The Real Mitt Romney

[xoxoxoBruce]

Another problem is banks sitting on money they are afraid to lend. I think if the propane demand went up, the bank would lend Buck Strickland the money to grow his business meeting that demand. Serving small business has been the traditional roll of local banks, and it allows them to pay interest to their local depositors, which helps the local community.

[glatt]

Originally Posted by Stormieweather

You need more customers in order to expand. Businesses don't just expand because they have extra money, they expand because demand is higher for their product/service (and they can't squeeze any more out of their current resources).

And that means more cash is needed in the consumer's pocket.

Originally Posted by Flint

I'm sure that is a valid variable here. I'm not an economist. But I do know that businesses want to grow and get bigger, and that it takes an investment in increasing capacity (buying a new truck, machine, or computer, for example) in order to get bigger. That takes money.

Stormie is correct. The myth that the Republicans are pushing this election is that small businesses are the job creators. That's not true. Businesses are reactionary. They get busy and they hire more help. They get busy when the consumers start buying their product or service more. Consumers buy more when they have more money to spend, (or feel like they have more money to spend and are willing to charge it.)

Sure, businesses always want to grow and expand. But if they are in a mature field, that growth is always through taking market share from other companies. That does not create jobs. If company A has 20 employees and competitor B has 20 employees, and they both are selling widgets, then for company A to grow and expand to 30 employees, competitor B will have to lose customers and lay off 10 employees. Net job gain zero. In fact, to take market share, often a company does it through being more efficient and offering a product at a lower price. "More efficient" usually means fewer employees. So you actually end up with fewer jobs total.

The only way to get the entire pie to be larger is to get new customers who weren't buying widgets before. The only way to do that is to invent a new widget (like an iPhone) or make the widget so cheaply that not only do you take market share from competitors, you get customers who were sitting on the sidelines previously.

The most effective way to stimulate the economy is to get consumers to start spending.

[piercehawkeye45]

Originally Posted by glatt

Stormie is correct. The myth that the Republicans are pushing this election is that small businesses are the job creators. That's not true. Businesses are reactionary. They get busy and they hire more help. They get busy when the consumers start buying their product or service more. Consumers buy more when they have more money to spend, (or feel like they have more money to spend and are willing to charge it.)

Sure, businesses always want to grow and expand. But if they are in a mature field, that growth is always through taking market share from other companies. That does not create jobs. If company A has 20 employees and competitor B has 20 employees, and they both are selling widgets, then for company A to grow and expand to 30 employees, competitor B will have to lose customers and lay off 10 employees. Net job gain zero. In fact, to take market share, often a company does it through being more efficient and offering a product at a lower price. "More efficient" usually means fewer employees. So you actually end up with fewer jobs total.

The only way to get the entire pie to be larger is to get new customers who weren't buying widgets before. The only way to do that is to invent a new widget (like an iPhone) or make the widget so cheaply that not only do you take market share from competitors, you get customers who were sitting on the sidelines previously.

The most effective way to stimulate the economy is to get consumers to start spending.

Agreed. Both supply (companies investing) and demand (customers spending) are important but I would argue that the supply side is not as widely recognized today so needs to be emphasized more.

I do want to make the point that in response to an increase in demand, companies can increase supply in two ways: hiring more workers or making their current workers more efficient. Historically, technology moved slow enough that increasing productivity wasn't an option but I think we are approaching the threshold where it may be cheaper (in general) for companies to increase supply by simply increasing productivity, not the amount of workers. I think this, along with technology allowing lower skilled workers to replace higher skilled workers (think manager positions), explains much of our current economic "recovery".

Honestly, my generation will have to deal with a lot of problems (national debt, rising inequality, global competition, climate change), but automation and increases in productivity may be the hardest hitting since nothing else can be solved without a strong economy. Also, it seems economists have their heads in the ground and scream "neo-luddite" every time someone suggest the problem.

[Sheldonrs]

The full details of Romney's tax plan:

http://www.romneytaxplan.com/

[Ibby]

We have a small business problem in this country.
The problem is that small business in this country doesn't work.

Maybe we could start with rigorous antitrust legislation and action to break up monopolizing or otherwise market-dominating multinationals that siphon money from the poor and working-class to offshore tax havens and to Chinese massive-scale industry.
Maybe we could tax the wal-marts and the apples and the fast-food conglomerates and the comcasts and the financial giants and use that money to subsidize and otherwise help local businesses fill some parts of those same economic niches across the country.
Maybe we could guarantee living wages to hourly or otherwise marginalized workers, giving them the option of shopping local instead of buying chinese crap from wal-mart.
Maybe we could fix the food deserts in our country by making sure EVERY American has access to affordable HEALTHY options, helping to close the health care gap between economic classes and slow the ridiculous rise in health care costs nationally.
Maybe we could put enough money into our cities to build the communities from the inside, with local, small, neighboorhood businesses, instead of outside businesses taking money back out of the community and to the affluent suburbs or gentrified neighborhoods.
Maybe we could work to end the highly racialized nature of our schooling system, and fund education in this country well enough to make sure every American has a REAL opportunity to learn not only job skills, and not only standardized test questions, but also civics, critical thinking, and other more broadly applicable skills that will leave them ready for the job market or for college.
Maybe while we're at it we could reform the for-profit predatory system of colleges that exist only to cash in on the guaranteed student loan program, and the banks that make the profit while the government assumes the risk, by regulating the rising costs of both private and public education, and subsidizing schools through GOVERNMENT loan programs, where the GOVERNMENT keeps the interest profits, instead of the banks.

I could keep going for an hour, if I didn't have to get dressed and ready to leave for class in fifteen minutes. Every one of those things would have broad stimulative effects on the economy, and have either a short-term or a long-term revenue-boosting effect as the tax base broadens. Keynesian economics, bitches. Shit works and always has.

