The Future of Work

[Anti Federalist]

The Future of Work

by Charles Hugh Smith

http://lewrockwell.com/orig11/smith-c.h6.1.1.html

A growing number of workers are becoming increasingly concerned about the future viability of their jobs (if they have them) and, in many cases, that of their professions. Looking at a future increasingly defined by slower economic growth and higher energy costs, many are asking,

What is the future of work?

Given the "recovery’s" stagnant job market and the economy’s slide into renewed contraction, it’s a timely question. To answer it, we must first ask, What is the future of the U.S. economy?

In broad brush, the Powers That Be have gone "all in" on a bet that this recession is no different than past post-war recessions. All we need to do to get through this “rough patch” is borrow and spend money at the Federal level, and the household and business sectors will soon recover their desire and ability to borrow more and spend it all on one thing or another. We don’t really care what or how, because all spending adds up into gross domestic product (GDP).

In other words, we're going to “grow our way” out of stagnation and over-indebtedness, just as we’ve done for the past fifty years.

Unfortunately, this diagnosis is flat-out wrong. This is not just another post-war recession, and so the treatment – lowering interest rates to zero and flooding the economy with borrowed money and liquidity – isn’t working. In fact, it’s making the patient sicker by the day.

The best way to eliminate the signal noise of official propaganda (“The stock market is rising, so everything’s great for everyone!” etc.) and the high keening wails of Keynesian cargo cultists is to construct a model of the underlying fundamental forces that will shape the future.

The best way to do that is to glance at a few key charts.

Let’s start with debt. Clearly, the “growth” of the U.S. economy since 1980 is debt-based. Debt has exceeded growth by 136%. If debt had risen in tandem with GDP, then total debt would be a mere $22 trillion instead of $52 trillion.

http://media.chrismartenson.com/images/debt-1940-2011.jpg

The next chart reflects how every incremental increase in debt has had a diminishing effect on growth. Where $1 of debt once added 70 cents to GDP, now it adds basically nothing, or even reduces GDP.

http://media.chrismartenson.com/images/debt-saturation.jpg

We hear a lot of euphoric babble about households "deleveraging;" that is, paying down debt and thus setting the stage for the next ramp-up of household debt. But the reality is not quite so euphoric. Compared to the explosion in household debt since 1980, which we might term the debt elephant, the recent “deleveraging” reduction in debt is more like a mosquito.

http://media.chrismartenson.com/images/household-debt.jpg

Next, let’s look at jobs and employment. To make sure we’re getting the full picture, let’s look at several measures of employment as a reflection of the underlying economy.

This first chart looks like a steady onward-and-upward trend of job growth. The “jobless recovery” appears to be a modest bump in the road of ever-rising employment.

http://media.chrismartenson.com/images/civilian-employment.jpg

By other measures, however, employment hasn’t hit a bump in the road; it’s off the road and sinking into a bottomless bog. Here is the civilian participation rate, which measures how many folks in the civilian population are participating in the labor market in one way or another.

http://media.chrismartenson.com/images/civilian-participation.jpg

By this measure, the labor market has retraced to the level of the 1981-82 recession thirty years ago.

Next, let’s look at another, perhaps even more telling metric: private payrolls per capita, which is basically a measure of how many jobs there are per capita in the economy.

http://media.chrismartenson.com/images/private-payrolls-per-capita.gif

What this means is that beneath the glitter of a “rising GDP” and “rising stock market,” the economy is producing far fewer jobs per capita.

If we look at the total number of civilians and the total number of jobs, the chart looks even uglier. We are back to the levels of 1970s stagflation, just as women began entering the workforce en masse to compensate for declining household purchasing power.

http://media.chrismartenson.com/images/civilian-employment-ratio.jpg

This next chart is civilian employment per capita, which is similar to the previous chart of private payrolls per capita, but includes all jobs, including public-sector/government employment. Once again it shows that the economy is back to the levels of the mid-1980s, even including the rapid expansion of local and state government payrolls.

http://media.chrismartenson.com/images/employment-per-capita2.gif

Another way to measure the real performance of an economy is capacity utilization -- how much of the potential capacity of the economy is being used. In good times, capacity is added because the existing capacity is running full-tilt. In recessions, there is not enough demand to use the economy’s full capacity, and therefore no reason to add to capacity with business investment.

