The Instigator
Economicsgeniusorsoithink
Con (against)
Losing
0 Points
The Contender
gannon260
Pro (for)
Winning
7 Points

Is Barack Obama shattering USA's competitiveness?

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Post Voting Period
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after 1 vote the winner is...
gannon260
Voting Style: Open Point System: 7 Point
Started: 1/25/2015 Category: Economics
Updated: 2 years ago Status: Post Voting Period
Viewed: 733 times Debate No: 68885
Debate Rounds (3)
Comments (8)
Votes (1)

 

Economicsgeniusorsoithink

Con

http://www.telegraph.co.uk...
The article that brought this to my notice.
My points against the article (i.e. i say barrack Obama is NOT shattering the LONG term competitiveness of the US economy.
The article speak of a Capital gains tax increase, which somehow leads to a fall in companies(specifically start ups). It says that the number of start ups are falling and more of them are failing. but that is not due to a tax structure. If a start up were actually profitable or with good product it will make money. And a failure of a start up will definitely make no money no matter what the tax rate may be.
Further the article so forth does not say about anything of the encouragement to businesses to increase the number of employees(evidently consumers) which is how Obama will spend the money off(maybe even to these start ups). Start ups cannot function if consumers(middle class and low class) don't have a surplus to spend on them or a product that can become a replacement of a current product. Now we see why start ups are actually failing. I am open to see if anyone can make a point against that.
But here is my taxation point a capital gain tax means that the person is essentially only taxed after the sale of his investment(of said start up) automatically this means the start up was either successful and made money(so tax it, cause even the rate increase to tax it is not much 5%) or not(so what capital gain would be there to tax, NONE).
To me this will in the long run make sure more companies and entrepreneurs will be created(consumers will buy their product). They will have surplus money which they will spend on cost cutting and innovating new products and technology. Which will grow the competitiveness of the company. Cost cutting and innovation automatically usually leads to a fall in extra short term jobs(because in the short term companies may need them unable to put forward the capital for lower expenditure investments or assets) and a growth in new areas. only thing america really needs is the education for such people to get jobs in new areas.

I welcome anyone to debate me on the economics politics or any social factors on this.
gannon260

Pro

I will be arguing that Obama is decreasing USA's cost-competitiveness by increasing taxes on the rich, increasing capital gains taxes, increasing social security(obamacare) and other factors. The push to increase the minimum wage is also bad for usa cost competitivesness which obama endorses. I accept and i look forward to this debate. Please do not use faulty economic theory and give us logical economic points to debate about.

round 1-acceptance
round 2- constructive
round 3- conclusions and rebuttals. (no new evidence)
Debate Round No. 1
Economicsgeniusorsoithink

Con

Now to argue the point that a tax on capital gains or the high earning people passing properties to the next generation will lead to a fall in competitiveness in american industry as a "destination for investment" is not probable because a rich man does not invest in a business, idea or a company with the tax rate in mind, he does so with mind to make a large profit.

Money will always go to an economy that's growing or has opportunity, so it is Obama luck that he has a growing economy, notwithstanding America has a new growth streak coming which is unlikely to . If it were not growing i will concede that a rate increase would kill current industry and make sure few new investments come. In the long run as i said before such would not lead to fall in competitiveness because the system would automatically make it efficient enough to stay competitive(cost cutting).
He is breaking the competitiveness for a short time(explained under) in order to make income equality and a useful resources for america which to my knowledge will help you'll in the long run. By giving tax breaks to middle class households for two important things that is collage(to get higher education) and tax breaks for child care both an investment of the future and will spur a demand for goods from middle class households. That is why corporations and new businesses will form because of well educated Americans and demand. Ironically many of the innovative guys in the Us have been kids who basically were getting education and though to do something different. Eg. bill gates, Steve jobs, mark Zuckerberg.

As cost-competitiveness works in short term if someone were to sell a business or transfer an estate, it may be seen as more difficult with a lower return to the investor. Especially, if he is removing the investment to buy a more innovative product. This may sound strange but this is because investors and entrepreneurs after getting profit expectations from sources plan their next big thing stuff, this dents the current plan of many people but just for sometime. Hence the uproar against it.

