Obama & the Democrats don't know how to run a country, and the stuff you state above goes against their socialist ideology. It's a pity that the smartest people, including academia, support our current regime.
I guess we should ask the Germans how to do it. In Germany labor costs are high and taxes are high, and yet they are very competitive in the world market, doing much better than we as the world's number one exporter (I would guess that is per capita). They are obviously doing something right, and it makes me question U.S. corporate, executive philosophy which generally exalts cheap labor and complains about high labor costs..
Businesses in the United States pay the highest corporate tax rates in the world: United States: 35% Canada: 18% Denmark: 25% Germany: 30% England: 28% Japan: 30% France: 33% Sweden: 26% Australia: 30% New Zealand: 30% Singapore: 17% Norway: 28% A Swedish Finance minister said a couple of years ago that high business taxes were making US corporations uncompetitive. (Sweden has high personal taxes and low business taxes).
It is simple. The American company wants to sell Widget X for 100 at a cost to the company of 1 and pocket the 99 dollar spread. Then underemployed American consumer earns 2 in real wages and uses 98 worth of borrowing thanks to massive credit expansion so they can buy the 100 dollar widget.
There is such crap opinon in these pages. The U.S. is the largest manufacuring economy in the world...sure we are pissing it away with bad tax policy and bad social policy but we have a lot to piss away. I run a manufacturing company and I can tell you that labor cost is not the whole game. Manufacturing is changing from linerar assembly line efficiencies of scale to more custom just in time efficient production and managment of supply chains and inventory. Computerized manufacturing is now presenting a revolutionary data base for the more effective management of both capital and labor that is creating efficiency in all cost imputs except taxation. There is a level of low margin, low tech, bulk production that does still benefit from cheap labor that has been provided in China and increasing Vietnam and soon Africa. As a high tech manufacturer of precision mechanical parts used in many industries, including petro-chemical production and refining, material processing, food processing, aviation, and flow control. I do not have much use of long lead time bulk production that comes from China...I don''t need to buy stuff that comes in a container six months from when its ordered. My customers expect the highest quality and on time delivery without having to hold thier own inventories. We opened a facility in Mexico to serve the North American market along with our North American facility becuase we could not secure a skilled work force of machinists and factory workers here. We have labor shortages right now. In Mexico I can hire experience lathe operators, CNC programers and skilled machinists readily...in the U.S. I have to hire through a head hunter. Its really not about the labor cost so much as a flexible factory work force that is relaible and skilled. We can't make the quality parts we make in China even though it is cheaper. This is the way it is in Germany, we make things that $1 hour people can't make and we sell it to China...it goes in thier infrastructure, thier planes, their factories, their buildings, thier transportation systems. Let China make the stuff that depends on labor...it becomes a commodity...like Japan got stuff with making hardware while we kept making software. We don't suffer labor cost in the U.S. we suffer culture devolution, bad work ethic, poor practical education and high costs of living and high taxes driven by big government that does not remember where the money come from. The biggest reason to locat in Asia is low capital cost, low tax and ease of doing business...which is making thier whole market domestic and export grow...so you need to be close to it to sell them the value added products that we and the German's are still best at...this adminsitration will have us moving whats left of great productive capacity to Singapore just to keep it from being confiscated by the stupid.
And Shabanddabdona...flexible counter cyclical tax policy is a really stupid idea. How is anybody who has invest in a facory going to get any confidence in that kind of system...the natural state of living things, and economic systems, is to grow...the only reason it doesnt grow is becuase morons keep skrewing around wiht the audicity that they know better. You and the rest of the 'know betters' would produce positive results just doing nothing for while.
I like that he using the laffer curve and bases all his arguments on that, it has been proven wrong and even Laffer himself says that the republicans have hijacked it from him and use it for political purposes. One of the most glaring problems is that it assumes at 100% taxation tax revenues are 0, because there is no economic activity. The soviet union proved this wrong, they had essentially 100% tax rates (communism) and still had a very productive (but inefficient) economy. http://finance.yahoo.com/expert/article/economist/4065 also see: http://www.time.com/time/nation/article/0,8599,2013683-1,00.html 5yr
Yeah, the Soviet Union was a real model of economic utopia! Do you live in Potemkin land? Are you kidding me...did you ever read Robert Conquest's classic, "Harvest of Sorrow" that describes how they destroyed Ukranian agriculture...useful idiots confiscating seed corn from the coops becuase the production didn't meet the Moscow projections. The Ukrain produced more wheat in 1900 with mules than it does today with tractors and the super human input of radio active fertilizer (Where is Spiderman when you need him). You did notice that they failed as an economy?....they they defaulted on all thier pension obligations...they defaulted on their foreign debt... they could not stop the Ruble from collapsing, so destroying the savings of all thier citizens...that they allowed the decayed infrastructue of a continental empire to be looted by government protected criminals...you know all that happened and you still wrote that tripe you wrote? You thing there were some inefficiencies? I guess so! You do know that thier economy is now much revived under a flat tax structure consistent with Art Laffer's theories? It would probably work a lot better if the government was not controlled by renegade KGB and police force criminals...but that is not a tax issue. Why is it that the Russians and Chineese understand the self evident and practical value of Laffer and they show its value in practice, but you can't see beyond your petty idiological criticisms? I guess Chian and Russia are not growing under low tax regimes huh? The fastest growing economy in the world is Singapore...grew 38% last quarter on guarter...they don't tax any income under $100,000 and then they apply a flat tax of 17% on all income over that...no capital gains...no inheritance tax...a VAT tax but a free port for imports and exports. Their soverieng wealth fund has a surplus of $400,000 per citizen....call Art and tell him it doesn't work.
When did I say the Soviet Union was an economic utopia? I just said they basically had a 100% tax rates and an ecomony producing taxes, which proves one of the laffer curves assumptions wrong. I am not advocating a soviet economy. Sorry you are confused. Unless taxes are exceptionally high, cutting them will only increase deficits. Compare California (high state income tax) and Nevada (no state income tax) California has a huge population and if it were its own country would be the worlds 8th largest economy. Nevada is essentially a wasteland, obviously something other than tax policy drives economys. 5yr
Sytrader...it that was the extent of the point you were making then the point is stupid and petty nit picking that avoids the substantial reality.