Thursday, August 12, 2010

Real World Understanding

I often read Menzie Chinn knowing he is correct, but lacking in second generation analysis. Here he finds wage rigidity, but refuses to split into Income levels. He might find that wage rigidity is mainly primary in only the top 10% of Incomes, and relatively absent in the lower 60% of Incomes. This stands because of a real Lay-off and Rehire at lower wage mentality within the top 10% class, who are the vital Managers; long have they been separated from a sense of responsibility. Business technology today is directed towards Production which can utilize relatively unskilled and inexperienced labor; something totally in tune with the above stipulated policy. Employment losing its percentage share of total Income in this country reflects the policy as well.

Steve Collander serves as a good example of modern interpretation of the national debt. I take the contrary view to the debt expansion: mainly that it aids the employment issue little; it serves business and financial interests as an alternate source of Investment; it serves as a pressure release where Tax reform can be avoided; it does not dry up Imports into this Country, as it presents a viable alternative to excess American Dollar outflow overseas; and will cause a real crisis once the economy begins to recover and Interest on that debt quadruples. The real Cost of American conscription of debt cannot be permanently suppressed, and it will hit with oppressive pressure.

I will finish the current Post with this article from Mark Thoma. The upflow principle of taxation will always assure the upper Income classes of getting an advantage over lower Incomes. The only distinction being that they get the full advantage of the Tax Cuts, while lesser Incomes only partial benefit due to the lesser amount of Income earned in the specific bracket. It is my theory that there must be an increase in taxation for business policy to be compelled to Change. Every revision of the Tax Code has always eliminated the difficulties impacting the upper Incomes from previous recessions, which consistently means that the lower Incomes must take it on the Chin, in order to reorient the economy to Productive mode. It has long been apparent to myself that in the real business model changes must impact the upper Incomes, the suppression of lower Incomes will bring no Production schedules alteration. lgl

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