"A word in earnest is as good as a speech"
~Charles Dickens: Bleak House

Thursday, September 22, 2011

Jobs Bill, Warren Buffet & Walmart.....Oh My!

I started writing this blog in the car on the way to work this morning, listening to my morning news (wish I had time to sit down the the paper and a coffee, but I generally pick another half hour of sleep over that). It was another interesting day of news. So, I picked three stories I would like to share.

The first is the American Jobs Act. I have not had a chance to read all the text yet and I admit I am getting most of my information at this point from President Obama's Speech and White House Fact Sheet and the news: Construction good for the economy & psyche, Boehner's Response to the Jobs Bill and so on.

So basically what I have gotten from all of this is that the President wants to pass another stimulus package (but we can't call it that anymore). But unlike the 2008 stimulus package that President Bush passed, this one actually seems well thought out and there are provisions in it that may actually stimulate the economy and start to rebuild America (I especially like section 4 of the Jobs Act which relates to states only being allowed to use American iron, steel and manufactured goods when doing public construction jobs), while investing not only in the infrastructure of the country but also the education of our children. Again, I have not read all the details, but what I have read I like. I am saddened by the fact that the Jobs bill will not pass (I know - so why am I reading it? Well, I am just a geek like that). The Republicans can't allow it to pass. If this bill passes and the economy rebounds, they have lost the White House in 2012. Starting in 2010 when Mitch McConnell stated that his top priority is to deny President Obama a second term, Washington has been at a stalemate and nothing has gotten done. But when even Republican Mayors are saying this bill may have some promise - being the party of no may just blow up in their faces.

Which leads me to my next fun fact/observation. In a news report I heard the other day it was stated that 1% of Americans make a million dollars and would fall under the proposed Buffett Rule based on the Op-ed piece that Warren Buffett sent to the New York Times. You will notice that the first link tries to explain why both Warren Buffett and President Obama are incorrect. I will admit I am not an expert on taxes and I really don't understand the difference between an effective rate, an average rate or a marginal rate; and I certainly can't understand why some people pay a 15% tax rate on some of their income and 31% on other parts of their income. But what I do find interesting is that while only 1% of the American public fall in the Buffett rule category, 46% of Congress (139 Republicans and 106 Democrats) fall into this category.

So, my question is: are the Republicans (and the Democrats who are not supporting the bill) digging in their heels because the Buffett Rule would hinder job growth (as John Boehner states) or is it because raising taxes on the wealthy hits too close to home? Is it because it is unfair to the majority of the American people, or is it unfair to the donors of their election campaigns?

So what does all this have to do with Walmart (believe it or not there is a connection). The report I heard today was about the reaction of Mayor Menino, local businesses and consumers to building a Walmart in Boston. Walmart gets a bad rap around America: Why Walmart Does Not Help the Economy, The Walmart Debate and my all time favorite the Lord Waldemart series produced by the Harry Potter Alliance. And while the lawsuits and empty main streets tell a bleak picture, I think people are missing the point. Much in the way that the American Jobs Act includes a component of "made in America," communities across the country need to invest in "made in my community." The WBUR story puts it well - why should we put money in the pockets of people who are not going to spend it in our community? Why should we "import" products from a company housed in another state when we can invest in distributors and such in our own community? And that is the basic problem with our current definition of capitalism today.

When capitalism was "invented" (for lack of a better word), businesses were owner run, which meant the owners lived in the community they served. Therefore they had a vested interest in contributing to the community - they spent their profits in the community, they invested in other businesses in the community, they created jobs in their community (if people work they spend money). The health of the community you did business in had a direct impact on your profits and so you cared. Managerial Capitalism and the resulting multinational corporations destroyed that role of business - they still seek the profit of capitalism but have lost the point that the profit is supposed to go back into the community.

Does this mean that Ford can't do business in China? No, but if a car company is going to do business in China - they should purchase parts for cars sold in China, in China and they should purchase parts for cars sold in America, in America. If Walmart is going to profit off the people of Boston, they should build up the economic stability of Boston. If we returned to the small town capitalism way of doing business we would not need the American Jobs Act. If we were the strong self-sufficient country we were prior the "greed is good" generation business would understand that they need the consumer to survive and consumers would understand that we need successful businesses to survive.

Those are my observations for today ..... until tomorrow: Good Night and Good Luck!


  1. I don't understand some of the specific points that you make in relation to the US tax system etc, Leann, but I get your overall point and agree totally. Your final two paragraphs are perceptive and well argued - especially the penultimate one.
    You say that you are not an "expert" and I know that you are a very busy lady but could I recommend a short, easy book which puts a lot of things into perspective in relation to taxation, free market economics and the globalization of economics at the expense of individual countries and the needs of ordinary people? It isn't a heavy political tract but written by an economist at our Cambridge university -Ha-Joon Chang. The book is short, not technical and whether you agree or not gives much food for thought. It is called "23 things they didn't tell you about capitalism". You can read it as a whole or dip into it - it has chapters like "What is good for General Motors is not necessarily good for America" or "Making rich people richer doesn't make the rest of us richer".
    Have a good day - we are off to Manchester for the weekend to see our daughter and family. Kate is playing in a concert tonight (cello) so we and our grand-daughters - Sophie and Ellie - will be watching mum play!

  2. Excellent - thank you! I have been looking for an easy to understand economics book. While I understand the basics - it is the intricacies of the tax code that I don't understand .... probably because I don't have enought money in the bank account to need to understand them.

    I wish your daughter the best of luck at the concert!