Holy Grail of Growth!

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Economic growth as far as the eye can see! A thundering flood of growth, enabling total tax revenues to increase while cutting the absolute share of income going to taxes. That is what Congress in the US have pledged will happen by their adoption of yet another version of trickle down economics. This post is not intended to discuss the merits of the tax bill. Instead, it is intended to discuss the holy grail that we seek - economic growth. What is it, and how is it different now than it was during the time period that Donald Trump seeks to return us to - when America was great.

 

Back in the 1950's and 1960's, the economic cycle was centered directly on manufacturing things. When the economy was good, factories that made things expanded. Capacity of making things kept increasing. Eventually, capacity exceeded demand, and the manufacturers of things cut back on production, procurement, and people. Layoffs would occur, and since the economy was in synch, cutbacks in one segment caused cutbacks in others. Within a few months, or a year or two, the imbalance in supply and demand would favor production, and the economy would reverse its downward trajectory and start expanding again.

 

This cycle held firm through the post war period, until the 1980's. The byproduct of these economic cycles was inflation, especially when it was accompanied by deficit spending from the Federal Government. Severe fever medicine was supplied to the economy through crippling interest rates. I remember buying my first house in 1982, when I assumed existing mortgages. One was a smaller second mortgage with a 15% interest rate. The inflation fever broke, and the economy of the US began a glide path enabled by falling interest rates.

 

Throughout the 1980's and 1990's, the economic cycle began to change. US manufacturers, having grown complacent servicing their captive market, began to lose market share to those who paid attention to the voice of the customer and improved the quality of their products. Often those were foreign producers. Auto manufacturing was the poster child for this transition. But the change to the economic cycle accelerated due to the end of the Cold War, when the entire world became open for production. Now began the exodus of manufacturing jobs to lower wage nations as China became everyone's favorite supply chain partner. No need to worry about those union workers and the environmental regulations - we will outsource both our labor and our pollution.

 

But a strange thing happened in the 1990's - the economy grew even though the manufacturing sector declined. How was this possible? It was because an increasing portion of our economic output depended not upon the manufacture of things, but upon the manipulation of electrons. With the advent of the internet, it enabled generation of economic activity that relied much less upon the manufacture of things. Compare and contrast the economic activity of the old Ma Bell phone company, with their offspring, the cell phone and internet service providers. Since phone service was viewed as an essential public good, the old phone company received a monopoly to service a region. They were regulated so they would be ensured of operating at a profit, but not so much that their fees would generate a backlash. Then they had to maintain their system of copper wires and switching centers, and received payments from each household for renting their phones, for local service, and charges for each long distance call made by a subscriber.

 

Now look at the telecommunications sector today. Cell phone service is rapidly replacing land lines, and in order to provide cell service, it requires dispersed cell towers instead of a distribution network of fibers and poles. Much less stuff is required to maintain a network, meaning that manufacturing and resource use decreases, while the economic activity from cellular services grows exponentially. Then you have the alternative service providers, like those who bundle internet, cell service, and TV in one package. And then there's the lucrative practice of selling data. Quite literally, the economic activity generated by electronic waves means that money is being plucked from the air. If you compared the fraction of income that was spent on phone service back in the 1970's, with the fraction of income spent on cell service, data features, and internet service now, far more economic activity is occurring in the telecommunications sector now than in the era of Great America.

 

If you examine the economy over the last 50 years, manufacturing still maintains a high share of economic activity. But that share is spread more thinly across the landscape, since manufacturing productivity has increased so much, and manufacturing employment has declined precipitously. We are now at the cusp of yet another inflection point in productivity. Robotics and the use of Artificial Intelligence will replace the human worker at an increasing rate. In fact, one unintended consequence of the tax bill may be that companies who repatriate money from overseas and invest it in the US, choose to invest it in automation that further reduces the human input.

 

So it is possible to increase economic activity while decreasing physical inputs into an economy. We live better by consuming less. That is undoubtedly good for the environment, but how does that affect the world of labor and enable those who work to have motivation to improve their lot in the future?

 

The premise of the Make America Great Again movement is that we can withdraw into our own borders and internalize manufacturing, thus unleashing the ability to generate economic activity in every town in the nation. Manufacturing is viewed as the panacea that serves as a labor force relief valve for those who choose not to continue education. Yet now, manufacturing labor requires significant knowledge skills beyond that of a high school graduate. Many manufacturers despair of finding qualified candidates for their openings. Even if a candidate is able to pass drug screens, they are not willing to commit to a rotating shift lifestyle. And despite the desires of leadership to isolate the US economy, we are competing globally, and no one else owes us any economic favors now.

