Cutting Edge Theory

Joseph Stiglitz wrote an honest Opinion this morning, basically stating that We need to find a Stimulus that actually works. I agree with him, but also wonder why We need stimulus at all. What is wrong with economy can best be enumerated with the Statement, ‘The Rich are not getting Richer.’ All the Stimulus packages proposed bring on some form of giving this savaged group Relief. I, on the other hand, have the suspicion that the distress extends beyond this prized, and select segment of the economy. I actually believe they might suffer less from the expected Downturn than other groups like Mortgage-Holders or the Poor. It would be nice to extend potential stimulus to all Groups likely to face a bitter Retreat, or not.

Everyone who reads my material steadily realizes I hate Tax remissions of almost every type. My proposal of any such type benefit suggests not only significant hypocrisy, but a fear which does not reside in my breast; I believing that We are working out of the Recession already, it only being a fact that the major losers of the Recession have yet to record their losses. I still need to get back to my original argument, though, to state that any stimulus should counteract the common potential Business reaction to losses, which is Layoffs of labor. My Stimulus package would be far simpler than that advanced by Others, though very specific: Business should be allowed to deduct 120% of all Labor Costs incurred within the confines of the United States, and this with direct provision that this Tax remission can only last for Three years; with absolutely no other Stimulus offered.

What does this Stimulus do? It will be of short duration, and grant succor only with the extension of employment. Those who are responsible for factors igniting the Crisis will be left in isolation to work through and record their losses; the most wondrous methodology to teach such Plungers not to repeat their adverse performance. It does not do anything for Consumers who already have a Job, but increases the ability of Consumers without Jobs to find one; a beautiful method to again teach Consumers to adequately budget their resources. Businesses quickly realize that they must extend Employment in order to enjoy potential stimulus, and Employment could possibly increase in the Period cited, simply because only about 40% of the labor value to Businesses will be taxed. Labor Productivity in the Period would obviously lower, raising Employment, with little Complaint extended by Businesses–increasing the number of Jobs. Total Wages will increase, while lower Consumption sales will be received less frantically. It is also one of those incredible Tax remissions which might actually raise long-term Tax revenues. Of course, We could also do nothing, and let the economy correct itself. lgl