If you became the leader of your nation...

[marharth]

A simple example is stores forced to pay higher wages will pass those additional costs onto their customers pushing prices up, that increase may well be on top of the price increase forced on their supplier by the wage demands of their employees, unless of course that supplier has moved his production overseas to keep costs down. What is better, a low paid job or no job at all? the minimum wage forces people to price themselves out of the job market.

 

I'm not sure what the wallet thing is about, an empty wallet is usually a sign of living beyond your means.

 

"How does the economy grow in corporations and the upper class make a ton of money, but the middle and lower class make less?"

 

Simple, it's called incentive, it's explained here...

 

http://www.thefreemanonline.org/featured/why-socialism-failed/

 

There is no incentive to grow and succeed if there is no reward, to suggest otherwise ignores human nature.

The issue with that is that companies can afford to pay high wages and they can still make a profit with their current prices.

 

You are saying the only way to fix the country is through cutting spending. You can't fix the economy by cutting spending if you don't have any way of getting income.

 

You are saying the economy is better off if the upper class has a huge percentage of wealth? Why? What does that have to do with incentive?

 

How can the middle and lower class have reward if the majority of the wealth is with the upper class? It won't work out like that. That is simple math. You can't gain wealth if its in another place.

 

They can but they'll make a lot less than their competitors, their competitors will have more to spend to invest on things like R&D and expansion. Also investors will get a better return on their money, those investors include pension funds and other investments made by ordinary working people. Anyway why shouldn't the wealth creators be rich? we all benefit from their endeavours, they did the work and took the risk, why shouldn't they benefit? Lets turn this around, what right do you or I have to the fruits of another mans labour? would you be willing to hand your money or property over to someone with less than you? there are plenty in this world who would love to have some of your stuff, if you wouldn't be willing to give your stuff away then why expect others to do so?

 

The middle and lower classes can work their way up, surely the opportunity to work your way up is preferable to the socialist system of keeping everyone down? they may not get the breaks but at least they have a chance, a chance that socialists deny people.

 

As for fixing the country, you cannot borrow your way out of debt, you either spend less or earn more, it's no different to the way people run their own finances. If a country keeps racking up debt sooner or later creditors are going to start to question the ability of that country to service its debt, it then that yields start to rise and the cost of the debt spirals until the country can't make its repayments and defaults. The likes of Greece, Ireland and Portugal are small enough to be rescued by other nations via the IMF and EU, the US is far too big to be rescued. Cuts and a lower standard of living isn't what anybody wants, however the alternative is far worse. Defaulting means having to balance the budget overnight, the scale of cuts that would involve are huge. The other problems that come with a default is the stuff of nightmares.

I see your point now on competition. I still think it is a bad idea to let companies exploit people to fix the economy, but I see your point.

 

It is not that the rich people should not be rich. It is that the middle class should have a larger percentage of wealth then the rich. Society requires you to give things you "own" to other people. The entire idea of being in a society is giving up some things to work together. If you really believe that you shouldn't give things up to help others there is no reason you should even want to be within a government system.

 

When the one percent of the country controls forty nine percent of the wealth it is a bit hard for the lower and middle class to get significant gains.

 

I understand you have to do cuts, but how are you going to get money back into your government? Why is taxation always off the table?

[JimboUK]

 

I see your point now on competition. I still think it is a bad idea to let companies exploit people to fix the economy, but I see your point.

 

It is not that the rich people should not be rich. It is that the middle class should have a larger percentage of wealth then the rich. Society requires you to give things you "own" to other people. The entire idea of being in a society is giving up some things to work together. If you really believe that you shouldn't give things up to help others there is no reason you should even want to be within a government system.

 

When the one percent of the country controls forty nine percent of the wealth it is a bit hard for the lower and middle class to get significant gains.

 

I understand you have to do cuts, but how are you going to get money back into your government? Why is taxation always off the table?

 

What I've noticed over the years in the private sector is that you tend to get rewarded more for working hard than you do in the public sector, in the private sector you're seen as an asset, in a lot of parts of the public sector no ones cares who works and who doesn't. Those really willing to get on in life can do well in the private sector, those who don't deserve all they get.

 

As for taxation from a debt standpoint that comes under earn more. I have no problem with high earners paying a little more, what we don't want to do is punish success or disincentivise those who create jobs and wealth. It's a balancing act, there is a need to increase government revenue but too much tax will in the end cost money as growth is slowed and avoidance becomes a real issue. A good example of how not to do it is 1970s Britain, at one point the tops earners were paying 90% tax, needless to say they left taking their money and jobs with them. What happened was that instead of taking a smaller percentage of something we ended up taking a huge percentage of nothing, that is always the risk with too much tax.