 

Economic expansion in the era of technology requires making a commitment to provide the labor force for high skilled manufacturing. This appears to be a requirement of the public sector to provide the training required, due to the failure of the private sector to serve as a competent trainer for skills. Think ITT technical and other private educators who delivered only excess debt instead of marketable skills. Community college needs to serve both as the foundation for trades education, and as the entry level for bachelor degree programs. It will require close coordination with industries so as to deliver potential employees with enough knowledge to be worth hiring. This increased support for community colleges is essential if we want to benefit from the leveraged growth that new manufacturing jobs can provide.

 

The other area where growth can be generated is in developing an extended plan for upgrading our deteriorated infrastructure. There are some places where private / public partnerships can be created to build new features, but that will result in ongoing expenses to ensure investment return to the private entity (think more and more tolls). Still, the huge unmet need in renewal of our existing infrastructure must be met by government expenditures. Again, this can be funded by the users of the infrastructures, but the traditional techniques like a gas tax will not work in the era of electric vehicles. At some point, those who keep trying to shrink government will have to realize that targeted tax increases are required in order to keep our civilization vibrant and productive, and to increase economic growth. The recent tax bill where simplification was touted, but the net result was to redistribute income up the income chain, shows that we as a nation are not ready to address the real issues facing our country. Maybe when multiple bridges collapse due to neglect we will realize our folly.

 

This post originally posted on my blog at https://evenabrokenclock.blog

Comments

George N Romey Added Dec 6, 2017 - 7:55pm
Very good article. One of the biggest issues is that new businesses like FB require far few workers. We have too many talented workers and not enough good jobs for them. However to correct the imbalance would require a change in hours worked something the private sector shows zero intention of doing.
 
A massive infrastructure program would help bridge the gap and recreate the velocity of money. However the power brokers have no interest in this.
 
So increasingly we will become a low wage, underutilized workforce. Underemployment will continue to intensify. This all will lead to a more unstable society.
Ari Silverstein Added Dec 6, 2017 - 8:18pm
While I don’t advocate for trickle-down economics, let’s make one thing perfectly clear, it’s never been tried.  Trickle-down would mean the rich would pay less taxes in hopes their extra spending money would flow to the middle-class and poor.  However, in America we practice progressive taxation.  This means the more you make the higher rate you pay.  So not only do the rich pay more in absolute dollars they pay more as a percentage as well. It’s like a penalty for being successful.  The GOP’s tax plan keeps all that in place, so why the bitterness?
Cliff M. Added Dec 6, 2017 - 9:50pm
  Ari, The propensity to consume is lost with the trickle on theory.The ordinary consumer has been squeezed to the point that discretionary income has become less and less. The velocity of money has slowed to where it was during the great depression and still falling. More money in the hands of less people .Economic policy is currently owned lock, stock and barrel by the contributor class.Progressive taxation means nothing anymore with many wealthy patrons paying at effective rates less than the middle class.Middle ground is what is needed here.Investment that would help the majority not just the asset and capital holder class. There is a 60% range between historical highs and lows on tax rates.We know what is effective from past history. How long will reality be ignored? The greatest sustained growth where prosperity was most widespread had a top marginal tax rate of 91%. The middle class was created during this period. Average wages grew over 40% during Ike's 8 years in office. With the Trickle on approach started during Reagan ordinary wages have seen only minimal increases .This  with tax rates from the 30 - 40 % range.As for the comment "Trickle down economics hasn't been tried", Have you had your eyes closed for the last 35 years?
George N Romey Added Dec 7, 2017 - 6:54am
We’ve been in one form of another of deregulated trickle  down for the past 40 years. It’s made the rich much richer and that’s about it.
Cliff M. Added Dec 7, 2017 - 7:43am
Trickle on has pretty much dominated the economics since Reagan. From capital gains to low rates for the top to QE. Now we have the abomination of the GOP tax cuts which heavily favors capital. Minimal has been done to stimulate demand and now deficit spending will crowd out any stimulus that could help more than the top. The supply sider's have done well . We are going to need the next big dilemma to force a change in paths. Share the wealth has become an unspeakable term.Short term gain for the select few has created long term pain for the many.
Even A Broken Clock Added Dec 7, 2017 - 10:43am
Ari, let me ask one question of you on your response. You ask, why the bitterness? I ask you, where did you see bitterness expressed? I was not arguing the merits of the tax bill, but am attempting to get at the underlying factors influencing economic growth. My point is that economic growth is different than it was back in the days that Donald Trump is trying to return us to. One of the sources that I used in developing my thoughts was a government study published in 1996:
 
