Joe the magic Plumber, your average Joe or a campaign surrogate?

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Hello? Did you NOT notice that the government is handing over $700 billion to save AIG? TALK about sharing the wealth. Obama is appearantly not the only "socialist" around these days....

 

A Societal problem that will likely not change no matter the result of the election. But the idea that Obama wants to take from the rich and give to the poor might just turn some of the rich over to McCain's side. And that might mean that they use their money to buy whatever influence they can...

And your Democrats have lost to George W. not once but twice. Forgive me if I don't believe that Obama has a chance in hell at winning. With the economic crisis, the companies that provide jobs will prefer a candidate that is more likely to play ball. That traditionally been the Republican candidate...

Actually I call that a panic move. Maybe some of these institutions should go belly up. It would drive down interest rates and real estate values, hopefully making home ownership available to working people a reality instead of the botched debacle we have now...

 

Companies don't provide jobs - the market does....

And that's why Warren Buffet supports Obama? Obama wants to cut taxes on for the middle-classes - you know, the really large class of Americans you failed to mention in your post.

GWB may have won in 2004, but his approval rating at the moment is 25 percent, and over 90 percent believe that the country is going in the wrong direction. Doesn't say much for the Republican government. As for GWB, his own party has disowned him, and even I feel sorry for the way he is being treated by his former supporters (what nice bunch they are).

Gnarff - Obama voted for the 700 billion dollar bail-out of Wall Street - That IS "sharing the wealth."

 

But Companies sign the paychecks. In the Manufacturing sector especially, companies can, with enough financing, go where they get the best deal, between labour costs, local taxes and what have you. In down times, other areas may sweeten the pot to get or keep jobs in their area. I've seen it in Canada. When the dollar got over a certain point, it was plants in Canada that started to suffer first. The market doesn't necessarily determine where the jobs go...

That means that the Democrats must have really sucked in 2004. Further, George W is not running again. John McCain is not George W. I worry about the Democrats that try to sell that bill of goods.

They're politicians, what would you expect? And don't think your beloved Democrats are any better. If McCain wins the presidency, they'll carve Obama real quick after that...

Yeah, Share the wealth with the people that already have the money. The problem is that they've been irresponsible and greedy with it and are losing what they had. The banks have been the problem here. They are the ones that escalated the cost of homes, pricing home ownership out of the range of the working people. And now that they have to pay the piper, they threaten to pull the plug on Credit (which may not be a bad thing in the long run) if they don't get tax payer money to cover these bad debts.

The Government has panicked. They handed over a $700 billion tribute payment to a greedy, irresponsible entity that believes that they have the country by the balls.

 

They may sign them, but it's the customers and investors of those companies who pay them.

The US has become less of a manufacturing and more of a service work force. The manufacturing jobs are lost in some places at great cost to the local economies. But in other parts of the country, the service industries have been growing. The best way to escape the outsourcing of jobs is to constantly reinvent yourself. The notion that anyone will work at one job, for one company is no longer a reality for the most part. You have to be market savvy. Besides, a lot of the work that is outsourced is work that most people don't want.

For instance, I used to sell computers, which required me to be plugged into the tech/service side of the business for my customers. In the early 90's a lot of tech support was done here in the US for Compaq, HP, etc. But the centers were not owned by the manufacturers. I worked close to a tech center and saw support reps regularly. They hated their jobs - those jobs paid next to nothing, required long hours, and the reps were ill-treated. No one shed a lot of tears when those jobs were outsourced to the East. The manufacturing jobs were a little different.

For instance, the Compaq campus employed thousands of assembly line workers, which supported the local area - stores, specialty shops, restaurants, etc. Many of them went out of business once Compaq moved most of its manufacturing to the East (and was later taken over by HP). That area of North Houston has since recovered, but it has taken years. It's not that Compaq wanted to move its manufacturing operations; it is because the market dictated that movement - a declining market for PCs (market saturation) and thin profit margins controlled events more so than anything else. You can rant about taxes, but that's only a very small part of the equation. The market is "king."

 

But the companies are the buyers of labour. They go somewhere else, then they are demanding labour in a different, likely cheaper market. That means that the jobs leave the area.

But are the service jobs increasing as fast as the manufacuring jobs are decrasing? We already know that most of these service jobs pay less than the Manufacturing jobs, so the impact is felt across the economy. This is likely contributing to the problem at hand.

That may work for the individual, but for a whole nation, it's much harder to acomplish.

I'm not always sure about that. Some factories close and move somewhere cheaper, and you find that the people that lose their jobs actually wanted to keep their jobs...

