Job Creation Mythology and the Worst Thing to Happen to Palm Beach County Since Bernie Madoff!

                                            
More on Classical South Florida

One of our Florida followers, Ruth Horowitz, let me know that she prefers Classical South Florida to the old WXEL by a mile!  I agree with her that the selection of serious music they play is a significant improvement over what WXEL played.  But Ruth, rather than getting her news from NPR as I do, sticks with TV and the newspapers to keep up with the world.  

As far as I am concerned, CSF has relegated NPR's news and interview programming (All Things Considered, Morning Edition, Fresh Air) to a feeble and inaccessible frequency (unless you are in your car). They know this and suggest that those Palm Beach County listeners who can't pick up the signal get it from the internet or go out and purchase an HD receiver.  Their web site actually says this!   What chutzpah!

To me, National Public Radio is more than just classical music and that is why I feel that Classical South Florida may be the worst thing to happen to Palm Beach County since Bernie Madoff.  I enjoy listening to the great music Classical South Florida provides, but I cannot forgive them for making me meticulously turn the dial each morning to try to pick up Morning Edition via the scratchy and distant signal of WLRN in Miami. They screwed Palm Beach County royally.
JL


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Job Creation Mythology

There is a myth that if the wealthy, and businesses for that matter, get tax breaks, they will use that extra money that would otherwise be paid to Uncle Sam to invest in economic expansion, thereby creating jobs. 

Everyone seems to agree that jobs are the elixir which will cure our economic ills.  Employed people have money to spend, creating demand, which should result in manufacturers and retailers hiring, creating still more jobs, to meet this consumer demand. And thusly, we should roll out of the recession in which we find ourselves.

But given low tax rates and liberal (pardon the expression) deductions, do the wealthy actually pour the money they gain from them back into the economy?  I think not.  It appears to me that they invest it, and those investments are not necessarily the kind which result in job creation.  The only times I recall this actually happening was during the last years of the nineteenth century when the “robber barons,” such as Carnegie, Vanderbilt and Rockefeller built industries (steel, railroads, petroleum) which hired great numbers of workers and to a lesser extent, during the Reagan administration.  The rule today seems to be for the wealthy to put the money low taxes give them into investments which will grow their wealth, with no more than lip service toward job creation.  Today, with the stock market in a “bear” phase, the wealthy are buying up America’s wealth at bargain rates, but that doesn’t create jobs.

As for business, having to pay lower taxes is not going to result in a business (I prefer that word to “corporation” which has some negative, although totally unjustified, connotation) going out and hiring some new employees.  Businesses strive to make a profit and when the demand for their products or services is such that they need more employees, then and only then will they hire!  The same goes for expansion of their operations, which will occur not because they have the money to do so, but only when demand warrants it.

I conclude that the only way to bring about job creation is for the Federal Government to jump start it by funding Federal jobs improving our schools, roads and infrastructure.  Once the salaries of those employed in these Federal programs are pumped back into the economy, there will be an increased demand for products and services which will enable businesses, already bolstered by lower taxes, to hire new employees.  Ultimately, the “jump-start” Federal programs will be phased out.  The wealthy, at this point, will be investing in businesses as well, once they start thriving, not for the specific purpose of creating jobs, but because expanding businesses will be a good investment.  
People are happy when they have meaningful employment!

For this to work, the following steps will also be necessary:

1.    Funding: Recognition that funding for the Federal jobs program must come from increased taxes on the very wealthy is necessary.  There need not be any increase in taxes on businesses.  Actually, their taxes should be reduced to make hiring easier once Federally-enhanced demand calls for it.

2.   Taxes: Outsourcing of jobs should be illegal.  In earlier blog postings, I explained that this could be accomplished by putting prohibitively high taxes on that portion of a company’s profits which is attributed to outsourced jobs. Other than this restriction, taxes on businesses should be reduced or eliminated.  This may compensate them for no longer being able to outsource to cheap labor markets and also eliminate the necessity of being domiciled outside of the United States for tax purposes.  The money lost by such tax reductions will be made up by increased taxes on the wealthy, particularly in the capital gains area.  Instead of taking it from the businesses, the government will be taking it from those who benefit from investing in those businesses. Another great American myth, beside the one about their creating jobs with investments, is that such high taxation of the wealthy will hurt the economy.  Any distress it might cause those who can well afford it is far less than the distress experienced daily by the unemployed and under-employed millions in this country.

3.     Real Estate: Finally, there must be a resolution of the real estate credit debacle.  It will not do any good for the economy if those who get a new job are still saddled with years of unpaid mortgage payments and the danger of foreclosures.  In a prior blog posting, I suggested that a Federal Program be developed to purchase “underwater” and foreclosed properties, auction them off to pay off the cost of their purchase, and then require the new owner to either resell them or turn them into rentals, with the original owner, most desirably, as the tenant.  Initial funding to enable the Federal government to purchase these properties would come from a bond issue for that specific purpose and include a cushion if the government should lose money on the transaction.  The bonds would be paid off on the sale of the properties by auction.
Jack Lippman



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