http://www.esa.doc.gov/sites/default/files/serviceindustries_0.pdf
 
At the end of the post, I do make the editorial assertion that the tax bill does nothing that would support an infrastructure proposal that would stimulate real economic growth, but the rest of the post is devoid of political spin.
Even A Broken Clock Added Dec 7, 2017 - 10:50am
Cliff and George - you've hit upon the key factor regarding economic activity. The velocity of money has slowed significantly. That is one key reason why corporations are not investing their excess cash, but instead returning capital in the form of share buybacks and dividends. I agree that trickle down economics have not been successful, and I disagree with Ari's assertion that a progressive taxation system represents a punishment for success. I would maintain that instead, in a civilized society, the following quote from the Bible is appropriate:
To whomever much is given, of him will much be required; and to whom much was entrusted, of him more will be asked.
— Luke 12:35-48, World English Bible
 
As a society, we must realize that not everyone wins the lottery of life. Some are successful because of family connections, and find themselves on 3rd base due to their status. Others have worked hard and become successful. But in order to maintain a civil society, it is fair to expect the successful to contribute more to the maintenance of that society. Ayn Rand be damned.
Stone-Eater Friedli Added Dec 7, 2017 - 1:18pm
As long as the planet can't grow in size, growth is an illusion, except if you kill some billions (c) Monsanto, MIC and other criminals. The first won't happen, though.
Dino Manalis Added Dec 7, 2017 - 2:23pm
We all need growth, including Russia and China, to increase revenues and pay costly bills.  Growth is always essential with pro-growth pro-business policies to encourage consumers and businesses to spend and invest.
Bill Kamps Added Dec 7, 2017 - 3:47pm
Economic growth will naturally slow over time.  As more people have all the things  they want, they arent going to buy more.  As countries modernize, population growth slows.  The US population is currently only growing at .7%.  It is therefore VERY difficult to grow an economy at 4x the rate of population growth.  This is normal.
 
George wants a 30 hour work week, so are we going to make it illegal for people to work more hours ?   If I want a second job, or want to work from home the government is  going to stop me ?  That is preposterous on the face of it. 
 
People will do what they have always done, just like when the horse buggy  was replaced with the  car.  The black smith was out of work, and wanted a government subsidy like the family farmer was getting.  Unfortunately for the black smith, Congress deemed  the family farm strategic, and subsidized it, while the black smith had to learn to be a mechanic or went hungry.  People have to learn to do other things.
 
Just as one example, we have a shortage of air craft maintenance people.  There are more jets flying today than at any other time.  All of them need people to fly them, maintain them, clean them, and help people move around airports.  There are always jobs for those that can figure out something useful to do.  The government was not created to provide jobs for people, find that somewhere in the Constitution.   People used to subsistence farm, until the Industrial Revolution created the need for jobs as we know them today.  There never was a guarantee that there would always be a job for everyone that would allow people to buy two cars and a  house.
George N Romey Added Dec 7, 2017 - 4:57pm
Even when we had real full employment some people chose to work more than 40 hours or a 2nd job for a number of reasons, possibly to pay for an expensive hobby.
 
We are facing something new. Technology that is totally replacing the need for humans. At some point we need to adjust. Bill seems to forget that 100 years ago the norm was a 10 to 12 hour day, six days a week.
Even A Broken Clock Added Dec 7, 2017 - 5:40pm
And yet as I've noted, economic activity is being created in ways that don't involve manufacturing things. Much of the jobs associated with this activity is low wage, as George has noted, think food delivery apps. Just think about apps in general - 15 years ago they didn't exist, now they are ubiquitous. No manufacturing is involved, but the payment for them generates economic activity. Stone, that's the hope for continuing growth without destroying the environment at a greater rate.
 
Bill, so how does someone get educated for aircraft maintenance? Here's what I was talking about with community colleges. In WV, there's an airport that has a large airplane maintenance facility. In conjunction with that, the local community college has an associate in applied science program in aircraft maintenance. That's the type of close-coupled course offerings that need to be in place to serve businesses in the local area.
George N Romey Added Dec 7, 2017 - 6:33pm
It would be nice to troop off to school for a year or two to learn a new skill. However the rent or mortgage, car payment and health care premium doesn’t wait. And no company will pay for training.
Utpal Patel Added Dec 8, 2017 - 6:53am
Ari makes a great point.  Calling the tax bill an example of “trickle-down economics” is a de facto criticism of the tax bill. 
 
Allow me to explain, targeting the rich for extra taxation and then reliving some of that extra taxation is not trickle-down economics, it’s called smart economics.  You simply can’t continually increase taxes on a group of people and think it won’t have adverse consequences. 
 