I’ve drawn some lines to clarify what happened during each primary phase of the post-war era. During the stagflationary 1970s, capacity utilization see-sawed between growth and recession, tracing out a series of lower lows and lower highs. This downtrend reflected the reality that the economy wasn’t growing; it was stagnating, hitting new lows with every downturn, and never reaching its previous high-point during recovery.

After finally hitting bottom in the 1981-92 recession when Federal Reserve Chairman Paul Volcker vanquished inflation by jacking up interest rates to 18%, the economy entered a 30-year cycle of financialization (deregulation of the banking sector and the rise of debt as the engine of growth), globalization, and technological innovation that fueled a multi-decade trend of rising productivity.

The wheels fell off the financialization and dot-com boom in 2000, and the Federal Reserve and federal government created an even more extreme version of financialization that inflated a gigantic debt/real estate bubble. Like all financial bubbles, this one burst, and once again the Fed and federal government scrambled to inflate another debt bubble.

Since the household sector was tapped out and its primary asset, the family home, had lost a third of its bubble value, the Federal government borrowed $6 trillion to bail out the banking sector and spread trillions of dollars around as stimulus and giveaways like "Cash for Clunkers."

http://media.chrismartenson.com/images/capacity-utilization2.jpg

Unsurprisingly, this injection of trillions of dollars did boost capacity utilization. Roughly 11% of the entire GDP is borrowed and spent every year now by the federal government. But just as in the stagflationary 1970s, the decline reached a new low and the subsequent rise never got close to the previous bubble high of 2006.

Now that the economy is rolling over again, capacity utilization is also declining.

None of this reflects a healthy economy. What it does reflect is an economy that has depended on ever-greater amounts of debt to power a diminishing trend of growth, and an economy which creates fewer and fewer jobs with ever-greater mountains of debt.

This is not a bump in the road; it is the exhaustion of the entire model of growth that we have depended on for the past 30 years. Once the debt saturation point has been reached, adding more debt subtracts from the economy rather than adds to it. This is reflected in the decline of employment by every metric: total number of jobs, civilian participation, payrolls per capita, and employment as a percentage of the total population.

(Thirty years of "free trade accords" and "consume your way to prosperity" have resulted in de-industrialization and loss of jobs? Well, color me unsurprised - AF)

We are past the point of debt saturation, and so we need a new model of employment, and indeed of “growth” itself. Sadly, as discussed in a recent report, the Status Quo financial witch-doctors have only prescribed more debt and more unproductive friction.

Unfortunately, as the above charts abundantly illustrate, the patient (the U.S. economy) hasn’t been cured; rather, its condition has gotten worse. The stock market is like a sort of makeup that has been slathered on by the Fed to give the appearance of health, but the internal measures of jobs and income (both declining) show that both the “health” and the “recovery” are illusory.

[DamianTV]

This needs a Bump. Just on the simple Picture Books alone...

[Zippyjuan]

Hopefully not too far off topic but I was reading an intereting article recently which pointed out that it is not just moving manufacturing jobs out of the country which has cost jobs- it is that we are getting hired at no pay to do things others used to do. We pump our own gas. We can check ourselves out at more and more stores and bag our groceries- instead of a checker and bagger to help out. We act as our own travel agents by using the internet. We don't shop at actual stores as much and more of them are closing- leaving more out of work. Busses used to take kids to school and now more than in the past, a parent has to take the kids to school and pick them up afterwards. The point they were raising was that we were doing more and not getting paid for it but it as well as how it eats into our available time, it also means that people who would have done those jobs in the past have lost their jobs- and they are not coming back.

[Revolution9]

Americans need to readjust and retrain. I have gone through five major technological phases just keeping up with an arts career since 1980. In the course of that I had several other fields I gained experience in. All of those job experiences are now coming to bear on my latest and greatest job. One that I would not be so far into had I not branched out from the arts at an earlier point and got back into it later. I am certainly glad I do not have a manufacturing job. It is a very specialist position and because you manufactured one object or set of object at one place does not necessarily imply that the next manufacturer that hired you would have a ready to go worker. The chances are you would need training to manufacture their objects. I think the next phase of American business is the rise of the small businessman who can maneuver nimbly in the current and future fast moving marketplace. However, until certain corporate behemoths are put in their place and their boundaries of influence properly defined this will not come to pass.

