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Just an Idea

ThinkAlways
Posts: 2
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4/30/2015 8:09:50 PM
Posted: 1 year ago
Hi. I'm new to this site, and am not an economic expert at all. But that is why I thought it would be interesting to throw out an idea to you guys in order to get feedback, as many of you are very knowledgeable about the economy and can tell me if it's B.S.

One of the problems I see with the economy is that too many jobs have either a) been outsourced to other countries, b) been replaced by new technology, or c) become highly specialized, and beyond the skill level of someone with a high school education or less.

Income inequality and wealth disparity continues to increase, and the median income has reverted to 1980s levels adjusted for inflation. And with the rising cost of living, which from what I've read has increased 67% since the 90s (correct me if my numbers are off), the middle and lower classes are getting squashed. As production has continued to increase, the median income has stagnated. That's why I don't see the solution to our economy being merely an increase in productivity.

Now, what if corporations and businesses were required to employ a certain number of employees relative to their profit margin, after they reach a certain threshold of profitability, or opt out and pay a tax penalty? That way, productive businesses and corporations would be required to share more of their earnings, and more people would be employed.

Even if the number of employess far exceeded the workload,

a) companies could rotate employees in and out, creating part-time jobs with full-time pay,

b) companies could find creative ways to utilize the extra employees and increase productivity, or

c) worst case scenario, the employees would simply be paid for doing nothing,; which is pretty much what government programs do to some degree right now.

Now, the employees would consume a large portion of their earnings, reinvesting into the economy, AND all the libertarians would like the fact that the money is being spent by consumers and not the government.

Now, obviously there are at least two considerations: the tax code and corporations leaving the country. I am not sure what other considerations there would be, but I'd imagine there are some I cannot foresee due to my lack of knowledge of economics. Tax reform is needed, so something like this could be worked into a new tax system as the main source of redistribution (yes, I know some hate that word).

Of course, given the oligarchic nature of politics these days, I highly doubt any political party would be for ideas like this. But I am still interested in hearing what you guys think.

BTW, who decided it was okay to allow companies to outsource American jobs to other countries? Kind of a dick move in my opinion.
darkkermit
Posts: 11,204
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4/30/2015 8:56:01 PM
Posted: 1 year ago
Okay, so your main problem is that low-skilled worker productivity isn't keeping up with rising production? In some ways, I do agree with this.

Your premise is that people need jobs? But why should unproductive work be something to strive for? The productivity exisits, all that's needed is to redistribute it. Progressive taxes and gurantee income can remedy this. Instead your goal is to create unnecessary work.

However, I think even low-skilled workers in developed nations make out much better then people living in undeveloped nations, even if they aren't getting the gains from productivity, so I honestly don't feel too much compassion for their well-being.

Your solution is to punish companies for higher profitability. The more profitable they are, the more they have to employ people. This disenctivies profit-seeking behavior which involves lower the cost of production of goods and services that will spread throughout the economy. Furthermore, companies can get around this by moving their companies elsewhere, and we do want the companies to stay or else you lose all the jobs and productivity they provide. It further disincentivies high-risk companies that would be a bad investment decision for venture capitalists who require them to have high rates of return to justify their investment in them.
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Chang29
Posts: 732
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4/30/2015 11:23:14 PM
Posted: 1 year ago
At 4/30/2015 8:09:50 PM, ThinkAlways wrote:
Hi. I'm new to this site, and am not an economic expert at all. But that is why I thought it would be interesting to throw out an idea to you guys in order to get feedback, as many of you are very knowledgeable about the economy and can tell me if it's B.S.

One of the problems I see with the economy is that too many jobs have either a) been outsourced to other countries, b) been replaced by new technology, or c) become highly specialized, and beyond the skill level of someone with a high school education or less.

Income inequality and wealth disparity continues to increase, and the median income has reverted to 1980s levels adjusted for inflation. And with the rising cost of living, which from what I've read has increased 67% since the 90s (correct me if my numbers are off), the middle and lower classes are getting squashed. As production has continued to increase, the median income has stagnated. That's why I don't see the solution to our economy being merely an increase in productivity.

Now, what if corporations and businesses were required to employ a certain number of employees relative to their profit margin, after they reach a certain threshold of profitability, or opt out and pay a tax penalty? That way, productive businesses and corporations would be required to share more of their earnings, and more people would be employed.

Even if the number of employess far exceeded the workload,

a) companies could rotate employees in and out, creating part-time jobs with full-time pay,

b) companies could find creative ways to utilize the extra employees and increase productivity, or

c) worst case scenario, the employees would simply be paid for doing nothing,; which is pretty much what government programs do to some degree right now.

Now, the employees would consume a large portion of their earnings, reinvesting into the economy, AND all the libertarians would like the fact that the money is being spent by consumers and not the government.

Now, obviously there are at least two considerations: the tax code and corporations leaving the country. I am not sure what other considerations there would be, but I'd imagine there are some I cannot foresee due to my lack of knowledge of economics. Tax reform is needed, so something like this could be worked into a new tax system as the main source of redistribution (yes, I know some hate that word).

Of course, given the oligarchic nature of politics these days, I highly doubt any political party would be for ideas like this. But I am still interested in hearing what you guys think.

BTW, who decided it was okay to allow companies to outsource American jobs to other countries? Kind of a dick move in my opinion.

Simple, keep governmental requirements out of the solution. The problems you state were created by government interventions. Wages and prices will adjust to a new level of equilibrium without government distortions. Nominal GDP (a meaningless number) will drop and deflation will occur (Deflation is the bogeyman to macro-economists). That is how free market regulate themselves.

Currently in America, wages for the lowest skilled workers are extremely high, leaving these workers unable to compete. Low skilled workers cannot, by law, negotiate a competitive wage based on their ability for provide value to an employer.

As you put it, "oligarchic nature of politics", a government solution is exacting what oligarchs need to maintain power. Asking the source of a problem, to solve problem will end with the desired result of those in power.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
ThinkAlways
Posts: 2
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4/30/2015 11:59:48 PM
Posted: 1 year ago
Thanks guys for your feedback! I appreciate the viewpoints. I'll be giving some thought to what you are suggesting.

I think the worry, about companies leaving would be a concern about productivity decreasing. But our GDP-per capita is great. About $10,000 per person above most of the 15 nations that have higher Social Progress rankings. So the risk of losing some companies doesn't seem to be as high as it seems. Progressive taxation could redistribute if we closed the loopholes and raised taxes on the wealthy, but I am wondering if there are more effective ways to do that; which was my suggestion.