Dow at a new all-time high: What additional incentives do job creators need?

REUTERS/Eric Thayer
The Dow reaching a new all-time high at the end of the day Tuesday.

Please forgive me if this is too Bolshie a question, but with the Dow reaching a new all-time high today, with the NYTimes today summarizing the incredible state and federal tax breaks that enable corporations to build their projects with tax-free bonds, with many corporations enjoying record profits, with CEO pay up 727 percent since 1978 (compared with 6 percent for average workers), with the top 1 precent of households owning 34.5 percent of all household wealth and the bottom 50 percent of households holding 1.1 percent, what additional incentives are needed to get the job creators properly motivated to do their small bit to get the unemployment rate down from its current 7.9 percent to something a little closer to the 3.9 percent it was in December of 2000, just before, well, you know…?

Comments (11)

  1. Submitted by Arito Moerair on 03/05/2013 - 03:55 pm.

    What do you think?

    They need more tax cuts. And fewer burdensome regulations. These businesses with their record profits are being strangulated by taxes and regulation! Isn’t it obvious?

  2. Submitted by Tim Walker on 03/05/2013 - 03:57 pm.

    What additional incentives are needed?

    Go ask ALEC,
    I think they’ll know …

    (Apologies to Jefferson Airplane …)

  3. Submitted by Paul Brandon on 03/05/2013 - 04:04 pm.

    Profits for doing what?

    If corporations (many of them multinationals) can increase profits without hiring more workers (at least in the United States) they do NOT have any incentive to do so. As you point out, our tax code gives them incentives to avoid hiring; that code can and should be changed.
    For discussion; one might increase the corporate income tax (and clean it up so that profits can’t be easily ‘off-shored’) and include an offsetting deduction for wages paid in the United States. One might cap eligible wages at $250K to exclude executive salaries.
    I’m sure there are many more possibilities, and that someone has written a book.

    In sum, the problem is changing the nature of the existing system of incentives.

  4. Submitted by RB Holbrook on 03/05/2013 - 04:44 pm.

    Incentives?

    What is supposed to happen? The Job Creators are doing just fine as they are, thank you. Hiring people would mean they would have to pay wages, and wages would come out of their pockets. They are making money, and that is what matters. As long as their profits keep going up, there is no need for them to change how they do anything.

  5. Submitted by Hiram Foster on 03/06/2013 - 06:12 am.

    Structure

    Corporations are making money by reducing costs, including employee costs, and it’s corporate profits along with a lack of good places to put money outside stocks that is driving the stock market. A case in point that’s been in the news lately is Best Buy. Lately, they have been something of a turnaround story, but note the turnaround doesn’t come from expansion but contraction of the business along with greater efficiencies, which among other things, means employees doing more, rather than more employees.

    What needs to change here is for companies who are contracting to face competition in the markets they don’t serve or underserve.

  6. Submitted by Rod Loper on 03/06/2013 - 07:43 am.

    Time for a transaction tax?

    This would be a painless way to use the Wallstreet Casino to erase the deficit and dampen
    “irrational exuberance”.

  7. Submitted by Neal Rovick on 03/06/2013 - 08:07 am.

    The human motto?”Get away

    The human motto?

    “Get away with what you can.”

    Some people run stop signs. Others…

    (quote)

    The facts are simple. Mitt Romney’s blind-trust invested more than a million dollars in a “vulture fund” managed by Paul Singer, a Romney adviser. In 2008, while Delphi Auto Parts was in bankruptcy, Singer’s fund bought, for twenty cents on the dollar, Delphi bonds — lots of them. With Delphi under Singer’s control, he threatened to shut it down unless the taxpayer bailed it out — holding General Motors and Chrysler hostage, because if Delphi shut down, the companies would lack steering columns and other essential parts. After getting his way, and a $7.3 billion bailout from the public, Singer then closed all but five U.S. plants to move these operations and 25,000 jobs to China. Mitt Romney’s investments in Singer’s fund help make this loss of American jobs possible…..and a 3,000% profit for Singer and Romney.

    http://www.huffingtonpost.com/carl-pope/romney-delphi-auto_b_2051373.html

    (end quote)

    That’s the way it’s done Mr. Black !!

  8. Submitted by Peder DeFor on 03/07/2013 - 10:12 am.

    Demand

    While there are probably half a dozen small reasons why job growth is low (and yes, over regulation is one of them), the biggest problem is lack of demand. Big companies are doing just fine selling/developing/producing their wares with the people that they have. They simply don’t have the pressure to bring more people in.
    I wonder how much of this is simply that people have changed the way they consume. I know that when the crisis hit in 2008, my wife and I had plenty of conversations about our budget and what we could do to trim costs. I imagine that lots of other people did too. And lots of others were forced into lower spending because they couldn’t get the crazy credit options available in earlier years. If our society has actually made some changes, it might be some time before productivity booms again.

    Eric, I understand the question that you’re asking, but the way you’re asking is kind of strange. Companies are created to make money. They do this, of course, by offering a service or product. And, oh, by the way, they hire people to do these things. The structure of your question almost sounds like ‘we’ve sacrificed enough to the gods of business; they should reward us with jobs’.

  9. Submitted by Paul Brandon on 03/08/2013 - 10:24 am.

    Peder

    You’ve got part of it right — market economies are demand driven.
    Demand increases when people have more disposable income to spend and things that they need to spend it on.
    Therefore, the most direct way to increase demand is to put money into the hands of people who are likely to spend it within our economy (the lower and middle economic classes).
    Increased private sector hiring -would- have this effect if it were happening, but the evidence shows that the private sector is increasing profits in a number of ways:
    First, efficiency; having fewer people do the same work (or sometimes having fewer people doing less work, with a net profit increase).
    Second, when the private sector does increase hiring, it does so where labor costs are cheapest. In a global economy this is not usually in the United States. So the private sector hires locally only where other factors (such as transportation) outweigh labor costs, or the product is a service that must be delivered locally. For example, phones can be answered in India, but burgers must be flipped where they are sold (even if the meat comes from Argentina).
    So, the private sector is not a good avenue for stimulating the economy.

    The most direct way to put money in peoples hands is to increase government spending, either on infrastructure or on social support. Either way, people have money to spend immediately, and whether they are single parents or construction works, they are likely to spend it (as opposed to investing it offshore). When they do this, business activity will -in turn- go up.

    And of course corporations don’t ‘make’ money (only the government does that), they redistribute it so that more ends up in the hands of shareholders. And yes, I’m aware of ‘multiplier’ economic effects, but they apply to ALL economic activity, not just corporate spending.

    So, it appears that you and you’re wife are lucky enough to have enough surplus cash so that you could reduce your spending without cutting into life’s necessities (I assume that you’ve paid off your mortgage). Most people are not as lucky as us.

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