Week 7 Blog Topic: Economics
This will be the last Economics topic for the summer. School starts in four weeks! I am sure you are just as surprised as me that the summer has gone so fast.
The weeks topic is more general than previous weeks so there may be many answers. As voters get ready to consider their choice for President of the United States of America (POTUS) it is natural to think about what the most important issue of this campaign is. For many voters it is the state of the economy. There is NO single indicator of what makes a healthy economy but several KEY indicators include the unemployment rate, change in GDP, new housing starts, and price index. There are multiple other factors that can be examined as well.
The mystery is how to improved these indicators and initiate economic growth. Throughout the 20th Century there have been two basic economic approaches as far as the government is concerned: Deficit spending or Free market economics (which can include some help on the supply side). These two approaches have been explored and promoted by two prominent Economist, Fredrick Hayek and John Maynard Keynes.
What do you think is the right approach in today's world. Democrats tend to favor job creation, high taxes on the wealthy, and protectionism for American manufacturers, while Republicans are more likely to approve tax breaks to corporations with the hope that new profits will lead to job creations, increased trade, and incentives for private business and individuals to expand their business. Both approaches, when implemented correctly can lead to economic growth.
Use the links to below to familiarize yourself with each approach, IT MAY BE HELPFUL TO FIND A FEW OTHERS, and give a description of how your might approach improving the US Economy. Make sure to explain what impact you hope your plan would have in the SHORT and LONG run.
For fun check out this youtube video highlighting the differences between two very important 20th Century economist. http://www.youtube.com/watch?v=d0nERTFo-Sk
HELPFUL LINKS:
In order to commence economic growth there are three main steps in allowing the country to flourish once again. First is to construct the Keystone pipeline. This would help the economy right now by providing thousands of Americans with a job. In the long run however, the US would save money by having fuel from inside the country rather than looking to another country and spend more money that is non-existent. Second is to cut unneeded government jobs and departments. If this is done we will have that much more money going to more important things, and in the future will help reduce the trillion dollars of debit America is in right now. Lastly, many political figures suggest taxing the rich more than those in poverty. But raising the bar of taxation should be raised to anyone making between seven hundred thousand to one million a year or less should have a tax decrease, anyone above increase the taxes. This would help right now for any small businesses that are close to blossoming that can’t afford to pay high taxes have money to give to new employees, allowing the business to grow. This helps in the long run by those small businesses able to expand and begin to be a chain therefore creating jobs for the future too.
ReplyDeleteThe pipeline building would only hurt the US in the long run. In the current global world the Middle East could explode any day in to World War III and all the oil would stop being exported or would increase drastically in price. With that the US would have no way to fuel the country for a substantial time if the need arise if we were to use the large reserve because the unemployed people can't pay for gas to put in their cars. And with laying off government workers, that just increases the problem as more people are out of jobs. Yes there are other places for them to get hired but there are indeed not enough job opportunities in the US right now and the government has placed these odd jobs there to keep the American people employed. These salaries have often been funded by a higher taxation on the successful people of the American populous. By raising taxes on the rich even more the government is in fact PROMOTING poverty, if you make less and live harder we won't take as much from you. In the Declaration of Independence the forefathers spoke of equal and equal opportunity, higher taxes on the rich does not promote equal opportunity, it in fact punishes people who worked to achieve what they could and punishes them for taking the opportunities this country offers them and making a comfortable living off it. Not building the pipeline is a smart move for the future defense of our country, these government jobs provide hard working Americans with job opportunities they deserve and have been exploited from in the private sector, and raising taxes on the rich punishes Americans for working to achieve something and for dreaming and utilizing the freedom given to them by the Americans who have died in numerous freedom defending conflicts since even before the Revolutionary War and undermines the Bravery of our forefathers to stand up for what is right and for the freedom of Americans for all times.
DeleteTaxing the rich more and the poor less is going to do nothing but make the economy worse. People that are just starting out their careers are going to ask themselves "Why am I going to work hard to get a good job and strive to make a big salary when the government is just going to take away more of my money?" People are going to want lower-end/mediocre jobs because they will be taxed less. Now you have a country full of people going no where with their life because they are afraid of high taxes. In my opinion, income tax shouldn't even exist. That is the money you earned from working, the govenment shouldn't take that away from you. Realistically speaking though, since there is an income tax, it should be the same rate for everyone that way its fair and equal. The poor might complain saying its unfair how the rich are rich but this is the United States, everyone has an equal opportunity to be rich. Its the poor's own fault for being poor.
DeleteI agree that the price of fuel is a huge issue for the economy, but America uses more fuel and oil than any other country. We will always be dependent on other countries for that resource. We also must remember that fuel is finite. Alternative resources for fuel will be essential and could save a lot of money.
DeleteAddressing James, most people would not decide to relinquish to lazy principles and not strive to become wealthy for the sole reason that the government is taking your earnings away. A motive to become wealthy will generally remain regardless and people would not be inclined to have the attitude of settling for a mediocre job.
DeleteAlso addressing James, the average middle class person has a 25-30% income tax while most of the rich are taxed in the teens. Increasing taxes on the rich would actually be more equal. Furthermore, Aria was referring to increasing taxes on those making a million dollars a year, anyone under this threshold would still live a very comfortable life and I don't believe that people would lose motivation to be successful because success is not defined by if you make millions of dollars or not.
DeleteNikki and Nicole, I'm mainly talking about taxing the rich to the point where its bringing the wealthy down to the same income as the poor. I'm diasagreeing with the idea of taxing the rich to lower the income gap between the rich and poor.
DeleteAlso Nicole, its not true that the middle class get taxed more than the poor. Currently, the more money you make, the more you get taxed. -http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html
Both the Republicans and Democrats have good believes on how to fix the economy while having bad believe on how to help fix the economy. I believe that cutting taxes for job creation, and increasing trade helps. On the other hand i strongly believe that cutting taxes will hurt the economy. Cutting taxes will not just hurt the economy but it will also cause the government to pull in less taxes than normal. This is because if a Entrepreneur wanted to start a new business, but the taxes were to high, this might make the Entrepreneur not want to open the new business. Business in america are very good for the economy. Another way to tell high taxes are bad is because they do not promote spending but rather promote not many profits to be made. For example, say a person had some extra money and wanted to buy a movie ticket. Since the tax on the ticket is to much, the potential customer decides he better save the money and not see a movie. Since the taxes were high, the movie theater made no money and so didn't the government. If taxes were cut, new business would start and extra things like the movie ticket would be purchased. In return money would flow more easily through the economy instead of being saved. This would create jobs since new business needed employ's. Since money is flowing at a greater rate through the economy, then more taxes are being payed.
ReplyDeletewww.moneynews.com/FinanceNews/Tax-Cuts-May-Fuel/.../379244
www.dailykos.com/.../-10-Things-Republicans-Don-t-Want-You-to-.
I really like the points you made. Especailly about the contrast of tax raises and Entrepreneurs. Also, the point you made about the movie ticket taxing was one I hadn't thought of. Many people now would rather stay at home then go see a movie. But this is bad for theater sales because they loose the money from the ticket but also any food or refreshments inside because those prices are high too.
DeleteI've never really liked the idea of tax cuts until just now. In truth, I support a raise in taxes, particularly for the wealthy, but what you've said about how a simple tax cut can influence small transactions like movie tickets actually makes sense. Tax cuts and raises are a big issue, but as I realize now, even more so on a smaller economic level.
DeleteThis is a really unique way of looking at taxes, both on a small and a large scale. It's so true that people will stop spending if it's costing them too much, which would create a pause in the flow of money. I believe a tax cut all around would be the best solution. People would have more money to spend with businesses and put back into the economy.
DeleteIt's natural that people act in self interest, without consideration of humanity at large. People react to the market and the market reacts to them, creating the boom/bust cycle with which we're all familiar. This is what happens in a free market, and making it more free won't stop it. When people trade voluntarily, i.e. when they spend, everyone gains. A government seeking to improve an economy should therefore focus on increasing spending. This is commonly achieved by increasing social programs, initiating public works, investing in new infrastructure, and cutting taxes across the board. The time for encouragement of the private sector in not a bust, but a boom, when the government should be increasing taxes & cutting spending to pay off the hefty debt it accrued during the previous bust. At this point, where it is in the private sector's best interest to help expand the economy, the gov't should be doing as little as possible.
ReplyDeleteHowever if nothing is done now to control the increasing debt then how are we ever supposed to make up for it during the next boom? Then with this extra large debt the taxes increased to get more of that money take away from the American people and they do not get to experience the boom. During the bust is the best time for the federal government to budget. If you are considering them cutting spending by moving some government jobs into the private sector I understand but I don't agree that we should just sit around and wait for a boom to encourage the evolution of the private sector
DeletePerhaps I was speaking too generally, because I agree, the current level of spending is wildly unsustainable. However, with taxes already having been cut to a bare minimum, I fail to see any way to help the private sector other than encouraging people to buy things.
