Where is the US economy headed?

Good afternoon, Georgeob. You and I differ on stuff, but I look forward to your posts. You invest some effort in composing a thoughtful response. That is somewhat rare here.
What caught my eye in your most recent post - which I assume you wrote vs cut and paste - were these phrases regarding labor unions:
> the intransigence of labor unions
> the need to free our labor markets from the the asinine constraints of self-serving unions
> the current administration is in the grip of paymasters in organized labor.
I am paraphrasing of course, but you lay the blame for at least a part of our economic difficulty on the doorstep of unions.
I think that you are falling into the trap of finding labor unions to be a convenient whipping boy.
I googled in "% U.S. Labor force union members"
I cribbed stuff from various sites, mostly governmental. I would like a peer review of this:
> 14.7 million americans belong to unions which works out to 12% of the working population
> 7.6 million are in the public sector while 7.1 million are in the private sector
> 7% of the private sector employees belong to unions
> 36% of the public sector employees belong to unions
> The median pay for union members is $917/week vs $717/week for non-union members. I didn't find out anything about benefits.
> In 1983, union membership was 20% - 8 points higher then now.

Would you agree that that data is accurate? That would be a start.
Thank you.

Walter
I haven't found Bachman's speech, but I did find an article about the NH event.
She reportedly said that she, as a child, asked what her mother had done to prevent/protest the Holocaust.
Now, Bachmann sees the next generation of Americans asking their parents a similar question: what did you do to prevent/protest tax increases on the wealthy.

It is hard to believe that this woman went to law school.

Its hard to believe she went to grade school.

Here is some of my thoughts about a wrong headed and ignorant policy desire by the administration, as an example of many that they have. I have heard that they want to eliminate so-called "tax breaks" for the evil oil companies, which I believe includes something called the "depletion allowance. Of course this fits the Democrats template and plays well to the population that view oil companies as rapists of nature and profiteers upon the backs of Americans rolling in and out of gasoline stations paying dollars per gallon of gas. They visualize fat executives sitting around big desks and conference tables smoking their big cigars and living it up.

There are several things about this that should be pointed out. First of all, Tax breaks are there for a reason, and in the case of the depletion allowance, it is a perfectly fair policy based upon the fact that oil companies must spend huge sums of money to explore for, drill for, and prove out oil and gas reserves in the ground. It is akin to any company spending large sums of money to develop an asset, such as inventory in their warehouse that can be sold, or to build plants and factories to produce goods. Just as it is perfectly fair for companies to depreciate their assets and receive credit on their taxes over time, it is perfectly fair for oil companies to be able to the very same thing in the industry they are involved in.

If they are unable to do that, their business will suffer and they will have to look for other ways to take up the slack. Therefore, the elimination of tax breaks like the depletion allowance will surely lead to decreased investment in leases exploration and development, which will in turn lead to decreased production and decreased profits, thus lowering the return of royalties to landowners, including the government, example offshore leasing. This is not the worst. It will probably lead to more layoffs and less job production in the energy sector, as well as increase pressure for more imports, balance of trade, and increased energy and oil and gas prices.

I cite this because this is just one of many examples that can be observed.

One of the visions in the mind of Democrats is that oil companies are huge, rich, and making billions. What they do not adequately understand is that bringing oil and gas products to the market is a monstrous job that can only be done by mega companies with mega bucks to do it. Small companies would simply be unable to find, produce, transport, refine, and market the products as they are now done. Big jobs require big operations to accomplish.

The other part to this subject is the fact that the government takes or confiscates in tax about 50 cents per gallon from a gallon of gasoline, all without doing one thing to produce, refine, transport, or market that gasoline. A quick check finds that over 100 billion gallons of gasoline are sold in this country each year, which generates tens of billions for the governments without doing anything really crucial to produce that commodity. I think it might be close to 200 million dollars per day in taxes that are generated for government.

Anyway, these are a few of my thoughts this evening about why we need a president and an administration that appreciate the ingenuity and productivity of private enterprise, and that would encourage it, instead of finding ways to pour more cold water onto the people, thats us, and our productivity.

Another suggestion for folks that have it in for energy companies, if you think they are so prosperous, go buy some of their stock and enjoy part of their success.

okie says:So you're saying WalMart should get a depletion allowance when they sell something in their warehouse because now they have something less to sell? That strikes me as sheer loopiness.

I seriously doubt Nigeria, say, pays the companies that drill oil there a depletion allowance, yet those companies seem to make themselves a tidy profit.

