Millions of unemployed face years without jobs

[tsetsefly]

from the NYT: http://www.msnbc.msn.com/id/35504954...w_york_times//

BUENA PARK, Calif. - Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits. Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

This is not surprising given the amount of government involvement that will occur in this recession. Until people dont give up the notion that government can "create" jobs then we will continue to see people without jobs.

This article also points out to manufacturing jobs lost and low skilled jobs lost I find it funny that in all this debate about keeping companies in the US only regulations or penalties are brought up as a way of keeping companies here. Not once are incentives considered. how about cutting the corporate tax rate which is one of the highest in developed countries? I think that would much more than just penalizing companies for leaving.

Anyway, the reactions to the financial crises have been horrendous and to think that we will keep doing the same is even more mind-boggling.

[touchring]

Re: Millions of unemployed face years without jobs

from the NYT: http://www.msnbc.msn.com/id/35504954...w_york_times//




This is not surprising given the amount of government involvement that will occur in this recession. Until people dont give up the notion that government can "create" jobs then we will continue to see people without jobs.

This article also points out to manufacturing jobs lost and low skilled jobs lost I find it funny that in all this debate about keeping companies in the US only regulations or penalties are brought up as a way of keeping companies here. Not once are incentives considered. how about cutting the corporate tax rate which is one of the highest in developed countries? I think that would much more than just penalizing companies for leaving.

Anyway, the reactions to the financial crises have been horrendous and to think that we will keep doing the same is even more mind-boggling.

Reducing tax won't help because it will only worsen the deficit. The only solution which i can think of is to downsize the US military, withdraw from Iraq and Afghanistan - adopt Israeli style security for ports and airports.

[Chomsky]

Re: Millions of unemployed face years without jobs

Reducing tax won't help because it will only worsen the deficit. The only solution which i can think of is to downsize the US military, withdraw from Iraq and Afghanistan - adopt Israeli style security for ports and airports.

+1

It really is the elephant in the room.

[Slimprofits]

Re: Millions of unemployed face years without jobs

Reducing tax won't help because it will only worsen the deficit.

Please explain

[tsetsefly]

Re: Millions of unemployed face years without jobs

Reducing tax won't help because it will only worsen the deficit. The only solution which i can think of is to downsize the US military, withdraw from Iraq and Afghanistan - adopt Israeli style security for ports and airports.

It wont help get jobs or the deficit?

You can cut taxes and spending.
I agree with downsizing the military. Ending both wars and closing down hundreds of bases around the world is a must. There is no need to be wasting so much money having a presence in countries where conflicts ended decades ago.

Another area where you can cut spending (and their are many) is farm subsidies. It is a myth that the family farm is being helped by the subsidies, in fact they get hurt by it. It's mostly the biggest farmers (corporations) who get the largest amount of subsidy money. This artificially keeps prices high, especially when you throw in import quotas. Sugar is a good example of this, the same family corporation that gets the most in sugar subsidies also gets has the highest total allowed to import. And they are great contributors to both Democrats and Republicans.
A Sweet Deal for Big Sugar's Daddies

Federal Sugar Subsidy Helps Destroy Florida Everglades

I also don't see how to keep low-skilled jobs without cutting corporate or manufacturing taxes, it just wont happen. Penalizing companies to force them to stay here will only hurt them financially as well. This off course could be applied to other industries. As longs as certain industries aren't privileged (ie FIRE) this is really the only thing that can help.

If job creation is needed, what do you propose should be done?

[Milton Kuo]

Re: Millions of unemployed face years without jobs

Please explain

Reducing or eliminating corporate taxes will only cause more corporations to domicile in the U.S. or repatriate earnings from abroad. However, it will not necessarily stop a corporation from outsourcing its labor to less developed countries while hire more Americans.

In essence, by eliminating corporate taxes, you get another form of "trickle-down" economics and we all know how well that has worked out. :rolleyes:

[don]

Re: Millions of unemployed face years without jobs

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance.

“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.”