DeleteTrace,
DeleteCan you explain how you would go about cutting taxes across the board while increasing social programs, initiating public works and investing in new infrastructure? Where will the revenue come from? Also, if taxes are cut consumers will have more money to spend clearly but how can the government direct that spending into the most efficient places and how can the government insure that consumers won't simply save their surplus income in the fear of another recessionary period?
The revenue comes from the same place the deficit always comes from: loans. Governments aren't people, they can get loans ("sell" bonds) at such low rates that it's stupid not to.
DeleteIf the gov't finds that consumers' money would be best spent on certain things, they could lower sales taxes for those things and/or subsidize them, like it's now doing with solar power, among other things.
I believe that in the current situation the most ideal thing would be to bring jobs back to the US. The country needs people to start spending again and the people therefor need money to spend which means they need good paying jobs. Now with bringing jobs back to the US some may argue that the higher salaries demanded by workers would raise prices of goods more thus making the people spend less and the companies have to lay-off all those workers they just hired. This scare would only be for a brief period, in the current situation these prices seem to high because the people of the US do not have any money as they do not have jobs or they are getting scammed due to the poor selling performance of their company. By bringing jobs back to America yes for a brief period things would look worse as with the new hires the prices have risen to compensate but the newly employed have not had the time to save up and accumulate money. Once the people accumulated this money the prices would (proportionately) be close to the same now if not (proportionately) lower. The thing that would be brought back though is the much needing spending. The true Americans that refuse to buy foreign would have a much wider spending market and the careless bargain hunters would still find satisfactory prices with their new salary. Now promoting the large corporate whigs to do this is not the simplest of tasks, however the best tactic to taking down and controlling these greedy savages is to take by the seat of their pants; I don't mean just grab them and do it I mean the back pocket where their always hungry wallets linger to exploit anyone to fatten themselves up. To control them there should be a very large tax placed on any foreign import that has put American citizens out of a job. This tax should be large enough to more than offset the difference in price that would be necessary to offer the Americans a fair wage. With a large tax on foreign goods we are not closing out international commerce such as through a boycott and these taxes could often be paid for by foreign companies or governments thus also benefiting the deficit in the US right now as a large part of the debt can be funded by foreigners taking a larger burden off the American public; by no means do I believe this would solve the issue of the federal deficit but I do believe it is a very smart decision for the US to make as it really has some benefit in almost all major fields of the American Economy. It promotes spending; provides jobs; reigns in greedy private sector exploitation; and even helps alleviate the debt crisis. This is by no means a solution to our debt or an end to our recession and possibly a depression, but it is a very strong first step that would set a bold standard and set the foundation for new policies to further improve the national economy.
ReplyDeleteI completely agree bringing jobs back to the U.S is an ideal strategy. I also agree with the point you made on how the people who were just hired would need to save up in order for prices to drop. I enjoy how you made the comment of placing a higher tax on foreign imports, I believe that placing this tax raise would help promote jobs for American citizens.
DeleteI'm so glad you mentioned taxing foreign imports! It's about time that America started relying on its own American businesses and inventions instead of supporting foreign economies and science programs in booming independent countries like China.
DeletePersonnaly, i believe that there are jobs everywhere in the united states and that you just have to look. It is just that people are unwilling to downgrade jobs. I know that downgrading jobs might make things harder but it show there are still jobs. For example, to get a job all i had to do was keep in touch with a store manger by visiting the store every so often. Eventually i got the job. Even if there was not any jobs then people without jobs could create their own ways to make money. I did this when i was fourteen and am still doing it on top of my job at Albertsons. Since i was not old enough to work, i started a window washing company. This was a great way to earn money. I would earn at lowest thirty dollars an hour and seventy five dollars at least but since i was sort of lazy and disliked the advertising, i did not get many jobs. It is diffrent with everyone but these are just a small examples.
DeleteProtectionism is never a good idea. Best case scenario you break even, but usually you end up with dead weight. Free trade benefits everyone involved, and, in the long-term, results in more jobs for both parties. This is because economies all have comparative advantages. The nations to which American corporations commonly outsource are willing and able to perform low-skill tasks for low wages. As America allows those nations to perform those tasks and focus on industries where it has an advantage, we will become better off in every way. In the mean time, I agree with Neil; having a higher education isn't a guarantee that you'll get to use it.
DeleteIf you put a large tax on foreign imports you have to consider how much of our products are through foreign trade. I believe that you would have to ease into the tax if possible. Taxing foreign tade will effect the majority of markets in a negative way. Which I do not blieve will solve any problems at the moment
DeleteI definitely agree that we need to bring jobs back to the U.S. and keep as much money circulating within the country as possible. However, a large tax on foreign goods is not ideal in today's world. It would maybe help us in the short run but damage us in the long run. The world economy depends on free trade as Trace said, and if it were cut off by the world's current superpower, it would decline more so than it already has. I also dislike the phrase, "True Americans that refuse to buy foreign..." It makes it sound like people who do buy foreign are not "true Americans" but in reality any logical person with an economical state of mind would want to save money by buying the less expensive product.
DeleteA lot of the outsourcing that takes place today eliminates blue-collar jobs that have notoriously fueled and been the backbone of the American economy for the past century. It is no secret that automation has made assembly line positions and many of the service-based professions obsolete. With the ever expanding expanse of technology and a heightened burden of taxes on domestic corporations, I believe many manufacturing jobs will continue to disappear. Instead of pointing fingers across party lines and wondering how to get these jobs back, I believe the U.S. needs to depart from the former identity of its economy and look to what has made it a global superpower- innovation. Instead of lingering in the past, the country must maintain its edge by pioneering the world's evolution into a technology-centered society, where sources of income may prove endless. However, in order to bolster this already undergoing evolution, the government must refocus its efforts to make a college education an extremely common attribute among its citizens as this will most likely lead to having a more educated populous.
ReplyDeleteI think in order to truly put the American economy on its feet, the government needs to make education a priority. A college education might become a rare commodity if the annual cost to attend maintains its astronomical pace, seeing that college tuition has increased by 15% between 2008 and 2010. Public and private institutions alike continue to roll around in their enormous endowments while students and parents are forced to sacrifice an arm and a leg to finance a post-secondary education. Not only does this neglect many from attending places of higher learning, but also it leads to massive amounts of college debt after a degree is obtained (the current national college debt is about $1 trillion). This only handicaps the college graduate and cripples the economy as they are not able to make purchases with their new jobs because they are paying off loans. I believe the corruption in the education system is something to be ashamed of. College should not be a place to capitalize on a wavering student, but instead organizations working to make the country a more educated and better place. As a short term goal, the government should work to scale back the cost of attendance to college in order to make it a viable opportunity for all. In the long run, this will develop a new class of young professionals ready to take our country to new heights.
http://www.cnbc.com/id/40682477/
http://www.usatoday.com/money/economy/story/2012-06-13/college-costs-surge/55568278/1
I do agree with you when you say outsourcing takes place because blue-collar labor cost too much in the US. The reason blue-collar work is to expansive in the US is because it is expansive to live in the US and not expensive to live in china. Since it is cheap to live in china, labor is cheap. It would be hard to make labor cheaper in the US but there are some solutions that might encourage business owners to stop outsourcing if it is so bad. One way would to give business owners that did not support outsourcing tax cuts and business owners that did outsource would get a tax owning a overseas business. This is just a small idea that might work or might just cause a million other conflicts. What if outsourcing in the long term is healthy for our country but just appears to be negative?
DeleteI do think it would be beneficial to give tax breaks to companies fighting to keep manufacturing domestic. Nonetheless, most of these assembly line and manufacturing positions will disappear as the capabilities of technology increase. With that being said, the U.S. must adapt to the changing global economy.
DeleteYou are correct that putting a higher priority on education could be beneficial, but if more high level job positions aren't created, then we are just further educating the blue-collar work force. In addition to education, it should be made a priority to help businesses grow and expand.
DeleteI truly wish the following points would be considered in congress instead of the same old “Cut all government spending, lower taxes. Go America!” lecture. The American economy today relies too much on foreign trade, avoiding every possible threat of poverty, and living from lay-off and budget cut to the next. Essentially, it’s not all about the frivolous government spending or just how much money is being spent during the holiday seasons to give everyone “economic confidence”; so why do our present politicians assume that if we fix the government and corporations’ spending of money, we fix everything?
ReplyDeleteThe real solution lies within the distribution of wealth. We live in a nation where “society rewards labor with poverty… and cannot possibly inspire the maximum potential of work.” If America wishes to truly get back on its feet- it needs to implement factors from both Keynesian economics and Laissez-faire capitalism, among other economic strategies. To put it bluntly, America needs to work harder and its government needs to ensure that the wealth being earned is justified. I simply don’t understand why those on Rodeo Drive and Wall Street earn more than parents who work multiple jobs just to survive.