Also if America needs to grow and give a better standard of living to people in a capitalistic economy it will from time to time have to re distribute the income for a greater demand or it risks eroding its demand. And a lower American demand risks not only USA's companies current cost advantage due to large scale of economy but also will decrease the investment in the country hence decreasing the overall competitiveness of USA cos globally and internally. And what Obama has done may not be the most nicest thing for a politician he has done the most necessary thing for an economy and long term cost competitiveness of America.
gannon260

Pro

Capital gains tax is bad for future growth, it does so by cutting future profitability of investments thus the return on investments. yes your correct, rich men invest for a large profit, which is why they factor in capital gains tax laws to maximize return. Reduction in return on investments reduces potential reinvestment which furthur spurs job growth and demand. I dont understand how increasing capital gains tax leads to higher growth. The fact is this, capital is vital to the economy and capital gains taxes reduce the potential amount in the future by decreasing the amount reinvested and discouraging others to seek alternatives. A business cannot grow if they have no capital and therefore cannot compete in the global market. Mass redistribution of wealth does increase demand, but hurts us job competivity as labor prices increase through things such as minimum wage. Tax breaks are good since it increases demand. Obama has increased taxes on the rich which yet again reduce the amount of capital into the market again. Yes demand will increase entrepreneurship, but you cannot do so if you don't have the means of economic expansion (capital) to produce more goods.

It is a well known fact that obama supports a minimum wage. Minimum wage increases will decrease corporation profitability. This leads to an increase of service/good prices and higher wages also mean more people getting laid off. According the the congressional budget office, which is nonpartisan therefore reduces the likelihood of bias, a minimum wage hike to $10.10 will lead to 500,000-1,000,000 jobs. That is a lot of jobs lost due to a minimum wage hike. Increasing the minimum wage to those heights leads to job losses as companies try to maximize their cost competiveness despite the increasing costs of labour. It is a fact that increasing minimum wage, increases corporate expenditures, therefore to offset this, the workers have to become either A) more productive or B) laid off or even both. Minimum wage increases increase cost of final product or good by increased labor costs thus making American products less cost-competitive on the global market without minimum wages. If the firms offset the costs by reducing employment, that is also detrimental to our economy.

Pro, a better standard of living by redistributing resources is not cost-competitive. Better standards of livings require high amounts of work output to offset these costs. A capitalistic society cannot increase it's wages and wealth and simply stating that demand will solve all the economic problems. The fact is that increasing demand may not even effect the USA as some products can be imported and therefore the productive spending capital is lost to outside producers. Redistributing resources as you said will also cause massive inflation as people are spending rapidly and costs are going to continue to soar since there is so much money flowing. Inflation is bad for the economy because it leads to the devaluation of currency since it now no longer has much intrinsic value since it was taken from the rich without exchange from labor. We need to have rich people who take entreprenuerial initiative in a capitalistic society and not tax them like crazy. Rich people after all are what lead our corporations, and without their leadership, we wouldn't have things like iphones thanks to rich people like steve jobs. Rich people spur our economy and there is no need to burden them with soaring taxes as Obama has done.

To conclude, capital gains tax is bad, reduces reinvestment. Reinvestement is needed for economic growth for businesses.

Increase rich people tax bad, rich people spur economic growth and leadership, as well as own businesses that produce things. Businesses are needed to remain efficient and for long-term economic growth.

Redistribution is bad, leads to inflation and the increasing demand may go to foreign entities and not spurn our own economy as it's meant to.

Minimum wage leads to decreasing profit margins and therefore increasing product price or employment, decreasing overall competitiveness.

I rest my case.
http://www.whitehouse.gov...
https://www.cbo.gov...
Debate Round No. 2
Economicsgeniusorsoithink

Con

http://www.forbes.com...
Unbiased report of the Obama tax raise and its applications
The capital gains tax is Good Here is why. An increase with the new policies is good too.

Tax is paid to get benefits from the state. A capital gain tax is applied to the gains an individual makes on a business. Now to run businesses the state provides services. It provides incentives and provides infrastructure. Now the capital gains tax increase is funding three important infrastructural changes for the economy
1. More smarter workers at a lower level to optimize the low level job output. Improve the efficiency of workers at that level. An investment for the future so America can compete with foreign nations latter on. Hence hell yeah he is not shattering any competitiveness in fact increasing it. Because smarter workers at low levels which is usually the level at which most workers are unproductive will lead to overall productivity at lower costs. Because well they are not exactly coming out of four year collage. And post that the chance to get four year collage at a lower cost will give these Americans a better life and companies a better work force in the long run.
Thus improved workforce will open up new avenues which may lead to USA overcoming the marginal profit that companies make by outsourcing production and IT work. This will attract the capital.
2. A cut on taxes for Child welfare spending which will lead to more income used on children rather than taxes( and paying off the deficit that they will leave anyways with the kids, snide remark of what nice things have been left for your generation and mines)
3. The tax cut for households to have two earners without getting penalized will add spending power to a lot of middle income households to spur demand and hence investment. Further it will encourage more people to work mainly females who found it useless to work for the earlier marginal increase in the household income.

These points lead to improved competitiveness of USA's workforce and will lead to a better return on the investment. It will increase investment in current and new industries to meet the demand.

Now here is the point why no one will stop or even slow down investment in the US to transfer operation to China. only top companies(about top 0.5%) can actually afford to source products from outside producers due to the elaborate requirements. Their share in GDP is 16.5%. But still there is 84.5% of any growth that has to be meet by local producers. A better work force can reduce that 16.5% by some measure certainly.