And when that fog horn blows I will be coming home
And when that fog horn blows I want to hear it
I don't have to fear it
I want to rock your gypsy soul
Just like way back in the days of old
Then magnificently we will float into the Mystic

[tsetsefly]

Re: Millions of unemployed face years without jobs

Reducing or eliminating corporate taxes will only cause more corporations to domicile in the U.S. or repatriate earnings from abroad. However, it will not necessarily stop a corporation from outsourcing its labor to less developed countries while hire more Americans.

In essence, by eliminating corporate taxes, you get another form of "trickle-down" economics and we all know how well that has worked out. :rolleyes:

I believe it was a politician who used "trickle-down"theory, as there is no theory in economics called trickle down...

ill use this from wikipedia just because I have read this before, but this is from conservative libertarian economist Thomas Sowell:

Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners--but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics.

And I disagree that more companies would not base their operations in the US, I think they would...

[Milton Kuo]

Re: Millions of unemployed face years without jobs

I believe it was a politician who used "trickle-down"theory, as there is no theory in economics called trickle down...

I was not using the term "trickle-down" economics to refer to a school of economic thought so much as I'm using it to refer to a way of getting money into the hands of the general populace. Eliminating corporate taxes in the hopes of corporations hiring more Americans is much like having the Federal Reserve give tremendous amounts of money to the banks in the hopes of reviving the credit markets. It's not going to happen.

And I disagree that more companies would not base their operations in the US, I think they would...

If you're talking about companies moving their headquarters to the U.S., you'll note that I explicitly stated that they would. However, if you're talking about companies repatriating manufacturing, engineering, and other blue-collar and white-collar jobs, I'm going to have to disagree with you.

Take a look at all the manufacturing that has left the U.S. The factories have been relocated to countries where labor is much cheaper, tax laws are more attractive, and labor laws are weaker. With all of the cost savings achieved by offshoring, you'd think that U.S. consumers would get a much better price on the products now manufactured overseas due to the cost savings but you don't. All you get are potentially higher stock prices and bigger executive bonuses.

If you have a corporation with an average per capita gross of $200,000/employee, the corporation is not going to relocate jobs to the U.S. where the average cost of labor is $100,000 versus $10,000 overseas. The cost of labor difference is so high that the corporation is still better off using overseas labor even in an environment where U.S. corporate taxes are zero. Furthermore, workers overseas are much easier to abuse than U.S. workers.

Of course, all of the above applies especially to publicly-traded companies on the Wall Street treadmill. Privately-owned companies, being beholden to no one other than their owners, can choose to accept a lower profit margin as a trade-off for doing a societal good. That is, it is possible that the elimination of corporate taxes could result in privately-owned companies hiring more Americans, assuming that management is more interested in the welfare of the U.S. than corporate profits.

[touchring]

Re: Millions of unemployed face years without jobs

If job creation is needed, what do you propose should be done?

This is a hypothetical scenario - impose a 50% tax on ALL imported goods and services, with the exception of food and basic necessities. Companies will need to pay a 50% tax for services and software remittances.

If it costs too much to import, US firms will start making the stuff or engage local contractors instead of outsourcing. In the short term, 1-2 years, unemployment will rise even further as retailers get hit and close shop, and high end exporters get hit by retaliatory tariffs, but after 2 years, domestic production will kick start and start making stuff and services that were formerly imported. Retail jobs will also return. On top of that, the trade and federal deficit disappears.

[MulaMan]

Re: Millions of unemployed face years without jobs

[quote=tsetsefly;150011]Until people dont give up the notion that government can "create" jobs then we will continue to see people without jobs.[quote]

Wrong!

It was the government that "created" the job loses through "financial de-regulation" and "free-trade" - selling out America's middle class.

It is EACATLY THE GOVERNMENT that MUST "create" jobs by re-regulation of wall-street and rolling back of "free trade" deals that benefit the rich business owners while offshoring all the middle class jobs to non-democratic, non free-market, countries.

GOOD GOVERNMENT IS THE ONLY SOLUTION. They don't create jobs directly, but they need to re-create an environment that benefits a strong middle class over a small capitalist class, and yes that includes strong labor laws. The ONLY uber rich in America should be those that "build" things or invest long term in building things - Bill Gates, Buffett, .. we do not needs those wall-street billionaires that specialize in "stealing" wealth.

The government can create millions of jobs by an audit all US employers to ensure they have ONLY hired American citizens. Anyone caught hiring illegals goes to jail with a minimum 5 years sentance per illegal.