If America can try to reduce its idiotic government spending like a new soccer field in Guantanamo Bay and even thousands of dollars researching the libidos of cocaine infused Japanese quail instead of cutting out crucial education and transportation budgets, then we have a chance with beginning the rest of the process. In addition, there needs to be a balancing factor in the distribution of wealth, whether that is a tax raise or temporary cap on wealth. By doing so, more money will be spent to avoid such consequences, thus helping to set the cycle of spending in motion almost immediately. In the long run, an increase in the general flow of wealth is going to not only help more entrepreneurs and private business owners, but also those on the lower scale of the wealth index who can slowly start to find more access to employment and cheaper housing. With more Americans at work and less money being thrown away to the banks, idiotic causes and luxuries- one can surely expect the economy to begin the long journey of recuperation.
http://endoftheamericandream.com/archives/30-stupid-things-the-governemnt-is-spending-money-on
http://www.wisegeek.com/what-is-keynesian-economics.htm
http://www.npr.org/2012/01/09/144885506/how-do-gop-candidates-plan-to-fix-the-economy
If the government could cut taxes, and give its people more spending money, that would be one possible way out of the depressions. But the government would also have to cut its spending to implement such a tax cut. But there are places for funding to be cut. One such place is prisons. Rather than keeping sex offenders and murders locked up for life, they could face a death penalty, reducing prison population, and government spending there. But doing that is not as easy as it sounds. Right now in the US, it is cheaper for the government to lock someone up for life, than go through the ordeals and paperwork of its own court system to administer the death penalty. Something could be changed there, but you risk offending (liberal) Americans. Or, marijuana and other illegal substances could be legalized, and taxed to no end, with something between a 50%-100% tax rate. But there you risk offending some (conservative) Americans with the legalization of an illegal drug, and drug users with the high tax. But something needs to change so that more of the average Americans paycheck stays in their pocket.
ReplyDeleteOh, joy! I had forgotten to complain about the prison system in my original post. The US penal system has more prisoners per capita than the police state of China, has more black prisoners per capita than South Africa at the height of Apartheid, and is overwhelmingly ineffective and expensive. Fortunately, this is a pretty easy problem to solve. First, end the War on Drugs, which has done little, if anything, to curb drug abuse and has only served to fill our prisons with minor, non-violent offenders. Then, end privately-owned prisons. They get their profits by cutting corners on the safe and fair treatment of prisoners and staff, often barely meeting health standards and all-but-forcing prisoners to provide underpaid labor. After those reforms, we can improve cost and efficacy even further by looking to the EU for tips; of special interest is the Norwegian "Cushy Prison" Experiment.
Deletehttp://www.dailymail.co.uk/home/moslive/article-1384308/Norways-controversial-cushy-prison-experiment--catch-UK.html
Stopping government spending is definitely the way to go. All the things you said are great ways to stop spending but not by much. To really make a difference, the government needs to throw away welfare programs such as unemployment, food stamps, healthcare, etc. Getting rid of all these things would decrease the size of the government and help stop spending.
DeleteTrace, I agree with you about ending privately owned prisons. It sounds like you've down your research and they're wasting precious funds. And Alex, this is just my own beliefs talking, but I don't believe in using the death penalty on prisoners just to save money. I understand that this brings up a touchy topic but taking a life, no mater whose life that is, should be taken into serious consideration.
DeleteJackie I agree with you. In a paper that I once wrote for a class I deiscovered the costs of the dealth penalty. In the non fiction book I read it was (not exact numbers) around 3-4 million dollars for each conivct put to the dealth penalty. Times that by how many "should" be put to dealth tha would be an enormous amount of mone being spent. I agree that government spending needs to be cut. In the example of the prisons, in this book I read it talked about spending money on prisioners. The book gave the example that some prisions were building million dollar basketball courts. I belive that spending such as this can be cut.
DeleteI like the point you made about the death penalty in prisons.Why should money and space be wasted keeping a criminal alive who is going to die in prison anyway? While it may cost money to put a prisoner to death, I'm sure it costs more to keep them alive and accomodate all their needs. Obviously not all criminals should receive the death penalty, but people who are sentenced to life in prison evidently did something horrible to get there. A lot of money is wasted on making prisoners happy and that is something that really needs to stop to help our economy.
DeleteA way we could help our economy recover is reduce the number of outsourced jobs to other countries. If we provide people with more job opportunities rather than giving them to people in other countries, we will be able to give people more opportunities to get more money circulating in our economy. Although it is more costly to have to have these blue-collar jobs in America, I believe that if we stopped outsourcing these jobs to other countries we would improve our economy by providing more people with work.
ReplyDeleteI believe for the US economy to get back on track, we need to focus on what we really need to do with government spending. Education should be a priority in governemnt spending. To better our economy we must first better our education to help our country continue to create technological innovations in science and medicine. America has been a world leader in science and technology for quit some time and for us to continue to succeed in this we must continue to improve our education. Government spending should therefore be focused on improving education in the United States.
You are correct about outsourcing. It is a selfish thing that companies to do to save themselves a few dollars, when they could instead be helping get the economy back on track by creating jobs. Besides, it is annoying to be talking to a customer service representative and not be able to understand them because their accent is so thick.
DeleteLike most people on this blog, I agree that we need to bring jobs back into the country, to make more jobs available, and to make some much-needed changes in government spending. Government funding to institutions like prison must be cut and educational funding must increase. However, I don't believe that funding for education should necessarily be top priority over other areas that require attention.
DeleteI personally believe in lower taxes and less government involvement. There are a lot of things that to happen in order for our economy to get better but I think there are a few very important issues.
ReplyDeleteThe first thing that needs to happen is for all of our jobs to come back to America. This would employ millions of unemployed Americans that desperately need a job. The only way I can see those companies coming back to American soil is to give them incentives( such as tax breaks). Even if we do get the jobs to return, prices of items would increase because they would have to pay workers more.
The next thing is to give small businesses more incentive to hire people. Small businesses are hurting very badly. Major corporations such as Walmart are running more and more businesses into the ground. As far as I'm concerned Walmart OSA monopoly.
Another point I want to address is regulations. There are way too many regulations. Companies can barely go about their daily business any more. With so many regulations it is hard to do your job. If you ever talk to an an accountant they will tell you that they add tons of new regulations every year for taxes. We need to reduce regulations but we still need to keep some to make sure things stay in order.
Our worst problem is our country's debt. Until that gets fixed I'm not sure how much better our economy will get.
I like how you pointed out that more jobs need to come back to America to get the economy back on track. In order to get more money circulating in our economy we must first have more people making money in the country, instead of outsourcing jobs to other foreign countries.
DeleteYes, we do need more jobs to come back to the U.S. The only problem I see with jobs coming back are that the price of products will go way up. Companies won't be able to hire workers for as cheap as they do in foreign countries.
DeleteI agree completely that the government needs to handle the debt because until the government fixes its problems it cannot try to fix the economies problems
DeleteI agree with your viewpoint on Walmart. I think there should be less regulations as well, but big corporations do have a lot of flexibility. Americans just don't realize that small businesses have better quality items just for a couple dollars more. Walmart gets most of their products from foreign nations thus having less quality. If mom and pop shops received more business the money circulation would stay in the US and not go overseas.
DeleteWhen it comes to restoring a broken economy, the most effective thing to do is to create more jobs. If only doing it were as simple as it sounds. There are many ways which it can be done, however the most effective ways would be to Increase international trade and help businesses to expand and grow. When given incentives by the government, private businesses will be more inclined to expand (whether it means putting up more stores, growing their product line, or increasing overall efficiency), and create more jobs in the process. The positive effect of International trade was explained well in the Undercover Economist. Trade would both increase the quality and quantity of goods in America, and also raise competition for national companies, further causing growth and expansion, and a plethora of jobs. For example,The city of Bruges was an economic powerhouse while they were trading Efficiently with other regions, but once that trade ceased, the city slowly faded away and is hardly known today.
ReplyDeleteI do agree that in order to help the economy, businesses and the government must creat jobs, however I feel that in order to do that, they must cut down on international trade. The reason for this is, all of the jobs are being done internationally because of the money we are willing to spend, when the money could be being spent here in the U.S. if we were to provide jobs for the 24 million Americans without jobs. We must prioritize, and in order to do that, we must put the citizens of our own country in first priority and creat jobs on a national level.
DeleteErika, I agree with you. Businesses should be more nationally based as far as employees go. However, the cost of hiring domestic employess would not be as cost efficient as hiring employees internationally. For example, employees hired in China cost much less than employees hired in America. To offset the cost of hiring domestically, businesses would have to raise the prices of their products drastically. We would soon see a large rate of inflation. This would be more harmful to our economy than job loss because the prices would not come down so even though everyone has a job, they don't have enough money. As an alternative to hiring American employees, businesses should receive a tax cut.