Rev9

[georgiaboy]

Americans need to readjust and retrain. ... I think the next phase of American business is the rise of the small businessman who can maneuver nimbly in the current and future fast moving marketplace.

I agree, Rev. I actually think the trend is doing the first thing you state (retrain) in order to transition into the second. Can you expand on the nimble small businessman you mention? What do you mean by that exactly? What industries? What sectors? Are these specialized contractors for hire, or business owners managing others in a company, etc.? Are you talking about e-business?

[Bossobass]

This is the biggest problem in the US today, and it goes largely (and amazingly) unnoticed, unspoken and absent from all of the economic discussions and charts therein:


Even in a tight credit market, David Meinert didn't think he'd have a problem getting funding from his bank. He was a model entrepreneur, with good credit and a profitable business earning $2 million in revenue. But when he applied for a relatively small $50,000 line of credit from Chase in late 2010, he got denied in 12 hours, with no explanation. "It was insulting and made no sense, even to the banker. And there was no one to even talk to about it," Meinert says. "It's frustrating that banks are getting billions of dollars in taxpayers' money and they're sitting on that money and not lending it to small businesses. If you're making less than $10 million, they don't care about you."

Small businesses make up more than 1/2 of GDP and employment.

Small businesses are responsible for 19 times the patents generated by big business.

In all of the talk about needing the federal government to "stimulate" the economy and the "Super Committee" failure in its efforts to reduce deficit spending, over the past decade the Small Business Administration budget has been systematically cut until it now stands at 1/7,000 of the budget.

Small Business is being systematically starved, taxed and regulated out of existence. In 2008, while the initial bailout check to "ease the credit crunch" totaled 3/4 of a trillion, federally backed SBA loans totaled $12 Billion.

As the federal government debt vacuums up all of the available capital, small businesses and entrepreneurs turn to "venture capitalists" who demand that the entrepreneur give up control over his business or get no capital. Existing small businesses, like the one cited above, are simply told to "use your credit card" at an average interest rate of 16%.

AF,

Thanks for your consistent posts on "free trade" and other economic realities amidst the ocean of nonsense disseminated by the banksters through the media, backed up by the shills who troll these boards and have a great season and new year, my friend.

Bosso

[Anti Federalist]

Hopefully not too far off topic but I was reading an intereting article recently which pointed out that it is not just moving manufacturing jobs out of the country which has cost jobs- it is that we are getting hired at no pay to do things others used to do. We pump our own gas. We can check ourselves out at more and more stores and bag our groceries- instead of a checker and bagger to help out. We act as our own travel agents by using the internet. We don't shop at actual stores as much and more of them are closing- leaving more out of work. Busses used to take kids to school and now more than in the past, a parent has to take the kids to school and pick them up afterwards. The point they were raising was that we were doing more and not getting paid for it but it as well as how it eats into our available time, it also means that people who would have done those jobs in the past have lost their jobs- and they are not coming back.

Zip, some folks give you quite a bit of grief, but many times diamond nuggets of truth are in your posts.

This is one example.

How can we be a "service economy" when service is dead?

+rep

[Anti Federalist]

AF,

Thanks for your consistent posts on "free trade" and other economic realities amidst the ocean of nonsense disseminated by the banksters through the media, backed up by the shills who troll these boards and have a great season and new year, my friend.

Bosso

The same right back to you, my brother, a very merry to you and yours!

[ShaneEnochs]

I don't suppose there's a TL;DR version, is there?

[Anti Federalist]

I don't suppose there's a TL;DR version, is there?

Umm, let's see...

Debt fueled growth, de-industrialization (that I added is caused by "free trade") and government policy have all failed to invigorate the economy, thus making it next to impossible for employment prospects to improve, in either the long term or short term.

[ShaneEnochs]

Umm, let's see...

Debt fueled growth, de-industrialization (that I added is caused by "free trade") and government policy have all failed to invigorate the economy, thus making it next to impossible for employment prospects to improve, in either the long term or short term.

You're the man. +rep

[kahless]

If the US government was not brought and paid for by international corporations and globalists, they would have implemented the simple solution of eliminating the income tax and replace the lost revenue by adding taxes on all foreign imports.

American companies would then be able to compete. Manufacturing and jobs would return. It would also eliminate the incentive to move jobs offshore. Eliminating the income tax would spur personal spending.