And yes, the oil companies do make themselves fat multi billion dollar profits even after they pay for all that expensive research and drilling and refining you so commiserate with them about.

You might also take note of the fact, okie, that in the nineties, the major oil companies, concerned that they weren't making enough profit because there were too many independent refineries which were actually competing with them with the effect of lowering prices for refined oilm bought up most of those independent refineries and shut them down, and shut down some of their own, as well, with the natural effect of riging prices for refined oil, and increased profits for themselves. So much for free enterprise. I haven't seen any conservative outrage against that, or the often lobserved fact that the last thing most "free enterprise" wants is actual free enterprise--they want the system rigged to favor themselves, which is why they lobby Republicans endlessly with huge amounts of money. Newt Gingrich's invitation to companies to come in and write the bills themselves which would regulate them, for Congress to pass, springs to mind.

This proves that you along with many people do not understand business, MJ. Absolutely, they do receive a credit similar to a depletion allowance. I know this because I have been involved in a business, far smaller than Walmart, but the same principle applies At the end of each tax year, the value of inventory is essentially treated as an asset or money in inventory instead of in a bank. If you have ever filled out a Form 1040 Schedule C, you would know this. I am not an acountant, but I have learned this simply by experience, talking tith accountants, reading, working for a big corporaration, and owning my own business. Of course corporations do not use Form 1040 Scedule C's as individuals do, but the same principle would apply. If you doubt it, ask an informed accountant.

There are other examples of depreciation of assets besides inventory, which I hope you surely would know, including buildings, manufacturing plants, vehicles, and other equipment used for a business. They lose value after their initial investment, by being used up, worn out, or antiquated. An oil field will do the same, with declining production, lowered reserves, and ability to produce.

okie, Your admission that you are not an accountant shows your ignorance about depletion allowance.

From IRS.gov.

I'm going to repeat again: this is a bullshit argument. For he major fact that the depletion credit allows companies to write off more than they invested in the oil field in the first place. That's a subsidy, no matter how you frame it.



Totally false. What will happen is that the level of profits will go down slightly. It will cause no decreased investment whatsoever, because these companies will still be amazingly profitable.

This is nothing more than a Slippery Slope argument based on a faulty premise.

Cycloptichorn

I think that we are headed in the same direction as the Roman empire!

I do have a question for you all! Why don't we elect those who study these issues as a science so that we can evolve past this barbarian state of government?

Some of you seem to be correct in your answers of how some of this works but it is comparable to a mechanic having the correct answer to repair a model A car. Even though you can make the model A car purr like a sewing machine it is still a model A car and you can only do so much with it.

I think that we have some very bright people in the US but they are teaching or sharing info rather than leading us.

We could be flying by now if we could realize that there are better ways than those that are politically engineered.

What is wrong with political science and social engineering? Have you studied either or do you just go with your emotions of what you have been told?

We all should demand that science should be used to explore a better way forward for our society.

It appears that this video is true but it does not show what a evolved state of government would look like! It only shows what many of you were taught or think of how a ideal government should be formed.

http://www.youtube.com/watch?v=AVsjZBy7hww&feature=related

I'm not sure what you're trying to say.

You misunderstand the retail situation. Inventory cannot be taken as an expense when it is purchased. It is expensed (not depreciated) when it is sold. It's the old case of revenues minus expenses equaling income, and income is what is taxed. It's exactly the same as deducting rent and payroll. They are all legitimate expenses.

Depreciation of assets is equally valid. I am not familiar with oilfield depreciation. It may have features that depart from the treatment of conventional assets. If I find out it's the same, I'll be sure to let you know. You might check with farmerman on this. He wrote something on the subject, but I haven't studied the subject.

What I am trying to say is that this form of government that we have now will eventual fall as the Roman empire did if we are not able to do better. { In my opinion}

I think that what will happen is that we will end up with a even more sick {More prisoners and people with mental illness} society than what we do now!

I think that after a while there will be no way to manipulate our system to expect anything less!

Monterey Jack is making a point.

No, not really.

Thank you for bringing that to my attention as I do seem to miss a lot at times!

Monterey Jack made a very good point!

So was I. My point is that it is hard to make a good analogy from a misconception.

You wrote,

I still don't know what you mean.

You know, sometimes you just have to shake your head and get on with life.

Yes your point does seem to be correct in my opinion!


This does not seem to be quite correct!