DeleteAs Justine mentioned above, I believe that the most important change that must be made is the redistribution of wealth. As of right now, the rich are exploiting the poor and ever-increasing their profits while the poor suffer the full affect of the depression. Essentially as the term goes, "the rich are getting richer while the poor are getting poorer." The wealthy need to be taxed more because they can handle the financial blow. The money generated from the tax increase can be used in a variety of ways to create jobs, help small businesses, or even set aside for scholarship opportunities. I also definitely don't believe that the poor should depend whatsoever on government support. As someone else said above, there really are many jobs available the only problem is, the less fortunate are too complacent and lazy to seek them out. If there really are no job opportunities in one's vicinity, he must learn to take the initiative. Start your own business or demonstrate your passion or talents to companies in which field your interests lie.
ReplyDeleteExpanding on wealth distribution, many occupations are extremely overpaid while others are extremely underpaid. For instance, doctors in the United States make way to much money compared to say teachers in the U.S. Of course we can't completely equalize income for these type of occupations (communism), but we also cannot let capitalism roam out of control. To eliminate the godly prestige of doctors and the ability for them to charge such high prices for their services, medical schools need to accept more students because many of those rejected are unquestionably qualified for the position. With more doctors in the work force, the competition will drive their wages lower. They'll still be making a lot of money, just considerably less than they will before. Teachers on the other hand need to be regulated tighter. They need to be better trained and qualified to produce test scores that convince the government that they deserve more money. If wealth is partially redistributed, the poor, who make up the vast majority of the population, will have more money to spend which will in turn stimulate the economy.
I also hold your view that the economic tilt in this nation is wrongly favoring the rich rather than increasing prospects of wealth distribution to the poor, and that this distribution should be seen more with higher educated fields that have an extreme disparity, such as the doctor to teacher wealth ratio. While finding job opportunities are indeed the responsibility of the individual, I believe that economic circumstances of those recently laid off from their previous occupation warrant assistance from the government in order to ease the financial burden during this time, such as tax rebates.
DeleteAndrew if doctors weren't paid so highly then what would be the reason for going to college for so long. I do, however, agree that teachers should have some sort of judgement but test scores are a little touchy because teachers will become unwilling to take on less intelligent students.
DeleteWhat have the "poor" done to merit a federally forced redistribution of wealth? Surely in the US more than any other place in the world, anyone can make their own mark, and change their economic status? Are the poor maybe more contented with their place in the economic food chain than they pretend, if they are unwilling to do something to change it?
DeleteThe first step is to realize that it is business and not government that creates jobs and wealth within the American society. This is where we believe is the heart of the problem. It is evident that the Obama administration believes it is government that will lead Americans to economic prosperity. This is why the federal government has put forth a $780 billion stimulus package. Also, the US economy will do much better when companies are left to compete in the market place with minimal government involvement. A case in point, the Reagan administration had a policy of less government during the 1980s. This resulted in long term economic growth. Letting companies naturally compete within a free democratic society, with minimal government involvement, produces a robust US economy, which benefits all Americans. The writers of the Constitution of the United Sates, our founding fathers, believed that the role of government in the lives of people should be minimal. Should we not adhere to the principles of our Constitution?
ReplyDeleteWe need a solution that will not only create new revenue streams but whose byproducts will also benefit us in some way. We need a new and untapped enterprise that will revive the entrepreneurial spirit of the American people. We need to legalize the growth, distribution and sale of marijuana for recreational use.
You made a good point, there should be less government involvement if we want the economy to do better. The Regan administration from the 1980's clearly showed that less government intervention would lead to economic growth. Companies also need to compete more amongst themselves if they want to contribute to economic growth.
DeleteThe interesting thing about Reagan, though, is the fact that while he managed to create a substantial boom during his time it wasn't really due to lassez-faire business models. As the economist Paul Krugman points out, Reagan more than doubled the national deficit (similar to Keynesian economic models) and increased job counts and kept inflation low, following the Keynesian model once again. In fact, one could attribute the boom due to these deficit spending and job models, and not to the free market model that represents.
DeleteThe national debt acquired during the Reagan presidency was largely a result of the Cold War and defense spending (which managed to bankrupt the former Soviet Union and lead to its end). I believe the boom during the Reagan years was due to his supply side economics, which could prove helpful in the current state of the economy. His approach proved successful as "real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years".
Deletehttp://www.cato.org/publications/policy-analysis/supplyside-tax-cuts-truth-about-reagan-economic-record
Defense spending is still spending. You have to pay someone to manufacture the weapons, to harvest the raw materials, to build the factories and warehouses and silos. Those people proceed to buy things, fulfilling the flow of money so vital to Keynesian economics. After all, it was WWII that pulled us out of the Great Depression.
DeleteThe solution you suggest contradicts with your argument, given that a huge part of the Reagan administration involved the "just say no" to drugs campaign.Evidently Reagan didn't beleive that legalizing marijuana would aid our economy, and felt the need to get involved to educate the younger generation of its dangers.
DeleteYou mention Reagan's presidency to be used as a model for how to improve the economy, then also say that less spending is what we need. As Brett mentioned, Reagan actually increased the national debt two-fold through the combination of defense spending and his supply side economics plan , which didn't bring in enough revenue. So really what you're describing is that we should spend a lot, but not tax to bring in money to counter the spending. Or maybe you are suggesting that we should cut the budgets of other programs like education and social welfare as President Reagan did? Either way it seems like that sort of plan would not fit the goals that you say you'd want to achieve, being that Reagan and both of the Bushes increased the national debt greatly.
Deletehttp://zfacts.com/p/318.html
http://www.newfoundations.com/Clabaugh/CuttingEdge/Reagan.html
Henry, you mention how Reagan and Bush increased our debt but Obama has spent way more than either one of them. I just wish our country would have a balanced budget like every family has in this country. They need to quit spending money on things we don't need.
DeleteWell, the first thing that needs to be pointed out is that there are hardly any families with balanced budgets in this country. I agree that there is reckless spending, but the majority of it is needed. Also Obama has not spent WAY more than either of them, when compared proportionally they are actually very close.
DeletePersonally, I don't believe that a solely Republican ideal-based economy or a solely Democratic ideal-based economy is very wise. The United States has been referred to as a "melting pot", mostly concerning the number of nationalities in the nation, but I also consider it a melting pot of ideas. I apply this directly to the economy, as it needs to be a blend of both parties' ideologies, because not one side will be perfect. I know that I, for one, can see both sides, especially in the tax on the wealthy. Yes, they do pay a large sum in taxes, and that seems kind of unjust, but then again, they ARE already extremely wealthy.
ReplyDeleteWe need to start bringing jobs back to America. Foreign competition is a huge factor in this. We need to keep up with other leading foreign industries, as it seems that everything is "Made in China" these days. Granted, these products from other countries such as China are generally in strong demand. It's tough to try and compete, but the job creation from this would be enormous and specialists would arise.
That being said, I think small businesses should expand their companies. That would create jobs and also get more Americans involved in this competition. I think if the smaller businesses reached out, there would be far more products from the United States, thus stimulating the economy.
As far as spending goes, our government, in my opinion, has to be much more wise. Our nation's debt is 13.5 trillion dollars. This debt is a huge cloud hanging over our country's head and it doesn't seem to be shrinking. Personally, I think social programs, which cost a lot of money, need to be reviewed and altered or something of the sort and save money.
Where would the small companies get the money to expand from? Thus far, lobbying from large, controlling corporations is what is keeping the small business out of the playing field. These economic thugs are preventing these companies from competing with them, and are keeping the private sector minimal so that they can control majority wealth.
DeleteAs for the social programs, they are barely a tenth of the total government spending. I agree, some of the funding is being misused due to technicalities within the law and deserves review, but the true expenditures come from the military for a total of 23.8% of the total federal budget. The real question should be: why? Why are we spending so much on this silly war that hasn't needed our involvement for such a long period of time? The money could be put into the pockets of your every day American who lives below the poverty line, giving them the money to spend on the producing American countries.
However Obama praises himself for creating so many jobs. He created government jobs so it means people use thier own taxes to pay those people creating a hole for the average people so they can't open thier own small business. So Obama himself i fighting against the small business. Also large business are not everywhere in the country. Like the "Undercover economist" the author states location can be everything. small business thrive in smaller towns keeping the money of the town circulating locally.
