Krugman: The Story of Our Time

The Story of Our Time –

Is the story really that simple, and would it really be that easy to end the scourge of unemployment? Yes — but powerful people don’t want to believe it. Some of them have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.

What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was. And maybe, just maybe, that sudden exposure will give us a chance to start doing something about the depression we’re in.

Reprise: Go Ahead, Raise our Taxes

Let’s just do it.  Let’s just go over the fiscal cliff slope.  

The Bush tax cuts were designed to expire in ten years. For everyone. We’ve gone two years beyond that expiration date and it has cost the country dearly.

Before anyone starts talking about cutting Social Security, or Medicare, or Medicaid, or closing loopholes or what-have-you, let’s just push the re-set button. Let all the Bush tax cuts expire. End the Payroll Tax “holiday.”  All of it. 

I posted this back in November of 2010. It is timely and bears repeating:

We’re willing to bite the bullet along with the fat cats. Seriously.

I looked at our joint tax return from last year and going back to 2001 rates would mean paying an extra $102.63 in taxes between the two of us every two weeks. Basically $50 a week. At least as best as I can figure. That appears to be the maximum we would owe.

That’s the sacrifice we are willing to make.

Sweetie and I are fortunate. When it comes to household income, we land in that upper bar. Barely. But if Sweetie were to lose his job, we’d immediately plunge down to the bar second from the bottom.

We know how to live with less, but we can’t live with nothing and we have never felt so job insecure in our lives. If either one of us were to  lose our job today, there is nothing comparable in terms of income out there for us. It’s a fact.

We’ve had ten years of Bush’s tax cuts and really, what has it gotten for the vast majority of us? Stagnant wages and job losses.  Worries that Social Security is on the chopping block. Less social safety nets. Less police and fire, less education for our kids, pot-holed roads.

If tax cuts create jobs, then why have we lost millions upon millions of them? If tax cuts generate tax revenue, then why are states and local municipalities slashing their budgets to the bone, laying off employees, requiring wage cuts, freezes, furlough days, cutting vital services, and on and on?

We can live without that extra $50.00  every week.

You guys have had your chance.

It’s not just the small business that gets hosed

I’m catching up with my email, and this post by Prairie2 is eleven days old, but it’s timeless. Go read.

The Colonel can sell cheaper if the chickens also pay the bills


Then there is the myth of low prices. The big advantage that the BBS has is that it can come into a town and sell goods cheaper than its competitors pay for them wholesale. This only lasts until competition is eliminated of course, but to make sure this always happens they dictate the wholesale price suppliers sell to “small” buyers. They do this simply by demanding that they always get the lowest wholesale price as they have “economy of scale“. Wholesalers can’t actually cut wholesale prices no matter how much you buy, but they can raise the price they charge to the small buyers. Same effect without violating the laws of physics. What did you think, it was a miracle?

Prairie2 has half the equation right, but let me tell you how everyone BUT the Big Box Chain gets screwed.

I used to work for an office supplies wholesaler.

In our case the Big Box Chains (the Big Three – you know who they are) would lock us into extended contracts that guaranteed the Big Box Chain a price list that very often got them the item at our cost or maybe just a percent or two above cost (maybe). By the way, this price list was only for the online portion of their businesses. For their brick and mortar stores they bought directly from the manufacturer. This is key to understanding the next part of the scam they run.

We supplied all stock for their online business, which meant we held it at our warehouse and shipped it out to their customers at no charge to the Big Box Chain. Got that? They got a heavily discounted price on the inventory, but we covered the costs to store it, box it, and ship it. No freight was charged to the Big Box Chain regardless of whether the customer was charged freight on their end.

How could we do that and still make a profit?

There was one more leg to the stool: Volume discounts from the manufacturer. That is, if their price to us for a box of toner was $100 and we sold over a certain number of them in a month, we got a rebate.  These programs generally ran a quarter at a time.

