America’s Great Recession – ContinuedPosted: August 5, 2012
by Jim Amory
In the May/June issue of the People’s Press we showed that jobs are created, not by kindly business owners, but by people with needs, and the money in their pockets to buy what they need. Consumers are the world’s Job Creators, and no factory, no commercial farmer, no butcher, baker or candlestick maker would last long without their customers. The first step in starting a business is making sure there are customers, with money to spend, whose wants and needs you can satisfy – it’s called Market Research. The claim that politicians like Mitt Romney make that cutting business taxes will create jobs doesn’t add up. Do the math: a very healthy profit before taxes (say, grocery chain Kroger’s last year) of $843 million. They paid income taxes of $247 million or 29.3% of profit. But their total sales were over $90 Billion. The after tax profit for Kroger was $602 million, or 15.5% of its net worth. By reinvesting profits in the company at that rate, its value would double in 5 years.
Even if President Romney cuts Kroger’s income tax in half to $123 million it would only be 0.14%, a small fraction of 1% of Kroger’s sales. Kroger makes money from its customers and its workers, many of whom are customers, not from tax breaks.
We must admit, however, that the outrageous tax breaks given to Big Oil, Big Pharma, international outsources and other do certify them as above the Law of Supply and Demand, and a helluva good investment. The value of those stock options that are such a factor in the bonuses of C.E.Omigods really take off, and the roar of applause on Wall Street can be heard all the way to the Cayman Islands. The rich live in their own fairy tale world.
Meanwhile, Mitt Romney’s “Job Creators” sit on their hands and checkbooks, the disemployed and de-housed rot in despair, pots of money sit in bank vaults, and our wealthy country looks more and more like the
Hunger Games. The Job Creator CEO’s see no sense in hiring people when business is slow – and business IS slow: according to the 2012 Economic Report of the President the world is now using only 78% of its manufacturing capacity to supply the current weakened market. That capacity was built when the geniuses of Wall Street were convinced that the bubble would keep expanding forever, secure in the knowledge that even if the worst happened, and consumers ran out of credit, they, the Corporate “Persons” would get bailed out.
How can we get purchasing power back in the hands of working Americans who need it, and are the real Job Creators? They are the ones who will spend their pay checks, pronto – but first of all they have to be working, and with living wages. Only the Federal Government is able, in the existing condition of frozen capital, to pull this off.
I hear the cry go up, “But the Deficits! The terrible Deficits!” Yet unemployment itself is a major cause of the deficits, while people working at decent wages are the cure. Their present unemployment benefits, food stamps and what health care they can get – the most inefficient and costly in the developed world – drains federal, state and country treasuries. These same workers, with decent jobs, will pay federal, state, sales and other taxes to fill those treasuries. That is a double barrel assault on deficits. The Political Economy Research Institute of the University of Massachusetts estimates that each 1% reduction in unemployment reduces the Federal deficit by $90 Billion a year. States, counties and municipalities will also benefit.
….to be continued: please send or call comments, suggestions, accusations, etc. to: Jim Amory: email@example.com the author is a retired small businessman with 22 years experience in the criminal Dairy industry – 570 744-2484