DeleteIt is my belief that different approaches to handling the economy are appropriate at different stages in time. During time when the economy is struggling, I think the most effective approach, is the Keynesian approach, also supported by Paul Krugman. I think that the government should stimulate the economy and intervene in situations where the market has proven that it is unable to thrive during this time, for whatever cause, on its own. This was the case when president Obama took office in 2009 , and the reason that he spent money in stimulus packages to save some key American companies such as General Motors. In the words of Paul Krugman, "Now is the time for the government to spend more, not less, until the private sector is ready to carry the economy forward again." This means that we need to give the economy the boost it needs to be able to function again on its own. I agree with him and also believe that once the economy is rolling we can afford a much more hands off approach. Although the economy has ceased to recess and is beginning to turn around I don't think it's time yet to start shrinking the stimulation into the economy, this is a crucial point and it would be unwise to let it fail now.
ReplyDeleteThis approach I speak of is meant to add jobs, keep American business alive, and not let those that are struggling fall completely to rock bottom. Along with the benefits of this plan, however, are many issues. With so much government spending, the national debt increases greatly, and in order to counter that, the government needs to up their revenue, or cut spending in other areas. This usually entails raising taxes, which is not good because it upsets people when they feel like the government is taking their money. People often selfishly complain that the government is stealing money from them, it seems to me that they fail to realize that by paying taxes they are contributing to the welfare of their country that they live in,(usually considered a patriotic act) helping it out, and ultimately helping themselves. There are many who have lost faith in the economic approach that I have described, and turned to the opposite. The other approach available to us as Americans is one similar to the ideas of nobel prize winner Friedrich Hayek, to shrink the government, have it be more hands off, and to basically let the private sector figure it out on their own. I discourage this approach at this particular time because I don't think we are ready. I think that sounds like a wonderful plan for when we are already doing alright, and we want our businesses to prosper, but it's a giant leap from almost failing, as we were a couple years ago, to prospering, and we cant take that jump all at once.
http://www.rollingstone.com/politics/blogs/national-affairs/paul-krugman-on-how-to-fix-the-economy-and-why-its-easier-than-you-think-20120502#ixzz20zBgzftj
http://everything.explained.at/Friedrich_Hayek/
http://www.wisegeek.com/what-is-keynesian-economics.htm
I agree that the government may need to stimulate the economy somewhat when the private sector fails to fix itself over an extended period of time. However, the money used should come from other areas the government is spending unwisely and not by raising taxes. When taxes are raised, it only reduces the amount of money Americans have in their pockets to spend and put back into the economy.
DeleteI completely agree with the point you make of the population's general attitude towards tax paying. Although it can be justified to say that the money you earn should be the money you keep, this belief tends to contradict with some of the same people's opinioin that it is patriotic to help those less fortunate.
DeleteOf course nobody would pick taxes as the most preferable source of revenue, however, it is often difficult to eliminate spending in certain areas. There definitely is wasteful spending in the Government that I disagree with also, I too would like to see that cut. In a perfect situation, I personally would like to see the defense budget cut, however being that we are at war this is not really the time for that. Others would like to see education, and welfare programs done away with, and I would strongly advise against that. In my mind, taxing those that have truly superior incomes does not hurt the economy, taxing the middle class definitely does. The reason I don't think that it is bad for the economy to tax ultra rich is through this logic. (please tell me if you see a fault) If one person makes a ton of money, say upwards of 500,000 per year, you say taxing their money will reduce what they put into the economy, but really, one person isn't going to consume their worth of money, meaning that they're not going to buy more than 2-3 cars, they're not going to consume an abnormal amount of food or goods. Whereas, 10 people that each make 50,000 are all still going to need a car, are still going to eat food, and buy goods for themselves, and that's what I believe truly is what stimulates the economy. I'm not going into re-distribution of wealth here necessarily but just pointing out, the fact that someone makes 400,000 after taxes instead of 500,000 does not really hinder what they're contributing to the economy, but it does make our country 100k less in debt than we are, and that's why I think it works and I think it is a good idea.
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ReplyDeleteThere are two approaches which I believe, when correctly carried out, will drastically improve America's economy in the short and long terms. A major reason this recession is so devastating is undoubtedly attributed to the high unemployment rate which both of these approaches will assist in reducing.
ReplyDeleteThe first of these approaches is to cut back as much as possible on outsourcing jobs and manufacturing to overseas nations such and China and India. Sure, labor is cheaper overseas, but why hurt the American economy in the long run? Especially when millions of qualified Americans are unemployed. For examples, recently the iconic American clothing brand Ralph Lauren designed the 2012 USA Olympic uniforms to be shown off in London this month. However, it has been revealed that every piece of these uniforms have the label "Made in China". Yes, almost all of our clothing is not manufactured here, but thousands of manufacturing jobs could have been filled by this occasion alone. These uniforms could have easily been manufactured in the US. We have pride in our athletes, why don't we have pride in American laborers and manufacturers?
The second solution that will help in bolstering the American economy is the Paul Krugman idea of large-scale government spending to promote the spending of consumers and businesses so more money will circulate. This idea is similar to Keynesian economics where it is said that one person's spending will promote another's earnings and so on. Not only would this major government spending stimulate spending and earning, it would create millions of jobs--mainly by some of this federal money going to the states to "reverse their budget cuts" says Krugman. Additionally, senior economist at the Center for American Progress Heather Boushey pointed out that "Over the past two years, increased investments in infrastructure have saved or created 1.1 million jobs in the construction industry and 400,000 jobs in manufacturing." So not only could we create jobs, we could make low income areas more prosperous by building roads, bridges and factories. Though some are skeptical about the government spending approach because of the inevitable tax increase, this sort of stimulus will provide people with jobs that will enable them to pay these taxes and help contribute to the circulatory economy we need. Not only that, but we could levy higher taxes on cigarettes and alcohol or legalize marijuana as mentioned before for recreational use and tax that as well.
Bottom line is we need to create jobs--it is a huge factor in the suffering economy and if we can find an effective way to create and sustain more American jobs, we can also sustain a prosperous economy.
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DeleteJob creation is definitely a must, and mentioned by most others (including me), as a way of stimulating further economic growth. If people have money in their pockets which they had previously not possessed due to lack of a secure occupation, they have more of an incentive to buy. While the Ralph Lauren scandal points to a trend in our society to outsource for a cheaper product (and for something as symbolic as the Olympics, the uniforms should have been crafted in the US), I don't see how they can receive too much flack for doing what most US clothing brands continue to do: make a profit. And while the economy is still in a dismal state, consumers are certainly more prone to buy cheaper products from other countries than shell out more money for locally made goods.
DeleteI completely agree Carlyn, that the main reason the economy is struggling is due to the high unemployment rate. Keynesian economics does state that this circular flow of money is what keeps the economy moving, and in order to do this, we have to maintain this cycle within the U.S. and manufacture our own goods, with our own manufacturers, and create jobs.
DeleteI absolutely agree on the point on your take on outsourcing jobs. It’s one thing for corporations to take advantage of cheap labor abroad. But it’s another thing entirely for taxpayers - including those who are losing their very jobs to offshoring, to subsidize companies for destroying domestic jobs with tax breaks. That’s the ultimate insult. As long as corporations have the deck stacked in their favor, America’s working people will continue to struggle, and with it, so too will our communities and our middle class.
DeleteJob creation and tax cuts are popular proposals here, and both ones that I'm in favor of, but protectionism of US industry encounters various problems, especially in a world dominated by free trade agreements and economic unions (NAFTA, in our case).
ReplyDeleteIt's all good and well to say that import penalties and tariffs should be enacted, but with a consumer base so reliant on the manufacturing power of nations like China and India, it seems likely that we'd suffer greatly, at least for the short term, of a rapid rise in costs of foreign goods taken from our own pockets. Not to mention that these countries are lucrative, expanding markets for western companies and products in return, especially as the middle classes in these nations continue to grow as globalization expands. These nations would be far less willing to see US products on their shelves while tariffs on their own goods accumulate as soon as they hit our shores. In the long term, this can only spell out damage for international relations.
Perhaps penalties for outsourcing jobs could be measured as a way to resolve growth and unemployment issues, as well as tax breaks and other incentives to companies that have domestic employment bases. However, in such a globalized economy, I do see it as somewhat risky to pander corporations to government overtures - Especially when such companies would have little difficulty outsourcing permanently to a tax haven.
Finally, drastic reform, including points listed by Justine as far as reevaluating our interests in what matters, such as education, health, and transportation, should (in my opinion) be our top priority. Excessive military spending should also be cut, and while recreational marijuana legalization should be evaluated, if anything, on political grounds as far as the crime and corruption that prohibition causes, I don't believe it will be quite the economic savior that it has been touted as due to the fact that alcohol and tobacco tax revenue pales in comparison to other tax methods (Income, Sales, etc.).
I definitely agree with you and your commentary on reform. I think that some laws and spending should be re-evaluated as thoroughly as necessary to help revitalize the nations economy.