As long as all legs of the stool were in place, it all worked out. As the guy in the middle, however, we were really in a precarious position. First of all, the pricing negotiations with the Big Boys often took MONTHS to finalize, but they would hold us to the original price quoted them. By the time the price list was finalized, our costs often had changed (read: gone up), but we were still committed to selling it to the Big Boys at the original price quoted. In our case, our main business was inkjet and toner, which are particularly subject to the ups and downs of the cost of oil.You can see that by the time we paid the freight to ship to their individual customers, and taken it in the shorts on the cost we’d quoted to them, the only thing saving our bacon was the volume discount agreement with the manufacturer.

When the Big Name Manufacturer decided to end said program and instead extend rebates directly to the end-users, my old company was still locked in to its contract pricing with the Big Box Chains (the contracts were generally for a year). Needless to say, red ink ensued, the distribution center in Reno closed, and the only winner in this scenario was the Big Box Chain.

All the time I worked for said company and maintained all their pricing lists I never understood why we worked so hard to slit our own throats. It seemed to me that we should have been courting our small and mid-sized customers rather than chasing after the “big win,”  because Prairie’s got it right.  The mom-and-pops who were also our customers paid a quite a bit more for their merchandise.  I kept thinking that we could have told the Big Boys to go take a flying leap, offered some discounts to the smaller guys and earned their undying loyalty. Instead we chose to chase after the BMOC and lived in fear daily that he’d throw us over for a competitor.

I guess I just don’t understand business.

“If you put people on the butcher block, they’ll agree to anything,”

Even to cutting their own throats.

But, there is hope on the horizon

The 58-year-old assembler at the General Electric plant in West Burlington, Iowa, was called back to work in September.

She had been on layoff since 2007 from the non-union factory, which makes electrical switch gears for municipalities and energy-hungry factories, hospitals, and call centers. “You know how you have a fuse box in your house?” she asks. “These are like fuse boxes for a city,” the size of a refrigerator.

But the job came with new terms: a 50 percent pay cut—she’d now make $12 an hour. No health care coverage when she retired. And no chance she’d get the $5,000 bonus GE’s union workers won in last year’s national contract.

“You know what the deal is, so I don’t want to hear any complaining,” the manager at the 150-worker plant told her at orientation.

Six months later Smith is a leader in the Electrical Workers (IUE-CWA) organizing committee that’s expecting a Labor Board election in April.


Well, something’s got to give . . .

From the County Manager Report on the budget shortfall facing Lyon County, NV.

We have received correspondence, telephone calls and personal visits from our constituents asking that we not cut or eliminate services or raise taxes.

Sorry, but we can’t have it both ways.

We can’t keep vital services going and not raise revenue to pay for them. Everyone has got to be willing to pitch in a little extra to provide for those things that we can only provide collectively, or face the fact that this county is going to dry up and blow away.

“I like to pay taxes. With them I buy civilization.” ~ Oliver Wendell Holmes, Jr.

“Taxes, after all, are dues that we pay for the privileges of membership in an organized society.”  ~ Franklin Delano Roosevelt

Full report below the jump.

Continue reading

Job-Killing Tax Breaks

I don’t hire people because of tax breaks. I hire people to expand my business — and make more money. I measure the success of my business by monitoring our market share and the revenues we see month by month. I’m competitive. I love thinking of new marketing plans and tracking their success. I seek ways to cut costs so that we can build the bottom line. My goal is long-term success.

Go read it all.

Is this the proper time to say that I’ve mentioned this before?

How is giving an employer a tax credit of $4,000 going to incentivize them to hire an employee who would cost,  at minimum, $15,080 a year (assuming the rock bottom minimum of a 40-hour work week at minimum wage)?

If the company doesn’t have the business revenue to cover the $9,080 difference, why would they make the hire?

And here.

There is only one thing that motivates an employer to hire, and it isn’t lower taxes, free rent or tax credits. The only thing that will cause an employer to hire is profit potential.

No business owner on the face of this earth is going to hire a new employee unless they think it will bring them more profits than failing to hire that person will.  If not having that extra person on staff means that they will lose business that will bring in substantially MORE money than the cost of that employee, that employer will not hire. If there is no demand, there is no hire. Period.