Trickle-down economics was never Reagan’s policy proposal and it’s certainly isn’t Trump’s either.  It’s a word used by liberals to taint any effort by conservatives to grow the economy by embracing capitalism. 
Bill Kamps Added Dec 8, 2017 - 7:45am
Bill, so how does someone get educated for aircraft maintenance?
 
www.aviationmaintenance.edu/
 www.miat.edu/MIAT®/Houston
 
One does need to use Google.
 
I have seen various ads, of course I dont know the good ones from the bad ones.  That would take some investment in time.  Since Im not in the market for a new job, I dont need to do it.  Im sure there are scams out there like in every situation, and as full  disclosure I have not investigated the two mentioned here.

 
I will grant people, that if you never prepared for the end of you job, then when the job goes away you have a problem. 
 
At a young age I was given some good advice, which amounts to always be thinking about what you would do, if your job ended tomorrow, because one day it will.  People who put off this planning suffer the consequences, and then are at the mercy of the government.
 
Cliff M. Added Dec 8, 2017 - 9:53am
Utpal, Your idea on relieving extra taxation is just restoring the trickle on approach. Trickle on comes in many shapes and forms. The sum of the whole approach is the most damaging when this method dictates the majority of fiscal policy.Fiscal policy has been dominated with supply side goodies since Reagan. Income gains and who profit's from this approach are black and white. Moderate policy that lifts all boats is what is fair and needed. This approach has failed and does not address the demand problem which has denied any substancial growth.
George N Romey Added Dec 8, 2017 - 10:20am
The problem with preparing for the end of your job you don't know when its coming and what skills will be in vogue.  Also think of this in a practical way.  Most people go to work, if they are professionals (non exempt) chances are they are working to 6PM or later.  Then there is going home, getting the family dinner together, helping kids with homework, going through the bills and finally followed by maybe six hours of sleep (as concrete evidence shows most Americans are sleep deprived.)
 
Yes it might be nice to troop off to a college class every night to "update your skills." I obtained my MBA part time in the 1990s.  I only was able to do it because I was single and had two employers (switched jobs during the time) that were very, very supportive of my endeavor.  I can assure you that most employers 25 years later wouldn't be a accommodating. 
 
And the value of that hard obtained MBA 25 years later.  Not worth the parchment paper its written on. 
 
Here in Miami we also have a huge aircraft maintenance bases.  Opposite of the Miami terminal are some of the largest aircraft maintenance bases in the world.  You see commercial aircraft from all over the world.  Even for the jobs in finance the postings in no certain terms want finance experience in aircraft maintenance and/or parts even though said finance manager or analyst isn't ever going to walk over to the hangar and start tearing apart a Boeing 737. 
Even A Broken Clock Added Dec 8, 2017 - 10:22am
Bill, I was using your example about aircraft maintenance since I knew of a local community college had an offering that fed directly into the need of the business that would use the graduates of the program. Now, how do you motivate people to seek a job that actually involves hard work and requires classroom training? Ay, that's the rub, isn't it.
 
George, you are exactly right. Real life does go on while someone tries to gain new skills. At least with community colleges providing training, the cost of the training itself is less than that offered by the for-profit sector. What you said about companies not doing training is spot on. That's one reason why labor does get outsourced to other countries where the expense for doing the training is much less.
Even A Broken Clock Added Dec 8, 2017 - 10:25am
Utpal, I refuse to buy into the Randian philosophy of total selfishness being the ultimate good, and that any progressivity in the taxation system represents an unlawful and immoral taking of property from someone who has earned that property. We all pay rent to live in a society. If you are in the exclusive strata of society, you have more to lose if the society comes apart at the seams. Therefore you owe more proportionally than someone who is barely scraping by.
 
If you don't accept that principle, then you deserve the downfall of society when the underclass finally does rebel.
George N Romey Added Dec 8, 2017 - 10:34am
EABC taking the time take even a community college class is difficult.  There was a time in the 1990s if you needed to leave by 5PM to take that class your employer was willing, after all it was investment in their people.  Fairly likely the employer would pay for some or all of the costs.
 
Those days are gone.  Companies no longer look at employees, including the professionals as assets.  They are costs no matter what kind of touch feely video they put on their Careers page or hand out titles like Director of People and Culture (or at one time more commonly known as the Personnel Director).  This is the reality today in most corporations. 
 
Today you are needed to carry out a number of tasks and responsibilities. If tomorrow the market or technology changes those tasks companies are much more adapt to find someone that has exact skills rather than "retrain" a current employee. 
Bill Kamps Added Dec 8, 2017 - 11:50am
George, its supply and demand. It the past days you refer to labor was in short supply, and demand was high.  At that time it was too costly to hire and replace workers, and they needed more of them. 
 
