Big Rocks for the 'economic jar'

[muck]

You've heard the analogy before ... put the big rocks in the jar before the small rocks ... and put the small rocks in the jar before the sand ... and the sand before the water. If you do it in the wrong order, you'll never get the big rocks in the jar.

 

So, with that, I give you a missive from a newsletter I get:

 

Business Community Wonders When Congress Plans to be Helpful

The US economy is in a mess and if you didn’t believe that before, the stories from today’s issue of the (newsletter name) will probably convince you. The Fed and the financial community are engaged in bail outs and rescues and as bad as all this looks, there will be a day when the tide turns. The real question is what the economy as a whole needs to advance and here the blame can be squarely laid on the politicians. In the last week there have been some quietly aggressive statements coming from the likes of Bill Gates, Warren Buffet and the leaders of the manufacturing community. They all have some basics in common – address the infrastructure, taxation system and skills issues if you want the US economy to rebound. Thus far Congress has dropped the ball repeatedly and judging by the rhetoric that is dominating the campaign season there isn’t much hope they will reverse course in the near future.

 

Analysis: There are many issues but the top three seem to be taxation, employment rules and infrastructure development. The majority of business in the US is small business and they are consistently slammed with taxes and regulations that cripple their development. There remains a notion that corporate taxes will simply pull the fat off these big companies but in reality the corporate taxes paid by the very largest are simply passed on to the consumers while small business takes the brunt. The issue of employment is key to the tech community – limits of H1B visa applications makes certain that foreign nations get the talent and that US companies have to move overseas to get the people they need. The failure of the education system nationwide to value manufacturing means that there are fewer skilled people coming into manufacturing. The failure to develop the infrastructure in transportation, power generation and others limit expansion as well. The solutions can’t come from the politicians but the inhibitions can certainly be lifted and at some point there really should be the debate over what can be done to reverse current economic trends.

[The Irish Doggy]

Sweep the leg. Get 'em a body bag.

[Beaumont]

Warren Buffet has been very consistent over the past four years calling for higher taxes on large corporations and the wealthiest americans.

 

He endorsed Hillary Clinton on exactly this point ... emphasizing that he paid 17.5% in taxes and his secretary paid 30%.

[Beaumont]

http://www.washingtonpost.com/wp-dyn/conte...7062700097.html

 

As one of many examples ...

 

http://www.commondreams.org/headlines04/0306-01.htm

 

http://abcnews.go.com/GMA/story?id=3869458&page=1

 

His most recent comments:

 

Relative to GDP, government taxation is 18.5% and spending is 20%, so we borrow the balance. The national debt should not be a scary topic and the fact that it’s gone up is fine as long as it’s proportional to GDP. Where do we get that 18.5%? There’s 2.7 trillion in government revenues. 2.2 trillion comes from individuals, and less than 1% of that comes from the estate tax. 1.1 trillion comes from income taxes, with payroll taxes consisting of 900 billion, but it’s capped at the first $100,000 of salary. We want a tax system that encourages greater prosperity, but it needs to take care of the family.

 

We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%, and my cleaning lady paid 40%. The system is tilted towards the rich. The Forbes 400 total net worth has gone from 220 billion to 1.54 trillion, an increase of 7-to-1. You see in legislature that there is lobbying carried on by the powerful over issues such as the estate tax and carried interest for private equity investments. We need to flatten income and payroll taxes, and those making under $30,000 shouldn’t be bothered.

 

Let’s imagine that 24 hours before you are born, a genie comes to you and tells you devise a social and economic system. The only catch is that after you designed the system, you would choose a paper from a barrel which would determine your demographics. What objectives would you want? You need to devise a system that creates prosperity. It needs to be a meritocracy, to put the right people in the right place. It needs to have a strong education system, and throw off lots of goods and services. It also needs to not discriminate against women or minorities. Even though the per capita GDP is $47,000, 20% of the population makes less than $20,000. We need to eliminate that fear of sickness or old age. A tax code is the codification of a country’s values. But you can’t kill the golden goose of prosperity.

[yo mama]

http://www.washingtonpost.com/wp-dyn/conte...7062700097.html

 

As one of many examples ...

 

http://www.commondreams.org/headlines04/0306-01.htm

 

http://abcnews.go.com/GMA/story?id=3869458&page=1

 

His most recent comments:

 

Relative to GDP, government taxation is 18.5% and spending is 20%, so we borrow the balance. The national debt should not be a scary topic and the fact that it’s gone up is fine as long as it’s proportional to GDP. Where do we get that 18.5%? There’s 2.7 trillion in government revenues. 2.2 trillion comes from individuals, and less than 1% of that comes from the estate tax. 1.1 trillion comes from income taxes, with payroll taxes consisting of 900 billion, but it’s capped at the first $100,000 of salary. We want a tax system that encourages greater prosperity, but it needs to take care of the family.