 

One of the areas I would certainly look at is corporate welfare, propping up private companies with public money is wrong. These banks and car makers are in trouble because of poor governance, the banks especially, propping them up with taxpayers money is rewarding that failure. Governments should have guaranteed savers money and then let those badly run banks go to the wall leaving the well run banks to pick up their business. The same with the auto industry, if they can't make money or raise the money needed to tide them over they should be let go, if there is a market for the product then another company will fill the void, if not then so be it. What we have at the moment is privatised profits and socialised losses, I don't think anyone on the left or the right can honestly support that. The free market does work when it's left alone, when idiot politicians interfere with it we end up with the mess we're facing now.

[marharth]

 

I see your point now on competition. I still think it is a bad idea to let companies exploit people to fix the economy, but I see your point.

 

It is not that the rich people should not be rich. It is that the middle class should have a larger percentage of wealth then the rich. Society requires you to give things you "own" to other people. The entire idea of being in a society is giving up some things to work together. If you really believe that you shouldn't give things up to help others there is no reason you should even want to be within a government system.

 

When the one percent of the country controls forty nine percent of the wealth it is a bit hard for the lower and middle class to get significant gains.

 

I understand you have to do cuts, but how are you going to get money back into your government? Why is taxation always off the table?

 

What I've noticed over the years in the private sector is that you tend to get rewarded more for working hard than you do in the public sector, in the private sector you're seen as an asset, in a lot of parts of the public sector no ones cares who works and who doesn't. Those really willing to get on in life can do well in the private sector, those who don't deserve all they get.

 

As for taxation from a debt standpoint that comes under earn more. I have no problem with high earners paying a little more, what we don't want to do is punish success or disincentivise those who create jobs and wealth. It's a balancing act, there is a need to increase government revenue but too much tax will in the end cost money as growth is slowed and avoidance becomes a real issue. A good example of how not to do it is 1970s Britain, at one point the tops earners were paying 90% tax, needless to say they left taking their money and jobs with them. What happened was that instead of taking a smaller percentage of something we ended up taking a huge percentage of nothing, that is always the risk with too much tax.

 

One of the areas I would certainly look at is corporate welfare, propping up private companies with public money is wrong. These banks and car makers are in trouble because of poor governance, the banks especially, propping them up with taxpayers money is rewarding that failure. Governments should have guaranteed savers money and then let those badly run banks go to the wall leaving the well run banks to pick up their business. The same with the auto industry, if they can't make money or raise the money needed to tide them over they should be let go, if there is a market for the product then another company will fill the void, if not then so be it. What we have at the moment is privatised profits and socialised losses, I don't think anyone on the left or the right can honestly support that. The free market does work when it's left alone, when idiot politicians interfere with it we end up with the mess we're facing now.

For the most part I can agree with you then. Still not entirely sure how much regulation is needed in businesses, but I see where you are coming from.

[JimboUK]

 

For the most part I can agree with you then. Still not entirely sure how much regulation is needed in businesses, but I see where you are coming from.

 

I think it might be easier if we agree to disagree. :thumbsup:

[ginnyfizz]

Yes, corporate welfare strikes a chord, jim_uk. What I don't get it how we hear the huge banker's bonuses justified by something like "Yes we must pay them £XXX million pounds per year on top of their already monstrous salaries because if we don't, they will go abroad and create wealth and profits for someone else"

 

Er, what? I say. In the case of banks that have been rescued by the taxpayer, have received corporate welfare, as jim_uk aptly puts it, certainly not. These asses have not created wealth and profits, they have bankrupted their employer, and in most private companies, damaging your company to that extent usually means getting fired, or made redundant when the company folds. (Of course in some companies you can make profit for them and still get made redundant, as I know only too well....)

 

Actually these bonuses are about the only thing where I can say more regulation might need to be applied. Whilever RBS for example is effectively nationalised, Stephen Hester should count himself lucky to have a job, nevermind get a bonus. And if he doesn't...I need a job...

[brokenergy]

For starters, none of you would be in my government. Have any of you even thought of your ideas for one bit? Nationalizing infastucture? Deregulation? Imposing spending cuts on the public sector? Do you know how silly some of your ideas sound in this day and age? You can't buy back infrastucture, you can't do deregulation, you can't just do total spending cuts. Why? You don't have the money to buy back your ports and rails, it was massive deregulation that caused the GFC and has nothing to do with work moving overseas and cutting spending has no massive effect on increasing the budget back to surplus and in fact lowers productivity in the median to longer term, important when you want to bring it back to the black.