Let not confuse high demand for workers with altruism by companies.  It only existed as a means to an end, which was filling the demand for workers.
 
Now, labor has low demand compared to supply, so companies treat people differently.  Just how it is, I cant change the world. 
 
If tomorrow the market or technology changes those tasks companies are much more adapt to find someone that has exact skills rather than "retrain" a current employee. 
 
Yes! exactly! because they can.  If they couldnt find someone with the needed skills they would  train them.  In the past labor was in short supply so the decision was made to train people.
 
 
You are correct, you need to get ready for your next job, on your own time, because  no one is going to do it for you.  No one is going to career consul you, and no one is going to pay for your training, or give you paid time off.   However, if you can demonstrate you can do useful things that make people money, you will be hired.  It has worked for  me. 
Bill Kamps Added Dec 8, 2017 - 12:02pm
In Houston now there is unmet demand for aircraft maintenance people, and for welders.  How do I know this ? I see billboards and local TV ads with subsidies for this kind of training.  Companies dont do this unless there is demand. 
 
Companies have always tried to do what is best for them.  Sometimes that means they also do what is good for the workers.  But when interests are in alignment it is not because of charitable thinking by the companies.  Companies also make lot of mistakes because they are run by people. 
 
All we can do is make sure OUR skills are in demand, so we can do something useful and get paid for it.  I cant help the millions out there, I can help myself.
Even A Broken Clock Added Dec 8, 2017 - 12:46pm
Words to live by, Bill. A key question is how do we get those who are disengaged from the economy to get the desire to gain the skills they need. Our local paper gave some distressing stat's today. Almost 1/3 of the first year college students in our state who graduated from a high school in the state required remedial classwork in their college. That to me is a very sad statistic, since it shows that the first leg of the education system is now effective in inculcating the skills and desire for education in their students.
 
How do we build a culture where educational achievement is idolized like athletic achievement is? Until we make it cool to be smart, we'll always be behind the curve in trying to get people a leg up on their working careers.
George N Romey Added Dec 8, 2017 - 1:06pm
Bill what I’ve seen in the Miami market and professional recruiters have confirmed it is that companies would rather leave a position open for months on end than hire to train. I know people that do research on hiring trends and they also see this. Line managers just simply force that unfilled position onto others until the pink squirrel is finally found.  Three times in my career I was hired then trained but that’s not happening now.
 
It used to be in Finance you had to be exposed to a software package, today you must be an expert at the prospective employer’s software to get hired.
 
Stone-Eater Friedli Added Dec 8, 2017 - 3:34pm
Growth needs space to grow. That's what the word implies. We don't have that space.
 
WTF is so diff about that ?
A. Jones Added Dec 9, 2017 - 1:05am
I refuse to buy into the Randian philosophy of total selfishness being the ultimate good, and that any progressivity in the taxation system represents an unlawful and immoral taking of property from someone who has earned that property. We all pay rent to live in a society. If you are in the exclusive strata of society, you have more to lose if the society comes apart at the seams. Therefore you owe more proportionally than someone who is barely scraping by.
 
If you don't accept that principle, then you deserve the downfall of society when the underclass finally does rebel.
 
Scary.
 
What if successful earners of wealth tell you to fuck off, taking their property, wealth, and abilities out of the country? Then you'd have no one to tax. Will you deploy the police powers of the state (i.e., military) to stop them at the border? Will you confiscate their wealth in return for allowing them to leave? How far are you willing to go?
 
As for those in the supposed "underclass", they have never in history rebelled without the support and backing of a "professional revolutionary class", including the very wealthy, who dislike free markets and competition as much as any socialist but for different reasons: they don't want to get knocked off their perch by innovative upstarts.
 
Regarding "trickle down economics":
 
There is no such theory or model in the entire history of economics. It's a phrase invented by the left for the sake of dismissing free trade, open markets, low taxes, low government spending, and the rest of the apparatus of traditional liberalism.
 
The case against raising taxes is simple, and it's not founded on the idea that rich people would buy more consumption goods if taxes were lowered (thus showering retailers and vendors with higher sales). It's based on the unquestionable fact that taxes alter economic behavior: when taxes are high, the wealthy invest less in productive ventures that require time to become profitable. This time-intensive productive ventures are the source of new jobs and new wages for new workers. Actually, when taxes are high, the wealthy not only invest less, but they tend to spend more on  consumption goods: another car, another mansion, one more yacht, etc. Those purchases add very little to economic growth.
 
