Dragon
Senior Member
- Sep 16, 2011
- 5,481
- 588
- 48
I'd be more than happy to respond to your nonsense, Dragon.
Thank you.
First of all if the government removes capital from the top earners, those top earners cannot use that capital to create jobs. That hurts all those below them in the economic pyramid.
Your assumption here, which is incorrect, is that just because capital CAN be used to create jobs, it WILL be used to create jobs. In fact, that is only true to the extent that consumer demand exists for the products or services which those jobs would produce and bring to market. Otherwise, there is no return likely on the investment and it will not be made. To the extent that capital exceeds this threshold (and it ALWAYS does to some degree), it may be taken in taxes without any damage to the economy and even, depending on what the government does with the money, most of the time with a net economic benefit.
Jobs are created by the private sector.
Jobs may also be created by the public sector. So unless you mean no more by this than the bare statement, i.e. unless you had no intention to imply an "only" before "created," you are mistaken here as well.
Consumers cannot consume until someone MAKES something to consume. A business person has to decide that there is a potential demand for a product or service...invest capital in order to produce that product or provide that service...and then cross their fingers that they've figured correctly and that consumers will purchase their good or their service. Consumers are not the job makers. Jobs are made by the person that risks capital in hopes of making a profit.
Your first sentence is true, but trivial, and you are drawing a false conclusion from it. Consumption cannot pre-exist production, but demand does and must. That is, there must be money in circulation, and desire to buy (at least potentially), or no production will ever take place at all. A business person does not make that decision that goods or services may be profitably sold in a vacuum or as a wild guess. Either the product or service is already established and on the market, or else it's a new and innovative product. In the latter case, the business person is only likely to make the investment and take the risk to the extent there is money out there to be spent, which he can reasonably hope to divert from other purchases based on a perceived need or desire for the innovative product. If unemployment is high and most people are broke, there is no way that demand will exist for the new product no matter how desirable it is, and business is less likely to take a risk.
Investment in job-creating ventures is ALWAYS driven by consumer demand.
If we were to raise our top marginal tax rate to 90% what little growth we are experiencing would vanish like a puff of smoke in a stiff breeze and we would instantly go back into a severe double dip recession.
Why, then, did we not experience prosperity vanishing like a puff of smoke when we HAD top marginal tax rates that high?
Suppose that, in addition to the tax, we also enacted a complete dollar-for-dollar deduction for all investment in manufacturing or services that created jobs, but NOT for investment in financial instruments or other money-shuffling schemes that produce no real wealth? Would that not drive into productive investments capital that is now being unproductively invested, in order for people to avoid paying such high tax rates?
You have to lower the top to lift the bottom? Come on, that's ridiculous.
No, it's not. The reason, again, goes back to consumer demand, or more precisely the ratio between demand and productivity. Which is dependent on the ratio between wages and productivity. If wages don't keep pace with productivity, then the ability of the economy to absorb what is produced declines and eventually causes production to fall and the loss of jobs, which causes a loss of general prosperity. But if wages DO keep pace with productivity, that causes a drop in profit margins (because costs of business are increased with higher wages) which reduces income gains at the top.
We can either encourage the amassing of great wealth on the part of a few individuals at the top of the tree, OR we can encourage widespread prosperity and a strong middle class. But we can't do both, because those ends are conflicting.
As for when pay rises? Pay rises when business is good and there is competition for the best workers.
That's not always the case, and moreover it's not always the case that when business is good there is competition for the best workers. Or even when there is, that still isn't enough for full employment. It's not enough for the BEST workers to be decently paid; in order to have a healthy economy it must be the case that ALL workers are decently paid, while the best workers are better paid still.
It really helps to go back to the period when our economy was strongest -- 1942-1973 -- and look at how things were done then. Many of the factors that conservative economics insists are bad for the economy (high taxes on the rich, government regulation, strong labor unions) were in place in those days, and the economy far outperformed what it has done since those factors were changed.
You seem to think that if you just legislated pay raises for everyone that the economy would take off.
I didn't say that, did I? I believe in more market-based solutions for the most part, such as encouraging the formation of labor unions, and then allowing the increased bargaining power of labor to keep wages high, rather than having some bureaucrat impose high wages by fiat. I make an exception at the bottom because of the extreme difficulty of organizing very low-paid work, so I approve of minimum-waqe laws, but would not like to see the government dictate wages at all levels of the economy directly. I believe there are better ways -- which are still, nonetheless, liberal ways.
Employers will always pay employees more when they risk losing those employees to someone who WILL pay them more. That's how the free enterprise system works. If I have a great employee who's incredibly productive and I DON'T compensate him or her? I run the very real risk of losing them to my competition.
This is true, but while it can have an impact on differential pay for different employers WITHIN the overall labor market, it has no effect on the labor-market baseline. You are not going to be able to arbitrarily pay someone less than market scale, or indeed you risk losing him to someone who will pay more. However, that factor does nothing to raise the share overall going to labor as compared to capital, and the imbalances we see today in that are what is hurting our economy.