ldsuttonjr Loc: ShangriLa

Obama's Freeloaders Put a D**g on Economic Growth
By Michael Busler and Wendy Bidwell

Let's try to make this point as simply as possible: the President's economic policies are resulting in fewer people contributing to the economy and more contributors having to support freeloaders. This is the primary reason why, for the past five years, our annual economic growth has been in the 2% range instead of the 5% range we saw during the 1982 to 1984 recovery. Here's why:

If 100 people get together, form a society and all contribute to the economy, all working together to produce 1000 units of output, there are basically two options to divide the output. We could divide the output evenly, so that if 100 workers produce 1000 units, each worker receives 10 units. This represents an equal distribution.

In reality, this system has had only mild success and only in the short term, especially when societies are concerned with satisfying basic level needs like food, shelter and safety. Once past those needs the system fails because there is no incentive for an individual to work harder and increase her contribution, and the economy stagnates, like we see today in countries like Cuba and North Korea, and in some cases here at home.

Detroit's automobile industry is a great example of equal distribution going awry here in the United States. When describing the history of the UAW in a Wall Street Journal op ed on Saturday, John Schnapp said, "we highlighted its policy of demanding identical wages, hours and working conditions terms from all of the Detroit auto makers, regardless of their economic abilities."

Schnapp was a consultant from the firm coaching Nissan when it moved some of its operations to the states. The Japanese had to learn what you and I already know about the UAW... Those equal wages, equal conditions, and equal everything else didn't work out so well for the now boarded up bankrupt city of Detroit.

We are smart to choose a different way to compensate the 100 workers, which is theoretically how we do it in the U.S... to divide the output according to contribution, so that the greater the contribution the greater the output received (income). This provides incentive for everyone to produce more and, as a result, the economy grows.
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There is a problem though with those who, for wh**ever reason, cannot or will not contribute. Of the 100 people suppose five are unable to contribute because they mentally or physically can't. The remaining 95 people are compassionate so that they will give some of their output to those less fortunate. Now we have 95 people contributing instead of 100.

Then some individuals who have contributed little to the economy and as a result receive little output and income, decide they are better off not contributing at all and asking for the same level of output as those who cannot contribute. Another ten stop contributing. Now we have only 85 people contributing, but 100 people receiving output.

Then the current administration convinces more people to stop contributing and start pursuing their dreams, wh**ever they may be. So another ten people stop contributing. Now we have 75 people contributing instead of 100 so less output is produced.

We go from 100 to 75 by implementing initiatives like raising the minimum wage. The CBO just reported that raising the minimum wage will cost us 500,000 jobs...

The administration is pushing for a law so that, regardless of the contribution, each worker who does "work hard" should receive a minimum level of output. So it is decided that even if the value of a person's output is only two or three units, she should receive a "minimum wage" of at least five units. This again reduces what is paid to those who have actually earned it.

The small business can no longer pay some employees $8.50 and some 12.50 based on their contribution or merit... All the employees must receive at least $10.10, so the higher producing employee no longer has an incentive. More importantly, the owner will not rehire someone since he would be forced to pay the new employee $10.10.

In the end, with our example community of 100 people, 75 people produce while 100 people receive income and the economy cannot grow. Those contributing significantly are reluctant to increase their contribution, which slows the economy further. And we wonder why our GDP is 2% instead of 5%...Later this week, we'll get back to this discussion as we discuss the administration's efforts to narrow the wage gap for women. You won't want to miss this discussion...

Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Richard Stockton College.

Blake

?????? What in the hell!!!

J Anthony Loc: Connecticut

Bunk. PhD or not, you're making a lot of broad assumptions and leaving out of the equation completely the bankers who own and control the currency and credit. There could be no honest discourse about the economy until we put the monetary system itself under a microscope.

stan3186

Not that hard to understand. A simple example of redistributing the wealth. Pure socialist dogma.

son of witless

Fox keeps running the story about the hippie musician in California who eats lobster tail bought with food stamps. Typical Pelosi parasite.

stan3186

The post was not presented as a lesson in economics, but a simplistic explanation of what socialism is. For you to bring in banking, the Federal Reserve, and other factors of economics is just trying to discredit the author. I'm certain someone with a PhD in economics understands that there are many many other factors that influence economics. Your just another liberal that has to debunk anything a conservative has to say. Believe it or not, unlike Democrats, Republicans are not that easily misdirected. You need to learn your audience

pappadeux Loc: Phoenix AZ

What these poor 'freeloaders' need is a helping hand, and me being a basic person make it so simple...