[Ibby]

Originally Posted by Ibby

I could keep going for an hour ....

Not only could I spend a full hour listing bullet points - i could write for an hour each about each of them. Why can't that ever be something I do?

Here's something I posted on my tumblr as a slightly but only slightly tongue-in-cheek post at 3:30 in the morning, when i should be sleeping so I can do my homework in the morning but instead I'm drinking a tripel ale and tequila. and smoking up. My middle school ex I've been skypefucking with the last few weeks is texting flirtily with me again but very slowly while she writes her thoreau essay due tomorrow and, well, i'm not going to sleep until I know if she's gonna take a study break.

So, instead, I'm listening to the first four Ramones albums [Ramones, Leave Home, Rocket to Russia, Road to Ruin] in chronological order and indulging vices - i think im going to have a cigar in a minute - and #nightblogging on tumblr.

Originally Posted by Ibby

the vast majority of jobs worked by American workers are jobs that don’t “come home” with you.
When your shift or your day or your hours finish, you clock out and go home. Or, you get salary plus overtime, and you get paid extra in bonuses or manager’s raises or OT or whatever for time you spend outside of work doing work-related things, or your salary reflects your complicated and demanding schedule.

Why are the only major, inevitable exceptions to this…. Teaching and being a student?

Students do homework. Teachers spend time out of class grading and preparing and everything else. Arguably teachers SHOULD BE and in theory (but not practice) ARE paid a salary that takes out-of-class time into account.

Why are students, for 12-16-20+ years, educated in a way that assumes so much extra time outside of class - especially in high school/college/beyond - writing essays and doing homework, when that is NOT at ALL a skill applicable to working life in general, and not useful to the vast majority of the potential workforce, leaving especially those who can’t afford higher education in a situation where public education yet again fails to adequately prepare them for working life, reenforcing systemic patterns of disadvantage that add to the problem of vast numbers of people being unemployed and underemployed while major corporations sit on vast reserves of money?

TAGS:
#[ibby] really really does not like doing her homework #[ibby] would rather rant about our education/employment problem than actually do homework #this is nearly a standard 250-word page long thats a LOT for a 3:30am post #imagine if i cared even half as much about doing homework as about ranting on tumblr #nightblogging

[Adak]

Originally Posted by glatt

The most effective way to stimulate the economy is to get consumers to start spending

And consumers can't spend money, unless they HAVE money to spend!

Which is why we need JOBS, and yes, small businesses are the most efficient (fastest), new jobs creators, in the private sector.

It's not the Republican party's theory, it's straight out of economics. I understand your hesitancy to accept it, because it's a FACT, and liberals don't generally mix well with facts.

Businesses change as they compete, and sometimes get into entirely new markets, or new ways to serve their same market. The competition is a fantastic way for us consumers, to get better products and services, and THAT also gets the money moving -----> ZOOM!!

[Stormieweather]

Originally Posted by Adak

It's not the Republican party's theory, it's straight out of economics. I understand your hesitancy to accept it, because it's a FACT, and liberals don't generally mix well with facts.

I thought you said you weren't an economist?

Point is, making rich people richer does not directly translate to "job creation".

And yeah, I'd probably call Obama a centrist. Certainly not a liberal of any flavor.

[Flint]

That was me.

[DanaC]

Originally Posted by Adak

It's not the Republican party's theory, it's straight out of economics.

Yes, because as an academic discipline, economics is a politics/ideology free zone.

Economics is a little like history: one part 'science' to one part interpretation and one part art.

[piercehawkeye45]

Big_V. This lecture by Elizabeth Warren (1998) may interest you. It talks about why the middle class does not have enough money to spend. It is long, 1 hour, but extremely informative. The first 10 minutes are introductions so that can be skipped.

http://www.youtube.com/watch?v=akVL7QY0S8A

[BigV]

Originally Posted by piercehawkeye45

BigV, follow the link for the answer.

http://www.theatlantic.com/business/...ssible/263541/

Edit: A second article:

http://www.bloomberg.com/news/2012-1...-tax-plan.html

Basically, you assume unrealistic job growth or you change the definition of the middle class...

ph45! I have neglected to thank you for this *extremely informative post*. Thank you. They are good articles, no crap, lots of detail well explained.

Originally Posted by piercehawkeye45

Big_V. This lecture by Elizabeth Warren (1998) may interest you. It talks about why the middle class does not have enough money to spend. It is long, 1 hour, but extremely informative. The first 10 minutes are introductions so that can be skipped.

http://www.youtube.com/watch?v=akVL7QY0S8A

have started the vid, but it's gonna be preempted by the debate. I'll report later though. thanks.

[BigV]

Originally Posted by Flint

The way I understood it is because the rate is lower.

this is the core problem I have understanding Romney's tax plan. He says reduce rates, reduce deductions, revenue neutral. Where is this "more money" coming from?

[Flint]

Originally Posted by BigV

this is the core problem I have understanding Romney's tax plan. He says reduce rates, reduce deductions, revenue neutral. Where is this "more money" coming from?

A. The rate is a rate of income being taxed, so when you reduce rates there is more money left to individuals as income, and less money received by the government as taxes.

B. Deductions are (in effect) a method of giving money back, so when you reduce deductions, there is less money received by individuals as returns, and more money recieved by the government as taxes.

Whereas A. and B. have opposite effects, the net effect is neutral (theoretcially--I'm not arguing feasability, just describing a simple flowchart), meaning no change. Neutral doesn't mean more.



I'm still struggling to identify the area which is difficult to understand.

[xoxoxoBruce]

Neutral? Then what's the point?
When you make $50,000, your mortgage deduction is a very big deal.
When you make $50 million, not so much.