[Brian4Liberty]

Small Business is being systematically starved, taxed and regulated out of existence. In 2008, while the initial bailout check to "ease the credit crunch" totaled 3/4 of a trillion, federally backed SBA loans totaled $12 Billion.

As the federal government debt vacuums up all of the available capital, small businesses and entrepreneurs turn to "venture capitalists" who demand that the entrepreneur give up control over his business or get no capital. Existing small businesses, like the one cited above, are simply told to "use your credit card" at an average interest rate of 16%.


Hit that on the head. Helicopter Ben is hovering over JP Sachs and dumping out loads of free money (0% interest), which they then turn around and invest in government bonds for risk free profit. Small business and individuals are hardly getting any of it.

[Brian4Liberty]

The Future of Work

The story didn't really address this, but it is related: With the massive increases in productivity that have occurred over the past 100 years, the standard workweek should have been reduced down to as low as 3 days a week. Instead, all of that extra productivity has been siphoned off by the bankster parasites, and the average worker has seen increased hours and less pay (inflation adjusted) over the past 30 years.

[LibForestPaul]

small businesses and entrepreneurs turn to "venture capitalists" who demand that the entrepreneur give up control over his business or get no capital.

by design
private companies.
less oversight (SOX)

[Revolution9]

I agree, Rev. I actually think the trend is doing the first thing you state (retrain) in order to transition into the second. Can you expand on the nimble small businessman you mention? What do you mean by that exactly? What industries? What sectors? Are these specialized contractors for hire, or business owners managing others in a company, etc.? Are you talking about e-business?

A nimble businessman would take advantage of the world market 24/7 by having whatever product he produces on a website. He should be well aware of the state of the art in their field of manufacture or professional trade. Americans would do well to get themselves understanding just how global communications interlink and how to take advantage of such a scenario. Schools are not the answer as the tech changes so rapidly you just paid for outdated info that is essentially worthless to get employed with. Get the latest applications they use in your field and learn those via tutorial videos and sites.They need to create their own employment scenario and stop waiting for a corporation to hire them. I saw a grad student with a fancy degree and no job begin crushing fruit and freezing them in molds and paid the local gas station to set up on the corner of their lot. By the end of the summer his line was 20-30 deep at 2 bucks a pop for real fruit popsicles all afternoon long. I work as an artist for a very wealthy capitalist. I listened to what he needed as he went about his phone calls and rants and got my pal into a meeting with him for sales and he gave him an opportunity to make a half million in sales commissions in the next month or two. I am searching for a multimillon dollar estate for horses and cattle up where i live in the N Ga mtns. So, I was not afraid to step outside my profession and act as a personnel headhunter and a real estate finder and my pal is a graphics artist with some sales experience who is now selling cell phone tower space amongst other things. Those two things led him to pile more responsibility on my plate. Good. If I don't know it the internet will teach me. Two years ago my pal would have said he was not experienced in that field and blew it off. He has seen me tackle whatever anybody can throw at me and pay me for so that changed his attitude somewhat and gave him confidence to accept the sales challenge. The bonus is all he has to do is get the interest and the secret billionaire sends in a hit team of pro closers to finish the deal off. Fact is that is his hunt. He demands the close be left to him. I am nimble. I will learn whatever I need to to get another revenue stream happening.

Best Regards
Rev9

[Zippyjuan]

If the US government was not brought and paid for by international corporations and globalists, they would have implemented the simple solution of eliminating the income tax and replace the lost revenue by adding taxes on all foreign imports.

American companies would then be able to compete. Manufacturing and jobs would return. It would also eliminate the incentive to move jobs offshore. Eliminating the income tax would spur personal spending.

I ran the numbers once. It would require a 300% tariff on everything we import- food, oil, TVs, everything to replace the income tax. $100 a barrel for oil would then be $400- think what that would do for the price of gasoline and how that would impact the economy. In retaliation, other countries would probably impose similar tariffs which would shut off our exports to other coutries and the jobs those support. It would take time for our domestic industry to replace the imports so for quite some time we would have significantly higher prices on everything and also significantly higher unemployment. Then when imports tank due to the high tariffs, an even higher duty would have to be put into place because that revenue stream would collapse as well. Perhams 500% or 1000%.

Since 43% of taxpayers end up owing zero in income taxes they would not get any break at all and have zero more money to spend at the same time things cost tons more. That would not help the economy- it would destroy it.