That's why European welfare states with high, confiscatory tax rates, have such miserably low rates of growth: numbers such as 0.8% for Q3 for Germany; , 0.5% for France, 0.3% for Belgium, etc. By contrast, the U.S. was 2.9% for Q3.
A. Jones Added Dec 9, 2017 - 1:11am
As long as the planet can't grow in size, growth is an illusion
 
Growth = an increase in productivity, which implies the use of fewer resources to get the same output (or to get more output).
 
Today the U.S. uses far fewer resources for agriculture than it did in the 1700s, yet it's able to produce far more food on fewer acres of land. The planet didn't grow; knowledge did.
Doug Plumb Added Dec 9, 2017 - 8:31am
re "Bill seems to forget that 100 years ago the norm was a 10 to 12 hour day, six days a week.  "
 
So that is 60 - 72 hours. Now its 44 times two = 88 hours.
Even A Broken Clock Added Dec 9, 2017 - 11:11am
A. Jones - I suggest you familiarize yourself with the works of Toynbee if you believe that underclasses have not taken down civilizations in the past. Here is a description of what Toynbee stated in his Study of History:
Civilizations declined when their leaders stopped responding creatively, and the civilizations then sank owing to the sins of name="___id15">nationalism, militarism, and the name="___id16">tyranny of a despotic minority.
 
He discusses in great detail the rise of the underclass in civilizations of the past where those who do not participate in the economic benefits of a civilization, eventually take over the leadership of the civilization and crash it upon the waves of history. I would maintain that with the advent of Donald Trump in the US, and with the rise of nationalism and other movements in other western countries, that we are potentially witnessing the rise of a despotic minority that will run roughshod over the rights and desires of the majority.
 
Progressive taxation is not a bogeyman. It is a necessary condition for civilization. Where the discussion should occur is where is the line between adequate taxation or excessive taxation. That is a valid discussion, but the whole shibboleth of flat taxation being the only just form of income taxation is folly.
Cliff M. Added Dec 9, 2017 - 12:21pm
During the top 20 years for GDP growth the top tax rates were between 70 and 88% with only one year(1984) which ranks #12 at 50%. What does this prove about top tax rates and growth investment?I agree with even a broken clock about the discussion  about where this equilibrium point should be.With record profits and most income gains going to the top why has investment in other than Wall Street paper been severely lacking.Why are tax cuts for the top and corporations even the issue? These numbers are from 1934 forward.
A. Jones Added Dec 9, 2017 - 11:42pm
I suggest you familiarize yourself with the works of Toynbee if you believe that underclasses have not taken down civilizations in the past.
 
I suggest you familiarize yourself with the majority of historians who claim Toynbee was a pretentious and prolix windbag who made breezy, bloviating claims about past civilizations that cannot be proven one way or the other. That's the main reason no one studies Toynbee any longer. He was simply full of shit. You think he's great? Figures.
 
Once more:
 
When successful earners tell you and the underclass to fuck off, and leave the country with their wealth, property, and skills, what will you do for a tax base? You won't have anything to tax and redistribute once they're gone. You need them much more than they need you.
 
Answer the question. What are you going to do?
Thomas Napers Added Dec 10, 2017 - 4:15am
“How do we build a culture where educational achievement is idolized like athletic achievement is? Until we make it cool to be smart, we'll always be behind the curve in trying to get people a leg up on their working careers.”
 
That’s an easy one, remove the government from the education business.  Take all that money the government wastes and give it to each student in the form of voucher and let them figure out which schools are deserving.  The problem is that it would be the equivalence of cutting the snake off at the head, as the unionized public employee is the most loyal vote the Democrats have.  It's also their best source of funding.  The public schools system is also a great place to brainwash young minds…politically speaking.
Bill Kamps Added Dec 10, 2017 - 9:50am
Bill what I’ve seen in the Miami market and professional recruiters have confirmed it is that companies would rather leave a position open for months on end than hire to train.
 
George, I dont doubt it.  I would think that companies have gotten out of the habit of training because in general, it isnt needed.  That doesnt mean in specific cases they dont have difficulties finding the right person.  If training programs dont exist, they arent going to create one just for a handful of people.
 
However, compare this to the 1940s, when companies had to train hundreds of thousands of people to work on military assembly lines.  At that time NO ONE knew how to build a tank or an air plane, and they didnt need just 5 or 10, they needed 50K people of those kinds of people.  At one point in the US there were more than a half a million people building air craft.  Those people had to be trained, and large training facilities were set up.
 
After the war those people had to be retrained to build cars, and trucks, etc.
 
