|
Republicans believe that the way to create more jobs is to give tax cuts to the rich, who will then hire more people to step up production to stimulate the economy.
Problem is, of course, that big business will do no such thing. The first question big business asks before stepping up production is "Is there a market for it?" If there isn't a market already there, big business won't spend. They will seek out an area where there is already a market.
Which means, big business will not expand the economy. They will seek out already established markets and take them over, buying up smaller companies of undercutting competition in that market. We all know what happens when Walmart moves in-- the smaller businesses that sell the same goods can't compete, and they shut down. Often, the people who ran these smaller businesses wind up working for Walmart, at a reduced rate.
The same thing happens on a national level. Big business buys up small and mid size businesses to invest their newfound tax money. Not only do they have more money, but suddenly their products are more profitable. An item that was barely profitable before suddenly becomes more profitable because costs go down because taxes were cut. Smaller businesses are unable to compete. They shut down, the bigger business has successfully taken over the market, and the employees of the smaller companies go to work for the bigger company. At lower wages, because there is less competition for their labor.
Wages fall, small business falls, the economy becomes less diverse, more concentrated in the hands of fewer companies, so that if one of them stumbles from bad management, it has a bigger impact on the overall economy, since the bigger company is a bigger part of the economy. Also, larger businesses are slower to respond, less adaptable, etc.
So the short answer is that the Republicans favor the wealthy, and by doing so they shift the economy in favor of big corporations. Democrats favor labor, they make corporations pay higher taxes to cover their greater burden on society, and this shifts the economy back to small and midsize business, where the economy functions best. Remember, all money is, in the ultimate analysis, is labor converted to standardized paper form. When you weaken labor, you weaken money. Want proof? When did American become an economic superpower? Under FDR.
Want proof of the effects of tax cuts? Reagan cut taxes, and the economy grew at a very slow rate, wages fell, small businesses disappeared. The 80s were marked by the terms hostile takeover and merger, because that's how businesses were spending their tax cuts. THe biggest gains under Reagan came when he gave up supply sided economics and raised taxes in 84. Then the economy grew.
When Clinton took over he was stuck with Reagan's runaway deficit. He raised taxes on the wealthy but kept them the same on the middle classes. Immediately, as if guided by an invisible hand, small businesses bagan to grow, and while big business began to sell off their less profitable divisions, small business took them over. Wages rose, the stock market rose, and suddenly there was enough money to create a budget surplus. Bush took over, cut taxes on the wealthy again, and look what happened. Like clockwork.
Bush tries to claim he inherited a recession from Clinton, but the recession started in March, right after Bush's tax cuts took effect. At the end of Clinton's administration, the growth of the economy had slowed, but it was still growing. The stock market was going through a highly predicted and predictable correction under Clinton, but it really collapsed, against expectations, under Bush's tax cuts.
That's the short answer. I could give a longer one.
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