In 2009, the income tax accounted for $1.2 trillion in revenues for the government. Customs duties only accounted for $29 billion.

[heavenlyboy34]

A nimble businessman would take advantage of the world market 24/7 by having whatever product he produces on a website. He should be well aware of the state of the art in their field of manufacture or professional trade. Americans would do well to get themselves understanding just how global communications interlink and how to take advantage of such a scenario. Schools are not the answer as the tech changes so rapidly you just paid for outdated info that is essentially worthless to get employed with. Get the latest applications they use in your field and learn those via tutorial videos and sites.They need to create their own employment scenario and stop waiting for a corporation to hire them. I saw a grad student with a fancy degree and no job begin crushing fruit and freezing them in molds and paid the local gas station to set up on the corner of their lot. By the end of the summer his line was 20-30 deep at 2 bucks a pop for real fruit popsicles all afternoon long. I work as an artist for a very wealthy capitalist. I listened to what he needed as he went about his phone calls and rants and got my pal into a meeting with him for sales and he gave him an opportunity to make a half million in sales commissions in the next month or two. I am searching for a multimillon dollar estate for horses and cattle up where i live in the N Ga mtns. So, I was not afraid to step outside my profession and act as a personnel headhunter and a real estate finder and my pal is a graphics artist with some sales experience who is now selling cell phone tower space amongst other things. Those two things led him to pile more responsibility on my plate. Good. If I don't know it the internet will teach me. Two years ago my pal would have said he was not experienced in that field and blew it off. He has seen me tackle whatever anybody can throw at me and pay me for so that changed his attitude somewhat and gave him confidence to accept the sales challenge. The bonus is all he has to do is get the interest and the secret billionaire sends in a hit team of pro closers to finish the deal off. Fact is that is his hunt. He demands the close be left to him. I am nimble. I will learn whatever I need to to get another revenue stream happening.

Best Regards
Rev9
Good advice, and I agree. They don't teach this^^ in business class, folks. Take notes. I learned the hard way.

[heavenlyboy34]

I ran the numbers once. It would require a 300% tariff on everything we import- food, oil, TVs, everything. $100 a barrel for oil would then be $400- think what that would do for the price of gasoline and how that would impact the economy. In retaliation, other countries would probably impose similar tariffs which would shut off our exports to other coutries and the jobs those support. It would take time for our domestic industry to replace the imports so for quite some time we would have significantly higher prices on everything and also significantly higher unemployment. Then when imports tank due to the high tariffs, an even higher duty would have to be put into place because that revenue stream would collapse as well. Perhams 500% or 1000%.

Since 43% of taxpayers end up owing zero in income taxes they would not get any break at all and have zero more money to spend at the same time things cost tons more. That would not help the economy- it would destroy it.

In 2009, the income tax accounted for $1.2 trillion in revenues for the government. Customs duties only accounted for $29 billion.
Interesting. What would you suggest instead of tariffs? Cuts in spending/foreign welfare? Cuts in military?

[Pericles]

Interesting. What would you suggest instead of tariffs? Cuts in spending/foreign welfare? Cuts in military?

Imports run between $160B to $220B per month, so a tariff of 10% would raise about $200B to $250B per year.

[Warrior_of_Freedom]

The financial crisis explained in one sentence: A bunch of rich men stole our money and told us we owe them more money.

[Zippyjuan]

Interesting. What would you suggest instead of tariffs? Cuts in spending/foreign welfare? Cuts in military?
Taxing imports makes it sound like as an individual you are avoiding paying taxes and that sounds very attractive. But in the end, as a consumer, you are paying those taxes. They will be hidden in the price of everything you buy. Is it preferable to have the taxes hidden in the prices or is it better to have people file taxes at the end of the year and actually see how much they pay in taxes? If the costs are hidden, then people will not react as much to higher levels of government spending.

As Ron Paul has said, you need to balance the budget before you have any tax reductions or significant changes. Of course even if you balance the budget, you still have a $15 trillion debt. To get rid of that, you need to take in more money than you spend over a long period of time. If you wanted to wipe it out in 15 years, you would have to collect $1 trillion a year more in taxes than you spend.