As you have observed it was a different world back then.  Companies had training programs, facilities, etc.  In the 1980s they had to train people to do computer work, because no one knew how to build computers, write software, etc.  So they still did a lot of training.
 
However, large training facilities are expensive, and companies have cut costs to make more money.  MOST of the time they can find people they want.   Isolated cases exist like the air craft maintenance programs, and welders here in Houston.  So when the need arises they create the training.  But the need has to be more than a one-off, it has to be large.
 
Clock - I dont know how you motivate people to learn when they need to know to be successful.  A lot of that I would think has to come from parents, that is where I got my motivation.  I have had a job since I was 11, and thankfully I was raised not to expect help from the government, and told that any job I took, would be obsolete before long, so I had better be planning my next job while I was still employed. 
 
 
 
 
Bill Kamps Added Dec 10, 2017 - 10:21am
George, the  oil companies still had significant training programs right up until the last few years when the oil price went down.  Until recently there was a shortage of drillers, rough necks, and people to work on off shore rigs.  Since all the experienced people were working, they needed to train more or they couldnt drill wells.  They couldnt just assign the work to someone that didnt knew how, that would be too dangerous.  While they have stopped the training for now, Im sure when demand comes back, so will the training programs.  So again we are back to that law of supply and demand.
 
If the demand is high enough, and supply low enough, there will be training.
Jeff Michka Added Dec 10, 2017 - 12:30pm
EABC sez: And yet as I've noted, economic activity is being created in ways that don't involve manufacturing things-Of course.  building a manufacturing business that requires a major investment that can't show profits tomorrow, or perhaps, if well planned- and well done, a long time, isn't what investors want. "What do you mean it might be a couple of years before we can get a 12-15% ROI? We'll not be able to trade in our new fleet of Mercedes and get new ones!!!" There's more fear of no instant return than any concern about "growing the economy," or "starting a business."  There be risks for he latter, and the wealthy can't take "risks."  Horrors!!
Even A Broken Clock Added Dec 10, 2017 - 7:28pm
Jeff - I can remember that when we tried to justify an improvement project at my chemical plant, we had to pass a hurdle rate of about 20% IRR. And that was with a discounted cash flow of about 12%. In other words, they weren't interested in internal growth and saving money. And the last time I was dealing with projects like that was in the early 1990's. It's only gotten much worse since that time.
Even A Broken Clock Added Dec 10, 2017 - 7:32pm
A. Jones - we may have to agree to disagree on Toynbee. I've seen the criticism of Toynbee, but to me he provided the clearest understanding of history that I've seen. Maybe his work was not up to the standards of serious scholars, but it made sense to me.
 
As for your assertion that everyone who provides value to the economy will decide to desert this country and migrate somewhere else where their skills are valued and their compensation won't be confiscated, just where in the world would you suggest that these folks go? Except for a few tax havens, most civilized countries have much higher taxation rates than the relatively low ones in the US.
Even A Broken Clock Added Dec 10, 2017 - 7:36pm
George and Bill - for quite a few years I was engaged in implementation programs of SAP (business enterprise software) at my company. I understood the need for training, and was dedicated to providing adequate documentation for the people I worked with, and extended training sessions for folks who came into my group. However, I'd say I was in the minority and most folks who came into similar jobs got thrown to the wolves.
 
I still find it amazing that I was tasked with designing the architecture of our business (a multi-billion dollar business) within the SAP system and never once was offered the opportunity to take a SAP training class. Wasn't in the budget.
A. Jones Added Dec 10, 2017 - 8:35pm
 just where in the world would you suggest that these folks go?
 
Are you mentally retarded? Answer the damned question already.
 
What will you do when successful earners* leave? Whom will you tax? Whose wealth will you redistribute?
 
If you can't answer the question just admit it.
 
 [*I wrote "successful earners" (i.e., the wealthy). I did not write, "everyone who provides value to the economy", which would also include lower-middle class plumbers and professional dog-walkers.]
Even A Broken Clock Added Dec 11, 2017 - 10:54am
A. Jones - please stop being insulting. I am trying to provide honest responses, and I have noted that other of your posts are very good.
My answer to the canard that all wealthy people will flee the US due to excessive taxation is that it won't happen.
A. Jones Added Dec 11, 2017 - 8:13pm
My answer to the canard that all wealthy people will flee the US due to excessive taxation is that it won't happen.
 
(sigh.)
 
It already has happened, here and in other countries.
 
Let's try again:
 
HYPOTHETICAL:
 
What WOULD you do IF successful earners — WEALTHY PEOPLE — left the country in order to hide their wealth from your tax man?
 
