Economic Badness

[hwc]

We may be out of the recession (in that gross domestic product is no longer shrinking), but with a growing population, people delaying retirement because investments failed, and increases in productivity (GDP-per-worker) unemployment rates will continue inching upward. The stimulus package was not big enough to return us to full employment. So

Comments

Re: Questions for clarity, and understanding

[hwc]

> ...Justify your position provide evidence...

I'm not sure how. Just this thought experiment: Why do they accumulate dollars instead of buying American goods? If American goods are really too expensive, wouldn't that cause the dollar to weaken through the mechanism of supply and demand? On the other hand, if they wanted invest in America because we are perceived as stable, that would cause the dollar to strengthen. What actually happens? Foreign banks accumulate American assets and the dollar remains strong. ...and Americans lose exports.

> ...rich from leaving the USA and not paying any of the taxes...

We've had higher taxes in the past. Most of the rich didn't leave then. Even with taxes low now, too many find ways to launder their incomes to shield it from taxation. And I do believe that a top bracket much larger than around 50% is counter-productive; so I'm not talking about the 90% we had for decades during and after WWII.

>> ...will increasing the tax burden on the USA industries lead to the creation of jobs...

Good question. Do we *need* to balance the budget? As long as we have willing buyers for treasury bills at low interest rates, the answer is no. But there is no reason to believe that situation will last. When we hit full employment, we will need to balance it because doing so will keep interest rates and inflation down. High interest rates discourage job growth. And inflation tends to push real wages down. So federal budget deficits have a indirect, but real, cost---when we're at full employment.

Re: Questions for clarity, and understanding

[voland]

WW2 is a very difficult historical example Hal. Were would you immigrate to in 1939? Other that the USA was there any place one could potential expect to be better off? I would have gladly paid a 90% tax on my wealth to spend the ww2 years in the US, had I been around at that time. Also without seeing some numbers, I can not agree that the rich paid 90% tax rate. There had to have been ways to avoid taxation.

What I am trying to understand is why do you think that the upper income people should pay more in taxes?

As for my second question. You avoided answering it. Historically, there is a certain economic truism (low taxes = industrial growth). If you need to create jobs, give businesses a tax break, and they will employ more people.

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"Why do they accumulate dollars instead of buying American goods?"

For many years the US dollar was the de facto international currency, used as a reserve. This was largely based on the perceived stability of the US. I do not think the above is true anymore. We must adopt and adopt rapidly to this reality, failure to do so will be fatal. If we want to be exporters again, we need to drastically lower the price of domestic manufacturing.

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Going forward, I think that the entire model of taxation/wealth redistribution is flawed and will probably fail. If we go your route I.E. Stimulus by the omnipotent fed.gov, It will be a vicious circle: You need jobs to produce taxes, but you need taxes to produce jobs...