“Trickle Down”, jobs, and the GOP

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Just the other day, a gentleman called Nick Hanauer spoke at TED, the well-known California think-tank, disputing the axiom that it is the richest 1% that created jobs.  [Note: I have just learned that TED is not, in fact, headquartered in California, though many of its events have been held there.]  I had unwittingly subscribed to this assumption, though I doubted that throwing money at them would encourage them to add jobs to the economy.

Nick Hanauer, a self-confessed member of "The One Percent," spoke persuasively that in hard times we could not depend on the "entrepreneurial class" to spontaneously add jobs.  His main point was that adding a new position at any business was a last resort, and only happened when the business traffic at the place became unbearably great, and new staff was absolutely necessary.

Any business tries to handle their work with existing staff.  They pay overtime, they increase the work-load, they cut out additional services deemed inessential, they use time-saving tricks, until none of it works, and a new slave has to be found!

Why is this?  It is because every new employee means more hands, and less work; but it also means that you have to give him (or her) benefits.  Some of these benefits are required, by law; the other benefits are important for the business to compete for superior workers, who would prefer to work for a business with a better employee-benefits package.  Small businesses are obviously at a disadvantage here, because a large employer can negotiate for health insurance with some company like Blue Cross from a stronger bargaining position.  So the employer has to balance the need for extra hands with the constraint of extra costs.

Should the employer be worried about benefits for workers?  I, and most liberals, feel that they should not; after all, what does the employee's health have to do with his workplace?  (Well, quite a lot, I suppose, but it seems unreasonable to expect an employer to have to deal with matters that are mostly out of his control.  Why should an employer have to deal with an employee's house burning down?  Nobody expects him to.  Likewise, why should an employer have to deal with an outbreak of, say, the flu?  Doesn't it make more sense to say that the community--the town, the state, the federal government, should handle those sorts of disasters?)  The reason some employers prefer to handle health care themselves is that they can arrange for inferior health care for their workers for less money, while if the government does it, it [the government] will be less able to resist the inexorable pressure of the people for better health care for everyone!  Employers, quite justifiably, prefer to control the quality of the benefits they provide, because they can control the costs.  If the government were to do it, their taxes would go up, and (they feel), the government cannot be expected to keep costs low and benefits reasonable; e.g. unlimited cancer treatment.

The conclusion is that the only way to increase employment is to increase business traffic.  The only way to increase business traffic (Henauer concluded), is to give the Middle Class tax breaks.  They will then go out and find things to buy, and businesses will need more workers to cope with the demand.  Giving businesses tax breaks need not necessarily result in new employment.

Honestly, nothing the government can do will necessarily result in new jobs, except increasing the number of government jobs, and it appears only die-hard old school democrats want to do that.  (That's what you do after WW2.  We don't have a war on now.  Er.)

Some businesses (and businessmen), as we have observed through the years, would rather keep pestering their representatives to fool with the laws than go about trying to work with the system.  But often businesses would make decisions based on the state of their business and the economy.  So, it is likely that if sales are up, for instance, they would hire, while if sales are down, they would (possibly) fire.

Some businesses might make the choice to hand over their entire printing operation to an office services specialist such as Staples, or Office Max, or Alpha Graphics, or Kinkos, or many such businesses.  Some businesses might hand over their entire bulk-mailing task to an outside source; this is now standard practice.  Some businesses might close down an entire section, and move the entire operation to a foreign country, where salaries are lower.  (It used to be that businesses would move to the South, where labor was cheaper.  But southern folks eventually learned what folks up north were making, damn them, and kept asking for higher wages.  We could blame everything on the South if we really try!  It all goes to show that the trick of using national borders to perpetuate economic inequity will ultimately fail; this is a basic tenet of Socialism.  If we invoke this principle, of course, we will be labeled socialists, and nobody wants that.)

The entire idea of lowering taxes, and lowering government services to do it, is all about controlling the quality of life of the lower economic classes.  Businesses would like to ration out inferior benefits to any few workers they would care to employ, rather than risk The Government, in its own inefficient, bureaucratic way, providing expensive health care to the undeserving unemployed.

Finally, let's talk about Trickle-Down.

The theory, as I understood it during the Reagan years, was that if the Rich (the "hard-working", GNP-enhancing, GOP-supporting economic elite) were able to retain more of their income, they would spend more, which meant that retailers could sell more, and their employees could spend more, and eventually everyone benefits.

There seems to be no hole in this theory, except for the fact that the weak link in the chain is whether the Rich would choose to spend their money on Main Street, USA.  If course, if they choose to spend it at all, some poor wretch somewhere will probably get a little trickle-down.  It will take someone more economically knowledgeable than I am to analyze this proposition for its weaknesses.  (Perhaps one way the trickle-down is plugged is because the very rich are able to obtain a lot of goods and services by what amounts to barter among themselves, so that none of the money really finds its way into the hands of those who could really use it: we the undeserving poor, who use our savings to stave off starvation, rather than by stocks in the companies of these superhumans.  Actually, I do own stock in these companies, but once I cash them in, the money will probably be gone within 5 years.  Need to practice eating less.)

The numbers would probably not support this idea.  If the top 2% were taxed just a little more on their dividend income, I bet the bottom 30% could be taxed A LOT LESS THAN WE ALREADY ARE.  I wish I knew exactly how much less!  I would probably be willing to be taxed at the same rate I am presently --not too high, considering the services I enjoy, which the top 2% does not appreciate at all, e.g. subsidized public transport-- if the government could increase services.

Let's see how much I am charged by my employer for the --really rather miserable-- Health Insurance I presently enjoy ... just a minute please, while I take a look .. 7.2%.  Hah, if the Government were to raise my tax rate by 7.2 percent, I'm willing to bet that I would get far more reliable, superior health care.  I would have to go to a government hospital, and argue with government doctors for the care, I suppose, and if our cultural prejudices about government services are to be believed, it will be as badly run as public schools.  But I would get my shots, I would be written my prescriptions, I would have gloved fingers slipped up my reluctant orifices essentially just as I have it done now.  This cuts out all the bureaucracy of the Insurance Companies, who have to keep track of what health care I consume, and their highly-paid supervisors, all of whom have been trained to deny services.  It seems to me that anyone who resists this change in the way we do things must have a lot of friends in the Health Insurance Industry who will be out of a job if the Government takes over health care.  I, for one, am more upset about the unemployed and the underemployed, who get little or no health care at present, than about the potentially unemployed Health Insurance employees, who can bloody well get themselves more productively employed.  Of all the parasitic jobs one can take, being a health-care-management employee must be the worst.  I truly pity anyone who cannot find a job except in the health-care-management business.

[To be continued...]