100% Employment for the US, not Tax Breaks for the Wealthy

By Gerry Senda

Let's replace government for the privileged few with government that effects 100% employment for the US.

Currently, the US and states have regulations to ensure corporate competition and to prevent fraud and corruption, which is good, but when it comes to people and employment, jobs can be shipped overseas by companies who have received government subsidies and tax breaks. What is wrong with this picture?

We say that we force our companies to compete in a capitalist market system according to supply and demand and the price of goods and services. But when it comes to the price of money, as in interest rates, the Federal Reserve Bank SETS the rates - the rates are not set by the market. When the economy occasionally grows at a rapid clip and people are receiving their fair share of the new income, the Federal Reserve Bank increases interest rates to suppress that economic growth and we're told it's "to fight inflation." On the other hand, after all the money has been moved to the economically well-connected after a housing bubble or a stock market bubble, Federal Reserve Bank lowers interest rates when it won't do any good. What is wrong with this picture?

Currently, the US has 142,034,000 jobs. Dividing our GDP of $15T by the number of jobs produces the average GDP per job, or $105,600 per job. I support President Obama's stimulus plan of injecting $250B into the economy to grow the number of jobs. $250B / $105,600 = 2,367,000 jobs.

At an 8.2% unemployment rate, 154,721,000 jobs would be 100% employment. In other words, 154,721,000 jobs - 142,034,000 jobs means that the number of unemployed is 12,687,000 people. That 2,367,000 jobs would reduce the number of unemployed from 12,687,000 to 10,320,000 and the unemployment rate from 8.2% to 10,320,000 / 154,721,000 = 6.67%.

The money would be spent on high speed trains in California and repairing the nation's crumbling infrastructure, not unlike when the nation's interstate highway system was built.

Of course, President Obama's stimulus plan partially retains existing jobs of teachers and police officers rather than all of it going for new jobs, but the point of the preceding three paragraphs is compelling - among the many actions we can take collectively as a nation both in the public and private sectors to increase the number of jobs, this singular stimulus bill could reduce the unemployment rate by 18% (8.2% down to 6.67%). In other words, 1.7% of GDP ($250B / $15T) would bring back the American dream of a job back to 2,367,000 Americans.

To read two position papers on this topic see my archive papers in the League of Women Voters web site from my campaign for San Diego County Democratic Party Central Committee of June, 2010 at link:

http://www.smartvoter.org/2010/06/08/ca/sd/vote/senda_g/ .

The articles are

• Republican Party Tax Cuts for the Wealthy Do Not Increase Employment and
• Federal Reserve Act of 1913 as the cause of the Great Depression and the Bush Great Recession. - Debt Money.

  Even better, see my article on my web site: Here is a teaser, the first few paragraphs.

The so-called "theory" of "Supply-Side Economics" says that if taxes are lowered, especially on corporations and wealthy individuals, then so much economic activity will be stimulated, that not only will the general economic well-being be increased, but also the public treasury will be replenished by regular taxes on that incremental economic activity in an amount above and beyond the original amount of the tax reduction, called by Supply-Side economists as "investment."

This says that, for example, if a corporation were to receive, say a $1000 annual tax reduction, then so much economic activity would be generated that the public treasury would recover that $1000 in taxes simply from the growth caused by that $1000.

To determine how much growth that is, ask yourself what is the tax rate and gross income which would be taxed to recover $1000. At a tax rate of 33%, the gross income is three times that, or $3000. In other words, an annual investment of $1000 according to "Supply-Siders," will produce a 300% return-on-investment. Clearly that is not going to happen.

To see the entire article by that title, go to my web site at: http://www.gerrysenda.org

Thank you. Gerry Senda