Taughannock Falls

Taughannock Falls
from: althouse.blogspot.com

Saturday, November 13, 2010

A fundamental misunderstanding

One reason that the Republicans, and their big-money backers, still find support for cutting taxes on millionaires and billionaires is that the super-wealthy have been branded as "job-creators." The problem is that the description doesn't match the reality. Sure, sometimes the big corporations and super-wealthy create jobs. For example, a new Home Depot may be built in a suburban shopping plaza. People can get jobs there (albeit with low-wages and little or no benefits). Dig a little below the surface, however, and the picture is less straightforward. Home Depot is a huge chain with powerful purchasing power. They have used this power to force suppliers into cutting production costs on tools, lamps, lawnmowers and thousands of other items. Many of these suppliers have responded to this pressure by outsourcing jobs to low-wage countries. I can remember a revealing conversation I had with a Home Depot clerk who explained he used to work for the company that made the saw I was examining. "It was nice getting good pay to make a good product. Now I'm making peanuts selling stuff made overseas." So many working people have lost decent jobs that they'll even take crap jobs, often with their hours deliberately limited to fall just shy of receiving benefits. Of course we shouldn't forget that Home Depot won't be re-investing its profits in the local community, unlike the four small, family-owned businesses it will push into bankruptcy.

But what of the individual plutocrat, doesn't his spending stimulate the local economy? Consider the heir of an industrialist fortune, who conspires with Wall Street looters to move production overseas and sell off the family firm's assets for a quick profit. He may move to a tropical island, but even if he decides to maintain a country estate near the old factory town, so what? Are the thousands of people devastated by the collapse of local industry supposed to cheer because Phineas Bigbucks employs a half-dozen domestics to staff his mansion?

In short, creating jobs is something the super wealthy will do if, and only if, it suits their own interests. High unemployment rates mean lower wages, so these "job-creators,' actually have very little interest in creating many jobs. Of course genuine small-business owners (not billionaires) do have an interest in restoring American prosperity. A car-dealer, or furniture store owner, needs gainfully employed customers. Paying a slightly higher rate on the income earned over a quarter-million dollars would not hurt these people in the least. In fact, if anything, this modest raise on profits kept as income could spur people to re-invest more money into new hiring and business development.

1 comment:

peldark78 said...

I don't see why we don't have big WPA style programs to get people to work. If not now, when?