Hi, I have some Economics 101 questions - please help, thanks (loans, company)

[Kenneth-Kaunda]

Lol, Plenty of work for Chinese people, so I don't qualify unfortunately

[darkeconomist]

Originally Posted by pvande55

The question about the sandwich shop is relevant today. A popular chicken sandwich outlet has lines of customers out the door everytime it opens a new shop. So it is providing a product in demand. Yet a goofy Chicago alderman is trying to block one opening in his ward. The new jobs created as well as convenience, not having to go five or so miles, don't seem to matter.

Please don't bring politics in to a thread about economics in the econ forum. The Chick-Fil A controversy is purely political in nature and doesn't belong being discussed here, on this thread.

Maybe on a thread that is objectively about how our morals (and, therefore, our politics) affect prices and employment, but not here.

[hoffdano]

Originally Posted by Kenneth-Kaunda

From what I read, the wages for the common man in China are going up considerably now.

Plenty of work available for those who want it, and the infrastructure of Beijing puts many Western capitals to shame.

And horrific air and water quality. Leave Beijing and see how the rest of China lives.

[Kenneth-Kaunda]

actually that is a fair point - I've only been to China once and that was Beijing.

I flew into Tianjin (about 100km east) and then took the high speed train to the capital.

so I guess I only saw the modern side to it.

but I do read, that the wages are rising all along the coast in the factories. (around $250/month) , very low by Western standards for sure though.

[Willy702]

Originally Posted by NJBest

Because that goes against an already established theory called trickle-down theory: Trickle-down economics - Wikipedia, the free encyclopedia

The idea here is that wealthy people take their money and invest in businesses and startups so they can hire people, thus passing the money down to the working class. If you tax the wealthy, they won't be able to invest in businesses.

The point that is ignored out of hand though is that every govt dollar spent is not just waste. I'm no big goverment fan, but it has to be acknowledged what reducing govt spending is doing right now. Its causing cuts to public workers who may not be so bad, you know police, fire, teachers, etc. If govt cuts were merely funds used to pay contractors and other businesses there might be a benefit to cuts, but cutting municipal employee jobs is a poor way to do good for the economy. And the job numbers of late have made it unmistakable this has been the root cause of the weak growth and weak jobs numbers. If the money is saved and given back to the wealthy through tax cuts how much of that money are they really going to spend? How much of that money are they going to use to invest in businesses? I think countless studies have shown it to be a very smal percentage of what we might call incremental disposable income. The wealthy who are so inclined to start a business don't wait around for the money to come in, they use leverage to get it the moment the idea comes to fruition.

[Kenneth-Kaunda]

why can't the govt. just keep or even increase public spending (thus providing jobs), and hammer the rich for tax at the same time?

[NJBest]

Originally Posted by Kenneth-Kaunda

why can't the govt. just keep or even increase public spending (thus providing jobs), and hammer the rich for tax at the same time?

I'm just playing devil's advocate here to get you to think about it a little more... I'm not trying to get political.

But why hammer the most productive and hardest working folks (the rich) and let the least productive benefit from those taxes? Let's take a look at Bill Gates who invented a system that employs thousands of people, generates incredible amounts of income, and pays taxes on that income. (Forget the fact that he has vouched all his money away to charity). Why tax this guy for all he has accomplished and the benefits it has provided the economy and those who work for him?

We should encourage people to be like Bill Gates and create systems that put thousands of people to work. Not punish those who do.

[Kenneth-Kaunda]

well Bill Gates, from what I gather, came from a moneyed background so had a great helping hand to get his business up and running in the first place (ie: financial help) - not to mention all the family connections etc.

so do you really think Bill would have got this far had he come from a housing project? - I think that is unlikely to say the least.

So, yes, money can create money, but only if you have it in the first place.

[Kenneth-Kaunda]

Originally Posted by NJBest

But why hammer the most productive and hardest working folks (the rich) and let the least productive benefit from those taxes? Let's take a look at Bill Gates who invented a system that employs thousands of people, generates incredible amounts of income, and pays taxes on that income.

I'm also sure, that people like Bill Gates, Richard Branson etc...would still be active business players even if their taxes were higher - they'd just make slightly less profit.

IMO- A super-tax would be useful here because it would only click in right at the top, so would not hinder most business men.

but cutting public spending cuts jobs - so what is the good in that?

I thought job creation was the key to a good economy?

[darkeconomist]

Originally Posted by NJBest

I'm just playing devil's advocate here to get you to think about it a little more... I'm not trying to get political.

But why hammer the most productive and hardest working folks (the rich) and let the least productive benefit from those taxes? Let's take a look at Bill Gates who invented a system that employs thousands of people, generates incredible amounts of income, and pays taxes on that income. (Forget the fact that he has vouched all his money away to charity). Why tax this guy for all he has accomplished and the benefits it has provided the economy and those who work for him?

We should encourage people to be like Bill Gates and create systems that put thousands of people to work. Not punish those who do.

To go off your non-political point, your argument assumes that the rich are the most valuable members of the economy. Yes, they pay more in taxes in absolute terms. But, each additional dollar has less value to them than lower quintiles (if you have 100,000 jelly beans, what's one more bean?). Meanwhile, lower quintiles will more readily pump that money back in to the economy (not just in to tricky financial instruments devised by accountants and investment brokerages). Based off that, it does more good to take from the rich and give to the poor, so to speak.