Harvard survey: Businesses don't want to hire

What about Obamacare?  What about "uncertainty?"  This Harvard competitiveness survey can't be right. I'd rather trust one of those instant click-on surveys on Fox News' homepage.

America's 'Job Creators' Would Rather Do Anything But Create Jobs: Survey

By Mark Gongloff

September 8, 2014 | Huffington Post

America's capitalists take every chance they get to remind us that they are our "job creators," but it turns out that their least-favorite thing on earth to do is create jobs.

Most U.S. business leaders would rather build robots, outsource work or use part-time employees than hire workers full-time, according to a new Harvard Business School survey. Here's a nice infuriating graphic from the smarty-pantses at Harvard Business School, who are educating all of our future non-job-creators in the art of not creating jobs:

As you can see from the chart, 46 percent of our job creators would rather spend money on technology than employ humans, compared with a sad 26 percent who prefer people to robots, and another 29 percent who were confused or indifferent about the question or fell asleep while the survey taker was talking. Forty-nine percent would rather outsource than hire, compared with 30 percent who'd rather hire.

Ever notice how the stock market and corporate profits are at all-time highs, while our wages are flat and roughly half of us still think the economy is in recession? This chart helps explain it, and helps explain why workers' share of those corporate profits is near its lowest since the Truman administration.

This is also bad news for the future of the economy because it means fewer workers are getting the training they need for our super-awesome, high-tech, no-job economy, Harvard pointed out:

"Firms invest most deeply in full-time employees, so preferences for automation, outsourcing, and part-time hires are likely to lead to less skills development," the study authors wrote.

This will give business leaders, who already think we lack the necessary skills for their precious jobs, even less reason to hire us in the future.

Lower corporate tax rate doesn't create jobs

(HT: Peter).  Isn't it funny how all the axioms of Republican economics turn out to be shibboleths?  

Tax cuts on the rich?  Don't trickle down; increase inequality.

Deregulation?  Hurts real people; passes the $ bill onto all of us.

Austerity as a cure for recession?  Increases deficits, hurts job creation.

Work or starve?  ... Well, that one's in play right now. Personally, I think we're going to have more starving and less working, but time will tell. Time will tell. And then so will I, you can bet on it!

Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding "no"

By Linda Beale

December 3, 2013  | A Taxing Matter

URL: http://ataxingmatter.blogs.com/tax/2013/12/does-lowering-corporate-tax-rates-create-jobs.html

Local incentives for business are a losing gambit

Here is a must-read NYT investigation for anybody interested in local economic development. It shows that when localities compete for investment and jobs with tax and financial incentives, they are engaging in a zero-sum race to the bottom where everybody in the country (in this case, America) loses.

Here is what my colleague, a European ex-mayor and investment promotion expert, had to say about this article:

If incentives are provided, they need to be like "happy hours": a little discount to make clients spend much more. In most European countries, investment incentives are granted by central governments based on a law, which has to follow EU regulations. Cities/regions usually have limited role in that game and, if they grant some incentives (like selling land cheaper than market price) to an investor, this is included in the overall limit for the public aid and inspected by the European Commission pretty strictly. EU as well as national governments do not like to see what they call "displacement," i.e. companies moving from one location to another squeezing financial & tax incentives out of local governments.

The vicious aspect is that once your competitors [in other localities] start granting incentives, you get under pressure to do the same....

And here's what a one Midwestern U.S. city manager told me:

I think there should be a federal law that prohibits such incentives. It has created havoc and distorts decisions of businesses. [Home city name] lost two large employers this year to [Neighboring city]. [Neighboring state] offered an aggressive incentive package, more than what [Home state] and [Home city] could offer. The [Neighboring state's] governor brags about creating jobs ... but all he really did is take them from another location. That is not progress.

The human incentives for short-term gains are what mess this up. On the business side, managers feel like they "owe" it to shareholders to play localities off one another to get the company the best deal in the short term, even if it means uprooting operations and firing old workers only to hire replacements elsewhere. On the local government side, elected officials and city administrators -- who may be here today, gone tomorrow -- are incentivized to cut a ribbon and boast to the public about how many jobs they created, without bothering to look at the full economic cost over time.

Even with the best of intentions, localities are overmatched in negotiations with huge global businesses.  Said one commissioner in Travis County, Texas:  “We don’t have the sophistication or the resources to negotiate with a company that has the wherewithal the size of a country. We are just no match in negotiating with that.”

So yet again, the solution is for Big Government to step in and regulate how the game is played.

As Companies Seek Tax Deals, Governments Pay High Price

By Louise Story

December 1, 2012 | New York Times

URL: http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html

If Bain was the Harvester, then Romney was...the Grim Reaper?

