republican economic myth #3: the private sector will make it all better

Jan 2008
32,903
9,706
Vertiform City
#1
What has yet to register on many Republicans is that the private sector is not one entity, but two.

A McKinsey Global Institute study shows that between 2000 and 2007 the US ha5 its weakest period of job creation since the Great Depression.

Nobel laureate Michael Spence looked at which US companies created jobs at home from 1990 to 2008. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms, and financial services contributed almost nothing to overall American job growth.

The firms that did contribute were those operating mostly in US markets immune to global competition, including healthcare, retail, hotels and the government. And jobs in these areas are lower skilled and lower paid than jobs that were outsourced.

Clearly, it is a myth that the big multinationals are just waiting for more "economic certainty" to invest back home.

(Links to follow)

Thoughts?
 
Likes: Devil505
Dec 2010
36,825
28,615
Virginia
#2
What has yet to register on many Republicans is that the private sector is not one entity, but two.

A McKinsey Global Institute study shows that between 2000 and 2007 the US ha5 its weakest period of job creation since the Great Depression.

Nobel laureate Michael Spence looked at which US companies created jobs at home from 1990 to 2008. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms, and financial services contributed almost nothing to overall American job growth.

The firms that did contribute were those operating mostly in US markets immune to global competition, including healthcare, retail, hotels and the government. And jobs in these areas are lower skilled and lower paid than jobs that were outsourced.

Clearly, it is a myth that the big multinationals are just waiting for more "economic certainty" to invest back home.

(Links to follow)

Thoughts?
Good points. The observations I would add are that the Republicans like to talk about tax cuts and deregulation as the cure for the current economic malaise. The problem is that they can't really quantify how much SHOULD be cut or deregulated. The answer is always "more." In the absence of an ability to quantify how much "more" should be, and to definitively say how much these cuts and deregulation will return in growth and revenue it's a problematic assertion. At some point you hit a "tipping point" at which the mantra of deregulation and tax cuts simply don't yield an equitable return. Further, the republicans like to ignore the fact that the big cost driver in the private sector ISN'T taxes or compliance with government regulation...it's wages and total compensation. We simply can't drive wages and total compensation low enough to make US workers competitive with third world countries. So the question then becomes what is the real agenda?
 
Likes: nonsqtr
Jan 2008
32,903
9,706
Vertiform City
#3
We simply can't drive wages and total compensation low enough to make US workers competitive with third world countries. So the question then becomes what is the real agenda?
ideally the curve representing distribution of income will be bell shaped. But ours may end up looking more like a dumb-bell for a while. We import low wage workers and we outsource high wage jobs, the advantages only come "afterwards', once globalism is complete, and in the meantime Americans end up footing the bill for a lot of third world emergence. And the chances of the process ever completing are next to nil, so what we end up with is a whole lot of investment into a system that has no future. Might as well sit in the shower and tear up 100 dollar bills.
 
Dec 2010
36,825
28,615
Virginia
#4
ideally the curve representing distribution of income will be bell shaped. But ours may end up looking more like a dumb-bell for a while. We import low wage workers and we outsource high wage jobs, the advantages only come "afterwards', once globalism is complete, and in the meantime Americans end up footing the bill for a lot of third world emergence. And the chances of the process ever completing are next to nil, so what we end up with is a whole lot of investment into a system that has no future. Might as well sit in the shower and tear up 100 dollar bills.
Send them to me...I'll tear them up in my shower for a nominal fee.
 

kmiller1610

Former Staff
Mar 2007
31,383
6,087
#5
Not sure who creates the authorized list of myths in your universe, but the government cannot create opportunities, certainly not permanent, long-term ones. I don't care who is in charge or what policies you are promoting. But opportunities are more likely to bring sustained growth with lower taxes and less government interference. If the opportunities are strong enough growth can occur even in the context of higher taxes, but it's a false correlation to say that the higher taxes produce the opportunity.

A solid, recent example was the .com explosion when Clinton was President.

The biggest mistake the government can make (and Obama is proving it) is to pimp some alternate reality where borrowing from a shrinking private sector and "stimulating" through the borrowing will make everything better.

The real answer is to keep government lean, get out of the way and wait for the opportunities to evolve.
 
Likes: Six

One

Former Staff
Dec 2006
10,992
9,517
----> X <----
#6
Cutting taxes and deregulation to spur growth is a myth. To spur growth, you need more sales. And how do you get more sales? The logical idea would seem to be to lower the taxes on the middle and lower classes, leaving them more money to buy goods. We have already seen that the Bush/Obama tax cuts for the rich hasn't spurred any new growth.
 
Feb 2011
2,685
297
southeast Pennsylvania
#7
What has yet to register on many Republicans is that the private sector is not one entity, but two.

A McKinsey Global Institute study shows that between 2000 and 2007 the US ha5 its weakest period of job creation since the Great Depression.

Nobel laureate Michael Spence looked at which US companies created jobs at home from 1990 to 2008. The companies that did business in global markets, including manufacturers, banks, exporters, energy firms, and financial services contributed almost nothing to overall American job growth.

The firms that did contribute were those operating mostly in US markets immune to global competition, including healthcare, retail, hotels and the government. And jobs in these areas are lower skilled and lower paid than jobs that were outsourced.

Clearly, it is a myth that the big multinationals are just waiting for more "economic certainty" to invest back home.

(Links to follow)

Thoughts?
Yea, you're starting to show your lefty colors, and it's amusing.
 

Babba

Former Staff
Jul 2007
71,179
59,832
So. Md.
#8
Cutting taxes and deregulation to spur growth is a myth. To spur growth, you need more sales. And how do you get more sales? The logical idea would seem to be to lower the taxes on the middle and lower classes, leaving them more money to buy goods. We have already seen that the Bush/Obama tax cuts for the rich hasn't spurred any new growth.
Cutting taxes on the middle class can be slightly stimulative. But from what I've read it still wouldn't be enough.
 

One

Former Staff
Dec 2006
10,992
9,517
----> X <----
#9
Cutting taxes on the middle class can be slightly stimulative. But from what I've read it still wouldn't be enough.
I would think it would be more then slightly stimulative, since the middle class is who most business target. It just seems logical that if they have more money to spend, they will.