Jim Webb in WSJ: Class Struggle-American workers have a chance to be heard-

[Larry]

Should a job pay a middle class wage just because it used to pay a middle class wage? Why should those jobs be subsidized? We're moving towards a service economy. We're becoming more white collar every day. The jobs are out there, they are just different jobs. Back in the day, people made a killing as buggy whip manufacturers. There aren't many of them around, and that's a good thing because we'd just have massive warehouses full of unused buggy whips.

Great analogy.

Now explain why both the pay and the number of jobs for engineers are going down?

It's all those stupid engineers fault? They should have got themselves an education, and learned a skill that's actually usefull?

[Zen-like Todd]

Certain blue collar jobs are not going away any time soon, and their buying power has been decreasing. We will need those people for the forseeable future. I agree with Webb, we are headed towards a poverty class and a "I don't have to work" class.

There are always jobs that will decrease in value as time goes on. New machines will be developed that reduce the need for specialized labor. One hundred years ago, craftsmen of many stripes were prized and well compensated for their worksmanship. Many such products are now popped out of a machine that requires little more than a simple supervisor to make sure things don't go wrong. Look, it's supply and demand, and variations in cost. If someone has a skillset in demand, they will be valuable, and paid more as a consequence. No one is interested in subsidizing industries in decline just because someone doesn't want to shift careers. And by subsidize, I mean take money out of the pockets of people who have moved on already, reducing their earning power. The more appropriate response is to adapt to the economy as it changes.

[Larry]

Uh, no. It is classic ECON 101 type stuff. Even some of the most die hard leftist economists will admit it.

Oh and what an absurd counterpoint. I mean really….. you are smarter than this.

Sorry, the argument is exactly the same. "Entity X takes expense Xprime and figures it in when it's deciding how much to charge for finished good Y."

Explain to me why, if Entity X is a corporation then that statement's true, but if entity X is a person then the statement's false.

Here's another comparason to help you see how laughable your position is. Please explain the difference between these two statements:

• Corporations never pay taxes, they simply pass them along to their customers. Therefore corporations should never be required to pay taxes
• Corporations never pay for land, they simply pass along the cost to their customers. Therefore corporations should never be required to pay for land.

[Predicto]

Because the business will charge MORE for its goods such that it will receive the same amount after the tax as it would have had there been no tax in place.

For example:

For Widgets, I charge you X + t, where X is my desired price where I make premium Y, and t is my anticipated tax burden associated with selling the Widget at price X to receive premium Y.

Without the tax, I would charge X to receive Y, instead of X + t.

Or so the theory goes.

That theory does not take into account the fact that corporations price their goods to maximize profit in light of what the market will pay for their good.

In other words, 1) if a corporation can sell product X for 50 bucks to mazimize their sales and profit, and 3) you cut their taxes in half, then 3) they will still charge 50 bucks for the product. The only change will be the corporation keeps more money.

That is true Econ 101.

[Midnight Judges]

That theory does not take into account the fact that corporations price their goods to maximize profit in light of what the market will pay for their good.

In other words, 1) if a corporation can sell product X for 50 bucks to mazimize their sales and profit, and 3) you cut their taxes in half, then 3) they will still charge 50 bucks for the product. The only change will be the corporation keeps more money.

That is true Econ 101.

It's hard to quantify the competition factor.

[Zen-like Todd]

Great analogy.

Now explain why both the pay and the number of jobs for engineers are going down?

It's all those stupid engineers fault? They should have got themselves an education, and learned a skill that's actually usefull?

1) You'll have to backup your assertions with facts and figures.

2) Here's the deal. The market is what the market is. Industries change as changes in technology occur, and demand shifts to different products. You could have gone to school and become the best damn buggy whip engineer on the planet, but who gives a crap? If no one wants buggy whips, you're not going to get paid a lot of money to engineer buggy whips, and you shouldn't. If your education was any good however, it shouldn't be particularly difficult for you to change careers. There is no magic money fairy Larry. All you're doing is taking money out of the pockets of individuals have moved on so people can fall into the past. The American economy has been so successful precisely because it adapts and innovates and reinvents itself more often and more rapidly even than most other "first world" countries. The absolute last thing you want to do is stagnate our economy via handouts.

[JohnLockesGhost]

That theory does not take into account the fact that corporations price their goods to maximize profit in light of what the market will pay for their good.

In other words, 1) if a corporation can sell product X for 50 bucks to mazimize their sales and profit, and 3) you cut their taxes in half, then 3) they will still charge 50 bucks for the product. The only change will be the corporation keeps more money.