The last sentence is the best: 

Romney mentioned that it would routinely take up to eight years to turn around a firm—though he now slams the president for failing to revive the entire US economy in half that time.

That mask was made from magic underwear - Yikes!

NEW ROMNEY VIDEO: In 1985, He Said Bain Would "Harvest" Companies for Profits

This clip shows the young CEO focusing on businesses as targets for his investors, not as job creators or community stakeholders.

By David Corn

September 27, 2012 | Mother Jones

URL: http://m.motherjones.com/politics/2012/09/1985-romney-bain-harvest-firms-profits-video

Stiglitz: 'Deficit fetishism is killing our economy'

If you take away anything from this, remember these words from favorite bearded liberal Nobel economist, Joe Stiglitz:  

The fundamental problem is not government debt.  Over the past few years, the budget deficit has been caused by low growth.  If we focus on growth, then we get growth, and our deficit will go down.  If we just focus on the deficit, we're not going to get anywhere.  [...] If we go into austerity, that will lead to higher unemployment and will increase inequality.  Wages go down, aggregate demand goes down, wealth goes down.

Joseph Stiglitz: 'This Deficit Fetishism Is Killing Our Economy'

August 9, 2012 | Associated Press

What's wrong with the U.S. economy?

Growth comes in fits and starts. Unemployment has been over 8 percent for three and a half years. Cutting taxes and interest rates hasn't worked, at least not enough.

To Joseph Stiglitz, the Nobel Prize-winning economist, the economy's strange behavior can be traced to the growing gap between wealthy Americans and everyone else.

In his new book, "The Price of Inequality," he connects surging student loan debt, the real-estate bubble and many of the country's other problems to greater inequality.

When the rich keep getting richer, he says, the costs pile up. For instance, it's easier to climb up from poverty in Britain and Canada than in the U.S.

"People at the bottom are less likely to live up to their potential," he says.

Stiglitz has taught at Yale, Oxford and MIT. He served on President Bill Clinton's council of economic advisers, then left the White House for the World Bank, where he was the chief economist. He's now a professor at Columbia University.

In an interview with The Associated Press, Stiglitz singled out the investment bank Goldman Sachs, warned about worrying over government debt and argued that a wider income gap leads to a weaker economy.

Below are excerpts, edited for clarity.

___

Q: The Occupy Wall Street demonstrations are no longer in the news, but you make the case that income inequality is more important than ever. How so?

A: Because it's getting worse. Look at the recent Federal Reserve numbers. Median wealth fell 40 percent from 2007 to 2010, bringing it back to where it was in the early '90s. For two decades, all the increase in the country's wealth, which was enormous, went to the people at the very top.

It may have been a prosperous two decades. But it wasn't like we all shared in this prosperity.

The financial crisis really made this easy to understand. Inequality has always been justified on the grounds that those at the top contributed more to the economy — "the job creators."

Then came 2008 and 2009, and you saw these guys who brought the economy to the brink of ruin walking off with hundreds of millions of dollars.  And you couldn't justify that in terms of contribution to society.

The myth had been sold to people, and all of a sudden it was apparent to everybody that it was a lie.

Mitt Romney has called concerns about inequality the "politics of envy." Well, that's wrong. Envy would be saying, "He's doing so much better than me. I'm jealous." This is: "Why is he getting so much money, and he brought us to the brink of ruin?" And those who worked hard are the ones ruined. It's a question of fairness.

Q: Markets aren't meant to be fair. As long as we have markets, there are going to be winners and losers. What's wrong with that?

A: I'm not arguing for the elimination of inequality. But the extreme that we've reached is really bad. Particularly the way it's created. We could have a more equal society and a more efficient, stable, higher-growing economy. That's really the "so what."  Even if you don't have any moral values and you just want to maximize GDP growth, this level of inequality is bad.

It's not just the unfairness. The point is that we're paying a high price. The story we were told was that inequality was good for our economy. I'm telling a different story, that this level of inequality is bad for our economy.

Q: You argue that it's making our economy grow more slowly and connect it to "rent- seeking." That's an economist's term. Can you explain it in layman's terms?

A: Some people get an income from working, and some people get an income just because they own a resource. Their income isn't the result of effort. They're getting a larger share of the pie instead of making the pie bigger. In fact, they're making it smaller.

Q: So, for example, I put a toll booth at a busy intersection and keep all the money for myself.

A: That's right. You just collect the money. You're not adding anything. It's often used when we talk about oil-rich countries. The oil is there, and everybody fights over the spoils. The result is that those societies tend to do very badly because they spend all their energy fighting over the pile of dollars rather than making the pile of dollars bigger. They're trying to get a larger share of the rent.

Q: Where do you see this in the U.S.? Can you point to some specific examples?