Just for your information a devaluation of your currency would be good in comparison to other currency because it would spur export and curb import being an import nation trade wise.

Another thing on the point of Redistribution of wealth(because indirectly this tax and benefit is exactly that) is good as long as supply side of an economy is in shape to take it. Usually a business will invest in somethings to take care of it. Second of all and most important on that point is that inflation won't be found as most factories and establishments have surplus capacity which if get demand may improve their health and increase their demand for RM and labor.

Minimum wage
You gave me two article to read i read them
but i wrote this in the comment section pls read it
Eg:
Selling price 100. current profit margin 10 OK
labor is 22.5% of the cost of a company
raise in cost of labor by 20% due to minimum wage rise(just considering they can't cut employees number because it would affect their operational capabilities)
labor increases to 27%(20% of 22.5 is 4.5) of the product cost so cost of product is now 104.5(100-22.5+27)
so price will definitely increase by 20% to 120(knowing that there may need more)
Hence profit margin will increase because
120-104.5=15.5
but moreover we still have untouched the profit margin of 10
so its 25.5 profit on cost.
now you will never see this on a profit and loss account of a company because the moment a company raises its price it does so disproportionately because it has to spend on a way to keep customers so it spends on silly toys for children a new menu for old people of health freaks or advertisements just to get people enthused by its products, new kisioks or POP's and many times incentives to smaller traders to sell their stuff.
The cost of other raw materials will not go up much as the minimum wage raise will not be applicable to them that produce it. This is due to the current surplus capacity in the US economy. It will just be used rather that being left.
The sales will not be radically affected because those that are affected by the raise will automatically buy more of their own and those that are not affected by it usually either have a surplus(high paying jobs who will not stop at all) or not(lower paying jobs who will automatically cut down purchases not stop).

And by your own articles if you take their prediction seriously
just pure GDP added is
28 million people* working 27.5 hours a week(AVG)*52weeks*$(10-8) based on assumption not everyone is earining exactly minimum wage.
80.08 billion dollars
.5nillion people*loss of 27.5 hours a week*52*10
7.15 billion dollars
Now there are going to be many people
These guys will spend all their money on products and cause a ripple effect in the economy.
gannon260

Pro

hello nice debate,
1. please this is the rebuttals and conclusion, please do not present new information. yes, there will be smarter work force and increasing efficiency as jobs are cut from these capital gains taxes since corporations now do not have similar amounts of capital they used to. The increasing marginal profit will stay the same as company cut costs (jobs) since they have less capital. Less jobs decreases our competitiveness since the one of the four components of production of labor, there will be a reduction in our possible production with less people.

2. Please do not present new arguments so late in the debate. You do realize that government spending is increasing under obama and corporations are losing profits from these actions. Less profits mean less revenue for the government.

3. Yet again, providing new arguments so late in the debate.

4. Ok your simple math problem has one flaw. Why would corporations increase the price to purchase it? This will kill demand, killing people producing these goods as they need demand to work, and decreasing amounts of jobs are bad for the economy, less tax revenue for the government. Also increasing the price to purchase it destroys our cost competitiveness in the global market since the consumers now have to pay the price.

5. Finally, their new money will not create a ripple effect since they already spend money given by the government in the form of welfare. Once they start earning more, they will no longer be able to be in these welfare programs so their purchasing power will stay nearly the same. Also in your final equation, you forgot to subtract the current wages from $10-8 so you equation should be 27.5 hoursX52X(9-7.25)X28 million=$70.70 billion. How much do we spend on welfare? $386 billion http://www.usgovernmentspending.com...

To conclude, capital gains tax is bad, reduces reinvestment. Reinvestement is needed for economic growth for businesses.

Increase rich people tax bad, rich people spur economic growth and leadership, as well as own businesses that produce things. Businesses are needed to remain efficient and for long-term economic growth. pro didn't answer this argument

Redistribution is bad, leads to inflation and the increasing demand may go to foreign entities and not spurn our own economy as it's meant to. Pro didn't answer this argument.

Minimum wage leads to decreasing profit margins and therefore increasing product price or employment, decreasing overall competitiveness. Pro answered this argument but i have pointed out the flaws already.

Judges and voters, i hope you see that my opponent has incorporated many equations etc into his argument that are missing key components of logic. Vote for the best argument you deem is the best. Have a nice day.
Debate Round No. 3
8 comments have been posted on this debate. Showing 1 through 8 records.
Posted by Economicsgeniusorsoithink 2 years ago
Economicsgeniusorsoithink
Hi Man listen so i just like to say awesome to have my first debate
I would like to debate any topic you like, if you'd like. I made a mistake to debate but didn't have much time and needed much more time to make my arguments. Next time ill think about longer debate it may be long and boring but i don't think 2 days is enough to answer. so if you feel i was a bit week lets try another debate with a little longer time to rebut and all. about debating dude i personally like to keep it a continuous, i will try to do that three part debate.

