Pen Truth

Pen Truth Contributor

Is the U.S. economy broken?  No, it’s shattered, at least for the millions of displaced workers it is.  Wall Street however, is doing fine thank you.  This untenable situation has given rise to both the TEA movement and OWS, otherwise known as Occupy Wall Street.  As we can all agree, the system is flat out broken.  The media giants, the machine of the corporations are playing fast and foot loose with truth, dishing out hyperbole crafted to divide our society even further.  The media,  the corporate propaganda machine is playing a well financed hand of Machiavellian Politics and we, every day Joe and Jane America will be the losers if we fall to its venomous bite.

The situation that got us here is complicated and no mater how much I try to explain it, there will always be something that I missed.  Besides, the best said things are those said without too many unnecessary words.  In as short a dissertation as I can muster, the problem was caused by money.  Money?  Yes, money and money can fix it.  Now, I know that many of you like me were taught from a young age that money is the root of all evil, well that’s just not true, greed is the root of all evil.  Pure, unrelenting, unadulterated greed.

OK, Mike.  Thanks for the morality lesson.  Now, I thought that this was about the economy, how do we fix it?  Glad I asked.  While the causes may be many and too complicated for any politicians to understand it, the fix doesn’t have to be.  Fixing the economy may seem like a huge task, but no mater how big a task is you have to ask only a single question before you begin;  “Oh God What Did I get Myself Into?”  Once you stop smacking yourself in the forehead, open your eyes and breath.  Those last two are very important by the way because if you don’t, nothing else will mater anyway.

All problems have a foundation, a base, a single all encompassing feature and you have to figure out exactly what that feature is to get a handle on the task at hand.  In the case of our economy, MONEY.  Too much over there, not enough over here.  This blog is not going to be about wealth distribution or higher taxes.  One mistake that most people make in thinking through the issues regarding the economy is “Separation”.  Most people don’t realize just how much they are apart of the economy, they feel separate from the economy as if it has nothing to do with them directly.  In fact, nothing is further form the truth.  “We ARE The Economy.”  Wait Mike, you say, I can’t be the economy, the economy is huge, corporation huge, Wall Street Huge!  No.  Corporations would not, could not exist if there were no economy.  The simple truth about the man behind the curtain is this; An economy is the result of individuals trading their money (labor) in exchange for products or services (resources and labor.)

WOW!  Now that you understand Econ 101, let’s figure out what the fix is.  First, you learned that an economy is nothing more than people exchanging labor and resources in the form of money, products, and services.  What should stand out to you through all of this is that hated, communist, socialist word … LABOR!  Labor?  Labor.  Labor is a commodity just like resources and finished products.  Just think about it for a moment, “YOU ARE A COMMODITY TO BE BOUGHT, SOLD AND TRADED!”  Ouch!  However, there is a more important way to think about labor, an organic way of looking at labor … JOBS.  If you have one, you are lucky because about 16% to 22% of people that want or need a job don’t have one (the government has devised a creative accounting method to under-count the true number of unemployed in the U.S..) So, in short, money is labor that you carry in your pocket and exchange for stuff (yes, stuff. it’s a highly technical word.)

So Mike, are you saying that Jobs are the economy?  Why yes I am, in an over simplistic way.  And congratulations, you are learning fast.  This is also the long way of my pointing out that the root of the problem is jobs.  Now that we all understand this extremely complex idea, how do we fix it?  Simple.  You will have to unlearn all the information that the corporlitical propaganda machine has taught you (yes, I just coined that word.)  There are several ways to create jobs.  No, tax breaks for corporations do not create jobs.  The debate over tax cuts is a chicken and egg thing where the egg (jobs) comes first.  Only demand creates jobs, so if tax cuts are the answer, they need to be at the bottom, not the top.   This is one of those subjects that I could turn into a several part blog over the next few weeks, but this idea is too important to play that.

In the following paragraphs I will spell out simple solutions that have very large implications for our society, but they will create jobs.  The economic formula is simple, in fact so simple that even a politician can understand it:  Jobs = money, money = demand for products and services, demand for products and services = growing economy, growing economy = more jobs.  So, lets create a few “Rules” for our get the economy out of hell equation;

Rule 1:  Labor = Money

Rule 2:  Money = Demand for Products and Services.

Rule 3:  Demand for Products and Services = Jobs.