DeleteI definitely agree with your ideas about outsourcing jobs. Companies who keep jobs here in the U.S. should undoubtedly be rewarded with tax breaks because they are the ones that will help our economy grow and prosper! I also agree with your stance on marijuana legalization seeing that (especially in border states like Arizona) it causes many deaths. It will have some economic success, but you're right, not as much as some may think.
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ReplyDeleteWith our country becoming so reliant on oversea's and international trade, we have become dependent on (or depending on your outlook, at the mercy of) foreign interests relating to our economic well being. While the other nations of the world are also dependent on our trade, to reduce the risk of becoming crippled economically (such as in the 2007-2011 global financial crisis [see attached: http://www.usfn.org/AM/Template.cfm?Section=Home&TEMPLATE=/CM/HTMLDisplay.cfm&CONTENTID=20609]) one solution might be the reduction, though as Alex said not the complete removal, of foreign outsourcing and manufacturing by large international companies based out of and headquartered in the united states such as Coke, McDonalds and Nike, through tighter government regulation of business practices and ethics. By doing this, the government could insure more domestic job openings for the american populace, which would both provide opportunities for employment and economic stimulus for the lower/middle class workers at the jobs.
ReplyDeleteIn addition to tighter government regulation concerning corporations, as many of my fellow classmates have said, internal reform regarding federal budget spending and allocations would also need to be reviewed. The excessively high military budget that the united states has could be cut, or moved to different sectors, such as education (providing more jobs for teachers, better learning facilities and materials,) public works projects or Transportation (providing jobs for Americans resurfacing/building roads, building/reparing dams or other federal or state property.)
I agree with the part about the military budget. It was good to point out that by cutting it or moving it to different sectors would provide jobs for Americans. It would be very beneficial. Would the government want to wait until the war in the Middle East calmed down to cut the budget? I feel like that would be an issue in regards to the amount of money spent on the military.
DeleteCompanies that are headquartered in the US outsource jobs to other countries to keep prices lower, because of things such as minimum wage, labor unions, and other, while not uniquely American, stronger in America than anywhere else. Just be grateful they are headquartered in the US, not anywhere else. At least their taxes are payed to the US government, and not the Chinese government.
DeleteI tend to agree more with the Republican view on what the economy needs. I believe job creation is a very important part of economic growth. Creating jobs reduces the number of people on welfare, and increases tax collections for the state, local, and federal government. This money can then be funded toward public safety at the local level and national defense. Funds to the police department, in particular can be useful in the cycle of creating jobs. (Bear with me, here!) When a business is first starting up, the owner wants to make sure they are locating it in the area most beneficial to their future profit. This individual will look for low property taxes and a low crime rate. Low crime rate comes from the help of the police department, which receives funds from the tax collection gained when people trade in welfare for a job. As businesses become more successful and grow, they will hire more people and people will be buying more of their products. This brings in the concept of the circular flow of money (Keynesian economics) in which more spending equals more earning within the country, thus stimulating the economy.
ReplyDeleteI also believe that, while putting heavier taxes on the rich segment of society will help, it will not help dramatically. Only a small portion of the population is really considered rich. The majority of the country is middle income. It’s hard to decide what the country needs because those of us who are middle income aren’t exactly open to giving away more of the money we work hard for, but taxing the rich won’t help much. Part of the article on Keynesian economics states that “if poorer segments of society are given money, they will spend, not save, which promotes economic growth.” This is a win/lose situation. Sure, the economy will be stimulated, but these people will see no reason in contributing to society and getting a job if money is just handed to them. We will keep paying for their lifestyle.Lastly, on the topic of international trade, businesses in the US need to expand and think globally. The government needs to give more incentives to American-made companies to increase the amount of trade outside the country. Big businesses will receive tax breaks and other incentives for the revenue they bring in to stimulate the economy and create jobs.
I agee that people won't be a beneficial factor to society if money is just handed to them. Why work when you just get handed what you need to get by? Unfortunately, that seems to be the mindset of many people these days. They'd rather just get by than work their way to the top from the bottom.
DeleteThe first and foremost objective to improve the economy should be the improvement of the private sector. As Keynes proposed, the money in the hands of the average, or below average wage-earning American will give the necessary buying power to support a free trade with the globe. Without protectionist laws in place, nations would be more willing to trade with us, not only allowing us to sell and buy each others products, but we would also be granted a unity with the other nations, who will develop a dependency upon us, allowing for greater American hegemony (isn't that the goal after all?).
ReplyDeleteFree market and Hayek style economics would prevent such expansion. The saving of money in the business cycle is like an intervening wrench in a gear system. Without money to spend, how will American companies sell their products to American people? If they turn to global trade, then what happens to the poor American people? They rely on the "trickle down" effect, but the same concept applies with trickling water: in the end, that water evaporates, and ends up condensing near the top, never providing a necessary amount for the proper spending to occur.
To just let saving occur, as Hayek proposes, would be a mistake. Spending must occur for the economy to expand.
To move the money: Tax the wealthy.
DeleteThe richer you are, the less you pay for.
It seems hard to vision this economy (the private sector) lifting itself from the bottom of the economic barrel on its own, with no government assistance (bailouts, stimulus packages, ect.). It actually sounds absurd that the government reducing itself and letting the nation wishfully become the phoenix and rise from its ashes can be considered. I just ask that you consider something. When the government comes up with a trillion dollar stimulus package, where does that trillion dollars come from? Being that the U.S. is some 16 trillion in debt, the only way for the U.S. to come up with that money is really to borrow it or print it. So when the government passes a stimulus, claiming it is going to pump a trillion dollars into our economy, into the private sector, what is really happening? It sounds to me like a trillion dollars is being taken from the private sector with the promise that it will be given back.
ReplyDeleteI really believe that taxing the rich is not the way to go. Consider that the U.S. has a population of some 310 million. Now let's take away the children, elders, sick, and really anyone incapable of paying taxes. Let's take a wild guess and just propose that there are now 100,000 responsible for paying taxes. Of course there are those responsible, but just choose not to. 75,000 now. So, now it is up to 75k out of the 310,000,000 to pay taxes to a government 16 trillion in debt? Well, we could propose that the rich simply just pay more. They should, after all, pay their fair share right? Placing the burden on the "rich" is not the way to go. 96.54% of all income taxes are paid by the top 50% wage earners. As far as I'm concerned, the wealthy are the only ones paying taxes anymore anyway (obviously a fallacy, more of a symbolic jest, but more truthful than you'd realize).
Tax cuts and supporting businesses, because it is not up to our government to make jobs or make money.
http://www.rushlimbaugh.com/daily/2012/07/18/how_to_fix_the_economy
I completely agree, an increase in taxes is unhealthy. Taxing the rich, who are the job creators, any more might just cause a mass exodus of the wealthy similar to what is on the brink of occurring in France.
DeleteI appreciate the insight into who the tax "burden" truly rests on. However I'd just like to point out that while you made very clear what we should not do, you left only a brief sentence at the end on what you think we should do. If you could elaborate on that more it would be much appreciated, because at the beginning you said it'd be hard to see the economy rising by itself, then at the end you suggested that very same thing, saying that its not up to the government. Tax cuts and supporting businesses are a fatal combination for a country already so deep in debt, because to support business, I assume you mean give them money, whether that come in the form of stimulus, or a tax break, either way it puts our government more in debt, without including a source of revenue to balance it out. I notice that you cited rush limbaugh as your source, and I think you would probably agree that "Get the government out of the way" and make tax cuts is a far too oversimplified route to fixing this economy, if it were that simple I'm 100% positive it would have been done, but clearly that's not the end of the story, our current president realizes that, and it truthfully scares me how many people, including leading speakers (such as rush) do not.
Deletehttp://www.rushlimbaugh.com/daily/2012/07/18/how_to_fix_the_economy
DeleteI completely agree on your take on not taxing the rich. Raising taxes now is just plain stupid, and the voters get that fact. People want jobs, not redistribution, and it is established fact in the mind of most voters that higher taxes will lead to fewer jobs. The president can’t argue on one hand that we need to create jobs while arguing on the other that we need to take more money from job creators.
DeleteFriedrich Hayek said "processes that take more time will evidently not be adopted unless they yield a greater return than those that take less time" which is exactly why the U.S. economy needs free market trade. The reality is with the current regulations and taxes that U.S. companies face it is not worth the time and money to produce the same thing they can in China much easier. By giving companies incentives to stay in America they will use Hayek's policies to benefit Americans and the new companies would increase GDP and decrease unemployment..