But just one thing you got a fact wrong even if you raise the minimum wage most of the households eligible for welfare would not fall out of the safety nets, i got this recently from a democrat guy but i don't have the web site right now will find where he was showing it from latter.

About the redistribution i don't like the idea,i find it unfair but for the sake of argument i was not prepared and would like to point out in order to improve the redistribution and not lead to inflation there need to be two steps
1. Increase output of goods and do it so that benefits of scale of economy may kick in again a bit like an industrial revolution and produce new goods so consumer income goes towards said goods.
2. I do think that all my points are based that people need to innovate and that has happened in the past so i would just like to know from a Guy actually in the US why is it no one wants to innovate now?
No its not Capital gains tax going up by 5% it is ridiculous to think someone won't invest in an idea due to capital gains tax when the risk is far greater of it failing. anything would be good.

And why is your message facility off? I wanted to send this via msg but couldn't
Posted by Economicsgeniusorsoithink 2 years ago
Economicsgeniusorsoithink
Eg:
Selling price 100. current profit margin 10 OK
labor is 22.5% of the cost of a company
raise in cost of labor by 20% due to minimum wage rise(just considering they can't cut employees number because it would affect their operational capabilities)
labor increases to 27%(20% of 22.5 is 4.5) of the product cost so cost of product is now 104.5(100-22.5+27)
so price will definitely increase by 20% to 120(knowing american capital greed inc.)
Hence profit margin will increase because
120-104.5=15.5
but moreover we still have untouched the profit margin of 10
so its 25.5 profit on cost.
now you will never see this on a profit and loss account of a company because the moment a company raises its price it does so disproportionately because it has to spend on a way to keep customers so it spends on silly toys for children a new menu for old people of health freaks or advertisements just to get people enthused by its products, new kisioks or POP's and many times incentives to smaller traders to sell their stuff.
Now i know your argument there will be a fall in demand in such case or a rise in more costs but i covered that before.
Posted by gannon260 2 years ago
gannon260
Yea, the logic that minimum wage increase leads to profits for the companies that have to pay increasing wages is flawed. Paying your employees more increases labor expenditures and eats into your profit margin. Yes aggregate demand overall may increase due to more money for the lowest class, but that money is offset from minimum wage hiring companies who have to increase food prices go compensate for increased labor cost. Less people buying fast food leads to them using that money for alternatives. Anything theoretically can spur a market, but it all comes back to marginal analysis, was the decisions worth it. Poor people spend federal money, increasing mnimum wage leads to less federal money being spent and more private money to be spent which eats away at us federal tax revenues as profits are lower. There are unintended consequences
Posted by gannon260 2 years ago
gannon260
Yea, the logic that minimum wage increase leads to profits for the companies that have to pay increasing wages is flawed. Paying your employees more increases labor expenditures and eats into your profit margin. Yes aggregate demand overall may increase due to more money for the lowest class, but that money is offset from minimum wage hiring companies who have to increase food prices go compensate for increased labor cost. Less people buying fast food leads to them using that money for alternatives. Anything theoretically can spur a market, but it all comes back to marginal analysis, was the decisions worth it. Poor people spend federal money, increasing mnimum wage leads to less federal money being spent and more private money to be spent which eats away at us federal tax revenues as profits are lower. There are unintended consequences
Posted by gannon260 2 years ago
gannon260
Yes i am 15 years old. But my mental age is much more sophisticated and older.i am in debate team at my school.
Posted by Economicsgeniusorsoithink 2 years ago
Economicsgeniusorsoithink
sorry your not in either umm.... but
could you see if and give an opion
http://www.debate.org...
and another thing are you really 15 years ?
Posted by Economicsgeniusorsoithink 2 years ago
Economicsgeniusorsoithink
economics is not a logical science it is a faulty science (especially in text books) because economics deals with humans(i don't mean its bad), but we ourselves are not the most rational creatures and are influenced by many more factors. Economic theories don't work many a times. This is because economic theories were not created with our situation or a taxation regimes, but from observations made by people in a different time with different situations and taxation in place.

By the way i though i was up against you in the comment part of a debate on minimum wages. I don't thing i can see it anymore, could you provide some help please. i am new at the site thanks
Posted by gannon260 2 years ago
gannon260
You should take an economics class bro, your logics not good.
1 votes has been placed for this debate.
Vote Placed by RepublitariansUnite 2 years ago
RepublitariansUnite
Economicsgeniusorsoithinkgannon260Tied
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Total points awarded:07 
Reasons for voting decision: The evidence really did it for me here. Pro wins.