If we can get rid of the 20 million ilegals in this country, then that creates say 10 million new jobs and the tax base is supported again only by taxpaying citizens. The black market gets reduced back down to a few kids shoveling driveways and cutting grass while on winter and summer break from school.

[tsetsefly]

Re: Millions of unemployed face years without jobs

This is a hypothetical scenario - impose a 50% tax on ALL imported goods and services, with the exception of food and basic necessities. Companies will need to pay a 50% tax for services and software remittances.

If it costs too much to import, US firms will start making the stuff or engage local contractors instead of outsourcing. In the short term, 1-2 years, unemployment will rise even further as retailers get hit and close shop, and high end exporters get hit by retaliatory tariffs, but after 2 years, domestic production will kick start and start making stuff and services that were formerly imported. Retail jobs will also return. On top of that, the trade and federal deficit disappears.

so aside from inflation you want to kill the purchasing power of americans even more by increasing prices on everything but food and "basic necessities"( I would love to see the interest group battle to determine what is a "basic necessity").
This off course will lead to lower production in companies and people being laid off, more people loose their jobs further eroding the common goods market.
Domestic production would kick up, because their is no other option but at a much lower level as their export abilities would be greatly hampered by retaliatory tariffs and the consumer base at home will look nothing like it did before the massive increase in prices.

All the while you can bet government will once again have to bail out wall street, but even assuming that they wouldn't. You still have millions of unemployed that the government will have to pay for. The fewer imports from the tariffs will mean that revenue will dry up and as more companies set shops in the US that revenue will dry up. So you have a government with maybe 1 or 2 years of revenue increased but with greater spending do to the millions of unemployed.
This would result and higher deficit, continual low interest leading to more inflation coupled with rising prices across the board as companies have higher cost of production.

I would say that plan would definitely put the US in a depression, without a doubt.

[touchring]

Re: Millions of unemployed face years without jobs

I would say that plan would definitely put the US in a depression, without a doubt.

Yes, by itself, but there's a lot that can be done to prop up the economy during the transition stage - the US can also do what the Chinese had always been doing, print money to subsidize factory production, build high speed railways, electric cars, and power stations - tariffs will ensure that most of the labor will come from within the US. There's also so much that can be fixed, roads, bridges, power plants.

Once the projects get going, there won't be enough unemployed people to fill up the jobs. The "20 million ilegals" are definitely needed and more workers will need to be imported.

[Marek]

Re: Millions of unemployed face years without jobs

+1

It really is the elephant in the room.

+10

With defense, defense-related and associated payments for previous defense activities accounting for 54% of the budget, military expenses certainly are the elephant in the American room. To say these expenditures can't be reduced assumes our GDP + ability to borrow stays above that 54% of the budget (and that everything else in the budget can be driven to zero). Certainly a bold assumption.

Those clinging to the meme that defense is off limits are either weak on imagination or in denial.

We need to face up to the fact that the US is on Mil-Crack. And just like a crack habit destroys the health, finances and good judgment of a person, Mil-Crack does the same to a nation.

[karim0028]

Re: Millions of unemployed face years without jobs

+10

With defense, defense-related and associated payments for previous defense activities accounting for 54% of the budget, military expenses certainly are the elephant in the American room. To say these expenditures can't be reduced assumes our GDP + ability to borrow stays above that 54% of the budget (and that everything else in the budget can be driven to zero). Certainly a bold assumption.

Those clinging to the meme that defense is off limits are either weak on imagination or in denial.

We need to face up to the fact that the US is on Mil-Crack. And just like a crack habit destroys the health, finances and good judgment of a person, Mil-Crack does the same to a nation.

While i whole heartedly agree with the premise... Its not going to happen until the country itself is officially acknowledged as broke... Rome's military strength didn't disappear until after Rome financially collapsed. USSR's cold war activities didn't stop until they collapsed... Pretenses will be kept up to the very last minute, until they just dont... Its sort of like being the poorest person in the neighborhood and trying to keep up with the jones's; until you lose your job, then you just cant..... At that point you start tightening.....

Historically as far as i can tell, armies never shrink unless they are forced to........