Sunday, February 01, 2009

What to do next if failure looms?

I have been chewing on these Thoughts for some time, and came to the belief that I should discuss it with my fellow man. Stimulus is not likely to work with the American economy, there having been too great a use of the pump handle in the Past. An overwhelming element of the Recession states that Labor Costs were too high, as were Business Profits which used those expenditures to set their incredibly high Profit ratios. I can realistically assume that about 8% of Labor through the later Three years of the last Boom served no relevant production role, while some 11% of the advanced Labor units were overpriced. Now, one of the goals to a surviving Administration must be full employment, there cannot be any doubt about this Statement. The Question becomes how to accomplish full employment, and the Stimulus package stinks; too much money paid to the losers who cost Us the last Boom. An alternate Option should be advanced, just in case the Stimulus package fails of desired performance.

My alternative stands as a simple one: make Labor Costs a paying proposition for Business, but One where precision Business operation must be utilized to implement the profitability. I suggest a Tax deduction of 110% for all Labor Costs incurred on American soil for that Labor drawing less than $125,000 per year. Business operations must be efficiently run, and Profits would have to be generated to take advantage of the Tax deduction. A constraint upon usurious Labor charges is implicit, Lay-offs and Downsizing becomes expensive to management, and an additional Profit sector injected into the matrix. Business has a more developed range of viability, if actual Profits can be realized.

The first Question for debate asks if the additional 10% reservoir of potential Profits to alter the business format viability. It should be thought of as a high-paying Certificate of Deposit from a financial institution; if the amount of funds are attained, it has a rewarding rate of Return. A higher deduction level would make malfeasance sustainable with little added incentive. The law is simple in construct, even simpler in operation with only basic Accounting procedures required for either Business or Tax Agent–materials already in-place. Now comes the idea of effect: simple models scratched out by myself say an estimated 1.3 million additional Jobs within 18 months, with a potential 5 million Jobs within 5 years. An estimated 300,000 less Businesses are likely to fail with the added source of revenue. It sustains Employment under decreasing Sales for an additional 11 Weeks. (Realize that these are my Estimates, and quite capable of major error!) It is worth a Try, especially if the Stimulus fails of performance. lgl

1 comment:

MattYoung said...

Reduce the minimum wage by an increment. I do not know why this wage limit is not altered more often, both up and down by small amounts more often.