The Real Mitt Romney

[Flint]

Originally Posted by Stormieweather

You need more customers in order to expand. Businesses don't just expand because they have extra money, they expand because demand is higher for their product/service (and they can't squeeze any more out of their current resources).

I'm sure that is a valid variable here. I'm not an economist. But I do know that businesses want to grow and get bigger, and that it takes an investment in increasing capacity (buying a new truck, machine, or computer, for example) in order to get bigger. That takes money.

[xoxoxoBruce]

Another problem is banks sitting on money they are afraid to lend. I think if the propane demand went up, the bank would lend Buck Strickland the money to grow his business meeting that demand. Serving small business has been the traditional roll of local banks, and it allows them to pay interest to their local depositors, which helps the local community.

[glatt]

Originally Posted by Stormieweather

You need more customers in order to expand. Businesses don't just expand because they have extra money, they expand because demand is higher for their product/service (and they can't squeeze any more out of their current resources).

And that means more cash is needed in the consumer's pocket.

Originally Posted by Flint

I'm sure that is a valid variable here. I'm not an economist. But I do know that businesses want to grow and get bigger, and that it takes an investment in increasing capacity (buying a new truck, machine, or computer, for example) in order to get bigger. That takes money.

Stormie is correct. The myth that the Republicans are pushing this election is that small businesses are the job creators. That's not true. Businesses are reactionary. They get busy and they hire more help. They get busy when the consumers start buying their product or service more. Consumers buy more when they have more money to spend, (or feel like they have more money to spend and are willing to charge it.)

Sure, businesses always want to grow and expand. But if they are in a mature field, that growth is always through taking market share from other companies. That does not create jobs. If company A has 20 employees and competitor B has 20 employees, and they both are selling widgets, then for company A to grow and expand to 30 employees, competitor B will have to lose customers and lay off 10 employees. Net job gain zero. In fact, to take market share, often a company does it through being more efficient and offering a product at a lower price. "More efficient" usually means fewer employees. So you actually end up with fewer jobs total.

The only way to get the entire pie to be larger is to get new customers who weren't buying widgets before. The only way to do that is to invent a new widget (like an iPhone) or make the widget so cheaply that not only do you take market share from competitors, you get customers who were sitting on the sidelines previously.

The most effective way to stimulate the economy is to get consumers to start spending.

[Happy Monkey]

Originally Posted by Flint

For example, business A. pays slightly less in taxes, they will invest this in growing their business, thus growing their profit (assuming the same margin, getting 'bigger' produces more revenue). So, they add production, increase output, and service new customers. Every part of the industry they are a part of incrementally increases in capacity.

But business expenses are deductible, so if they want to invest in growing their business, they can do that pretax anyway.

Plus, if a "small business" is not only making $250,000 in taxable income, but making enough over $250,000 that the extra money taxed at that rate is significant, they are not the local corner store that politicians want you to picture when they use the phrase "small business".

[Ibby]

We have a small business problem in this country.
The problem is that small business in this country doesn't work.

Maybe we could start with rigorous antitrust legislation and action to break up monopolizing or otherwise market-dominating multinationals that siphon money from the poor and working-class to offshore tax havens and to Chinese massive-scale industry.
Maybe we could tax the wal-marts and the apples and the fast-food conglomerates and the comcasts and the financial giants and use that money to subsidize and otherwise help local businesses fill some parts of those same economic niches across the country.
Maybe we could guarantee living wages to hourly or otherwise marginalized workers, giving them the option of shopping local instead of buying chinese crap from wal-mart.
Maybe we could fix the food deserts in our country by making sure EVERY American has access to affordable HEALTHY options, helping to close the health care gap between economic classes and slow the ridiculous rise in health care costs nationally.
Maybe we could put enough money into our cities to build the communities from the inside, with local, small, neighboorhood businesses, instead of outside businesses taking money back out of the community and to the affluent suburbs or gentrified neighborhoods.
Maybe we could work to end the highly racialized nature of our schooling system, and fund education in this country well enough to make sure every American has a REAL opportunity to learn not only job skills, and not only standardized test questions, but also civics, critical thinking, and other more broadly applicable skills that will leave them ready for the job market or for college.
Maybe while we're at it we could reform the for-profit predatory system of colleges that exist only to cash in on the guaranteed student loan program, and the banks that make the profit while the government assumes the risk, by regulating the rising costs of both private and public education, and subsidizing schools through GOVERNMENT loan programs, where the GOVERNMENT keeps the interest profits, instead of the banks.

I could keep going for an hour, if I didn't have to get dressed and ready to leave for class in fifteen minutes. Every one of those things would have broad stimulative effects on the economy, and have either a short-term or a long-term revenue-boosting effect as the tax base broadens. Keynesian economics, bitches. Shit works and always has.

[piercehawkeye45]

Originally Posted by glatt

Stormie is correct. The myth that the Republicans are pushing this election is that small businesses are the job creators. That's not true. Businesses are reactionary. They get busy and they hire more help. They get busy when the consumers start buying their product or service more. Consumers buy more when they have more money to spend, (or feel like they have more money to spend and are willing to charge it.)

Sure, businesses always want to grow and expand. But if they are in a mature field, that growth is always through taking market share from other companies. That does not create jobs. If company A has 20 employees and competitor B has 20 employees, and they both are selling widgets, then for company A to grow and expand to 30 employees, competitor B will have to lose customers and lay off 10 employees. Net job gain zero. In fact, to take market share, often a company does it through being more efficient and offering a product at a lower price. "More efficient" usually means fewer employees. So you actually end up with fewer jobs total.

