The Nine Results - decline in net worth

[Whereisup]

The Wall Street Journal has long been pushing for the United States to become competitive with other nations in wages and labor legislation. Republicans may win next time and they are suggesting things like reducing the minimum wage and ending unemployment insurance. So we may soon be in what some writers call "a race to the bottom". However, if the wealthy conservatives go ahead and push wages to a very low level, that will make the lives of the executives ahd large shareholders worse.

Result 2: a decline in net worth

Corporations are entirely dependent on sales of their products and services to make money. If the number of their customers fall, corporations will first begin losing money, and if the problem of not having enough sales continues, those corporations will become bankrupt.

Now if the conserative wealthy are successful in pushing the wages of 90% or so of their employees down to a very low level, those newly impoverished people will bo longer be able to buy many goods and services made by the corporations, so the sales of the corporations will fall. The lower corporations push wages, the more their sales will drop.

This would end with the failure of most corporations and other businesses, which would drastically decrease the net worth of the conservative wealthy. The more than 500 people with assets of more than a billion dollars would be lucky if they managed to retain a few million dollars of their assets. Many people now worth millions would end up in many cases with nothing.

Some of the wealthy recognize this, but if one CEO increase wages, or doesn't decrease wages, while the other corporations don't, then the one corporation which did the right thing for the economy as a whole would become uncompetitive with those other corporations. Therefore, no single corporations dares to be the one to increase wage, which would produce economic growth through increased sales for everyone. Likewise, if a race to the bottom happens, a single corporation won't dare to be the one not decreasing wages.

Therefore, if the conservative wealthy want to save the economy, they will need legislation which requires all of them to do the same thing at the same time.

One possibility would be an international minimum wage which would raise wages throughout the world and create a level playing field.

In terms of international politics, that could be too difficult to bring off. However, I do have an alternative which would make it possible for the United States to level the playing field for ourselves.

I call this a trade minimum wage.

The United States could require that any corporations, domestic or foreign, in order to be eligible to have their products sold in the United States, would be required to pay their lowest paid employee the United States minimum wage or higher.

This would make American corporations competitive by increasing foreign wages, It would help the poor nations because the increase in their wages would create eonomic growth.

When the poor nations became developed, that would increase the world market by many times, which would provide new opportunities for American businesses skilled enough to export.

Jim

 

[whitehall]

Energy is the key. As long as the Obama administration promotes windmills and sun power and other primitive forms of energy the private sector will go overseas to produce a product. Washington D.C. is a thriving and dynamic city with constructions cranes all over the place but about 30% of citizens exist in third world poverty. The reason is that democrat party policies have created a plantation mentality where people expect government to supply them with the means to make a living. When you factor in the dismal failure of public education that produces generation after generation of ignorant people who only have the skills to put a condom on a cucumber you have a recipe for disaster. The half century of the Detroit plantation mentality created by democrats resulted in a broke and desolate city riddled with crime and people still waiting for a government handout.

 

[Whereisup]

Energy is the key. As long as the Obama administration promotes windmills and sun power and other primitive forms of energy the private sector will go overseas to produce a product. Washington D.C. is a thriving and dynamic city with constructions cranes all over the place but about 30% of citizens exist in third world poverty. The reason is that democrat party policies have created a plantation mentality where people expect government to supply them with the means to make a living. When you factor in the dismal failure of public education that produces generation after generation of ignorant people who only have the skills to put a condom on a cucumber you have a recipe for disaster. The half century of the Detroit plantation mentality created by democrats resulted in a broke and desolate city riddled with crime and people still waiting for a government handout.

Thank you for presenting some reasons.

I partly agree and partly disagree with your first sentence. The Obama wind and solar programs are so small that they produce almost no reduction in greenhouse gases. On the other hand, production of products overseas was happening long before Obama was elected President. Walmart was able to destroy somewhere in the area of a million small businesses in America, and to grow to its current size by insisting that most of the products it sells come from low wage nations. And Walmart is just one example.

One way to reduce the dangerous trade deficit would be to invent a lot of new products. However, a situation has developed in which new products by corporations are produced overseas from the very beginning.

One possible solution would be special help to corporations which produce a new invention in the United States. A stockholder message board liked this idea, but it never spread into the public debate.

The idea would be that for five years, everyone who purchased a new invention entirely manufactured in the United States would be able to take half the price of the item as a tax deduction. That would make it profitable for corporations to produce the invention in the United States because it would attract many customers. Research has shown that normally, very few people buy a genuinely new product, but then sales slowly build up as people see that others have purchased the product. Five years would give the product time enough to become established.

One of the shareholder message board members pointed out that there would be no cost in tax revenues until the product were on the market.

Once the new invention were being sold, income tax from the new jobs, and other taxes paid relating to the new product, would partly or wholly compensate for the tax revenues lost due to the tax deductions. Then, if this caused increased economic growth, that would increase tax collections even more.

China's economy has been growing the eight to ten percent area for many years. The American economy should be able to grow as fast and China's economy. The fact that our growth has been so slow means that we have been doing something wrong. The tax deductions for buying new inventions would help correct that problem.

Jim

Jim