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Thursday, June 16, 2011

Open for Discussion...

Former Labor Secretary Robert Reich said he could explain the problems with the economy in less than 2 minutes, 15 seconds—and he did it (with illustrations to boot). A friend posted it on facebook, and it got Miss Ginger's feeble little brain to reeling:

His arguments make a lot of sense, and certainly some of his statistics are compelling.  Miss Ginger is assuming them to be true, which may be naive; not sure on that.  She does realize that anyone who professes to explain the American economy in 2 minutes,15 seconds certainly will have to simplify, and will probably do so with some level of bias.  He also described a complex, multi-layered problem and offered a simple, vague solution.  So here goes Miss Ginger's attempt to do essentially the same thing!

Not that I am defending the "super rich". Miss Ginger often wonders what rich people DO with all that money! Miss G is far, far, from "super rich", yet she has all of the things she "needs", most of the things she "wants", and many of the things she "thinks it would be nice to have!" She even finds some spare change every month or so to support a worthy cause or 2!  Granted, she is spoiled rotten and lives beyond her means, but really- how does someone with $1,000,000 SPEND  all of that money? And do they DESERVE it?  I mean, really- what makes them so different from you or me... except for maybe the 4 inch spike heels, pancake makeup, and FABULOUS red updos?

Take Michael Dell, for example.  The man is a prodigy.  Earned $18,000 in high school selling newspaper subscriptions.  Created a PC company that took on industry leaders IBM and Compaq- and won!  Clearly, he is smart. Clearly, he works hard. Clearly, he can lead people to champion his cause.

But seriously- is he SO fabulous that he deserves to earn- are you ready for this- 1,530x's more than Miss Ginger Grant?  I'm doing a little rounding here, but my boss earns about 2x's what I make. Her boss earns about 2.5x's what I make.  The CEO of my company- ranked #107 in the Fortune 500- earns about 69x's what Miss G makes.  And he is considered extremely well compensated for creating America's Department Store.  Yet he earns 4.5% of what Michael Dell makes!

Now, giving credit where credit is due, Mr. Dell's little computer factory ranks # 41 on the Fortune 500.  So in GingerMath, maybe he should earn 2.6x's what my CEO earns.  Not 23x's what he earns!!  It's just so mind boggling!!!  What can he POSSIBLY do with ALL THAT MONEY?!!!

That comparison of 2 hard-working men seems crazy enough... but lets look at someone else.

How 'bout this crazy looking bitch?  She doesn't work at all- yet she is the #6 (actually tied with her sister-in-law at #5) richest person in America- and the richest woman on the list!

Even though she clearly buys her makeup on a discount at WalMart and gets her hair done at Fantastic Sam's, Christy Walton, and her sister-in-law Alice, are the world's richest women. They don't work. Alice is divorced, and Christy's husband is dead, so they don't even have to put out!  These rich bitches just lay around, eating bon bons, and cashing the checks that arrive in their mailboxes each day!

You wanna know the bitch of it all?  These privileged bitches are in the same income tax bracket as my hardworking boss, and my visionary CEO!!  They contribute at the same rate as all the rest of us, yet sit on billions of dollars that could be put to good use!  

Now, Miss Ginger is not saying that taxing the shit out of the rich will be the answer to our country's economic woes!  Granted, one can invoke "fun with math" and make all kinds of comparisons and conjectures about the fairness of taxation.  It's a centuries' old argument that will remain for centuries to come, and is probably the most difficult concept facing organized society.  

Miss G is a firm believer that excess capacity is a large part of our economic woes, and Reich's rant supports that, at least to some degree- what the hell else caused all that growth in the economy? The difference between the cause of the Great Depression and the current economic woes is the speed of technology.  In the 30's, overproduction mandated cost reduction, which could only be affected by layoffs. That, in turn, caused unemployment, which reduced demand even further. It also left financed machinery sitting idle, which caused bankruptcies   This made many businesses go under, causing even more layoffs, and the vicious cycle continued!

With today's speed to market, the problem just gets worse!  Excess capacity causes a need to find new markets. Those markets are typically overseas, requiring additional costs for shipping, as well as new sales and marketing teams- based overseas, where the goods are sold.  In order to reduce costs to maintain profitability in these new-found markets, companies either invest in work-saving technology or move production overseas- in either case eliminating jobs on American soil.So, while the American job market shrinks, causing grief for the working class, the American economy grows along with the world economy... providing dividends for the rich. Yet, the American PERCENTAGE of the world economy decreases as other markets prosper at our expense!  Another vicious cycle!

So, how do we stimulate the American economy without unfairly taxing the shit out of the rich?  It's really not rocket science! Or robotic technology! It's just plain common sense!