 

We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%, and my cleaning lady paid 40%. The system is tilted towards the rich. The Forbes 400 total net worth has gone from 220 billion to 1.54 trillion, an increase of 7-to-1. You see in legislature that there is lobbying carried on by the powerful over issues such as the estate tax and carried interest for private equity investments. We need to flatten income and payroll taxes, and those making under $30,000 shouldn’t be bothered.

 

Let’s imagine that 24 hours before you are born, a genie comes to you and tells you devise a social and economic system. The only catch is that after you designed the system, you would choose a paper from a barrel which would determine your demographics. What objectives would you want? You need to devise a system that creates prosperity. It needs to be a meritocracy, to put the right people in the right place. It needs to have a strong education system, and throw off lots of goods and services. It also needs to not discriminate against women or minorities. Even though the per capita GDP is $47,000, 20% of the population makes less than $20,000. We need to eliminate that fear of sickness or old age. A tax code is the codification of a country’s values. But you can’t kill the golden goose of prosperity.

What, are you trying to turn me on, or something?

 

All joking aside, tax reform is almost impossible to discuss for one main reason: most everyone wants changes that primarily benefits themselves. Buffet's theme about designing a system that would be fair if you pulled your socio-economic status out of a hat is, but that doesn't kill the golden goose of prosperity, is well taken.

[Randall]

Warren Buffet has been very consistent over the past four years calling for higher taxes on large corporations and the wealthiest americans.

 

He endorsed Hillary Clinton on exactly this point ... emphasizing that he paid 17.5% in taxes and his secretary paid 30%.

 

 

 

Many CEO's did the same when corporate gains was debated. Several said the economy is more important than personal gains. Some people think they are rich because of themselves rather than they are wealthy because of our country. Their allegiance isn't to the US, but to themselves and money.

 

People like Buffet have better priorities. Don't kill the golden goose.

 

 

(Buffet)It isn't just tilted toward the rich but tilted toward the investment class and against those who make a living by working. Investing can be work too, but there shouldn't be separate classes for taxation purposes.

Edited March 18, 2008 by Randall

[polksalet]

Buffet and gates have been rich so long they have forgotten what it is like to be poor. That is why they spout these idiot theories.

[wiegie]

in reality the corporate taxes paid by the very largest are simply passed on to the consumers while small business takes the brunt.

I would like to see evidence of this instead of a mere statement of it as a fact. I see no a priori reason why this should be the case. (Why is the ratio of price-elasticity of demand to price-elasticity of supply higher for smaller firms than for larger firms?)

 

The issue of employment is key to the tech community – limits of H1B visa applications makes certain that foreign nations get the talent and that US companies have to move overseas to get the people they need.

I agree--the US should do a lot more to ensure that it continues to attract the brightest people from around the world.

 

The failure of the education system nationwide to value manufacturing means that there are fewer skilled people coming into manufacturing.

You can blame part of this on the educational system--however, you must also consider that one major reason that people aren't going into manufacturing is because they perceive very uncertain future job prospects in manufacturing. Would you choose a career path in which you knew at seemingly a minute's notice that your job could be shipped overseas and that you would be basically left in the cold by an economic system that says "well, that's the way the free-market works". If you want people to go into skilled manufacturing, you had better give them some sort of assurance that the will have reasonable expectations of either job security or of a safety-net that will take care of them if their jobs go away.

 

The failure to develop the infrastructure in transportation, power generation and others limit expansion as well.

I agree. Edited March 18, 2008 by wiegie

[wiegie]

 

Buffet's theme about designing a system that would be fair if you pulled your socio-economic status out of a hat is

Sounds like it is based on a Rawlsian Theory of Justice (something that I am pretty partial to).

[westvirginia]

I would like to see evidence of this instead of a mere statement of it as a fact. I see no a priori reason why this should be the case. (Why is the ratio of price-elasticity of demand to price-elasticity of supply higher for larger firms than for smaller firms?)

 

I agree--the US should do a lot more to ensure that it continues to attract the brightest people from around the world.

 

You can blame part of this on the educational system--however, you must also consider that one major reason that people aren't going into manufacturing is because they perceive very uncertain future job prospects in manufacturing. Would you choose a career path in which you knew at seemingly a minute's notice that your job could be shipped overseas and that you would be basically left in the cold by an economic system that says "well, that's the way the free-market works". If you want people to go into skilled manufacturing, you had better give them some sort of assurance that the will have reasonable expectations of either job security or of a safety-net that will take care of them if their jobs go away.

 

I agree.

 

:divingboard: