is in India they require you to actually work, you don’t get to join a union and sit at your desk playing on the Internet half the day.
Somewhere in the Middle
July 19th, 2011
6:01 pm
RGB – Just read about the Saxby Chambliss proposition. Grover Norquist is not going to be happy.
DawgDad
July 19th, 2011
6:52 pm
Articles like this make me very uneasy about renewing my AJC subscription.
Federal spending either transfers wealth or drives us further into debt. Yes, there is a small multiplier effect from federal works programs, but nothing near the multiplier and economic growth arising from private sector jobs. Bigger government, more inefficiency and corruption, more “locked in” spending programs that will never go away, and ultimately higher taxes. Bigger government is empowering the wrong people in this country, and if we do not reverse the trend we are headed down the tubes as a nation.
FDR did not get the US out of the depression.
m9985
July 19th, 2011
8:27 pm
It is refreshing to see some comments on this issue in the AJC that actually make sense. Of course, there are times when government is inefficient, and, of course, there are potentials for abuse and waste. On the other hand, the federal government can have the ability to hire people in an economic downturn and improve the condition of us all. Business often is unwilling to take that risk.
Tax breaks are one way to stimulate the economy, but right now business is holding on to its capital and is not likely to spend it until it sees the economy improve. In the long run business depends on having customers who spend money. Our economy is changing because of increased automation and we need long term investments in projects that will employ more of our population.
ellacarey
July 20th, 2011
5:27 am
Unemployment numbers are comprised of those that are in the job market for the past 30 days. It does not include those that have not been in the job market in the last 30 days: people who have given up looking; those that have gone off unemployment because it has run out. One solution to unemployment is “High Speed University” check it out
rambling wrecker
July 20th, 2011
8:21 pm
@ RGB…That’s really a pseudonym for Herbert Hoover isn’t it?
Maybe you should take a class in remedial Economics….particularly the chapter about supply and demand.
Phil
July 20th, 2011
9:24 pm
You are a complete moron, yes you are. The federal government has no role in those programs. Jobs will not return until companies (yes, the villified greedy corporations) have the confidence to hire again. What’s good for them, and I’m not a part of one, is good for us. This hiring will not happen under this foolish administration, at least until we’re sure they’re on their way out, back to kindergarten.
misa
July 21st, 2011
4:48 pm
If GA would remove this “at will” clause more Georgians would be employed. Employers can hire and fire at their discretion
What’s your prescription for weakening economy? | The Biz Beat
July 22nd, 2011
5:52 am
[...] this week, I wrote about my idea for stimulating more job [...]
Knowledge, Not Ideology
July 22nd, 2011
12:57 pm
You neo-cons who think big business is the answer to everything are so silly. Did you happen to notice what happened almost three years ago on Wall Street, the epicenter of big business? Oh, I suppose that was because there was too much government regulation and oversight.
Folks, government, any government, has an important role in any nation, and that’s to lead. It’s not to sit back and watch. When a nation is attacked, a government doesn’t have the luxury of saying “Gosh, we sure hope someone takes up arms against our enemy.”
When a nation needs roads, bridges and water and sewer systems, a government can’t say “If you citizens get a chance, would you please build some infrastructure?”
And finally, when a nation is in economic turmoil, it is absolutely the worst thing the government can do to sit back and say “Any minute now, the private sector will get us out of this, so we better not do anything.”
The private sector has one mission and one mission only: to be profitable. Well, there’s more to sustaining an entire economy than just having a handful of companies that are individually profitable. An economy has many more components that must be monitored and corrected when necessary.
Sure, that sounds socialist, so feel free to call it that if you want. But any country in the history of the world that has had sustained economic health has done so with crucial government involvement, including this country.
Brian
July 24th, 2011
6:33 am
Create a “micro-loan” structure where companies invest in people to start businesses. Micro-lending has been hugely successful in Africa. Why not implement a similar program in Georgia to assist prospective entrepreneurs to spur economic development and help individuals achieve the American dream of owning their own businesses. Also, create new taxpayers. New taxpayers are produced by lowering taxes on small businesses so these business owners will have more money to create jobs, hire people and expand the economy.