That is true Econ 101.

That's right, the price they charge won't change. But taxes take a bite out of their income. That income can either A) be written off as lost and less is paid in dividends or B) passed on to employees through reduced benefits and/or wages. The CBO report I just cited points out that over 70% of the burden is transferred to the employees.

[ashburnskinsfan]

A Nobel prize-winning economist demonstrated a few years ago that taxes on corporations are simply pushed down the line onto individuals, either the capital investors or the employees. So ultimately it's individuals that pay taxes, all taxes.

A CBO report on the subject:

http://www.cbo.gov/ftpdocs/75xx/doc7503/2006-09.pdf

The report says basically that nearly 70% of the corporate tax is borne by employees. Also, the burden goes up, paradoxically, as the corporate tax goes up.

We know economic theories are always right.

Economists might assume that companies are run solely in the interests of their shareholders, but that is untrue, especially in large companies.

And corporations do pay tax. That’s why they should be taxed and fairly.

[Larry]

We know economic theories are always right.

Now, despite the fact that I'm arguing against this position, I'll say that a Nobel Prize is kind-of like a Lombardi Trophy: It does lend credability.

My problem is that the simple declaration that corporations pass along taxes isn't a fact, or even a theory. It can't be proven or disproven. It's a philosophy, a way of looking at things.

Now, I'll even agree that taxes will get passed along, if you assume that every business exists in a universe where they can charge whatever they want for their product, and where they chose to only charge the amount that's necessary to cover expenses. However, neither assumption exists in the real world.

[JohnLockesGhost]

Now, despite the fact that I'm arguing against this position, I'll say that a Nobel Prize is kind-of like a Lombardi Trophy: It does lend credability.

My problem is that the simple declaration that corporations pass along taxes isn't a fact, or even a theory. It can't be proven or disproven. It's a philosophy, a way of looking at things.

Now, I'll even agree that taxes will get passed along, if you assume that every business exists in a universe where they can charge whatever they want for their product, and where they chose to only charge the amount that's necessary to cover expenses. However, neither assumption exists in the real world.

Well, if you assume business can set prices where they wish, that opens up a third option for a business to make-up income: increase the price to the consumer. Anyway you look at it individuals are paying the tax: either investors, employees and/or consumers. Often individuals can be more than one.

[iheartskins]

That theory does not take into account the fact that corporations price their goods to maximize profit in light of what the market will pay for their good.

In other words, 1) if a corporation can sell product X for 50 bucks to mazimize their sales and profit, and 3) you cut their taxes in half, then 3) they will still charge 50 bucks for the product. The only change will be the corporation keeps more money.

That is true Econ 101.

No disagreement here.

That's a classic "Identify Assumption" response as is required on the LSAT, Predicto. You're skills are still sharp.

[Cdowwe]

Seems some college professors have some new puppets in this thread.

[Predicto]

No disagreement here.

That's a classic "Identify Assumption" response as is required on the LSAT, Predicto. You're skills are still sharp.

Yay me!


ummm I think

[NoCalMike]

Why how horrible it is that people that have initiative and that bust their asses to get to the top actually want to stay on top and keep THEIR money

See, right there IS the exact problem. When these gazillionaires were once common every day guys like you and me, making their measly wages, they played the game by certain rules. They went to work, made their money and paid their taxes. Why is it that becoming filthy rich suddenly entitles you to change the rules of the game, loot and plunder the system in order to get out of paying taxes period, and then on top of that you get numerous tax cuts over and over again.

The rules should not change for a person, company and/or coproration just because their value goes up.

It's also the value of the dollar itself that is killing people. Back when I was a late teenager, two people earning minimum wage could still move out and live in an apartment. Bills would be tight, and they wouldn't have tons of spending money for entertainment, but they could get by.

Right now, minimum wage wouldn't even get you half of a room.

[JohnLockesGhost]

Greg Mankiw's blog on this article.

http://gregmankiw.blogspot.com/

Free-market economists like me are typically less concerned about rising inequality; some, like Gary Becker, go so far as to call it a "favorable development." But let's suppose for a moment that a free-market economist were hired by the Dems to offer policy advice. If the boss's goal is to reduce income inequality, what is the best way to do that?


The standard Democratic fare would be quickly rejected. Erecting barriers to trade, raising the minimum wage, encouraging the cartelization of labor via unions, and bashing Wal-Mart are inefficient and poorly targeted ways to redistribute income.