So then what? Ron has also said he would honor commitments for payments to people elgible for Social Security and Medicare so if there are no cuts there (and we can't touch the interest on the debt- that is sure to rise in the future), we have this portion of the budget to work with (figures from the 2010 budget which had a budget deficit of about $1.3 trillion):

Discretionary spending: $1.378 trillion (+13.8%)

$663.7 billion (+12.7%) – Department of Defense (including Overseas Contingency Operations)
$78.7 billion (−1.7%) – Department of Health and Human Services
$72.5 billion (+2.8%) – Department of Transportation
$52.5 billion (+10.3%) – Department of Veterans Affairs
$51.7 billion (+40.9%) – Department of State and Other International Programs
$47.5 billion (+18.5%) – Department of Housing and Urban Development
$46.7 billion (+12.8%) – Department of Education
$42.7 billion (+1.2%) – Department of Homeland Security
$26.3 billion (−0.4%) – Department of Energy
$26.0 billion (+8.8%) – Department of Agriculture
$23.9 billion (−6.3%) – Department of Justice
$18.7 billion (+5.1%) – National Aeronautics and Space Administration
$13.8 billion (+48.4%) – Department of Commerce
$13.3 billion (+4.7%) – Department of Labor
$13.3 billion (+4.7%) – Department of the Treasury
$12.0 billion (+6.2%) – Department of the Interior
$10.5 billion (+34.6%) – Environmental Protection Agency
$9.7 billion (+10.2%) – Social Security Administration
$7.0 billion (+1.4%) – National Science Foundation
$5.1 billion (−3.8%) – Corps of Engineers
$5.0 billion (+100%-NA) – National Infrastructure Bank
$1000.1 million (+22.2%) – Corporation for National and Community Service
$0.7 billion (0.0%) – Small Business Administration
$0.6 billion (−14.3%) – General Services Administration
$0 billion (−100%-NA) – Troubled Asset Relief Program (TARP)
$0 billion (−100%-NA) – Financial stabilization efforts
$11 billion (+275%-NA) – Potential disaster costs
$19.8 billion (+3.7%) – Other Agencies
$105 billion – Other


Cut all of that (without any changes in taxes) and you can balance your budget. All of it- not just foreign welfare or bases overseas or the military. Everything.

Then if you want to get rid of the deficit, as I mentioned you need even more money. To have a balanced budget and pay off the debt within 15 years you would have to get rid of the entire "discressionary" budget and raise taxes by $1 trillion a year. Even after that you can't get rid of the income tax since it is still paying for the government you have left (though that extra $1 trillion could go away assuming spending didn't go up to eat it up).

[kahless]

Taxing imports makes it sound like as an individual you are avoiding paying taxes and that sounds very attractive. But in the end, as a consumer, you are paying those taxes. They will be hidden in the price of everything you buy. Is it preferable to have the taxes hidden in the prices or is it better to have people file taxes at the end of the year and actually see how much they pay in taxes? If the costs are hidden, then people will not react as much to higher levels of government spending.

On foreign imports that would be correct. However these goods would now be produced and available here at a lower cost. I agree that taxes could not be 300% or 400% but if you are have massive cuts to government then you would not need to collect as much. As companies return to the US and the economy improves the government would collect more in corporate taxes.

The unemployment-jobs and manufacturing situation is not going to get any better if we are unable to compete.

[Zippyjuan]

On foreign imports that would be correct. However these goods would now be produced and available here at a lower cost.

It would take a long time to get domestic production up and running to replace all those imports- years. Removing imports also removes competition from local companies which would mean that prices would tend to be higher- not lower. If goods could be produced at lower cost here, the would already be producing them here. All imported inputs such as petroleum or other natural resources are also not readily replacable (our proven oil reserves total the same amount as four years of our average oil consumption- assuming that you could extract and process it that quickly). This would also mean higher priced goods. And with 43% of taxpayers owing zero in net taxes to the govenment, most people would not see any impact by having income taxes eliminated but would be forced to face the impact of higher prices on goods and services. They would be made worse off.


I agree that taxes could not be 300% or 400% but if you are have massive cuts to government then you would not need to collect as much. As companies return to the US and the economy improves the government would collect more in corporate taxes.


Even with massive cuts you cannot balance the budget so you would not be reducing income taxes (unless you do replace them with something else)- as I showed above. In 2009, (latest figures I could find- http://en.wikipedia.org/wiki/2009_United_States_federal_budget ) corporate taxes accounted for about $340 billion or only about ten percent of government spending. Even if you doubled that, you would not be increasing government revenues by much.