Since you won't answer the question, I'll answer it for you (you're welcome):
 
1) You will stop successful earners (wealthy people) from leaving the country or stop them from putting their wealth in places your tax man can't touch. Your policy is called "capital control" and many countries have done it for precisely that reason: to stop the outflow of wealth (capital flight) earned by those who would rather keep it and invest it in ways they want, rather than have their governments take it redistribute it.
 
Something else might occur under this first scenario:  once you prevent successful earners from leaving the country or transporting their wealth out of your country, they might very well decide not to continue being successful earners, and instead, keep a low economic profile.
 
Whether successful earners emigrate, or whether they decide to keep a profile, the economic effect on your tax base is the same: it has shrunk, and now you have less wealth to tax and redistribute. That inevitable result leads us to your next move:
 
2) Once successful earners disappear from your tax base, you will then tax the middle class.
 
Those are the only two possible alternatives for you. You might even do some combination of both.
 
Your fantasy that successful earners will simply continue creating lots of wealth for you to confiscate and redistribute is founded on the socialist notion that successful, competent, ambitious people are Cash Cows, who will just keep producing no matter what the circumstances. You're wrong.
Cliff M. Added Dec 11, 2017 - 9:00pm
A Jones,  After the big Reagan tax cut for the top who got stuck with the next big tax increase. If I remember correctly ordinary wage earners took it in the shorts on the s.s. payroll tax which was conveniently absconded and thrown to the wolves in the "General Fund". Isn't there a group of 400 millionaires now who are saying they should be contributing more?
Cliff M. Added Dec 11, 2017 - 9:08pm
Look at the big mess the tax experiment in Kansas has made.All of these big cuts left huge revenue shortfalls leaving a massive deficit.Growth was minimal and now Brownbachs mess must  be completely reversed.Now the same play on the big stage. This could get ugly.
A. Jones Added Dec 11, 2017 - 10:08pm
All of these big cuts left huge revenue shortfalls
 
Easily solved: SPEND LESS.
A. Jones Added Dec 11, 2017 - 10:09pm
Isn't there a group of 400 millionaires now who are saying they should be contributing more?
 
Yes. They're hypocrites.
 
There is absolutely nothing preventing those 400 from contributing as much as they like.
Cliff M. Added Dec 12, 2017 - 7:05am
So if you spend less who are the winners and losers?
Even A Broken Clock Added Dec 12, 2017 - 10:52am
OK, A. Jones. One point I wish to make about the givers and the takers that get sanctimoniously dismissed by your ilk. The point is repeatedly raised that it is a minority who pay tax to the Federal government. That is true if only the income tax is considered. But to exclude the payment through FICA supporting social security and medicare is a specious argument, since this affects any wage earner who works at a job where withholding exists. It also applies to any self-employed person who follows the law (obviously those who work in the cash economy who don't pay self-employment tax are breaking the law). These folks have skin in the game and to pretend that they are only takers is misguided at best, hypocritical at worst.
 
I understand your conception that the existing progressive taxation system is killing the goose that lays the golden eggs since we are seeing a mass migration. I do know the failures of capital controls - look at Venezuela for an example of abject failure of that. My point is that out of the OECD countries, we are near the bottom in terms of country level taxation. Obviously that is still onerous to those who have swallowed the Randian kool-aid about everything that a man (always a man) earns is his and any attempt to forcibly extract money legitimately earned is immoral. I'm sorry you are of that opinion.
A. Jones Added Dec 12, 2017 - 5:27pm
So if you spend less who are the winners and losers?
 
If government spends less, the losers are those whose incomes depend entirely government spending.
 
If government spends less, the winners are those who were made to pay for those living on government spending.
A. Jones Added Dec 12, 2017 - 5:30pm
that is still onerous to those who have swallowed the Randian kool-aid about everything that a man (always a man) earns is his.
 
Precisely what part of what a man earns is not his?
Cliff M. Added Dec 12, 2017 - 6:07pm
A Jones how about all of the tax payers paying for public services and education.How about the kids that get shortchanged.You have a very narrow minded tunnel vision of what the effects of cutting spending will actually accomplish. Should we have a lottery to see who can guess what bridge falls down next?
A. Jones Added Dec 12, 2017 - 8:02pm
how about all of the tax payers paying for public services and education.
 
Privatize them.
Cliff M. Added Dec 12, 2017 - 8:16pm
Great  the only problem is that under the current rules of economics a large swath of Americans have been left with minimum incomes.With most of the income gains going to the top since Reaganomics the tax base naturally goes with the income.Most Americans would appreciate the opportunity to earn a good income and pay their fair share of taxes.

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