NationStates Jolt Archive

Perhaps the republican administration has invested in unemployment for a reason.

It is common knowledge among anyone with even a rudimentary understanding of economics that if the bush administration had honestly wanted to stimulate our economy and jobs they would have given a mssive tax cut to those with the highest marginal propensity to consume.

They did exactly the opposite, and this might be why:

If people are widely unemployed or anxious about keeping their jobs, chances of a large scale economic disruption in the form of a general strike in response to republican seizure of the presidency in contradiction with the popular vote or in response to palpable voter fraud are much lower.

That and people who're in fear of losing a job or who have been unemployed are more likely to work for a low wage, thus boosting the private sector, aka Bush's best buddies.

Bush's buddies solutions to unemployment

Manufacturing - Outsource it to the 3rd world and China
Services - Outsource it to India

teehee

A fairly well-known facet of Keynesian free-market economic policies, is that to maintain strict control on inflation (which is the main tenet of the current policies) is that there needs to be around 5% unemployment, to keep wage inflation under check.
With unemployment at this level, there is enough slack in case there's an unexpected pick-up, and there's enough people looking for work to keep the low wages so low (either through people accepting to work for less or being bullied into doing so with the threat of easily being replaced).
Above 5% unemployment, this means the economy is underperforming. Less and there's danger of inflation (through the leverage of not enough workers to fill the vacancies pushing wages higher).
Of course what's happening now has been an increase of illegal immigrants working for a pittance, which helps keep wages low.

Bush's buddies solutions to unemployment

Manufacturing - Outsource it to the 3rd world and China
Services - Outsource it to India
That helps, yeah.

The tax breaks "for the rich" in reality is tax breaks for the corporations. The idea has been used even before the World Wars, it is supposed to assist companies so they have no need to lay off workers.

American companies in 3rd world countries are competing in the Global Economy, as not all corporation in America provide for just the American citizen.

The Free Trade Act incorporated during the Clinton era opened doors for several of America's largest corporations (mostly pharmaceutical companies) to move into Mexico for cheap labor, no insurance costs, and free from taxations.