Since we now have our economic rules, lets put them to use in our economic recovery plan and see if they make sense:

Not An Entitlement.  First, and many will agree and many will disagree, but Social Security “Is Not” an entitlement and has nothing to do with the deficit.  However, it has everything to do with the economy.  Why?  Even retired people spend money and we know what that means, demand = jobs.  Rather than cutting benefits and increasing the retirement age we need to do the opposite.  Opposite?  Yes.  The longer people “have to work,” the fewer jobs there are for new workers.  Increase benefits?  Yes.  Remember Rule 2?  It leads directly to rule 3.  You do pass go and you do collect $200

Foreign Guest Workers:  When there are not enough “Qualified” American workers to fill the demand for products and services, corporations will use Foreign workers.  There lies a problem, those foreign workers get paid a fraction of what American workers get paid.  In fact as much as half or more.  This creates a situation where it is more profitable for a corporation to ensure that there are no qualified Americans to fill positions.  This is a real life example, but I am not at liberty to mention names.  An American with a BS in engineering can expect a starting salary of $80K+ and often a multi-thousand dollar signing bonus.  Foreign workers get half that and they never get to reach top grade because they can only be here for a few years. Our example corporation takes a position that requires a BS degree and upgrades it to where they can request cheaper foreign labor.  Since there are plenty of BS degrees but fewer MS degrees, we could upgrade the requirement to a MS degree.  Problem is, some one with a BS can easily get an MS in a short time online, so what to do… I know, upgrade the position requirement to a PhD.  A PhD is much harder to get, even impossible if you are already working full time.  We will get foreign PhDs for half of what we pay for workers with a BS degree.

My solution?  Charge the corporations a fee for the difference between what the job pays an American and what the foreign worker is being payed.  Put 100% of that money into the educational system to educate and train American workers, this country’s “Most” valuable natural resource, labor.  No Free Rides.

Interns:  Internship has become a very profitable way for corporations to secure labor without compensation… Free Labor.  Not since emancipation have the rich had it so good.  The remedy for this would not have a direct impact on the economy but would reduce the burden level or economic impact on governmental support services, i.e. Social Security and Disability Insurances.  Any corporation utilizing interns would have to pay into Social Security at a rate that they would for a waged laborer doing the same job.  The same goes for contributions to state and federal mandated health and disability packages.  Sorry, no free rides, no slaves.  Corporations will still have cheep source of untrained labor for that period of time, just not free labor.

Fair Trade:  The U.S. use to get 100% of it’s revenue from foreign trade tariffs.  Not any more, “Free Trade” has shot that to hell.  As an example, China keeps getting an extension on “Most Favored Nation” status, which means, no tariffs.  Meanwhile, China charges tariffs on U.S. goods going into their country, some as much as 20%.  Fare Trade is not Fair Trade.  Don’t overlook that it is not just China, but U.S. corporations that moved jobs to China and other free trade nations that benefit from the lack of tariffs.  Now you know why the calls for American Corporations to start paying their fair share is getting louder.

Tax holiday:  Now DC has been putting this proposal forward for corporations, an extension of  “Supply Side Economics” or “Trickle Down Economics.”  Supply Side Economics was the biggest Ponzi Scheme “EVER” perpetrated on the American people.  Give corporations and the rich “Huge” tax cuts and they will create jobs.  Sound logical to you?  Of course it does, it is simple and clean.  It is also a lie.  If XYZ corporation has only enough demand for their product to keep 500 people employed, a tax cut to them will not motivate them to hire one single new employee.  They will take their tax cut, say thank you very much, but not hire one single new worker.

However, (you knew that a however would be coming, didn’t you?) However, If you give those that have jobs and are already paying taxes a tax cut, they will buy things with that money.  They will create “Demand.”  This is known as … wait for it … “Demand Side Economics.”  WOW!  Amazing!  Give workers more money and they will “Buy” things, creating “Demand,” creating “JOBS!”   What A Concept!  Why Didn’t The Politicians Think Of It?  Well they did, but corporate greed got in the way… There’s that word again, greed.  It is why we need to get money out of politics, but that’s a topic for another day.

So let me now sum up the Ideas I presented  here in this blog;

  1. Lower Retirement Age so that more jobs are made available.
  2. Increase Social Security payments so people “Can” retire.  Also provide an incentive to those over retirement age to not reenter the work force.
  3. Eliminate the Social security cap and stop taxing social security for individuals with a combined personal income below the national average.
  4. Impose a contribution level  for Intern programs to cover public services and contribution to  Social Security.
  5. Levy a fee on corporations hiring foreign workers equal to the difference in pay ratio to american workers doing the same work.
  6. Reimpose tariffs on nations that under-cut our labor/economy.
  7. Tax holiday for those that “Buy” things.  No Federal Income Tax for 2 years for the first $75,000 in income.  Federal Payroll and State taxes still apply.
Just 7 suggestions?  So, tell me, honestly, can there be a better, simpler fix?  Let’s get America back on top.  Let’s get America working again ……. If you go away remembering just one thing from my diatribe, make it this;  “Demand Creates Jobs”, not tax breaks to corporations.
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