And if the demand for labour drops, the middle class that Obama says the country is carried by will shrink, leaving more poor people that need to be carried. What will the Democrats do to keep these jobs in the US?

 

Gnarff - Please take the time to read my post before you comment on what I've written.

That WAS my comment regarding service versus manufacturing: Read the line "manufacturing" is a "little different."

Hello? Hence my comment about the service side of the PC business. Read the part of my post regarding tech support service which says essentially what you just restated. My point was that the manufacturing jobs were missed more than the service jobs, specifically regarding service and support. This is where having actually worked in a industry pays off, rather than just commenting in some generalized manner without any experience.

Gnarff - I have no idea what kind of work experience you have but I've worked for some very large, Fortune 500 companies, and it is a matter of course, from the top down that customers are the ones who pay the bills. Public and private investing in corporate stock is another, but that's a broad spectrum of all kinds of people who own stock in publicly held companies; in smaller companies, private investment is also a key to growth, which may be closer to what you are trying to address in your posts.

Look, it's really simple: when there is a demand for a product or service, companies hire people to provide the products and services; they don't hire people just to "buy labor." In fact, most compaines are always trying to find ways to not buy labor, even against demand. That almost always never works in the long term, but it is good for short-term balance sheets, which pleases Wall Street. One of the things you hear complaints about in large companies is that the short term movement of the company stock affects the long-term growth and customer goals of a coporate customer strategy. Sometimes they work in opposite agendas. If you don't have enough labor to provide the R&D, produce the quality products and provide the sales and service for your customers, guess what they do? They go somewhere else. Guess what that means? No one in the company gets paid.

I can only tell you what most successful people are doing. They don't think of themselves as employees, but independent business people, or contractors. For a lot of people who work in a particular business the only thing different from company to company, is the sign they put out front.

I did want to come back to that, and it ties into the comment I made about being your own business person: A lot of those laid-off workers, who worked the lines at Compaq manufacturing, went into some good service jobs; networking services, computer repair, working in internet stations, working computer help desks in both the private and govenment sectors. In fact, some of them opened their own small businesses providing general computer services of all types. Some of them have done very well, and that is what I'm referring to about being able to reinvent yourself in this kind of market. You have to use your head and be able to think outside the box.

 

And from teh points I've made, it's a lot different.

But how many auto workers are qualified to be mechanics? And just how many mechanics do you need? A Friend of mine worked at a factory for 22 years making rims. Eventually the layoffs got so far that he was now unemployed. Because he spent 22 years on the job, his actual work experience was limited, despite that he would help with home renovations as well as a few callings at Church. He was over a year getting regular work again--and he was one of the lucky ones.

So if I went to buy a computer from Compaq, I just make the cheque out to one of the guys on the line? No. I pay the store, the store pays the company, the company pays the worker. It's called the flow of money. Once the company has the money, it's their discretion how they spend it--like wages to keep workers employed producing goods and services. They are free to spend that money to buy labour wherever they can get the best deal...

They buy labour not just to buy labour, but to produce goods and provide services. The need for goods and services determines how much labour they need to buy. They are always trying to reduce the cost of labour, through reducing the need for jobs or moving the jobs to production facilities where they can get cheaper costs or more tax breaks.

That's because they cut costs by not putting money into the economy where they try to get money out of. Eventually, that money dries up, and there is no more money to draw from that market.

If a business is poorly managed, of course it's going to fail (except banks apparently). That's part of the economy.

But some industries that only goes so far. With more and more manufacturing jobs leaving, the people that had those jobs can't just snap their fingers and get more jobs. Eventually, it leads to the scenario you described, where the companies are not getting money coming in...

But that doesn't translate to the automotive industry. How many automoptive workers are qualified to be mechanics or Car Salesmen? And just how many of those do you actually need? The skills that are most prevalent in the previous job are only really useful in a dissappearing industry. That's what's happening in my area. More and more automotive jobs are leaving and those workers are not in a position to re-invent themselves...

 

Explain just how your comments are different.

THAT's what I mean about "reinventing" yourself. Try thinking this through, rather than just a typical knee-jerk reaction.

Not really. You need a basic understanding of how modern business works. You CAN buy from Compaq direct and not have to pay a store to get a computer. That is one way that businesses save money, is buy selling direct. Again, try thinking outside the box.

[QUOTEI just make the cheque out to one of the guys on the line?][/QUOTE]

I'll let you in on a secret. The guys on the line are customers as well. They are considered to be "internal customers" by the companies that employee them. Customers are a source of revenue (that means how a company makes money).

Even though you keep restating what I said, I'm glad you get at that part of it. Your only error is that companies are not "free" to spend the money at their discretion, not completely. There's a little thing called overhead. That means paying your bills. Most companies purchase by POs. That means that before they tally their income as profit, they pay their bills, which typically have a 90 day lead time on most POs.

