The Media love (elite) Crackpot Economics

How else to explain the attention poured on "Joe the Plumber" after the last presidential debate? He didn't express one idea you wouldn't find in the most tendentious essays on the Wall Street Journal's editorial page, or spouted on air by faux populist like Limbaugh and O'Reilly. In other words, in giving "Joe" so much attention and air time, the media isn't providing a rare forum for the "working man" or "average American" -- once again they are only highlighting another mouthpiece for America's elites.

I'm a small business person and I hate the Republicans for peddling economic nonsense that benefits large corporations by getting out their tiny violins and weeping over the imaginary plight of small business. And the media for allowing them to get away with it.

How can income taxes affect phony Joe's ability to hire? You pay income taxes on profits - after expenses like labor. If Joe's business isn't generating enough business and income to justify hiring an employee he has problems entirely separate from the issue of income taxes. One problem could be that the market he is working in simply can't support his business. A likely problem is too few potential customers with enough disposable income to use his services. In that case "spreading the wealth around" in terms of economic stimulus may be exactly what his business needs.

Bottom line; you hire employees to increase earnings. At least, good business people do. Decisions about hiring have to be justified by demand. Will hiring allow you to increase earnings by producing and selling more products or services or reaching a broader market of customers? Etc. A job is not a charity or a favor dispensed by employers. (As Republicans imply when they say business owners "create" jobs. No. Market demand creates jobs. Employers hire employees to help them meet and exploit that demand; to be more productive.) Salaries don't come out of an owner's personal income – they are an expense that CONTRIBUTES to his or her income. Every single employee's salary has to be justified by what it contributes to the bottom line. The point of hiring is to INCREASE production and the earnings of the business, and therefore increase the owner's personal income.

If the demand for your product decreases, because of poor market conditions, competition, changes in the market that you didn't anticipate or other miscalculations on your part, you lay people off.
Joe the Plumber, if he decides to hire another plumber to help him in his work, will do so because it means the company can do more work. And Joe will pay his new employee a salary that allows him, Joe, to make money from that work.

If, in a market with strong and growing demand for his services, Joe lets his employee go because his personal income taxes went up, how is he saving money? He's not. He's just limiting his ability to make money.
If times aren't good and demand for services drop, Joe may have to layoff his employee because there is less demand. Less demand means less work to do and that, of course, mean less personal income -- which most likely will mean less taxes owed.

Joe doesn't want to pay taxes. That's just normal human selfishness that we all can relate too. But, as citizens, most of us know, or should know, that a sophisticated economy requires doing so. It is going to be hard to right the nation's economic woes without an honest discussion of taxes -- the who, how and why -- that includes respectful consideration of competing and conflicting interests. So while it would be easy to think that "Joe" is the problem, the bigger problem is the media's preference for promoting resentments, fueled by phony arguments from less than honest ideologues, spouting tired ideologies, while ignoring the real, and worried, voices of the broader citizenry.

It's the end of the world! (I hope.)

Or, more exactly, it is the end of the world as we've known it; as both a financial and social era.

I may be one of only a very few Americans to, despite the losses to my retirement account, the new caution of my customers, and the flat-lining of my home's value caused by our current financial crisis, feel inspired to hope and optimism, but I am. (Harold Bloom, discussing Ralph Waldo Emerson’s “idealistic glee” in response to the Panic of 1837 in today’s New York Times, appears to be another one.)

I think that's because I grew up in the 50s as a boomer construction worker’s daughter. I never had a view of that era (or any that followed) as one of stability and security. I saw firsthand that it was a period of immense, dynamic change and often painful dislocation (I personally went to 42 schools in 34 states). As a result, I've never viewed the American economy as being able to provide security. In fact, I was taught that security was the one thing our capitalist economy could never provide.

Capitalism can and often does provide vast opportunities, new beginnings and great rewards – but we tend to forget that the only thing it dependably provides is change. Sometimes very painful change -- but also, change imbued with idealistic possibilities.

Today, we all agree that capitalism requires workers and business owners to be flexible, adaptable and good at what they do, and, always working to improve and update their skills and knowledge. But we have forgotten over the years that such personal virtue alone isn't enough -- that risk, which capitalism demands, IS RISKY and, no matter how virtuous you are, doesn't lead automatically (by magic hand or otherwise) to reward. Born into a prosperity we didn’t create, sustained by magical thinking and one bubble after another, we’ve lazily relinquished our personal and collective responsibility, and our commonly shared economic fate, to “the market,” papered over the loss of jobs, industries and decent wages with too much and too easy credit, and the devolved the “American Dream” into little more than a Lotto fantasy. All conditions that this crisis, I hope, will make harder to sustain. I’m not dismissive of the hard times ahead. But I am hopeful that they will enable us to, at long last, see the unsustainable risk and confront hard times suffered by the bottom 50% for decades now.

My father was a skilled craftsman who worked in the energy industry, across the globe and the country, during this country's amazing post-war expansion. His attitude toward the job market was always entrepreneurial -- yet, at the same time, his most valuable possession was his union "traveling card." He knew that the nature and quality of his skills, along with favorable market conditions, were the only things that could guarantee him work. But he also knew that a willingness to stand up for his interests and for others, in his case through a union that gave him a voice in the nation's political conversation as well as at the negotiating table, was necessary to win respect, fair compensation and decent working conditions. His first and most important loyalty was always to the quality of his work, the one thing that made him valuable in the marketplace. But his other important loyalty was, through his union (the best mechanism he had for making that marketplace more just) to his fellow workers. He believed that selfish devotion to the money, personal prestige or status (rather than to skill, knowledge and justice) were economically short-sighted. And that the expectation of secure reward for loyalty to a company or a boss was naïve; not because the individuals or systems involved were evil but because the ever-changing and dynamic nature of capitalism could never guarantee such a reward.

My father, like others who came of age during the Great Depression, knew that social stability, in the face of capitalist instability, requires accountability (through laws and regulations), compromise among interests, and a social safety net beyond what can or will be provided by the private economy: A safety net that we all, as citizens together, have a responsibility to create and maintain.

If these times wake people up to these realities again -- if they realize that working hard and playing by the rules isn't enough; you have to be willing to stand up for, and if necessary fight for, your economic interest and the common interest -- then we will get through this and come out better on the other side. I believe that, although it has been muted in recent decades, there is a great spirit of creativity, longing for justice, desire for not just personal betterment but for the betterment of all, that resides in the heart of most Americans.

If this crisis forces us to tap into that spirit again, we'll be fine. Perhaps no longer "the greatest most powerful nation on earth" as our politicians have been fond of saying -- but fine enough to put our house in order, meet our responsibilities to each other, and live up to our highest ideals.