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  • dwb360 dwb360 Aug 30, 2012 12:57 PM Flag

    Demand Creates Jobs

    In watching the Republican Convention, it appears that all of our country’s problems can be solved by cutting taxes and reducing regulations on small businesses.

    It’s time for a realty check. During the Bush administration both taxes and regulations were cut and look what happened; our country experienced slow growth, falling real wages, slow employment growth, a very substantial increase in our national debt, and the “Greatest Recession” in many of our lifetime. These facts can not be disputed.

    While I believe that the tax code should be completely revised and that some regulations need to be reviewed and perhaps eliminated, the Republican Party apparently does not understand that it is demand that creates growth, and consequently jobs; not lower taxes.

    If products are in demand and individuals have the funds available they will purchase them. Unfortunately over the past decade real wages have gone down as our country has transitioned from an industrial economy to a service economy. Adding to the problem has been the outsourcing of jobs overseas and the housing crash all of which have resulted in less cash in the pocketbook of the consumer. As a result, overall demand is down and consequently employment.

    What our country has to do is to get more money into the hands of the consumer. This can be done either through tax policy, public work projects, or an increase in the minimum wage. Reducing uncertainty and developing long-term solutions to the problems facing our country would also give our economy a psychological boost.

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    • Interesting perspective. From my viewpoint, your "cause and effect" isn't the same as what I see as occurring. I believe the banking industry was coerced by our wonderful government to sponsor loans to people with poor credit. Then, they packaged those loans together and sold them on the secondary markets. This created a huge financial bubble which, when popped, forced people to stop buying stuff (as they had no cash) and to sell any securities they had to cover debts. This routed the stock market, leaving us all with less money in our 401Ks and generally feeling poorer.

      The rest of your post, I mostly agree with. We do need radical tax policy reform. We do need less government. We do need lower taxes.

      One last area we need to hit. Let's talk about manufacturing. Part of the reason we all have more money in our pockets today is exactly because we have outsourced lots of manufacturing to other parts of the world. In 1980, I could buy a decent golf shirt for $20. Today - 32 years later - I can buy that same shirt for $15. The same is true for electronics, small appliances, tools, etc. If our government gets involved and stops companies from assembling products in places where the cost is lower, this is the exactly the same as raising taxes. But what about jobs you say? If those jobs go away, won't our economy go down the tubes? NO! The wonderful thing about the United States is we are incredibly resilient. 100 years ago, some 30-40% of the population were farmers. That's now about 3% as our farmers - as well as the science of farming - has gotten really, really good at maximizing productivity. So what happened to the guys/gals that used to plow fields? They simply looked for other work. The same is true for people displaced from offshoring. It may take time, but we will morph and change as a society and will come out OK.

    • So help me understand...you don't believe that tax cuts will solve any of our problems, but "to get more money into the hands of the consumer" will? Should we just print the money and give it to people (like the Dems want to)? How about we cut people's taxes (of course if you don't pay any taxes then yours can't be cut - and if that is you then please stop #$%$ because you already don't pay any taxes) and give them more money to spend like you propose. You can't argue both sides to support the same stance.

 
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