Kevyn

In all of these simplistic economic models ala Atlas Shrugged there is never mention of the role or value of economic exploiters like hedge fund bankers, commodity speculators, electronic stock traders and corporate raiders who produce nothing but strip unearned wealth out of the economy. In the latter case often stripping a functional company of its asserts and deliberately putting it out of business. Surely they are far more damaging to the country than a guy sitting in the park drinking beer or a fast food worker who is a bit lazy.

lpnmajor Loc: Arkansas

Besides GDP is determined by the P in the acronym, of which the "freeloader" would have little, if any, impact on. Increased tax revenue does not affect GDP, just as a factory raising it's prices does not affect it. The actual # of "freeloaders" is unknown as the programs have not been looked at and assuming that all those receiving some sort of assistance are "freeloaders" is preposterous.

Constitutional libertarian Loc: St Croix National Scenic River Way

Yes but for every one of those corp raiders there are a million free loaders you do the math

Blake

"Obama's freeloaders"!! As long as it's the internet and blogging, people will always say a bunch of nothing. Obama has no control over businesses and corporations. The sad thing is that you know this. Why do you think unemployment was so high? Let me guess, cause Obama took office and started firing everyone. Why is the country in so much debt, what do you say because Obama is stealing all the money. You all have no ends as to what outlandish statements you all are willing to make about something that you really have NO idea about. We like to think that you are intelligent people. So when a president takes office and is faced with the most scrutiny, the most opposition than any president ever; and you wonder why it is labeled as r****m.

stan3186

The only reason it is labeled as r****m is because the liberals who have no idea what makes an economy run calls it that. If you were to actually try to learn something for a change, you might come to the conclusion that the economic policies of this administration has done nothing but make a bad situation worse. If he isn't doing it on purpose then he is absolutely ignorant. So, I give him the benefit of the doubt in that he can't be that stupid so he is doing it on purpose.

I am not about to teach an economics course on this forum so start looking stuff up and see what uncontrolled spending and huge debt can do to an economy. While your at it, look up what effects are usually resulting from increasing the minimum wage. All of these things are available on the internet on politically neutral sites.
Of course, if you are like most of the liberals on this forum, you really don't care because it has to be r****m in your world and you don't want to hear anything else.

Blake

Sounds like quite a bit information. Only one problem, it's false. So I am grateful that you won't waste both your and my time by attempting to teach something in which you only gather partial, not to mention, inaccurate information. Fact flash, the country was already in the toilet when he took office. When was the last time a president spent money on home? And what would raising minimum wage result in? Do to inflation and a rise in the cost of living ( both meaning more) companies are bringing in more revenue. Problem is the wigs at the top feel that the millions of dollars in salaries they were already making isn't enough. Companies and corporations that believe in paying their employees have never had a problem with the increase in minimum wage which is why they've already set their standards in comfortable wages. So give me some facts as to what the president has caused by his own action and not from someone else's actions in result of his.

stan3186

Raising the debt triple what it was when he took office. Lying about unemployment figures. If you want your health insurance you can keep it. He will put 4 million people to work by end of 1st term. Most t***sparent Presidency ever. Will post any laws on the .gov website for at least two weeks before signing for comment, etc. etc. etc. Now tell me what he has done and said that wasn't a lie.

Blake

State of the Union: Obama's promises kept and brokenBy Tami Luhby  @Luhby February 12, 2013: 12:22 PM ET

 

Checking on Obama's first term promises

NEW YORK (CNNMoney)

Looking for ways to lift America out of a downward economic spiral, President Obama made a lot of promises in his State of the Union addresses ... and he even kept many of them.

Obama was more successful in pushing his policy goals through Congress in the first half of his first term, when both chambers were in Democratic control. By the time he gave his first address before Congress in 2009, he had already secured the American Recovery and Reinvestment Act and put in place a program to assist homeowners facing foreclosure. By midterm, he wrestled lawmakers into approving two other landmark pieces of legislation that dominated his early addresses: health care and Wall Street reform.

After that, his track record became more checkered as the Republicans in the House blocked many of his efforts. He also failed to make much headway into some of the biggest problems facing the nation, such as entitlement reform.

Here's a look at how Obama did on some of the biggest promises of his first term.