No, sorry. That's not how it works at all. Let's say a store like Circuit City (one of many stores I've worked for) wants to sell a particular model Compaq computer. They place an order on a production run, say 5000 units. Usually, big box stores buy in very high volumes, which gives them greater buying power. Circuit may or may not have the order filled, depending on the commitment that Compaq has made to all its customers. But let's say the order gets filled. Circuit now owns the inventory. As the end user, YOU buy from the store, which then pays its employees (like me) for selling it to you.

But the "guys" on the line (who probably live in Malaysia) have already been paid, as have the engineers who may live in Scotland (if it's a notebook) or engineers at the main campus here in Houston. Since, you read my post, you know that the actual manufacturing is not done here any longer, but has been outsourced to the East. However, Circuit still makes money, as do the salemen (guys like me) and the guys who work on the loading dock and loaded it into the end user's car. And guess what? Say the computers go to a new business; maybe a real estate business needs three new computers for a new office, which is opening up in North Houston, but the computers need to be setup and networked by a tech. Remember those ex-line workers, who have had the smarts to reinvent themselves? You guessed it - they are about to make some income off of that sale of those Compaq computers as well. That's called the market. And it works very well.

Btw, there's no charge for the lessons I'm giving you in business 101. If you ever are employeed in a large company, you will be that much further ahead, Gnarff.

 

Back on topic...

Epiphany. It just occurred to me that Joe the Plummer has done more televised interviews than Sarah Palin has since she's been the Veep nom. Discuss. Well, cry...then discuss.

 

Again, that only applies to the Computer industry. But with the automotive industry involves a lot of factories taht make each part that goes on a car. A factory that creates mufflers offers little opportunity to re-invent yourself, and even fewer positions to move on to when the company shuts down.

And back to our Joe the Plumber, he's been working as a plumber for years, but when the job no longer exists (he's not getting fired, he's getting downsized), he won't be able to move right into another position like the one he held. It is this demographic that Joe speaks for--the ones that have jobs now, but aren't sure they will have those jobs. If these people have more confidence in McCain to protect those jobs, then they will have to choose between being in the middle class or being unemployed and watching what's left of the middle class enjoy tax breaks. That's the problem that Obama has to answer. And if I remember correctly, he did a poor job of it.

Simple, Unlike Joe the Plumber, Sarah Palin is trying to get 4 years of work for her 15 minutes of fame. She's got campaign stops, rallies, Saturday Night Live...

Joe the Plumber does the interviews then after the election, it's off to the unemployment line...

 

Gnarff, I wouldn't use Joe the Plumber as an example. He's been working illegally and uncertified for years. Further, the idea that a business would need to fire someone over a 3% tax increase is a little wanting. When all is said and done, the government taxes profit. Higher taxes don't make profit go down, so higher taxes won't cost Joe his job. Working unlicensed, on the other hand, probably will.

 

That couldn't be more incorrect.

Let's assume a business owner makes 250K profit before taxes. At a 36% tax rate that means he owes 90K in taxes so his after tax profit is now 160K. If the tax rate goes up to 39% the tax is now 97.5K and his after tax profit is now 152.5K.

Now what is the ramification of that additional $7,500 of taxes that Mr. Obama will saddle this business owner. Now if he is a follower of Joe Biden and therefore believes that "Paying more taxes is patriotic" then he accepts the reduction in his bank account and does nothing else.

However, most people don't live in Biden's fantasy land. The loss of this money will have ramifications. Common sense says that Mr. business owner will do something to recoup that money as he has no interest in having his lifestyle change. Therefore, someone is going to get hurt. Maybe Joe doesn't get a raise. Maybe the business cuts back on expenses, which hurts the revenue streams of other businesses. The possibilities are endless, but the one sure thing is that Mr. Business Owner isn't going to bear the full amount of the increased taxes, it will be others that will be helping him.

To put it another way. If everyone who had a job was told by their boss that their take home pay was going to be reduced by 3%, that would cause serious changes. Not as much going out to eat, maybe a vacation doesn't get taken, no new car, etc. All of these things have ripple effects on other businesses and therefore other people, besides who they were intended to effect.

Playing class warfare and pretending to "stick it" to the rich guy is foolish and I seriously doubt it ever works.

 

Maybe it is because you live in Canada, and may be unaware of politics here, that is causing you to make such a glaring error. It is not correct that more people have "confidence" in McCain regarding the economy. In fact, that is Mac's percieved weakness here by many. When you say "that's the problem Obama has to answer," I'm not sure where you are getting your info from.

