In a recent bulletin that he sent out to those on his mailing list, Dylan Ratigan explained that to create sustainable and decently paid jobs, a country must have more money coming in than going out. But we have the exact opposite, he says, with much more money leaving the country than we have coming in! And until we reverse that trillion-dollar imbalance, it is mathematically impossible to create anywhere near enough of the kind of jobs Americans need to climb back into the middle class.
There are three main components of the US economy that affect and determine the flow of money in or out of our country and thus the number of good jobs that will be generated. They are: Trade, Taxes, and Banking. Let's examine each one and ask what the government might do with each one to trigger the creation of more jobs.
1. Trade: Our Government Must Incentivize Corporations to Keep Jobs Here
If you look at the math of the so-called free trade agreements such as NAFTA, you will see that they put our country at a disadvantage and literally force American CEO's to do business that rewards them and their companies but hurts the rest of us.
All the deals our government makes with corporations are aimed at making it easier and more profitable to export jobs, sending investment money overseas and keeping the cash profits offshore rather than invest any of it here at home. Consider Caterpillar as an example.
They now make a lot of heavy equipment in China. If they made it here like they used to, it would face a 25% tax from the Chinese Government to export it into China, but if they make it in China -- NO TAX.
Why is this a problem? Because Chinese imports coming into America are taxed at only 2.5%! This means that Caterpillar gets a giant discount on all equipment it builds and sells in China -- hence the incentive to export jobs and investment money to China. It is the job of Jim Owens, the CEO of Caterpillar, to maximize profits for his company and shareholders. If you or I ran Caterpillar, we'd either export jobs and money to China, as the clear and obvious way to maximize our company's profits (under existing laws and tariff arrangements), or be fired just like Jim would be.
However, if our government had the courage to level the playing field (by increasing the tariffs on goods imported from China), the Jim Owens' of the world could say, "Let's make more of our products in America." Until then, it's bye-bye jobs and bye-bye investment cash, in favor of highly profitable, rigged trade agreements designed for no other purpose than to allow the extreme profits of all corporations big enough to build a factory in China.
Simple conclusion: We must level this playing field (i.e. balance our tariff arrangements) if we're going to trigger the creation of more jobs in America.
2. Ending the Rigged Tax Code Would Mean Many More Jobs in America
Washington needs to stop viewing the tax code as simply a way to raise money, and instead use taxes to create jobs and prosperity. The U.S. tax code needs to be designed in a way that spurs American investment and job creation, not prevent it as it currently does. What we're talking about here is the simplest kind of economics: if you lower taxes on something, you will always see more of it come into being. The principle also works in reverse, and here's a great example: the cigarette tax. Back in 2008, New York raised its cigarette tax by more than a dollar to $2.75. The result: consumption fell and the state's smoking rate dropped by 12%.
If rewriting the tax code can reduce smoking by 12%, then by altering the tax code in other areas we can also make investing in America grow by 12, 15, even 20%! Raise taxes on companies that build and invest overseas and cut taxes on those that build and invest here. That would add jobs by the millions! We can reverse this flow of money out of the country by using the tax code to make investing in our own country more profitable. It would certainly be much more profitable for all of us than continuing to send that investment cash and those jobs overseas, or using that cash for nothing more than financial speculation.
Of course, another issue with the tax code is corporate loopholes. Every year you and I send a check to Washington to pay our taxes, while large corporations, like GE, don't pay a dime! No need to demonize big business, however -- they're simply taking advantage of tax loopholes set up by their friends in Congress. And it's all legal! But we need to close those loopholes and somehow stop the practice of large corporations using money and power to gain favorable tax treatment.
3. Ending Rigged Banking Would Also Mean Many More Jobs
Our banking system right now is like a leaf blower in that it can either inject capital and spread it around through lending, which when done right creates jobs -- or it can suck way too much money out of the larger economic system in which it operates. And right now we're stuck in that reverse position where, with all that vacuum sucking, banks are taking potential investment money out of play. (With the trillion dollar bailouts we gave away the farm and in return got virtually no changes in the way banks do business!)
President Bush then passed the problem on to Barack Obama, and like a good Republican, Obama obligingly doubled down on the Bush plan, leaving banking and Wall Street to go on, still largely unregulated, as if nothing of any consequence had just happened. The President, Treasury Secretary Geithner and Fed Reserve Chairman Bernanke threw ever more of our cash at the big banks to keep them afloat in spite of all the toxic waste they had accidently accumulated in the form of worthless CDOs that were based on liar's loans and underwater mortgages. Problem was, the trillions then thrown at the banks by the Fed was created out of thin air and will sooner or later cause rampant inflation across the US.
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