A: You see it with oil and natural resources companies and their mineral leases and timber leases. Banks engaged in predatory lending. Visa and MasterCard just settled for $7 billion for anticompetitive behavior. They were charging merchants more money because they have monopoly power.

One good example was Goldman Sachs creating a security that's designed to fail.  That's just taking money from some fool who trusted them. Our society functions well when people trust each other. It's particularly important for people to trust their banks. Goldman basically said, "You can't trust us."

Q: Economic growth is slowing again. Unemployment seems to be stuck above 8 percent. Is that the result of high debts or slower spending?

A: The fundamental problem is not government debt. Over the past few years, the budget deficit has been caused by low growth. If we focus on growth, then we get growth, and our deficit will go down. If we just focus on the deficit, we're not going to get anywhere.

This deficit fetishism is killing our economy. And you know what? This is linked to inequality. If we go into austerity, that will lead to higher unemployment and will increase inequality. Wages go down, aggregate demand goes down, wealth goes down.

All the homeowners who are underwater, they can't consume.  We gave money to bail out the banking system, but we didn't give money to the people who were underwater on their mortgages.  They can't spend.  That's what's driving us down. It's household spending.

Q: And those with money to spend, you point out, spend less of every dollar. Those at the top of the income scale save nearly a quarter of their income. Those at the bottom spend every penny. Is that why tax cuts seem to have little effect on spending?

A: Exactly. When you redistribute money from the bottom to the top, the economy gets weaker. And all this stuff about the top investing in the country is (nonsense). No, they don't. They're asking where they can get the highest returns, and they're looking all over the globe. So they're investing in China and Brazil and Latin America, emerging markets, not America.

If the U.S. is a good place to invest, we'll get money from all over the world. If we have an economy that's not growing, we won't get investment. That's exactly what's happening. The Federal Reserve stimulates the economy by buying bonds. Where's the money go? Abroad.

Q: What's the answer, then? Raising taxes on wealthy people can't possibly solve all the problems you mention.

A: No, there's no magic bullet. But there are other ways of doing things. Just to pick one, look at how we finance higher education. Right now, we have this predatory lending system by our banks with no relief from bankruptcy. In some fundamental ways, it's really evil and oppressive. Parents that co-sign student loans now find out they can't discharge those loans, even in bankruptcy.

Education is so important, but there are so many barriers. Just 8 percent of those students in the most selective colleges come from the bottom half of the income scale. Eight percent! They can't get in because they don't get as good an education in elementary and high schools. Education is the vehicle for social mobility. It's how we restore the American dream.

GOP reneges on spending cuts, says gov't creates private-sector jobs

Newsflash: Congressional Republicans say deficit spending is good and creates private-sector jobs!... As long as it's for defense-related industries.

Yo, where the Tea Parties at when we need them?  

Republicans want to rewrite law imposing $50-billion cut in military spending

By Dave Helling

August 6, 2012 | Kansas City Star

URL:  http://www.mcclatchydc.com/2012/08/06/160357/republicans-want-to-rewrite-law.html

Obama created lowest corporate tax rate since '72

Yep, bonus depreciation is just another example of how Obama is killing private business and job creation. Putting $55 billion back in Big Business's pockets is not nearly enough; it's practically Marxist. He needs to cut their taxes even more! They've hardly got enough cash to fuel up their private jets, for goodness sake!

Seriously though, the WSJ has been doing some serious reporting of late on corporate taxes. This came after pointing out that two-thirds of U.S. corporations pay no income tax. If you crumple and burn their ridiculous editorial pages, (or just ignore and recycle them, if you want to be eco-friendly), then WSJ ain't so bad.

With Tax Break, Corporate Rate Is Lowest in Decades

By Damian Paletta

February 3, 2012 | Wall Street Journal

U.S. companies are booking higher profits than ever. But the number crunchers in Washington are puzzling over a phenomenon that has just come into view: Corporate tax receipts as a share of profits are at their lowest level in at least 40 years.

Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That's the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008.

Corporate income-tax receipts typically fall during recessions, and they declined sharply after the 2008 financial crisis, which wiped out big swaths of profits across the huge financial sector. But U.S. profits have rebounded sharply in recent quarters, while tax receipts have stayed low.

So where is the money? There are a lot of moving pieces, budget watchers say, but one view shared inside Washington is that a temporary tax break—supported by both political parties—is a key reason.

This tax break, known as "bonus depreciation," has allowed companies to write off investments in goods like industrial equipment, manufacturing machinery and computers in the year in which they're bought rather than over time. The White House estimates the subsidy has saved companies roughly $55 billion in corporate income taxes over each of the past two years.

Companies just reporting fourth-quarter earnings made clear they have aggressively taken advantage of the tax break, which lasted in full through December.

