Earlier today I watched the Governor of Virginia, Bob McDowell, expound upon the virtues of lowering taxes to stimulate employment growth. He said that every state with a Republican governor had lowered taxes and seriously increased employment.(He neglected to mention New Jersey which cut taxes and had an increase in unemployment) Therefore, the Federal Government should do the same and we'd all be better of. What he neglected to say is that this only works if you have a higher tax state from which to steal jobs. This is how it work: Assume two states with equal, including state taxes, employment costs to employers: State Goniff decides to cut its business taxes in half while state Schlemasel keeps everything the same. A business located in Schlemasel moves to Goniff in order to lower its cost. The unemployment rate in Goniff drops while the rate in Schlemasel increases. For the USA, unemployment remains unchanged. It is a zero sum game with one state winning and another losing.
The only way to make this cost cutting technique work on a national scale would be to eliminate the middle class entirely. This means paying computer programers $5,000 per year,as they do in India, or using sweat shop techniques, as it is reported are used in China. The "New Republicans" appear to be well on the road to this approach. All you need to do is listen to what they say and understand the implications.
1 comment:
Most republican policies, especially considering economics don't work. Its a simple fact. The "trick down theory" has well been debunked by now, and anybody whom denies this is ignorant of the facts. Bush tax cuts have been around a long time now, and yet unemployment still remains high. ~ The reason being is we have a severe problem with infrastructure. There is no cheap way to produce widgets in California and ship it to New York. High energy prices make diesel fuel roughly $4 a gallon, and since most big rigs get at best 6 miles per gallon, it affects the price of everything. Also outsourcing jobs is beginning to cripple America. Why hire an American $50,000 a year to do what someone in a foreign country can do for a few dollars an hour. This is clearly not sustainable for long term growth. Having our world economy depend heavily on a finite and hard to obtain energy resource is extremely risky as well.
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