[specialK]

On foreign imports that would be correct. However these goods would now be produced and available here at a lower cost. I agree that taxes could not be 300% or 400% but if you are have massive cuts to government then you would not need to collect as much. As companies return to the US and the economy improves the government would collect more in corporate taxes.

The unemployment-jobs and manufacturing situation is not going to get any better if we are unable to compete.

In Canada, our import duties on Chinese made goods are much higher than yours in the US, and therefore, we pay more for most items. I am not sure that our manufacturing sector is any better off for it (I can't even remember the last time I bought something that said "Made in Canada" on it). Many Canadians, myself included, simply shop in the US for their Chinese made goods or at online US-based stores. Overall, we are worse off here having higher import duties, I believe.

[VBRonPaulFan]

This is the biggest problem in the US today, and it goes largely (and amazingly) unnoticed, unspoken and absent from all of the economic discussions and charts therein:

Small businesses make up more than 1/2 of GDP and employment.

Small businesses are responsible for 19 times the patents generated by big business.

In all of the talk about needing the federal government to "stimulate" the economy and the "Super Committee" failure in its efforts to reduce deficit spending, over the past decade the Small Business Administration budget has been systematically cut until it now stands at 1/7,000 of the budget.

Small Business is being systematically starved, taxed and regulated out of existence. In 2008, while the initial bailout check to "ease the credit crunch" totaled 3/4 of a trillion, federally backed SBA loans totaled $12 Billion.

As the federal government debt vacuums up all of the available capital, small businesses and entrepreneurs turn to "venture capitalists" who demand that the entrepreneur give up control over his business or get no capital. Existing small businesses, like the one cited above, are simply told to "use your credit card" at an average interest rate of 16%.

AF,

Thanks for your consistent posts on "free trade" and other economic realities amidst the ocean of nonsense disseminated by the banksters through the media, backed up by the shills who troll these boards and have a great season and new year, my friend.

Bosso

Another poster, Steven Douglas had a good post explaining why small businesses and others couldn't get loans here (http://www.ronpaulforums.com/showthread.php?332055-Inflation-and-Housing-Prices&p=3773080#post3773080):


Yeah, and let's take a look at that shell game.

Firstly, unless the Fed prints money and immediately buries it, the money supply is still being inflated and devalued overall, regardless of signs. Just because the banks aren't loaning the money out does not mean that the money is not in circulation. The reason why 'deflation' happens despite this fact:

We have a case where financial institutions are leveraged to the gills, making them completely unstable, with serious liquidity problems - and extreme fears of being caught in the "domino effect", if nothing else. The highly leveraged condition they are in is 100% their doing, and due to the inflation they already created.

Now comes a nice little infusion from the Fed. But the banks aren't lending it out. Why, mayhaps? You would think that with the lowest interest rates imaginable, they would just be ITCHING to make new loans. It's not like people are not lined up - wanting/needing more loans, because they are. At the very least there are homeowners who are being foreclosed on that would LOVE some additional time and credit.

Why aren't the banks lending out the money they were given? Because they already did.

The banks were already operating from a dangerous insolvency vacuum to begin with, and only now realize the very dire need to cover some of that ridiculous insolvency that they should never have been permitted to create in the first place. At even the lowest interest rates, they would LOVE nothing more than to loan some more money out, but they can't, because they already loaned it out when they didn't have it, and shouldn't have, and must now look first to their own survival - their own solvency, the coverage of their own asses, which is in turn tied to the equally ridiculous insolvency of others. The banks need to fill the "reserves" they should have maintained, but didn't.

So no rocking the boat, everybody breathe in, nobody exhale, as the intense vacuum created by the banks does nothing but suck cash into the banks from any and all directions - the "liquidity trap" is not in "the economy" - it's in the banks which must now rob today and tomorrow to pay for yesterday. That money is going NOWHERE.

And those homeowners who need more time? Part of the banks' liquidity crisis includes some very cold-blooded, calculated, premeditated predation on "targeted assets", like "upside down mortgages" (e.g., home loans with owners who have positive equity that can be aggressively foreclosed on, so that the bank can liquidate it for badly needed cash - SLURP-GULP-BURP). And it is for the same reason that banks are DYING to loan money out to anyone with a 900 credit rating - because they're upside down as well - they have lots and lots of juicy liquidity that can be pounced on and gobbled up in the event of a default. So by all means, loan it out to them, because there really is, in most of those cases, no risk involved.

