In a “flat” world, trickle-down economics is no longer contained within the boundaries of a nation. The trickle now spreads globally, diluting its impact. When John McCain says he wants to decrease taxes on the rich and on businesses because he believes that is the key to economic growth, he demonstrates his age and the fact that he’s out of touch with the realities of the modern business environment.
To compete and stay successful, a business must keep its operating costs as low as possible, while simultaneously ensuring that investments pay off. To this end, businesses in today’s flat world:
Outsource work to other countries
Hire illegal immigrants
Set up off-shore tax shelters
Hire accountants and lawyers to take advantage of the already-broad tax incentives available to them and to find loopholes in the tax code that help them pay even less than they already do
Invest in companies and currencies over-seas
Buy failing companies here in the U.S., fire the acquired company’s employees, and then leverage a massive write-down on their taxes to pump even less money into our economy
How do any of these activities result in a trickle down of wealth to average Americans??
Taking this even further, business executives receive huge corporate bonuses that they then use to buy imported goods (cars, electronics, clothing), vacation over-seas, invest in highly risky hedge funds, and make investments over-seas.
Again, how is any of this trickling down to Americans?
The people at McCain rallies cheer when he talks about tax breaks for the rich. Are that many of them making over $250,000 NET income? They jeer at Obama’s plan to distribute wealth more evenly. I shake my head in astonishment. Do they truly not understand the basic economic reality at play in today’s world? What are they cheering for? How many of them are better off today than they were 10 years ago?
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This is from a Washington Post Comment on an OpEd written by EJ Dionne -- Two days ago, I tried some of my kids’ Halloween candy. Every year, the chocolate on the Reese’s Cups gets a little thinner and more gummy. The peanut filling gets more and more like brittle cardboard. The York mints are similar. The “dark” chocolate is still dark, but there is barely a hint of something that tastes like chocolate.
Then I remembered the economics professor who taught us how to increase profit by taking cost out of products. We did the math in a spreadsheet. We took out a few cents out of each product and multiplied by the sales projection. Then we gave it back to the shareholders as profit.
Later that day, I heard on the radio new author Bee Wilson who has written "Swindled: The Dark History of Food Fraud, From Poisoned Candy to Counterfeit Coffee." She cataloged bread that has no nutritional value and chicken who are bred like Sumo wrestlers. The similarities to our financial crisis are so obvious. A piece of commercial paper used to be a piece of commercial paper like a Twix used to be a Twix. Now, we have derivatives that are maybe 10 percent mortgage-backed. I wonder how much of that Reese’s cup I ate was actually a Reese’s cup compared to, let’s say, 12 years ago.
The blame goes to both parties, but this election is a verdict on unregulated greed - the belief that profit is inherently good and benefits all. What good is a candy that does not taste good? What good is bread that is not nutritious. And, what good is profit that does not get reinvested in America?