Step one is to differentiate the source of one's income better than we do today. Currently, when we do our taxes, we basically divide our earnings for the year into 3 "buckets":  earned income, meaning wages from a job; unearned income, meaning returns on investments; and capital gains, meaning, in a nutshell, profits from the sale of investment property. Today, each of these buckets has it's own complicated tax rate, and only one works on a sliding scale!  If you barely make enough money to make ends meet, we tax you at one rate.  If you are able to subside comfortable on your wages, we tax you at another.  And if you make good money, we take a bit more. I'm simplifying, but that's basically it.  But here's the fucked up part.  If you barely make enough money to make ends meet, you have nothing to invest- so you really could care less how we tax your dividend income or capital gains.  If you make enough money to make ends meet, you may actually find some funds to invest from time to time- and you invest them wherever you think you can earn the most money, whether or not it supports American jobs. And you pay the rate for unearned income. And if you are making a lot of money, you have a lot to invest- which, or course, you invest where you think you can make the most money.  And since you have money to make money, you can pay someone to help you determine the absolute best return on your money- which will usually lead you to a company with overseas investments! And when your investment counselor tells you the time is right, you sell the investment- at enourmous inflation over the price you paid- yet you are taxed at the same 15% that Ma and Pa Kettle will pay on that one share of Bank of America they have owned since 1963!

So how do we fix it?  That's not so easy!  We are not going to change the nature of the investor: they are in it to make money! So, how do you get them to support the American economy while still investing wisely?  It seems to Miss G that we need more than 3 "buckets".  

Bucket # 1: Wages. The keystone of a civilized society is that all should contribute. Anyone who has a job should pay some level of taxes.  What's the right amount?  That's a whole 'nother blog post!!

Bucket #2: Dividends/Investment Income. Somehow, we have to find a way to encourage companies to expand on American soil.  How do we create sliding scale tax schedule that encourages companies to create American jobs vs. jobs overseas.  We should be taxing the HELL out of American companies with manufacturing facilities and marketing teams outside of our borders! We MUST find a way to split this bucket between "pro-American" investment and "pro-global" investment!

Bucket # 3: Capital Gains.  This is a toughy- but maybe not!  On the one hand,  if I have made a good investment, and the company has prospered, I should be rewarded for my faith in the free enterprise system.  Yet, if the stock I sell supports a company with overseas investments, should I be taxes at the same rate as if I sell stock in, say, Whole Foods, which operates only here in the great US of A?

And that mention of free enterprise brings me to yet another rambling point... how do we protect our free enterprise economy as technology mandates a world economy that accepts socialism, fascism, and in some cases communism?  How can our American airline companies be expected to compete in a world economy where national governments so closely subsidize and manage the industry? How can we expect American manufacturing companies to hire American workers when people overseas will work for so little?  Even if we tax their earnings, it may not make a difference! 

In order to maintain America's position as a world leader, we must have leadership capable of leading the world!  Any GingerSnap who has traveled overseas: what's the first question the cab driver asks you upon discovering you are American?  That's right!  "What do you think of: Bush/Hilary/Obama/Palin/Bachman"?  I'm not recommending that we open up the vote to expatriates and non-citizens, but I DO think that we, as American voters, have to consider how our future leadership will guide us through this tumultuous world economy!  

I, personally, think Barack Obama has the cleverness, uniqueness, charm, and talent to lead our country into the next 4 years.  I certainly don't think the Repubicans (sic) have produced a wiener more qualified to lead the country in the New World Order!  Seems to me they have sallied forth a lot more (see you nest Tuesday)s!

So, whaddya think, GIngerSnaps?  Discuss in comments.. PLEASE!


mrs. miss alaineus said...

i love your ideas- at some point people need to realize that if we want better services we will ALL need to pay more and people that make a disproportionate amount of the wealth would have to pay more into the system. i guess if the wealthy want to opt out of the system entirely and live off the grid, contracting out for all the services the local, state and federal taxes pay for- that could be an option as well.

i think that if you make money in a foreign market, or on an american company that makes its profits diversifying investments in a foreign market, they you should have to pay taxes for the US and in the main country where the investment is made-

if you purchase something that is entirely made in the US you should get a tax break, also goods manufactured solely in the US should have a corporate tax break for keeping the business (and jobs) here.

we'll def bring you some labatt's blue light. you like tall boys or regular cans? funny you should mention a beer exchange- i want dd to bring me some yuengling lager...


David Dust said...

As someone who doesn't own anything of value, has never had any kind of investment or even savings, and can't even have a bank account (because creditors can seize it) - this discussion is way outta my league.

I'm just happy if I can pay my electric bill every month.


Bucko (a.k.a., Ken) said...

I think it is high time that our country realizes we have lived beyond our means, that we stop the tax cuts, and look more toward a flat tax rate. We will only survive by raising some taxes and limiting entitlements.

overseas shipping cost said...

Nice post! This is very informative! Great job! Kip on posting!

Beth said...

Excellent post, G. Was I the one who posted the Robert Reich video? I think I posted it, because I thought it was pretty good.

I think one thing we also need to address is training our workforce better. Of course, I'm all for higher education, and you know I loves me my science, but there are a lot of jobs out there going unfilled because we don't have enough people trained. These are in high-tech manufacturing jobs, and our community and vocational colleges could work on that. But I think our government needs to step in and help with that education.

Tax cuts don't create jobs. Demand creates jobs. The Repub mantra of lower taxes is a phallacy. Oops, I mean fallacy. :D

Kyle said...

I love Robert Reich. Well, I love his mind.

Well done Miss G! If you had the time and energy I'd love for you to do more posts like these. Not that I don't like all the other kinds posts you do. :)


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