Would this Economic Program Better the US economy?

Asked by: hts
  • "National Capitalism" Plan

    National Capitalism is what I call the following economic plan that I have developed. It is driven by a combination of Nationalism and Capitalism.

    Part 1. Protective Tariff

    The Protective Tariff will raise the price of Foreign goods, and allow American businesses to compete. When importing goods is so expensive that overseas companies can not profit from American Markets then they will open factories in the US, as they will not want to lose the American Market. This will create jobs, raise our GDP, and help our economy boom.

    2. The Disappearing Wealth Tax Cut

    This Tax Cut will implement a 10% Tax cut to the top bracket. This will help to boom the economy. However, long term Wealth tax cut's create an unstable economy and lead to recessions. That is why this Tax Cut will slowly disappear. The Tax will go back up 2% each year for 5 years. This will cause an economic boom, but avoid the instability that comes with a long term wealth tax cut.

    3. Relative Earnings Limit

    Top Ranking Officials of companies will be hit with a Maximum wage. However, if they want to make more money, there is a way. The more employees they hire, and/or the wages they pay these employees will determine the Maximum wage for that company. Therefore CEO's that want to make more money will have to either hire more workers, which will help lower unemployment, or raise their workers wages, which will raise living standards, increase consumerism, and help to expand the economy.

    Posted by: hts
  • Oh, great, an AP Macro kid.

    Okay, let's tackle this piecemeal. Okay, the protective tariff doesn't work like that. The protective tariff is to protect American businesses, not consumers. Actually, I'm pretty ambivalent on this bit, so it could go or stay.
    The disappearing tax cut is very poorly thought-out because the prices will increase to accommodate the increased spending coming out of the rich. Those rich will be burning the candle on both ends when the taxes go back up. But wait, they're a relative minority. Forget about them.
    Now the relative earnings limit is all but saying to people who run corporations "Hey you took a risk? Nice, I'm going to take some of what you made and spend it on stuff that benefits someone else. It paid off? Awesome, at least for me, because I'm taking even more. What? You're still profitable? I'm going to limit what you can make from your investment."
    What of the guys who run a purely automated thing somehow, and are the sole owner and employee? Meh, they're a minority too! Forget them.
    Now onto actual math. You've looked at a boom-bust cycle, and I assume that's what you're working off of. Forget that.
    My take on it is as follows:
    What actually needs to be done is to make those on welfare with no employment not be able to vote. People will gravitate towards their self-interest, and it would be in their interest to go out and earn money, pay taxes on said money, and otherwise be productive, so that they can vote someone who will re-institute the welfare for them. Of course, the law would have to come into effect before voting season, lest the politicos be voted out of office by a vengeful soon-to-be disenfranchised band of future future employment-seekers.
    But, at the end of the day, we do have a good system as it is. The fact that it's still standing is a testament to how relatively good it is.

  • Why it wouldn't work

    Although in a perfect world your idea of "communist-capitalism" would work, it is too limiting. Take oil, we don't make much of it. People will see that you increased the tax on oil, and will lessen the use of it. Foreign companies will stop exports, we suffer! A maximum wage is downright stupid. America was built for those wanting to advance and improve, that would hinder capitalism altogether.

  • So many assumptions with this plan

    There's an underlying narrative out there in the world about government policy and the overall economic climate. When you discuss economic theory and political theory it is important to remember that these two different things interact with each other, interfere with one another, but they are not the same thing.

    A tariff ought to work the way you describe, but it doesn't. Toyota builds many vehicles in the U.S., and has huge corporate campuses and headquarters in the U.S., but if you buy one, you get to pay an import tax. Ford builds many vehicles in other countries, imports them to the U.S., and you don't pay the import tax on those. This is because that tariff is in place to protect the companies, not the employees, the jobs, or the customers.

    Tax cuts stimulate the economy for one reason and one reason only, taxes function as a drag on the economy. Relieving some of that drag lets a stumbling economy regain it's balance. The economy is probably better off if it never has the drag to begin with. It may look more unstable, but that's just because with faster and larger growth there is more frequent and harsher corrections. Consistent government spending does help smooth the ride out, which due to the average person's poor financial planning is somewhat of a greater-good-than-harm function.

    I really can't wrap my head around how a maximum wage would ruin us. If it were a global policy, such that they couldn't just relocate to a tax haven country and telecommute, it might have some interesting forcing functions. Governmental price-fixing is something to be avoided if at all possible. It introduces noise into an otherwise incredibly useful feedback function. The minimum wage is a great example of this. There are certainly people who make more because there is a minimum wage, but there are also people who make less because there is a minimum wage.

  • Tariffs are a bad idea

    Tariffs cause prices to rise and take away incentive for protected businesses to remain competitive. The result is an economy with businesses that are inefficient and cannot compete. This is a longer term consequence of Tarriffs. Other countries will put in place counter Tarriffs which means that everyone, including the U.S. Will lose.

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