Monday, November 30, 2015

Outsourcing and Taxation

Since the time immediately before I came into this world, taxation has been an issue, then we weren't into the free trade era.  Now, I am no protectionist, by any stretch becoming isolated from the world is an extremely bad idea.  But like so many things in this world, all good (and bad) things must come with moderation.  Ah, where to begin with this cluster of a mess.

Well, I guess chronologically would be fitting.  For a long time taxes have been a major issue in the United States.  We are constantly told that high taxes are bad.  Yeah, I can bite into that, when I pay less in taxes, I have more money to spend.  The problem is, even though I have more money to spend, that does not mean everyone has more money to spend.  Some people have less money to spend because they have their social safety nets cut, which impacts jobs, which means that even less people have money to spend.

We tried this cut taxes once before, back in the mid 1920's.  When coupled with deregulation, we experienced the Great Depression.

So, as I just mentioned that when we deregulated, then cut tax rates the economy crashed.  You can argue and debate the issue all you want, but those are the breaks, it seems.  The lower taxes are, the more sluggish and worthless the economy becomes.  Once it starts, it is either a rapid collapse or a slow one.  In the mid-20's we had a slow collapse that escalated quickly, like an avalanche.  Does this sound familiar?

It should, it played out in our lifetime.  Think 2007, when the effects of trickle down economics and deregulation combined in what we now call The Great Recession.  You see, since the time immediately before I was born we started cutting taxes, told that it would trickle down in the form of savings, and higher earnings.  A flawed and now failed experiment in economics.  Only through decent strategy and a good deal of luck (as well as greed) did we manage to hold the worst case scenario off.  The free market prevails, or has it?

You see, one major difference between the Great Depression and the Great Recession is free trade.  As I have often lamented, "Free trade isn't free."  It has an inherent price to it.  Now, don't get me wrong, I love the concept of free trade, everyone gets brought up, the theory is great.  What I make here, gets sold in more places, what is made there gets sold here.  But that isn't how it actually works.

What I sell here is made in China, by some poor SOB who is working for next to slave labor.  It gets imported here, and sold by someone like myself for a huge profit, I get paid a few dollars an hour, and don't make enough that I could actually afford said item.  That pretty much sums it up.  We no longer have the jobs to hold off anything in line with another depression.  But it was done to bring everyone up, and yeah that is true.  But the road to hell is paved with the greatest of intentions.  

Companies focusing on immediate profits moved overseas, they outsourced jobs to make more.  It was cheaper for them to do it, and you can't really blame them.  After all, their goals are to make profit, more profit, maximum profit.  Push, Push, Push, make money, make it now, make the most.  Jobs went away, people moved on to other things, retooled, reeducated, and we moved on in that state since NAFTA, until 2007.

Then, we had that dust up, people went scurrying to retool, reeducate, relocate, find something, anything.  Only this time, there wasn't a whole lot of anything to find.  Everything spiraled out of control, people lost everything, blamed were those who wanted the fulfill the dream of home ownership, to have that newer car, to do the things that their parents and grandparents before had done.  We have a real issue with assigning blame in this country, we go for the low hanging fruit, those guys busting their backsides to make it big, while those who have already made it, those born into it, escape it.

I blame Reagan mostly for this, but Clinton had his role, both Bushs and Obama furthered it.  Obama for his part has attempted to change things, he tried to make it better, and I do believe that without his pushing and shoving it would have gotten far worse.  But the fact is, we bought into free trade, we bought into trickle down economics, and we were sold out for profit.  Now I sit here, in my mid-30s, looking back at my life, looking forward to the lives I will eventually bring into the world.  I am not a happy man, and its not the last several years of my life talking, its an unhappiness about not only where I have been, in the richest country in the world, but where I am heading that leads to much of my malcontent.  Am I really a trouble maker?  Oh yeah, my mask is slipping, and once it slips from my face, I no longer act like I care what happens.  The sad thing is, I stopped caring one May day, I still go through the motions of caring.

That doesn't matter much now, does it?  We have gone too far down the third way politics rabbit hole in terms of every aspect of our society.  This notion that we have to reconcile Conservative and Liberal ideas is patently wrong, and accounts for nothing.  I come forward with an idea, you as the opposite thinking of me counters with your idea, we spar over it, we fight, we nearly strangle each other with our thoughts and opinions, and hash it out.  That is when things work best, now, isn't that funny?  Back in the day, that is how things were done.  We were the best at it, it forced us to not only compromise, to find a balance, but we actually came up with some pretty good ideas.  Now, we start out at the centristish position, and move right.  We have been for nearly 40 years, and its about time more of us who see problems start talking about it.

We need jobs brought back, and the quickest way to do it is to make it less profitable for companies to keep jobs outside the US.  You do that with taxes on them, and you stop them from offshoring their money to avoid them.  You put things back to when we were doing a lot better than now, you tweak, you build, you adjust until you get it right.  You deal with a little bit of pain, before the cancer spreads.  You try and limit the effects before everything is spent.  Oh, and if you thought reading about The Great Depression was bad in the history books, and you thought living through The Great Recession was bad, wait until this new wave of automation has come through, and we have been further sold down the river by the likes of the GOP and Clintons.