ReplyDeleteThe opposition is that this is slow and they want to be more proactive but by spending government money is throwing off the natural flow of things. Why would someone hire another worker to make an extra 5,000 dollars if they will have to pay that same amount to taxes? Why would you take the job if you could just wait for a stimulus check? If the government doesn't get involved the company gets more money and the worker gets a new job all with no government spending. By increasing the supply of money as in Keynesian economy the dollar's value would go down substantially. By fighting the free market the U.S. is fighting what Hayek calls a natural process so why not use it?
http://www.wisegeek.com/what-is-keynesian-economics.htm
I agree with your standpoint on government involvement. But if the government didn't step in and help people would get angry with the government and demand something for their troubles. When the government steps in and helps some people dislike that too. Basically the government can't make everyone happy so they do what they think is right.
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ReplyDeleteThe best approach to the economic situation is to cut taxes and reduce government spending.
ReplyDeleteBy cutting taxes, businesses can grow properly without the burden of high taxes. When they grow, they will create jobs themselves, without the help of the government. Some people say that the solution is to tax the rich more. This is the most backwards thing I have ever heard. The reason the rich are rich is because of the hard work they put into their lives. The majority of the money that gets taken from the rich gets put into the pockets of the "poor" people living off of welfare programs like unemployment. Currently, the government will give you unemployment money for two years. Does it really take two years to find a job? The length of this makes people lazy. They say to themselves "Well I've got food, television, and a roof over my head what more do I need?" It's because of this that they do not strive for anything in their life or want to better themselves. They will just sit on their butts for two years, collecting money from the rich who actually did strive and make something of themselves, so sorry, taxing the rich more is not the way to go.
Of course the government can't keep spending if they are cutting taxes so they need to reduce spending. There are so many ways to do this. For one, getting rid of all welfare programs would be a huge start, like unemployment, for example. Other programs too like healthcare and food stamps. In doing so will stop government spending drastically so they do not need as much money and can tax less.
People in this country have every opportunity to go far with their life. Why do you think so many people want to come to this country? I'll tell you why, because everyone has an equal shot and becoming whaatever they want and making as much money as they want. You can't do that in ANY other country in the world. This is why the United States is so great.
AMEN!!!! i have two jobs that have a great ending pay and people say that the rich is the problem?that is the idealogy from the 1920's of the trickle down effect from the rich to the porr which was a factor to the great depression. However some people do need the unemployment money... but not two years. Also the system is abused a lady used food stamos to buy candy and soda and used that to sell to kids for money.
DeleteExactly! You work hard for your money so why should it be taken from you and given to people who are easily able to take care of themselves? 1920's? Sounds like Woodrow Wilson to me, the one that started welfare and all that jazz that is destroying our country today! I was watching a news show one time and a reporter went out to one of the buildings in New York where people pick up their unemployment checks. He questioned them asking if they knew where the money came from. They said "Obama." To which he replied "And where does Obama get it?" Their answer was "I don't know." And these are the people that are going to be voting in the next election, Ha!
DeleteIn every plan to cure the diesease of poverty, there will always be hole, or certain circumstances where the solution is just not applicable. However even though keynes and Hayek disagreed with one another both plan were radical and could meet at a middle ground. defecit spending is the worst idea for a country. It is spending money we dont have and just as well will hurt the economy in the long run. However sving money does go in a circular motion. It goes to the people then to the businesses then to the government then to the people again who have government jobs. in the middle ground though spending money is truly great for he ceconomy but not spending more than what we have. Perhaps saving and speding like paying the bills for a family then saving the rest of the money for groceries and for a rainy day such as a depression. Even the both ideas of Keyes and Hayek have great pointts Keyes is better for the economy.
ReplyDeleteSaving too much money can damage the economy rather than help it. People always need jobs and priorties can be neglected for the saftey of the U.S. if the profit gained by the U.S. is saved instead of put back into the economyto build roads and maintain the country. It isnt the government who create the jobs its small businesses. Giving incentives will motivate people to open small businesses creating jobs and becuase those jobs fuel the economy then the government will begin to recieve more profit to improve this great country. However government jobs are payed for by the people sso instead of saving the money is given to the government to be put back into the government creating a loop of debt.
I believe that the republicans have the right idea. lower taxes for higher corperations create a higher profit which creates more of an industry and a higher demand for workers also, the incentives will also, increase small businesses in local areas keeping the money circulaing between businesses.lastly, higher trade is so key, not only will increasing trade improve our economy but cretat jobs in other countries which can aid the global economy as a whole to improve pricing and growth.
Clearly there are many ways one can approach mending our economy, or any country’s state of economy for that matter. Most of our current economic distresses are rooted in problems of government secrecy where the government subsidizes corporations who earn income and create jobs outside the United States. This way of acting blatantly goes against the interests of our citizens who expect the government to subsidize and provide for U.S. corporations, which would naturally create more jobs, ones that would likely provide enough income for the individual to live of off. Along with this direct strategy should be increased government spending (within reason the economy’s condition in that point in time), and the unlikely flat tax making it impossible for the upper class to avoid tax paying. Although some argue that taxing the rich would lead to decreased motivation for those who strive to build an empire, this argument is formed in lack of consideration of where that motivation or desire comes from in the “want-to-be-wealthy.”
ReplyDeleteFor me, discovering a generally effective economic system only seems to be half the battle, because once the realization is made of what will mend the economy, morals are also called into question, and for most cases compromises must be made. For instance, there is no question that the death penalty reduces costs to sustain inmates; however, I tend to lean towards a completely different approach that reduces spending and eliminates the question of “who deserves to die compared to another” as a case by case circumstance. If criminals were able to exist in a an isolated society in which each has a job that serves others’ benefit, then they would create the financial means for themselves rather than taking tax payer’s money who are reluctant to help the living of a “criminal.” This idea of an isolated society is generally Marxist. Eventually, I feel as if our systems and policies should move towards resembling those of Karl Marx in eliminating class structure and aligning job by ability and receiving by need.
I really liked the way you pointed out and worded where the root of our economic distress is--government secrecy. Not many Americans know just how much money is being put into large corporations that outsource jobs and income that could be strengthening the U.S. economy and providing jobs for qualified individuals. I also love that you brought up the common complaint of paying taxes for inmates. They could easily perform a job that would provide the finances for them to live and the complaints about spending so many tax payer dollars on prisons could be generally ceased.
DeleteYou and me both know we share similar views on economic and political principles and your explanations that root deeper than facts and statistics also ring true for me. Nothing is black and white when dealing with the human species. We are dynamic, flawed, unique, and in constant change, and nothing can simply be explained by a few principles or "strategies". IF only it were that easy to solve the world's problems. As long as we are human, there will be no simple solution. OR, perhaps the solution is just that, simplicity. Although I Marxist policies are quite controversial, it cannot be denied that he was a brilliant man with revolutionary schemes, workable or not, that would change the world forever- for better or for worse.
DeleteIn today's world, at least in the short term, I would follow the ideals of Keynesian Economics. The policy in which the United States economy takes root cannot be based on one simple equation with one simple outcome. Our world is forever changing and at any given moment our economy can be down the path to prosperity or disaster. Hayek's policy would work in a perfect world but fails to take into account the variable of humans. The economy has to be a circular flow of saving and spending and not a trickle down by cutting taxes for the extremely wealthy. With this said, the most important thing that I would do in my economy would be to increase to the minimum wage. It would stimulate the economy by increasing consumer spending without adding to state or federal deficits. Consumer spending is the backbone of the economy and increasing the demand for products is key in promoting production and jobs. A raise in the minimum wage would put more money in the pockets of low-income consumers who are more likely to spend it right away at local businesses thus stimulating the economy.
ReplyDeleteI love that you pointed out that our low-income consumers are the ones who will stimulate the economy if wages were increased. However, I feel that the wage increases could also hurt the economy. I have no doubt that the this would stimulate our economy, but I am interested to know how long it would do so. I feel that our lower income consumers may just stimulate our economy too much and end up in a debt that no one wants to see for many years to come.
DeleteI completely agree with what you said about the economy having to be a cycle of saving and spending and not a trickle down from big corporations. I also agree with you that the minimum wage should be increased but I don't think the economy is presently ready for the short term effects of that.
DeleteRelying on the government's power to create jobs and tax the rich even further is not the solution to the economic crisis. There are several things wrong with this in my opinion. First and foremost, it allows the government to further control businesses. We live in a capitalist society; there should be minimal government control and more consumer control. By creating jobs, the government is assuming the power of the businesses. FDR tried to do this in the late 1920's with the New Deal Plan and it did not fix anything. There was temporary relief but the Depression remained until WWII helped our industries. The economic growth was not long lasting, which is vital to any nation. Longevity is key because it means we have a higher standard of living that is consistent and sustainable for a long time. It's not fragile either.