 

Populist policies have never been a good place to go in the first place as it is shallow, vote grabbing with no depth and long term commitments. The whole point of being elected is to provide with well thought out policies that support the long-term, national interests of your nation, not your personal agenda. You have to make compermises, you have to pick and choose your battles and you have to have a basic understanding in policies 101. Eg. "Stopping the boats" (Aus' flashpoint over refugees going to Aus illegally on unsea-worthy boats) does not equal to reopening a old processing center, sending people into transit nations, using temporary protection visas or turning back boats, it requires a well thought out plan that tackles the core of the issue rather than band aid solutions to grab votes.

 

Ergo, I would actually try and make alternative, well thought out policies rather than spew my personal retoric about how the world should work.

[ginnyfizz]

So, if you cannot afford to pay for the public sector at the level it is currently spending, it is silly to cut back on it? It isn't silly, there is no option, apart from jacking taxes up to unconscionable levels. Your sort of argument is what has kept governments burying their heads in the sand and refusing to bite the bullet. It is why certain countries are cap in hand to the EU and the IMF and others are keeping their AAA credit rating - because they have faced up to the seriousness of their issues, and are taking painful measures to sort them out.

 

This has nothing to do with personal rhetoric. It is how things work out in the real world. You cannot continue to live beyond your means - it is the same for governments as it is for individuals who go loopy on credit.

 

As for deregulation and denationlisation, whatever makes you think that the people, represented by the Government, are the controlling influence where companies are nationalised/heavily regulated? Experience suggests that it's the trade unions that call the shots, and end up pulling their own houses down around their heads.

[Marxist ßastard]

jacking taxes up to unconscionable levels

So, just curious: What are "unconscionable levels"? Because I know of at least one case where a country's top tax rate was >90% but it seemed to hobble along pretty well.

[ginnyfizz]

jacking taxes up to unconscionable levels

So, just curious: What are "unconscionable levels"? Because I know of at least one case where a country's top tax rate was >90% but it seemed to hobble along pretty well.

 

I can so remember that too, although I believe I am not actually allowed to mention the name of one of the countries involved, according to some of the posters in this thread that is. In that country they have since got used to income tax rates of no higher than 50%. In addition to the National Insurance rates having increased and the current economic squeeze being on, I think putting up rates of Income tax any higher would not be the way to incentivise people.

 

They would have course have even less to spend than they do now if you did and that wouldn't be much use to kickstarting growth, either for big or small businesses.

[Marxist ßastard]

Oh. Well, you greatly overestimate my knowledge of British/UK/Crown (who sets the tax rates?) economic history, because I was talking about the US. So I guess that makes two.

 

Come to think of it, it's probably pretty common that countries experience their strongest growth after raising the top marginal tax rate to nearly 100%. And it's provably true that lowering that rate doesn't spur growth:

 

http://filipspagnoli.files.wordpress.com/2008/08/correlation-between-economic-growth-and-changes-in-top-marginal-tax-rate.jpg

 

Here's that data evolving over time for the US:

 

http://filipspagnoli.files.wordpress.com/2010/02/top-marginal-tax-rates-and-gdp-growth.jpg

 

What that last graph doesn't show is that in the early 1920s, the top rate was around 75%. In just a few years' space, banker-turned–Treasury Secretary Andrew Mellon cut it down to the 24% rate you see there. His argument was exactly the same as yours: A 75% tax rate discourages the wealthy from investing in business, so we should encourage the wealth creators by bringing it down to 24% as quickly as possible. The Great Depression came only months afterward.

 

Everybody forgot about Mellon's theory until the '70s, when it came in vogue again: Trickle-down economics. We've got to encourage the wealth creators. And this time you can see we did it in three major stages. The result? An immediate slowdown in growth, followed by a string of recessions, and now economic collapse.

 

Is that painting with too broad a brush? Okay, how about this: GDP growth was 3.8% following the Clinton tax hike, but only 2.5% following Bush's tax cuts for the wealthy (not including the recession, of course). And employment growth was three times higher after the hike than after the cuts.

 

Tax cuts for the wealthy do not spur growth. That's plainly evident even just looking at the first graph. And I think I make a fairly strong case that such tax cuts actually cause economic slowdowns, if not outright recessions. In any case, the theory that we must encourage the wealth creators is complete BS.

Edited December 29, 2011 by Marxist ßastard