Low Taxes Do What?

Those who complain loudly about how many jobs have been “exported” to other countries because of international free trade totally ignore all the jobs that have been imported to the American economy because of that same free trade. Siemens alone employs tens of thousands of American workers, and Toyota has already produced its ten millionth car in the United States. —Thomas SowellLow Taxes Do What? (Hoover Digest)

I’d never considered this perspective before. Here’s another fascinating quote, an attempt to counter the meme that Regan cut taxes for the rich and soaked the poor, leading to defecit spending:

What Reagan’s “tax cuts for the rich” actually cut were the tax rates per dollar of income. Out of rising incomes, the country as a whole—including the rich—paid more total taxes than ever before.

As Sowell puts it, “Simple stuff like this is not very exciting for economists, and there is no payoff in one’s professional career for clarifying such things for the general public.” That kind of explanation won’t fit on a bumper sticker as easily as something designed to get you in the gut, like “AIDS: The Reagan Vietnam.”

Sadly, I think that regardless of their political persuasion, this topic would probably put the average freshman comp student to sleep, so I won’t bother Googling for a good counter-opinion to present as a pair of readings. Someday maybe I’ll teach an upper-level rhetoric course…

4 thoughts on “Low Taxes Do What?

  1. Okay, I think the figure of $40 per head was a number that had been dissected, derived, discussed in threads of several blogs, doesn’t pop out in searchable text (really hate unsearchable Radio and Haloscan comments for this reason). The figure was based on approx. 3 million unemployed and the roughly estimated 3 million discouraged or underemployed workers during 1Q2004 (these two groups are rarely ever factored substantively into unemployment reports). The amount the Administration proposed was $250 million for a retraining program for 2005; note this opinion:

    “New programs in FY 2005. The president’s budget also includes funding for two entirely new programs—Community Based Job Training Grants and a pilot demonstration for Personal Re-Employment Accounts (PRA)—which make up its “Jobs for the 21st Century” plan. The job training component consists of a community college grant program based on partnerships with industries. This program is so poorly funded ($250 million) it is insufficient to compensate for cuts to community college training programs in other parts of the FY 2005 education budget. The PRA initiative is a pilot project funded at $50 million that would provide $3,000 to individuals likely to exhaust their UI benefits so as to help them purchase employment services (e.g., training), child care, and transportation. Under the PRA initiative, workers would actually qualify for less funding than they would under WIA or TAA, and acceptance of a PRA disqualifies them from WIA intensive or training services for one year or more. There is, moreover, little empirical evidence that such cash incentives help the long-term unemployed find work. In fact, reemployment bonuses have been particularly ineffective when given to displaced workers and others who are structurally unemployed. Finally, PRAs are not a viable alternative to extending unemployment insurance for the long-term unemployed and should not be used as such.”

    — From Economic Policy Institute’s Viewpoint, by Ross Eisenbrey, “On the President’s Fiscal Year 2005 Budget for the U.S. Department of Labor”, submitted to the U.S. House Committee on Ways and Means, 04 MAR 2004 (http://www.epinet.org/content.cfm/webfeatures_viewpoints_FY2005_FedBudget_and_jobs)

  2. Dennis, I’ll have to backtrack and dig up the supporting information on that, but my recollection is that this is roughly the amount approved for this year’s budget for retraining unemployed workers — the figure might have been $120 million total based on 3 million unemployed workers. A drop in the hat…the amount had been batted around with the $3000 unemployment training savings account for some time.

  3. I’ve read something similar in the last few days noting that the U.S. didn’t invest much in microwave power technology, which might turn out to be big. It’s easy to have 20/20 hindsight, of course.

    Where did you get the $40 per 2M jobs figure?

  4. The problem isn’t that jobs go overseas; that’s not what upsets displaced white-collar professionals (like me).

    It’s the fact that this administration could see this coming and failed to make appropriate investments in this country’s infrastructure in order to provide adequate stimulus. By infrastructure I mean not only investment in projects that will maintain a level of employment for blue-collar workers who may lose jobs to cheaper overseas labor, but investment in innovative technologies that keep America in demand.

    Fuel cell technology, for example, could completely revolutionize the automotive and other industries here in the US and make for plentiful employment among both white and blue-collar workers. Yet the Bush Administration failed to do anything more than a passing token investment.

    Look carefully at the 70’s and 80’s; blue-collar workers were told to go back to school and get degrees in order to be more competitive and have a crack at more and better opportunities. Now? A dearth of white-collar workers, educated and nowhere to go except part-time or low wage jobs. (The administration will spin about the turn around in the economy, but until they can generate more than 300,000 jobs a month on a consistent basis, they can’t stay even with new workers entering the market. The unemployment numbers don’t reflect the discouraged unemployed or the under-employed. Last check there were still 2,000,000 permanently lost jobs.) The administration has offered a bandaid amount of money for retraining, amounting to $40 per each of those 2,000,000 lost jobs. What exactly do we train well-educated professionals for anyhow? And how do we do it on $40 a head for each of those lost jobs?

    One might also look at the fallout from the last several years of offshoring. Four and five years ago consultancies were advocating offshoring, and companies responded in droves. Now? Those same consultancies are backtracking, realizing that cheap labor doesn’t necessarily guarantee savings if it doesn’t guarantee customer retention. (Google up Gartner Group reports in particular on this point.)

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