Posted on 05/31/2011 7:05:20 PM PDT by khnyny
To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.
Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.
And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.
“Usually the business cycle is a rising-and-falling, all-boats-together phenomenon,” noted J. Bradford DeLong, an economics professor at the University of California, Berkeley, and a deputy assistant secretary for economic policy in the Clinton Treasury Department. “It’s quite a puzzle when you have this disjunction between profits on the one hand and unemployment.”
A search for answers leads in several directions. The bulls’ explanation, heard with more frequency these days, has the virtue of being straightforward: corporate profits are the economy’s pressure cooker, building and building toward an explosive burst that will lead to much hiring next year.
The December jobs numbers suggest that that moment has yet to arrive, as the nation added just 103,000 jobs, or less than the number needed to keep pace with population growth. The leisure industry and hospitals accounted for 83,000 jobs; large corporations added a tiny fraction.
(Excerpt) Read more at nytimes.com ...
Profits of a worthless dollar.
China does not guarantee you a job; if you can’t find work on your own, tough - you don’t work
- China does not guarantee you a home; if you can’t afford a house or apartment, then the street is your bed
- China does not guarantee you food; no job, or lost your money? Time to starve or pick through the trash
- China does not guarantee you health care; broke your arm? Well, pay your copay first and then the doctor will see you
And so on. In fact, most of what we in the US take for granted, or assume that the Government will give us (or in the case of health insurance, should give us) is not guaranteed for the average Chinese “Communist”.
In the US, if you lose your job, you get unemployment insurance and the Government will retrain you; in China, you go find your own and learn your own skills, no coddling here.
In the US, if you lose your house or cannot afford one then there’s always section 8 housing for you; in China, better find a friend or family member to take you in or you’re out on your own.
In the US, if you cannot afford food, we give you food stamps and Government cheese; in China, it’s the grace of friends and family or you’re eating grass.
In the US, if you need medical treatment, walk in to any hospital and you get treated, even if you cannot afford it; in China, they’ll gladly see you right after you pay the cashier your initial copay to see the doctor.
In the US, if you risk your funds and it pays off, the Government demands a share of the profits via the capital gains tax (of course, they didn’t take any risk in the investment initially); in China, you get to keep the profits of your wise investments.
......... Here is where it gets interesting... Above I made some comparisons between the US and China, with regards to jobs, housing, food, medicine. What we see is that the US is further along the scale of “freedom - to - communism” than China! And it’s not just in those areas.
Consider business. In China, you can just set up a shop and start - no license needed if you don’t plan on hiring someone else, or don’t sell to another business (where your transaction would be B2B, and taxed). Buskers, no problem. Street vendors - have at it. Good luck trying that in the US!
How about taxation? China taxes you nominally on your income, with a high “standard deduction”; but it is on salary only. It is NOT on all forms of income! If most of your income is in bonuses - even monthly - then you pay no income tax. No capital gains tax for gains made outside of China. Heck, if you earn a lot for another company, then that company must withhold for you, and you don’t even have to file tax forms.
China makes most of its taxation on the VAT/Business-to-business tax. It’s 17% on reported invoices between businesses. I say reported, because there isn’t really any enforcement here in China. You don’t have to report your sales; of course, that means the purchaser doesn’t receive an “official” (reported) invoice, so they cannot use it for tax deduction purposes. But if that’s OK with both sides of the transaction, it goes “free” - not reported.
For exports, China sets the B2B tax rate at 6%, thereby encouraging companies to export, since they can make 11% more on the same product sales. And people wonder why the Chinese are so fixated on exporting - it’s a “free” 11% additional income for them!
Overall, China’s not the Communist hell-hole most Americans think. In many ways, it’s much more capitalistic and free-market and libertarian than the US! http://simplyshrug.com/index.php?option=com_content&view=article&id=64:the-myth-of-communist-china&catid=31:general&Itemid=50
Per the Chinese constitution, the chinese communist party owns half of any business that foreign corporations start there.
I think that’s why Cisco other transnational globalist trash corporations have declared they are Chinese companies now. Maybe that gets them a free ticket past the chicom owns half your company thing.
BTW if cisco is a chinese company they should incorporate there and stop forcing the American taxpayer obligations to OPIC and other ‘free trade’ subsidies.
But I have a question. If the government doesn’t provide housing, what are all those ghost cities about? And the redevelopment areas where they tore down the old housing and put everybody into high rises?
