Great George Will! You are right on the money. But, do you know what? Our government, through "Free Trade" agreements has not only gutted our manufacturing base but has neglected small business
outright. Just a few days ago, I read where a tax cut is supposed to "help".. uh...all businesses compete
on the worldwide market. Politicians in Washington are promoting Gobalists International Business. Not only to they get a tax break but can easily move manufacturing, telephone banks to China, India, Phillipines, Vietnam etc. Ok, how does that tax break help small business compete? Let me give you an example. My small company holds patents on a few products. In order to become more efficient and control costs, we started manufacturing our product about five years ago. Due to cost increased in raw materials and compoent parts, we have begun to out source manufacturing for our small compoent parts to China. Why?
Because they cost too much in America. Why? Because of labor cost, OSHA (a good thing if practiced in a reasonable manner), state and local interference etc. The fact is American labor cannot compete with countries like China and India. American companies must have a "level" playing field and we are not getting it with "Free Trade Agreements" like NAFTA-SHAFTA. Free Trade Agreements are for companies like good ole Walmart with outlets around the world including China where their manufacturing is located. Oh and in order to be successful in China, these muti-national companies must have good working contacts with Bejing aka Communist Party. It has been said that without Free Trade Agreements, US would lost many jobs. Well, those jobs could be replenished by Small Business. Yes, creation of more jobs and a larger
tax base. But, God Forbid, why would our politicians help small business when they are getting most of their
campaign funds from big multi-national corporations?
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Stimulating Talk, Redux
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Today's economic difficulties are novel, arising in part from new financial instruments and practices, such as the securitization of mortgage debt. In a rapidly evolving economy, which America's always is and the world's economy now is, difficulties usually are novel. Hence, economic policy is a science of single instances. Still, the past offers lessons.
In 2001, when $600 rebates were rained on American households, most people sensibly applied most of the money to savings or debt reduction. Today, with mortgage, car and credit-card debt equal to 18.7 percent of the value of household assets—a record high—rebates might again only slightly stimulate consumer spending, which is 70 percent of economic activity.
The coming stimulus will almost certainly include tax rebates because they are simple and immediately noticed. And if they do not spur demand, never mind. Nobel laureate Milton Friedman, a NEWSWEEK columnist from 1966 to 1983, finally concluded that any tax cut of any size, at any time, for any purpose, should be supported because individuals spend money more productively than governments do and waiting to cut taxes until government spending is cut is like waiting for Godot.
As Congress prepares to put its 1,070 hands on the economy's tiller, remember this: Congressional pay is not munificent, but members' compensation includes the pleasure of wielding incentives or mandates to change how people behave. So Congress relishes crises as reasons, or excuses, for expanding government's regulatory reach. People in government at all levels crave that pleasure. Consider California, that leading indicator of leading indicators. That state's Energy Commission proposes government control of temperatures in the state's homes and businesses. It advocates programmable communicating thermostats (PCTs) for use in a crisis, such as a spike in energy prices, or a shortage of energy. In a reasonably run society, the latter would cause the former, which would prompt solutions for the latter. But in Big Brother's California, the government would broadcast signals to "nonremovable" receivers in the PCTs, signals that would raise homeowners' air-conditioning settings or lower their heating systems' setting.
Washington can stimulate (i.e., enact longstanding agendas in the name of recovery from a perhaps nonexistent recession), but economic conditions on Nov. 4 may already be largely baked in the cake. Last week NEWSWEEK wondered whether 2008 would be " '92 Redux." We should be so lucky. Although Bill Clinton was elected in 1992 because voters were convinced the economy was awful, the growth rate in that year was 3.3, better than the 3.1 average since 1945.
© 2008
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