Jobs: Job creation was a central theme running through all four of Obama's addresses to Congress. Boosting employment was at the root of many of his proposals, spanning fields such as energy, education, exports and infrastructure.

The 2009 stimulus bill sent money flowing to the clean energy and infrastructure industries, prompting hiring in those areas. It also provided a financial safety net to the states, keeping teachers, firefighters and other government workers on the job. Obama pushed for partnerships with the manufacturing industry and community colleges to prepare the next generation of American workers.

While the administration succeeded in getting a few smaller jobs bills through Congress after the Recovery Act, Obama did not get comprehensive employment legislation in the later years of his first term. And while he's placed a lot of emphasis on the revival of themanufacturing sector -- calling it in last year's speech "a blueprint for an economy that's built to last" -- the industry has lost 606,000 jobs since his first inauguration.

Still, there's no question that jobs were created on Obama's watch. The nation added 1.2 million jobs since he took office. That's even more impressive when you consider the big hole he had to dig out of: The nation started shedding positions in early 2008 and continued for more than a year into Obama's term. Employers have added 5.5 million jobs since the nadir in February 2010.

However, the economy is not creating jobs fast enough for a strong recovery to take hold. Last month, only 157,000 jobs were added.

Taxes: It took four years, but Obama got what he wanted in terms of eliminating tax cuts for the wealthiest Americans. Sort of.

Since Obama took office, he's used his State of the Union addresses to call for an end to the Bush tax cuts for the rich. He said the nation can't afford to make the tax break permanent for the wealthiest 2%, or those making more than $250,000.

On January 1, as part of the fiscal cliff deal, Congress approved raising the tax rate on individuals making more than $400,000 and couples making more than $450,000. But they are the wealthiest 0.7% of Americans, not the top 2%.

Obama also couldn't make good on a plea to keep a tax cut in place for working Americans. Working folks got four years of tax breaks under Obama, initially with the Making Work Pay credit in 2009 and 2010 and subsequently with the payroll tax cut. But their good fortune was only temporary.

 

Krugman: Focus on deficit is 'destructive'

In his 2012 speech, Obama said the "most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile." That tax hike took place in January when Congress allowed the payroll tax cut to expire. The tax break had put an additional $1,000 a year in the pocket of the average household earning $50,000 annually.

Obama's repeated calls to cut billion of dollars of taxpayer subsidies for oil companies went nowhere.

Deficit Reduction: Obama cut the deficit during his first term in office, though not quite to the extent he pledged in first address, in which he proposed to slice it in half.

The deficit was $1.5 trillion in fiscal 2009 and is projected to be $845 billion for the current fiscal year. However, that depends in part on whether the sequester cuts are enacted this year.

Non-discretionary spending was also largely frozen, as Obama promised, thanks in part to the Budget Control Act passed in 2011.

Though the president mentioned reining in entitlement spending -- particularly Medicare and Social Security -- he accomplished little in that arena. While the Affordable Care Act did cut Medicare spending, much more is needed to truly restrain health care spending, the main driver of the deficit. Congress will now square off over deeper Medicare cuts as part of the debt ceiling and sequester negotiations.

Energy: Obama stressed the importance of investing in clean energy in each of his speeches, saying that it will t***sform the economy, create jobs, protect our security and help save the planet.

The president did indeed expand the amount of clean energy being produced in the United States, keeping his 2009 promise to double the nation's supply of renewable energy in three years. And he strengthened vehicle fuel efficiency standards.

But much of his clean energy success is based on funding and tax credits that were contained in the Recovery Act. On its own, the industry is not profitable as Obama had hoped. A number of these subsidies are expiring at the end of 2013, and it's not certain that Congress will renew them.

Obama also had some big failures in the energy arena. He did not secure a comprehensive energy and climate bill, as he requested in 2010. He was also not able to put rules in place limiting carbon emissions.

"President Obama expanded clean energy supply, but he failed to create enduring clean energy demand," said Kevin Book, managing director of ClearView Energy Partners, a research firm. 

quote=stan3186]Raising the debt triple what it was when he took office. Lying about unemployment figures. If you want your health insurance you can keep it. He will put 4 million people to work by end of 1st term. Most t***sparent Presidency ever. Will post any laws on the .gov website for at least two weeks before signing for comment, etc. etc. etc. Now tell me what he has done and said that wasn't a lie.[/quote]

CNN reports: