Where is the US economy headed?

I am sticking with my thesis that the notion of giving tax credits to private employers to hire employees is futile. I don't have any work for new employees to do.
I favored the notion of extending unemployment benefits. It is the humanitarian thing to do and it does get some cash immediately into the economy.
I appreciate that many folks feel that there are lazy people who are quite willing to live off their unemployment benefits rather than competing for the minimum wage jobs out there.
I reject the notion that, if we cut the taxes for the wealthiest, they will create jobs for those with the lowest incomes.
In the past few pages, there was the notion of the U.S. "printing more money" in order to lower the value of the dollar which would make our exports cheaper and imports more dear. I am not sure that is a good idea.
Thomas has raised the notion of some sort of WPA. I could certainly support that.
I think that that is where we may up going.

1) If you have absolutely no work to do, you won't find it profitable to hire an employee even with the tax credit. Clearly this tax credit is supposed to encourage marginal employers. The idea is to turn employees that are almost worth hiring into employees that are barely worth hiring.

2) I think you are committing a fallacy of composition here. For example, if everybody sits in a stadium and you're the only one who stands on his toes, you get a much better view. But when everybody in the stadium stands on their toes, everybody has just the same view as if you were all sitting---and you're feeling uncomfortable to boot. Standing on ones toes is an advantage for the individual, whatever everybody else is doing. But it's not an advantage for anyone if everyone is doing it.

I think the logic of the employment subsidy involves a similar composition effect. If the federal government only subsidized you for hiring an employee, the results would be as absurd and disappointing as you say. But the federal government subsidizes every employer for hiring people. And to the extent that the new hirees spend their subsidized income, they create work for each other's employers to hire people for. I do believe the composite effect of the subsidies is to create work for companies to do.

Thomas, I agree with rjb, it makes no sense to hire employees when there is no need for them. Just a basic lesson from running a business, I think you need to have a demand to fill before you create an inventory to satisfy that demand. I think it is just basic good business sense to fulfill the supply in response to a demand, not the other way around. For example, it would be silly for me to hire more employees to create more product to place into a warehouse, if I am already overstocked on the product due to slow sales. Receiving a tax credit might sound fine, but it would be akin to throwing money down a rathole so that later I could fish out a portion of it.

If the government wants to give tax credits to businesses to stimulate the economy, it would make more sense to reduce taxes for the existing business, so that the businesses could sell their products at a reduced price and still make about the same profits. Then, sales would increase and stimulate the economy, thus creating a need for more employees, which would further stimulate the economy. The point I am making here is the place to stimulate the economy is to stimulate demand first, not supply. The market will always respond favorably to demand, but simply creating supply without doing something to increase demand would only lead to further debt and stale inventories.

Assume for a moment that you have enough work to pay for 1/2 or 3/4 of an employee. You wouldn't hire a full time employee because you can't justify the cost.

Now, if you get a tax credit that allows you to hire a full time employee and only pay them 1/2 or 3/4 while the Federal government picks up the rest you can justify hiring them because you can afford to. Plus you get the added benefit of using that employee the rest of the time as well even though the federal government is paying that added cost.

While you may not have need for another 1/2 employee right now, you can't honestly believe that every employer is the same as you. Certainly the Federal government can't pay for 1/2 of an employee at every business but if it pays for 1/2 an employee at 1 out of every 1,000 businesses, that ends up being a lot of people getting jobs.

I'm not surprised you would think that, but that just makes a mess of your position's logic. A tax credit and a tax cut have exactly the same effect on a business's finances. More income in the income statement, leading to greater assets or lesser liabilities. If one doesn't make sense economically, neither does the other.

Thanks, Thomas, Okie and Parados for a nice discussion this evening. Quite a rarity on this thread. Bedtime for me and I find myself agreeing with parts of what each of you are advocating but disagreeing with other parts.
Back tomorrow, I hope, for a continuation.

I've been wanting to talk about the sorry state of American cities as well as the pitiful state of infrastructure.

I've been thinking about wasted and ruined American cities for years.

I live in a rural area and can walk to more than one working farm. My area is also home to several well known colleges. I live between two arcs of a small river. Were I to walk for three minutes to the south east, I would cross the river on a bridge built in 1952 while three miles to the north, another bridge, built in 1948, crosses the same river. Neither bridge looks like it was painted since it was built.

That's the launch. Begin.

rjb, Not all employers are in your situation; they need the credit or subsidy to add employees to their workforce that are needed.

This is true of many nonprofit social service organizations that without government subsidies for wages and benefits, it would be impossible to run their programs. This also applies to many commercial enterprises where the cost to hire new employees are prohibitive for various reasons including meeting minimum wage requirements, benefits, and payroll taxes. Many small businesses are short-handed, and the owners end up putting in 15 hour days to keep their business open.

The demand for workers are there, and we all know many are looking for jobs. The government can help improve the employment picture by providing these businesses with tax credits to hire.

More workers means more tax revenues, and more workers simply improves our economy.

corporate profits are huge, but they are refusing to hire, We have conditioned business to shop the sales....IE they wait til government freaks and offers subsidies for them to do what they need to do and would do even if government did not pay for it. Ditto for banks. This is ridiculous.

I believe we're trying to address the small businesses, and not the mega-international conglomerates, since small business are the ones who hire the most workers in our country.

In this instance, they do not have the same effect. Your employer is expected to take on and pay one full time employee. They get a tax credit for 1/2 an employee and pay the other half themselves. Net loss - half an employee's wage.

roger, Not necessarily; that half-paid employee's production can be 100% of all other employees in the company, and the net profit from that falls to the bottom line.

Ya sure

Except no one is required to take on an employee. It is an incentive for an employer that is considering but can't quite justify an employee yet. The employer doesn't lose half an employee's wage. He gains a full time employee.

And in addition to all that, some branch of the government would probably pay unemployment benefits to the worker anyway. So from America's point of view, the effect of the policy is that the government stops paying the hired workers for doing nothing, and starts paying them for contributing to the nation's GDP. Sounds good to me.

This identical argument is going on in the higher echelons of the bureaucracies. In those stratospheric regions, where it is inadvisable to venture if a life is what you want, journalists hang on like limpets to those who have penetrated above the ozone layer and they "bond". The different points of view, very similar to these on here, as well they might be in view of how the process works, are "leaked" or "briefed" and depending on which media source is consumed are the views expressed on here which have been conditioned by the Pavlovian-style reward of flattering the ego into believing it knows what's going on. Which does, of course, preclude the argument that the American worker needs to be taught a lesson in order to remain a player in global markets. Which is not very flattering and gets selected out by the readership in the usual jolly-old Charlie Darwin style. Media only does Carrot.

And yet--one of America's leading behavioural scientists, Skinner or Watson, I can't remember, said "woe betide a society that does without Stick" or words to that effect.

The scientific argument is about whether or not the American worker does need to be taught a lesson. It is happening after all. Even if the fate of some is necessary to provide a warning to others.

Government that pays people who are not earning that pay, is corrupting those people and corrupting themselves.

By reducing the tax on businesses overall rather than targeting the tax credit to specific actions of businesses, you allow the businesses to make the best choices for their businesses, rather than trying to make puppets out of businesses and control every little detail of what they do. In other words, if a business needs to upgrade their equipment rather than hire more employees, a general reduction of taxes allows them to do that, which would make far more sense than to coax them into hiring more employees when they don't need them. And the government would be able to accomplish the goals of increasing employment anyway, because buying more equipment might stimulate sales of equipment companies, thus stimulating hiring of more employees by those companies to fulfill the increased demand. And if the companies chose instead to upgrade their physical plant, it would likely lead to construction activity, which would also create jobs in that sector. Both of the latter examples I cited would be more efficient than the companies simply hiring more employees when they don't need them.

This actually brings up the subject of social engineering using the tax system, is that a good idea? The government tries to do the same thing with businesses when they use the tax system to try to control what and how businesses conduct their business, but the actual result of it may lead to unintended consequences and more inefficiencies than would otherwise occur. Taxes are an artificially controlled factor by bureaucrats that typically do not know what they are doing, while the free market is a truer environment in which businesses must operate in and be controlled by.

Can you justify bankers who sit on their butts most of the time raking in billions. They have not invented any product or process except the leveraged loan from which they rake in their loot.

talk72000, if it is so easy, then go into banking and rake in your "billions."

Do you know any bankers and what they actually do? I doubt it. You sound like an idiot.