Why are people still losing their job and why are companies reducing their work force to partime..
One of the main reasons this is happening is because of growth of governments around the world, particularly in developed countries. Governmemts have been consuming an ever-greater part of their respective GDP's. Unfortunately, though the government does provide jobs, government spending does not effectively add to GDP. With such a large amount of resources being absorbed by governments, there is less and less for private-sector financial activity.
Nowadays, most companies' largest expense is now tax, which is usually higher than payroll or other overhead. With most money going to pay taxes, there is less left to hire new workers, or pay existing workers more.
Many people don't understand the effects of taxation on the economy at-large, or how it effects them individually. As individuals many of us pay federal income tax, social security, property tax, sales tax, utitlities taxes, some have to pay state income tax, and then there are rhe numerous fees and expenses such as vehicle registration, licenses, etc.
But it doesn't end here. The taxes paid by businesses and corporations are passed directly to consumers in the form of higher prices for products. At some point the increase in cost becomes so large that consumers begin to stop buying goods. In order to stay in business, companies at this time consider moving their manufacturing/operations overseas.
I am not saying that government and taxes are a bad thing, as they are necessary parts of a safe society. But people somehow think that the intentions of those who work in government are somehow different than those who work in the private sector. As a rule, people want more. They want more money, a bigger home, and more toys. People who work in the government are no less ambitious than people who work outside of it. Government workers want more responsibility, more pay, and more benefits, and, to an extent, this is fine.
But now we find that many government workers are more highly paid than their private sector counterparts, and that the government has expanded it's role to take over and perform tasks and services which most people could do or provide for themselves.
On the surface, this doesn't sound so bad, except for a couple of things. First, the government doesn't have to compete with other service providers, which means that it can perform as badly as it likes, with no consequences. Next, money spent by the government does not produce a effective positive return on GDP.
And though governments tax us rather heavily, they have been spending spectacularly more than what they collect in revenue. This has resulted in the accumulation of spectacular debts. Here in Japan, more than 25% of the revenue collected by the government must be spent just on debt servicing costs.
To negate the effect of these debts, governments have reduced interest rates to nearly 0%, and have embarked on massive "quantitive easing" programs. These programs are purported to "add liquidity" to the markets, but in reality the goal is to devalue currency, since the amount of debt is not tied to inflation.
In the last presidential campaign there was a call by the president to have the "rich pay their fair share", or to pay more in tax in order to reduce the burden on the middle and lower classes. What wasn't mentioned is that the top 1% of wage earners in America already pay about 40% of the revenue collected in tax. The top 10% pay more than 70% of tax collected.
The top 10% employ nearly 80% of all Americans.
One basic concept which many people fail to understand is that any tax levied on the top earners is immediately passed down to the lower income classes. It is the most basic nature of economics. If my company is charged a higher tax rate, I simply raise the cost of my goods to cover the increase, just as I would do if I had to pay more for energy or materials.
Another thing people in America don't seem to understand is that the vast majority of rich in America are not Wall Street bankers, CEO's, or IT entrepreneurs. Most rich people are small business owners, and most Americans work for small businesses.
Also, most rich Americans are not blue-blooded Thurston Howell the third types. 70% of the rich in America are first-generation rich. Their money was not given to them, they worked hard, saved, took risks, or came up with an idea that people loved.
Taxes on these people affect the economy disproportionately. Whatever they pay in increased taxes ends up not being spent on their staff, equipment, or growth. For those who are not rich, it makes becoming rich more difficult, and further increases the gap between rich and poor.
In order for the economy to improve, people need to have more money. For the people to have more money, their government simply needs to take less of it.