The only way to get the entire pie to be larger is to get new customers who weren't buying widgets before. The only way to do that is to invent a new widget (like an iPhone) or make the widget so cheaply that not only do you take market share from competitors, you get customers who were sitting on the sidelines previously.

The most effective way to stimulate the economy is to get consumers to start spending.

Agreed. Both supply (companies investing) and demand (customers spending) are important but I would argue that the supply side is not as widely recognized today so needs to be emphasized more.

I do want to make the point that in response to an increase in demand, companies can increase supply in two ways: hiring more workers or making their current workers more efficient. Historically, technology moved slow enough that increasing productivity wasn't an option but I think we are approaching the threshold where it may be cheaper (in general) for companies to increase supply by simply increasing productivity, not the amount of workers. I think this, along with technology allowing lower skilled workers to replace higher skilled workers (think manager positions), explains much of our current economic "recovery".

Honestly, my generation will have to deal with a lot of problems (national debt, rising inequality, global competition, climate change), but automation and increases in productivity may be the hardest hitting since nothing else can be solved without a strong economy. Also, it seems economists have their heads in the ground and scream "neo-luddite" every time someone suggest the problem.

[Sheldonrs]

The full details of Romney's tax plan:

http://www.romneytaxplan.com/

[Adak]

Originally Posted by richlevy

So if it's not locked down it's free stuff? Laws do not cover everything. As a matter of fact, the more libertarian and tea partiers are arguing for less laws. The assumption is that government protections are unnecessary because the free market and innate human compassion will provide the necessary checks and balances.

You're mixing business policy with charity/welfare policy, and throwing in a little Conservative vs. Liberal philosophy?

Wow! Can you narrow that down to something more specific?

Mr. Romney proved this wrong. If there was the least fiscal advantage to destroying companies or moving them overseas, even companies that were stable and profitable before being loaded with leveraged debt, then these companies were torn down.

"The least fiscal advantage", I take big exception to. You don't take over a company and take on that level of risk, for a small chance of an upturn. If the company wasn't able to jump up a BIG step (in the opinion of Bain Capital), then Bain Capital wouldn't have been there.

In the primaries Gingrich pilloried Romeny for this. This was not 'creative destruction', this was destruction by loophole.

Yes, and Gingrich's association with the truth, suffered because of it. He was working with hardball politics, and that's how the game is played. Politics is not a particularly polite field of endeavor. The voters eventually saw it was b.s., and let him go. He had his own skeletons in the closet, from the way he treated his first wife and son, after he left them. (Quite mean spirited, if I do say so. Gingrich is NOT a nice guy.) He is a smart guy, but his problem is, he has a lot of wacko idea's, stacked right next to the great idea's. When he reaches for one, he frequently gets the other kind.

[Adak]

Originally Posted by Lamplighter

The GOP can't use "communist" to scare voters any more, so the new boogeyman is a "socialist".

Then how would you describe him, to an American? He's MUCH MORE left than a "liberal" has normally been described. I agree he's obviously not a communist.

I like the term "statist", because he's trying to move the fed state, into every part of our lives.

And I don't WANT the state into every aspect of my life. That requires a LOT of tax money to support it, and THAT leaves me with both little money, and little freedom.

Does "little money" and "little freedom" sound like something you want?

[Adak]

Originally Posted by glatt

The most effective way to stimulate the economy is to get consumers to start spending

And consumers can't spend money, unless they HAVE money to spend!

Which is why we need JOBS, and yes, small businesses are the most efficient (fastest), new jobs creators, in the private sector.

It's not the Republican party's theory, it's straight out of economics. I understand your hesitancy to accept it, because it's a FACT, and liberals don't generally mix well with facts.

Businesses change as they compete, and sometimes get into entirely new markets, or new ways to serve their same market. The competition is a fantastic way for us consumers, to get better products and services, and THAT also gets the money moving -----> ZOOM!!

[DanaC]

Originally Posted by Adak

Then how would you describe him, to an American? He's MUCH MORE left than a "liberal" has normally been described. I agree he's obviously not a communist.

I like the term "statist", because he's trying to move the fed state, into every part of our lives.

And I don't WANT the state into every aspect of my life. That requires a LOT of tax money to support it, and THAT leaves me with both little money, and little freedom.

Does "little money" and "little freedom" sound like something you want?

He's not the one trying to put the state into womens' bodies.

[Happy Monkey]

Originally Posted by Adak

Then how would you describe him, to an American? He's MUCH MORE left than a "liberal" has normally been described. I agree he's obviously not a communist.

MUCH LESS left than a liberal.
Center to center right. It's hard to think of something he's proposed or done that wasn't proposed or done by the moderate Republicans of yesteryear. The Overton window strategy has worked; Obama's a big disappointment to liberals, but he'll get the votes because in every way Obama failed them, Romney's worse.

[Stormieweather]

Originally Posted by Adak

It's not the Republican party's theory, it's straight out of economics. I understand your hesitancy to accept it, because it's a FACT, and liberals don't generally mix well with facts.

I thought you said you weren't an economist?

Point is, making rich people richer does not directly translate to "job creation".

And yeah, I'd probably call Obama a centrist. Certainly not a liberal of any flavor.

[Flint]

That was me.

[DanaC]

Originally Posted by Adak

It's not the Republican party's theory, it's straight out of economics.

Yes, because as an academic discipline, economics is a politics/ideology free zone.

Economics is a little like history: one part 'science' to one part interpretation and one part art.