Great explanation and I agree...but I think what’s occurring now is multi-causal and partly fueled by the incredibly once in a lifetime awful real estate market. Banks have tightened their belts and are not lending money to the same degree and rightfully so. Too many Government regs and market fear are both to blame for the belt tightening which has swung too far on the pendulum in the opposite direction. The banks have huge drags on their balance sheets from under water properties - both residential and commercial. Money lending is tight and consumers and small businesses cannot get loans, etc.
The only people reaping a profit nowadays are the connected.
http://washingtonexaminer.com/politics/2011/06/commerce-private-hand-public-glove
Those were not my comments.
Smith’s whole analysis was based upon the expansion of the division of labor which maximizes wealth creation. That is only possible when the market is international otherwise the division of labor is not driven to its extreme. He was writing to get rid of a system which strictly controlled foreign trade and the export of precious metals strictly for nationalistic reasons. He pointed out that national wealth would be maximized under free trade. He argued to DROP restrictions on imports. And exports of metal as well.
His idea of supporting domestic producers did not mean he believe that international trade should be restricted as it had been under mercantilism.
Many of us have tried to point out that arguments allegedly against “free trade” are nothing of the sort but are beefs with governmentally regulated trade. We have never had free trade.
In order to discuss this rationally (a stretch I know) you have to tell me what “free trade” is. I know but it is clear you do not.
Every post confirms the fact that you don’t know what free trade is. This is why you refuse to define the term as you understand it.
castigating me for comments I did not make!;)
It's hard to tell which comments you're being castigated for, but if it's that 'profits are bad' thing then please understand that's what the NYT was saying, not you. This NYT article is a mindless worthless outdated Marxist party rant --and that makes hedgetrimmer's post #45 even more weird because she seems to be agreeing with the 'profits-without-jobs' lie and blaming it on trade.
Let's just say we're all together on that, we all hate any buying and selling by free people as long as the buying/selling is defined as being something that's really bad.
So let's go to standard definitions and say what is it that we want. Some people like tax hikes on imports and more government controls over who we do business with. I say we need lower taxes and less government control. Anyone else here like anything?
How so? I went to the source for you, the World Trade Organization. I went to the history books for you the Continental magazine, and I went to the news for you, China’s military build up.
Its looking more like you are willfully ignorant, you can’t even post a true definition of the ‘free trade’ system that is looting our economy at breakneck pace. I gave you a link to the WTO, go there and educate yourself.
ROFL
expat_panama is one of those Obama alinsky school bloggers. He takes his political philosphy, Marxist global communism, and uses the Alinsky technique of projection against those who are attempting to show the true impact of ‘free trade’..
He seems to look out for posts on ‘free trade’ then enters the thread and trashes any loyal American who supports constitutional tariffs and the elimination of income tax, the opposite of what the free traitors need and want to continue their economic destruction of America.
We have thirty years of evidence that ‘free trade’ is ruinous for freedom and a free economy. The best he can do is project his failed ideology on others.
Thanks. Agreed. As ‘free trade’ exists today it is a tool of globalists, who are merely communists in business suits.
The enemy within has been very successful in creating a story for the ‘left’ about economic, social, and environmental ‘justice’ and a story for the ‘right’ about ‘free trade’ and profits uber alles with no reference to patriotism or morality. Both stories lead to the same place - destruction of the american economy and middle class under the tyranny of global communism.
You might be interested in the following article which I haven’t completed analyzing. The focus is how off shoring has ‘ruined the income and employment prospects for most Americans’. Included are references to ‘guest workers’:
http://www.amconmag.com/blog/2011/05/31/a-nobel-economist-says-globalism-is-costly-for-americans/
Same article:
http://www.foreignpolicyjournal.com/2011/06/01/a-nobel-economist-says-globalism-is-costly-for-americans/
If you go out to this site, you can down load the paper which the article uses as a starting point:
http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366
One only has to look at what is hidden in the current unemployment stats, and at how the CPI has been manipulated downward (which in turn inflates the GDP) to see how bad things have become.
/end rant
I’m for trade and tax policy that encourages producers to manufacture more in the USA and for buyers to buy more from America. The solution is not that difficult. Reward corporations that hire Americans and reward those that buy American.
Now when it comes to regulations, we simply need to do what the Chinese do to those who screw the country. Shoot them. Don’t waste money on bureaucrats to regulate; just put the industrialists who put us in danger in front of a firing squad, a wall and blind folded. Guaranteed other CEOs won’t ever feel the need to flaunt regulations that risk the safety of Americans again. All it will take is one sacrificing one CEO and the rest will never again endanger Americans.
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