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Friday, October 7, 2011

Taking Wall Street

In the park

Demonstrators from Occupy Seattle lined the Westlake Mall. They were sunning themselves, having a nice time...and frightening some people. The signs they held said things like “Down With Capitalism” “End Corporate Greed” and “Tax the Rich.”

They crowd seemed to be mostly young, smart and far left. Mostly they wanted an exciting way to spend the afternoon, Some wanted gainful employment. They blamed companies for not hiring them, although that is a bad attitude to take to a job.

But the “occupiers” raise a valuable question; Why aren't American companies hiring? The per-fabricated answers about rich corporate greed are surreal. The actual cause is this administration has sucked the life out of the private sector with their massive spending spree.

Every dollar the government spent came from the private sector and therefore was not available to make private loans to private companies. Companies need cash for liquidity, buying raw materials, and hiring. They have to borrow money for those reasons, same as anybody. Money for loans was available overseas, so that's where the jobs went.

The only way to start job creation in the US is to cut federal spending. Proof of this is the fact that the Republicans resisted giving Mr Obama his massive federal $447 billion debt-laden “Jobs” package. Despite this employment is up last month anyway. By working to reduce federal spending and federal debt, the Republicans managed to create jobs. Its not magic, it good economics.

Governments are great wasters. Who else engages in war? Everything a government does is at somebody else expense, there is no felt need to conserve resource. Government waste, in money or human lives, goes on.

Corporate Greed?

Greed is a human motivation. Maybe the complaint is all humans are greedy. Being made up of humans, corporations have no more than their share of greed. But as to why corporations are not hiring many people, we should consider their motivation is to make money, just the same as their employees. Weirdly, it is corporate greed which puts people to work.

But the corporations don't hire... enough. Why?

First, there is a monster tax coming on employees. “Free” health care has to be paid for. Mr Obama and his Leftist cohorts in Congress added taxes so employers would pay around $4500 more, per employee, per year. An up-front cost of $4500 per hire gives corporations some pause.

The self-employed face the same taxes. So many workers who thought they dodged the tax increases face a nasty surprise.

The second difficulty has already been touched upon. Credit and loans have been hard to get due to the credit crunch. To add to the misery, the administration made extra rules to make it harder for lenders to collect. What cash was available, the government sopped up. Thus every company has a cash crunch going on. Many face the decision to lay off people or not make the payroll.

But what about record profits? Companies have had to become internally supporting; they can't get loans anymore. Less-critical jobs were cut in order to build up a supply of cash required to make tax payments. Some manufacturing jobs were cut and sent overseas usually because of regulations, usually via the EPA, which reduced productivity. Worker productivity had to increase in order for the company merely to survive.

Profitability had to increase for two reasons, companies have to internally fund what they used to be able to get from banks. Companies must carry more cash than before. Secondly, much of that apparent surplus is going to go away as soon as all of Mr Obama's new taxes kick in. High unemployment is a result of new taxation, not profitability.

Tax the rich

There is a persistent sour attitude toward wealthy people that makes no sense. In a free market, a successful person can be copied and all the copycats get richer. There must be a nasty twist on schadenfreude which makes people complain about the wealthy. Anyhow....

I examined Forbes listing of the 400 richest Americans, then checked their political affiliation (Its easy to do. Forbes provides the links.). The top 4 were solid Democrats, then the list becomes a mix. Overall, its fair to say that “the rich” in America do not devote themselves to one party or another.

Which means neither the Democrats nor the Republicans are likely to start taxing people just because they are rich. Members of each party realize there is not enough money in the rich to cure the national debt problem, so instead they curry favor with the wealthy. The Democrats talk about taxing the rich more than the Republicans, which suggest the wealthy Democrats suffer from battered spouse syndrome.

1 comment:

Anonymous said...

Marchers all have i-phones. Everyone works for Obama. All of them are greedy pigs. I worked to build my job from nothing. They want to smash me with taxes and debt so they can have their stupid opinions. Greedy Demotrash.