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- NYTimes.com
There's a lot of finger pointing going on right now, after massive
bailouts and government spending has failed to translate into new jobs.
But as the above quote suggests, there's certainly one place to point
it. Corporations are still seeing substantial growth in profits even as
the job market continues to shrink. Why is this? In part it's because
they're hoarding what capital they have (which, not incidentally, often
includes the public dollars we spent to bail them out). But rather than
reinvesting this into the economy, they're protecting profits by
cutting costs - especially workers. Fiscal conservatives look at this
like an austerity measure. The shedding of workers is just the
proverbial "tightening of the belt," that we all need to do in lean
times. Another way to look at it is that hoarded capital is capital
which is not being circulating in the economy. That means that in order
to create the liquid capital needed to get money moving again, the
government has to print more of the stuff - which of course, devalues
the currency and more or less defeats it's own purpose. Now, I'm no
economist, but this looks to me like a damn fine argument against
letting the Bush tax cuts expire. Tax hikes on the very corporate
profits (i.e. hoarding) that's helping to stall job growth can and
should be redirected to state and local governments to prevent those
jobs from being lost as well. It's basic Keynesianism (which I know
will irritate some people no end). When the economy contracts, private
sector corporations - the ones who control most of the capital - begin
hoarding by cutting costs and shedding jobs. This lowers demand which
induces further hoarding, etc, etc. To make up for this, Keynes argued
that the government should make up for it by expanding it's own work
force to compensate, thus keeping people employed and demand stable. If
the federal government can't do this, then that tax money should go to
the states where it can protect libraries, schools, police and roads.
These things create jobs. And while I'd always prefer the private
sector to be the job creators, the reality is, right now, they aren't.
And if they aren't who will be? This is something we need to keep in
mind when people start arguing against any and all forms of taxaton. Of
course people out of work and small business don't need more taxes when
they are struggling. But corporations are not struggling - they're the
reason you're struggling. Try to remember that the next time some one
tries to scare you with the tax hike boogieman.

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