Union Pacific Co. said the benefit lowered the railroad's taxes by $450 million last year compared with the year before. Energy company Dominion Resources Inc. has said the bonus depreciation provision will cut its income taxes by $1.2 billion to $2.1 billion in 2011 through 2013, even as the tax break shrinks. Shedding light on its 2011 taxes, Time Warner Cable Inc. said it expects to pay $700 million more in taxes this year, assuming capital expenditure is flat, now that the stimulus benefit is lower.

The tax break spurred purchases. Another railroad, Kansas City Southern, said it accelerated investment in 30 new locomotives last year to capture the bonus depreciation. Truck maker OshKosh Corp. said the deduction inspired its customers to speed up purchases of its trucks. General Motors Co. on Wednesday attributed some of the drop in sales of SUVs and pickup trucks in January to higher purchases in December by corporate customers that wanted to capture the accelerated depreciation.

The tax break shrinks for calendar 2012. Now, companies can write off only half of their investments, but the White House has proposed expanding it to again cover 100%. The White House estimated this would cost roughly $5 billion, as it only accelerates deductions businesses would otherwise have taken over time. Business groups have supported the tax break, and some are now lobbying Congress to extend it through 2012.

The breaks may be helping stanch a years-long economic downturn, but they are also extracting their own price. Companies paid just $181 billion in federal corporate taxes in fiscal 2011, about 8% of the $2.3 trillion in total revenue collected by the federal government. That's down from 15% of the total in 2007.

Individuals, meanwhile, paid $1.1 trillion in income taxes last year. Much of the rest comes from the taxes that fund Social Security and Medicare, which are paid by employers and employees.

Earlier this week, the CBO raised its projection for the government's 2012 budget deficit from $973 billion to close to $1.2 trillion, in part because of "disappointingly low corporate tax receipts of the sort that's a little puzzling," CBO director Douglas Elmendorf said.

The CBO cut its projections for 2012 corporate income taxes from $279 billion to $251 billion. It expects them to rebound to $427 billion in 2014 as the tax breaks ends.

The White House is gearing up to propose overhauling the complicated U.S. corporate tax code. Beyond the partisan bickering that's sure to ensue, the White House will need the business community's support for its effort, and companies might be reluctant when current rules work in their favor.

The U.S. has one of the highest corporate tax rates in the world, with a combined top state and federal rate of 39.2%. But many companies pay much less because of a number of tax breaks and other provisions that reduce their tax bills.

There also has been an increase in the number of firms structured as "pass-throughs," which pay no federal corporate income tax and instead distribute their profits to investors, who pay taxes on the income as individuals.

Traditionally, the vast majority of corporate income taxes are paid by businesses with more than $250 million in assets. The Internal Revenue Service hasn't published data on the breakdown in corporate filers since 2008, so it couldn't be learned whether that proportion had changed in the last few years.

Business groups expect tax collections to turn back up soon as tax subsidies expire and once past losses can no longer be carried forward to offset profits.

"Everybody is expecting it to come back up," Martin A. Regalia, chief economist at the U.S. Chamber of Commerce, said of corporate tax receipts. "It's just being delayed because of the depth of the recession."

Krugman: 'We are the 99 percent' an understatement

We Are the 99.9%

By Paul Krugman

November 24, 2011 | New York Times

"We are the 99 percent" is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent's gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.

And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite's taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.

Before I get to those policy disputes, here are a few numbers.

The recent Congressional Budget Office report on inequality didn't look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.

For the most part, these huge gains reflected a dramatic rise in the super-elite's share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.

Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs?

Well, aside from shouts of "class warfare!" whenever such questions are raised, the usual answer is that the super-elite are "job creators" — that is, that they make a special contribution to the economy. So what you need to know is that this is bad economics. In fact, it would be bad economics even if America had the idealized, perfect market economy of conservative fantasies.

After all, in an idealized market economy each worker would be paid exactly what he or she contributes to the economy by choosing to work, no more and no less. And this would be equally true for workers making $30,000 a year and executives making $30 million a year. There would be no reason to consider the contributions of the $30 million folks as deserving of special treatment.

But, you say, the rich pay taxes! Indeed, they do. And they could — and should, from the point of view of the 99.9 percent — be paying substantially more in taxes, not offered even more tax breaks, despite the alleged budget crisis, because of the wonderful things they supposedly do.

Still, don't some of the very rich get that way by producing innovations that are worth far more to the world than the income they receive? Sure, but if you look at who really makes up the 0.1 percent, it's hard to avoid the conclusion that, by and large, the members of the super-elite are overpaid, not underpaid, for what they do.

For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone's income and his economic contribution.

Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.'s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door.

Meanwhile, the economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England's director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, "If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare."

So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about "job creators" and demand that the super-elite pay substantially more in taxes.