And, in time, if the bank holds on long enough, and everybody else in the economy, those who actually produce something works hard enough and generates enough private capital to SEED the banks, the banks may then reach a level where they feel it is finally safe to come out of their shells, and they can then go back to expanding credit and inflating the money supply. Meanwhile, deflation is another way of saying, "fill the one-way sucking bank vacuum".

[DamianTV]

The Money Supply is only being inflated for the top 1%, and it is being done at such a rate that it is devaluing what is left of the currency for the other 99%. Yet, day after day, we continue to see prices on everything go up. And there are still a lot of people that can not make the association that the Value of the Product has not increased even though its Price has.

The Value of the Product has NOT increased, the Value of Your Money has decreased because the 1% inflate Their Money Supply, not ours, and They control Our Prices.

[The Gold Standard]

In Canada, our import duties on Chinese made goods are much higher than yours in the US, and therefore, we pay more for most items. I am not sure that our manufacturing sector is any better off for it (I can't even remember the last time I bought something that said "Made in Canada" on it). Many Canadians, myself included, simply shop in the US for their Chinese made goods or at online US-based stores. Overall, we are worse off here having higher import duties, I believe.

That's because tariffs aren't the answer. Free trade isn't the problem. The gradual destruction of our currency inflating our prices and nominal wages is the problem. If wages were what they were 50 years ago and prices had been allowed to fall during that time our standard of living would be dramatically higher than it is today, but wages would still be low enough that is wouldn't make sense to move our manufacturing jobs overseas. Sound money is the answer, not protectionism.

[Zippyjuan]

That's because tariffs aren't the answer. Free trade isn't the problem. The gradual destruction of our currency inflating our prices and nominal wages is the problem. If wages were what they were 50 years ago and prices had been allowed to fall during that time our standard of living would be dramatically higher than it is today, but wages would still be low enough that is wouldn't make sense to move our manufacturing jobs overseas. Sound money is the answer, not protectionism.

Perhaps it is ironic that a stronger dollar actually encourages jobs to move overseas. A strong dollar makes US imports cheaper and our exports to other countries more expensive. That is why countries have been trying to devalue their currencies in responce to the crisis- to try to give their exports a boost and limit imports so that it will encourage more jobs in their own country.

[The Gold Standard]

Perhaps it is ironic that a stronger dollar actually encourages jobs to move overseas. A strong dollar makes US imports cheaper and our exports to other countries more expensive. That is why countries have been trying to devalue their currencies in responce to the crisis- to try to give their exports a boost and limit imports so that it will encourage more jobs in their own country.

That is the big fallacy that convinces these fools to destroy our money. A strong dollar makes everything cheaper, not just imports. It's pretty obvious that as the dollar has declined our trade deficit has risen over the last 30 years, but people still believe this nonsense. The level of price and wage deflation we would need to be competitive globally again is just unacceptable those who don't understand any economics except the big government Keynesian propaganda they were fed in college, so we will just go on believing that we can inflate away our trade deficit. It will never happen though, because it doesn't work that way.

[Zippyjuan]

A strong dollar makes everything cheaper, not just imports.
Definition: http://www.investorwords.com/4783/strong_dollar.html

strong dollar

Definition

Dollar that can be exchanged for a large or increasing amount of foreign currency. The strength of the dollar has an impact on imports and exports because goods and services from a foreign nation are usually purchased in the currency of the producing nation. For example, if the dollar were strong, one would expect imports to be high and exports to be low because the dollar will buy a lot in a different country while it is expensive to purchase dollars with outside currencies. Alternatively, with a weak dollar one would expect high exports and low imports. opposite of weak dollar

[DamianTV]

Many countries used our Dollar as their Reserve Currency, thus, the stronger our Dollar, the stronger their monetary base. The opposite is also true. The weaker our Dollar, the weaker our currency. When we introduce the idea of a Fiat Dollar currency that other countries base their reserve on, and our top 1% keeps the Fiat Currency they just created for themselves, it devalues their currency more than it devalues our own. This is the Short Term result, the long term is that the values of both currencies drop like a rock, and it takes time for economies using the Dollar as a Reserve Currency to adjust to our newly created Fiat Money.

Thus, I still believe an Honest Non Fiat Non Fractional Reserve Goverment Coined Interest Free is the solution to most of our financial woes.