Well, it seems that preliminary speaking, the sales boost that retailers where expecting and hoping for the holiday season occurred...just not as high as they hoped. Today, the public went out to return items, take advantage of sales, and use those gift cards they all received today. However, despite these extra few days of moolah coming in, it doesn't seem it will have the overall boost they wanted, and probably by extension the Bush Administration wanted. I am sure right now they are going "We cut taxes!!!" that should have fixed everything, but of course it didn't.
I wish fixing this lagging economy was as simple as cutting taxes. It would be nice. Simple solutions for complicated problems are always a great thing. However, most people tend to realize that if four straight years of plan A isn't resulting in the expected growth, maybe its time for plan B. But why did plan A, cutting taxes for everyone, but especially the rich not work? Pretty simple really, its called greed for the rich and no change in disposable income for the rest.
Now don't get me wrong, just like they say in the movie Wall Street, "Greed is good." I do believe that. It can be a good thing. However, to much of anything, including greed, can be a bad thing. To much greed leads to Enron disasters. To much greed leads to the virtual monopolies that oil, cable, gas, etc currently enjoy. We call them cartels right now, but really they are monopolies for their is no real competition. The corner stone of the western economy is competition which doesn't exist in those and many other areas.
Greed is the reason why the free enterprise economy works and other economic theories don't. Communism assumes people are willing to sacrifice for the whole, basically that greed doesn't exist at all as part of the human condition. Of course it does and communism belief that they can end it is why it will always fail. Socialism assumes the same but tries to control the greed. Again, it can't be totally controlled. Trickle Down economics, a favorite of the republicans, also assumes greed is not a factor. They just assume someone will spend that dollar as it trickles down, it doesn't occur to them that someone would just keep it rather then spend it. Free enterprise though actually harnesses greed. Uses it to the wholes advantage. The problem of course is that it can't account for a level of greed so strong it damages the whole. Thus the need for government regulation.
The whole point of the tax cuts for the rich is the assumption that they use the money saves to re-invest in their companies and by extension their people. Its assumes that greed would not be a factor. They could use the tax savings by expanding, therefore hiring new people, therefore growing the economy cause they new people now have more money to spend. That's the theory anyway. The problem though is twofold. One, the tax cuts help the bottom line, guarantees that the higher ups get their bonuses, but doesn't nothing to encourage expanding or re-investing in a company. Profits do that not tax cuts. The problem then leads to how profits grow...which is people buying the product. However, currently no one has the high level of disposable income to buy the products that encourage a company to grow that then encourages the company to hire, give raises, etc which then leads to more disposal income which leads to...well you get the idea. In other words, why should the company use the tax cuts to expand when their is no demand from consumers to meet that demand? What is happening then is the rich get their bonuses and not much else. The cycle has been disrupted so the growth has been too.
Excess greed is part of the problem. Part of the disruption. Companies now treat their people as disposable. Benefits get cuts, raises and bonuses have all but disappeared. Job security? A myth your parents tell you about. All this leads to the one thing a powerful economy doesn't want...careful spending. People buy what they need rather then what they want. They don't buy the big ticket items in volume either such as a house, car, that plasma tv, boat, etc. Those are long term costs that can only be made if assume long term job security. These are also things that build and grow an economy.
Again the assumption is that the tax cuts will fix what ails the average person. Give them a little cut, they have more money, thus will buy more. The problem is once again an issue of motivation. With companies, they have no motivation to grow, no demand to do so. With the average person, the tax cuts are such they don't build a sense of security and they don't increase spending. Supposedly the average middle-class family has had a tax cut for the last four years. Have you noticed it on your paychecks? I know I haven't. I think its there but its not like I go "Yes! Five bucks off my taxes, I can buy that car!". Simply put the cut isn't enough to influence spending habits.
The solution for the economy then is not easy but the goal is. Figure out ways to increase the disposable income of the average American. Devise ways that encourage companies to invest in their existing workforce rather then investing it overseas. Encourage companies to expand the skills and knowledge of their works. Encourage job security. Do whatever it takes to so that people feel they have the security to buy and buy and buy. That grows the economy. That is why the bubble of the late 1990s was so successful and it can be found again.
Tax cuts might be apart of the answer but they are not the only answer. More solutions need to be tried. More needs to be done. This administration doesn't have the care or the concern to do that. Their idea of helping is to basically make bankruptcy an exercise in futility. To waste billions of dollars on interest to loans that pays the tax cuts for the rich. To ignore problems. This country has lost its world-power status. It can find it again. We just need leaders that understand that rather then kow tow to the damaging greed of companies, they need to harness the greed of its citizens.
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