ReplyDeleteSecondly, creating jobs will cause inflation. Government created jobs are often for internal improvement and not consumer industries. If workers are making money but the corporation they are apparent of doesn't gain any profit from consumers, there will be more money circulating in the economy but no other factor to balance it. Prices will have to be raised because more and more money will be there but there won't be anywhere else for it to go. If the businesses have their taxes lowered, there will be more money for the creation of new products, thus the creation of new jobs. More products leads to a higher GDP, more jobs leads to a higher income, both combined lead to a rockin' economy
. (http://everything.explained.at/Friedrich_Hayek/)
In today's economy I feel the right approach is that of the democrats. Not that I completely and only agree with these ideas, I just feel that they correctly embody what our country needs. As the fourth source mentions, some want to cut taxes dramatically and some want to make decisions selectively and most importantly, slowly. With the timid government spending that we have had in the fast few years, I do not feel that the best way to solve problems is to start making dramatic changes to taxes. Americans react better to things when those ideas aren't shoved down their throats. As much as we all like to see change, slow and steady may just win the race this time.
ReplyDeleteIn regards to the Keynesian Economy, I feel that the ideas Keynes had to improve our economy would benefit us without a doubt. However, our government is not known for taking chances with their money. "Priming the pump" would simply never happen in an economy like ours. We don't have money to lose and we don't have people that want to take the chances of losing it. Ultimately I do feel that increasing money supply would be the correct approach in today's world, however I just don't think it is realistic.
As I have read through the sources provided I have discovered that I don't really believe in either the Democrats psotion or the Rupublicans. However that doesn't mean I don't bleieve in individual parts. Such as the job creation from the Democrats. I do believe in the economic theory of John Maynard Keynes. His theory makes sense. A goverment needs to encourage spending in a non-excessive way. Like said in the article (http://www.wisegeek.com/what-is-keynesian-economics.htm) economics is a large ongoing circle of money flow. This would help the American Economy in the short run, buy jumpstarting a recovery. This will also help the economy in the long run by sstimulating the economy, and getting it back into a stable posotion.
ReplyDeleteI also believe that governemnt spending needs to be reduced drastically. Yes there are things that the governement needs to spend money on, however not to an extent. http://www.usaspending.gov/ will give you a list of spending in all aspects of the government. By loking at statistics I have realized it is an ovverwhelming amount. I believe that if each category given or agency is able to reduced even just a million dollars a year a large ssum of money could be saved. THere is numerous agencies listed on the site, which will add up. This will help the economy in the year span and the long run. Money will be able to be given to other things in need, and later on everything added together will help make the ecomony be at a stable point.
When saying that our government spending needs to be reduced dramatically, I wonder if that includes ideas of "shrinking" our government which has been made ever so popular by candidate Mitt Romney. I do believe that cut spending of our government could benefit our nation, but how would they make up for it. Would we then earn money in some other form or what? I am interested to see what would happen and if it is going to be a part of Romney's campaign for the future.
DeleteIn an ideal situation, the best of both platforms would create the "best" world. However, because we live in a country divided by these "parties" this will never happen. Why? Because when you sign your allegiance to a specific party, society automatically makes you an enemy to the opposing parties platforms and beliefs whether or not they are logically a better option. There is no picking and choosing; it's all or nothing. However, this is a topic for psychology and not economics. As someone who shares a deep belief that American politics are governed (pun intended) by huge corporate giants that have a hand in every aspect of an American's life, I would recommend a revival of the failed trust regulations of the early 19th century industrial boom. The fact of the matter is, in a capitalist society where "competition spurs development", the competition is being squandered. This means that development, in a sense of expanding the quality of life for citizens in a recovering economy, will, too, be squandered. Picture this situation: A newly founded company produces a revolutionary solar panel that could change alternative energy as we know it. It's expensive to create, and requires a large, skilled work force. The product hits the market, and consumers bite. Meanwhile, a preexisting prominent solar company just lowered the price of their less effective, yet just as expensive to create product. This is possible because 70 percent of its employees work oversees for half of what they would in the US. The revolutionary product is now forgotten and gathers dust and the new company soon goes out of business. The outsourcing corporate giant now returns its original prices (or possibly raises them) and business continues as usual. With no regulation this cycle continues or worsens, and "development is squandered".
ReplyDeleteVery well written Benjamin, and I applaud your ideas as well as the clear presentation of something that many of us do not realize there at the end. My only comment is that you only mentioned revival of the trust busting regulations from early 19th century as a solution, but I'm sure you realize that the setting has drastically changed since then. I'm assuming you meant to connect the trust regulations with the outsourcing problem you mentioned later, I don't believe that the trust regulations from the time period you speak of necessarily apply in that situation, being that times and problems have morphed since then, however if the regulations were adapted to, say, impose a penalty on corporations that ship their jobs out of America, I think that's a wonderful proposal.
DeleteI appreciate your input and I agree that what corporate regulation was in the 19th century is nothing like it should look like today. It appears more research should be endeavored on my part to better analyze what can be done in today's world. Some sort of punishment for these outsourcing businesses could have a positive impact on the overall citizenry of the US; however, a strong believer of the power of incentive in the human drive, I hold the opinion that giving benefits to companies that employ at home could have a more positive impact than punishment. Maybe a conglomerate of the two could result in the "best of both worlds" as I described earlier.
DeleteI like how you touched upon how society is so vehemently and blindly opposed to the opposing parties idealogies, regardless of their efficiency. Such blind partisanship is only going to cause worse problems down the line.
DeleteThat's a great idea, reward is almost always more effective than punishment.
DeleteAlthough I cannot fully believe either of the theories, I find myself identifying more with the Keynesian economic theory. I do so for the simple fact that spending equals a better economy. When individuals are under economic pressure and are unable to spend, the government needs to increase its spending to provide a stimulus as well as a foundation for more economic growth by the private sector. However, this does not mean that the government should give hand outs to individuals because it is a waste. Instead, the government should increase the number of jobs and give money to the state governments so that there is a reversal in budget cuts, as well as an investment in education. In the short run, more people will be employed and able to spend. This spending will prove to be beneficial in the long run and a more stable economy may exist. Furthermore, I do not believe tax cuts would increase spending significantly; rather, the rich should be taxed more as a sacrifice for their country’s prosperity. Also, the practice of outsourcing the production of goods does not benefit the nation, only a company with an increased profit. By manufacturing goods at home, many people will have the opportunity to have the jobs that they need. The people at large need to be given the resources and opportunities to succeed and to assist in the recovery and growth of a nation’s economy.
ReplyDeleteGiven the current economic situation, I agree with the Keynesian approach more than I do with Hayek’s. The economy is fragile at the moment and simply looking the other way is not going to fix things. If the government increased spending, more money would be put into people’s pockets which would enable them to pay their taxes and spend more than usual. Businesses would take in more money, and would be able to hire more people or give raises to current employees. The people receiving this extra money would be able to spend more than they could previously, and the circle continues. This flow of money would significantly improve the economy in the long run, and once it became secure enough the government could back off. Government interference is not necessary all the time, but it is when there’s a problem.
ReplyDeleteI don’t think that cutting taxes is the answer because while many don’t like them, they’re not pointless. I think that people forget that taxes are really just payment for a service, not a random fee. Paying taxes gives us access to education as well as protection through the police and firefighter force. Granted, government corruption might allow the money brought in from taxes to be misused, but this is not always the case and taxes are important to our country’s well-being. Government involvement will improve the economy now and will allow for a laissez faire approach in the future.
In order for the United States economy to improve, there needs to be more jobs and more spending. I believe the Democratic ideals will help our economy grow because the protect American manufactures and tax the people with the most money. When we keep American companies in the US the money stays here in the US, but if a company outsources then the money goes to other countries. If companies keep sending their money away to foreign nations how will the US economy ever improve. Also higher taxes on the wealthy would benefit public services by bringing in higher wages and allowing more resources to be available. There needs to be more jobs for Americans as well. When someone has a job they are more comfortable and are more likely to spend money since they feel like they have an abundance of cash. In turn this brings in more revenue for companies which allows their employees to receive more money. This circle is know as the Keynesian approach and is the countries best hope for a better recovery. This will work for the long run and the short run, but if Europe doesn't get their economy rolling soon the US will be stuck in a rut.
ReplyDeleteSean I understand everything except how taxing the wealthy will allow for higher wages. Why would an everyday employee get paid more if the CEO was getting paid less?
DeleteEducational standards i believe should be set at all levels and not just one. I believe that at more local levels educational standards must be specific to the students in the area but overall there should be a national standard to what should be learned by a certain time. Much more research should be carried out on how to successfully teach students efficiently so that the system of education can improve instead of just arguing what is best. Since the government is in charge of providing education i believe that they should step it up and learn how to effectively and efficiently provide for it and should focus on educational standards better. If the government fails to do so then education will not advance quickly enough and the United States will fall slowly behind. Finally, i believe that test are good but many strategies provided before taking a test like study guides, are bad because they only prepare a student to take the test. After many people take a test, they just assume it is okay to forget and they can just remember the concept on the test later, but in reality when it comes to remembering what was on a test, things can be hard to remember.
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