It's Mac who has appears to have the "economic" problem.

Source: http://blogs.abcnews.com/thenumbers/2008/10/the-economy-and.html

TGS - My understanding is that Obama's tax increase is only on the amount over 250K, not the entire amount. So say the plumber makes 260K, the increase is only on the 10K, not 260K from where it would be atm.

 

You can change the figures however you want, it still doesn't change the way the world works. Raising taxes on the "so called rich" causes pain and suffering to the non-rich. Lowering taxes on the rich gives them more money to spend and that enhances the non-rich.

For the record I'm not talking about Bill Gates. To people like that money is a game not a real thing. However to someone making 400K a year it makes a difference. Assuming what you say is true that would mean 3% on the 150K excess or $4,500. You have to remember, someone who makes 400K a year has the house, cars, and expenses of someone who makes 400K a year. I guarantee you they will make their money back. In my previous post I neglected to mention that another way they will get their money back is to raise prices. I'm sure all the people who live in apartments will thank Obama later when their rents go up, or course nobody will tell them that though.

 

TGS, what you claim as certainty is, actually, a very contested theory. I have seen similar views spread by proponents of the trickle-down theory, but despite its popularity (arguably more among pundits than among economists) it has seen its share of, shall we say, uncooperative reality. Yet how about another idea - that giving to, or allowing more money to remain in the hands of, the lower/middle class allows it to purchase and develop more, thus benefiting the economy as well*. The difference is that it would improve the consumption of another kinds of goods - more varied foodstuffs and household goods, better quality of services such as education, etc, rather than luxury goods. I'd say that a better-off lower and middle class can boost the economy much better than a better-off elite; at the very least they are more likely to patronize, thus help, local establishments and thus create more jobs in their own region.

As far as I know, in the years between the 30's and the 80's - and during some of the 90's - the taxation was relatively more favorable towards the lower/middle class. Hardly a time of unmitigated economic disaster for the USA, I think. Actually, I'd say empirical data is often unkind to your claims - many low-income countries have (relatively) very good conditions for the rich and priviledged. Conversely, many countries that have heavy (progressive) taxes also have their share of strong business. Finland has its Nokia, Sweden its Ericson, Scania and Electrolux. Mexico has one of the lowest levels of business taxation - yet I doubt there are many people in the US who would prefer to live south of the border (actually, I'd say there are more who'd want to move north).

In short, the world works in complex ways, but the view you showed above is imo wrong just as often as not.

*Yes, I think we have all heard a lot of anecdotes welfare money put to waste, inefficient government programs, etc, etc. However, it must be noted that both approaches will have a certain amount of waste. If you can prove that Enron-style corporate scum form a smaller percentage of their stratum than "welfare queens" of theirs, or waste a smaller percentage of the tax revenue forfeited by the state on them, be my guest.

 

Really? We've had a progressive tax for years. THAT's been the way the world works. Fortunately for tax accountants - and that helps keep them employed - there are all kinds of deductions and loopholes to help out the rich, so that they can still keep a large portion of their incomes.

The way Obama explained it to the Republican "plumber" is what many of us have been arguing for years, especially those of us who have worked in business. When you cut taxes on the middle-classes they have more of their income to invest and spend. That means that people will go out, to say, Lowe's or Home Depot and buy some new plumbling fixtures. Many of them will not intall those fixtures themselves, unless they like to inflect self-pain, (I hate working on anything plumbing related), will hire a company like the one Joe works in to install their new fixtures. That is how the extra 3 percent is made back again by the plumbing business - an increase in the customer base (which is what Obama tried to explain to the guy). That's how an economy grows, because not only does that help the plumbing business, but also the retial store that sold the fixtures and the company that manufactured the fixtures as well - and the shipping company that shipped the product, and the manufacturer that produced the carton that it was shipped in -- you get the picture.

Upgrading homes (home improvement) is generally a hot market in a good economy. Many people with older homes like to remodel and upgrade. Have you seen all those home improvement shows on cable? If I were to go back into sales, that's where I would be right now, since many people are upgrading their homes rather than selling them, with the housing market what it is. Joe's company could be well-positioned if Obama wins and cuts taxes on the middle-classes, like he says he will

 

I was under the impression that his boss was looking to retire. He would then have to buy the business and get the liscence in order to keep a job. He believed that Obama's policies might not enable him to do this.

That's exactly the concern. Will these cutbacks shrink the middle class?

Okay, I admit it. Within a month of the election and for the next three and a half years I won't remember which party uses the elephant and which one uses the Donkey because they both act like jackasses. But this isn't politics, it's economics. You increase the burden on a corporation, they will try to sluff that burden off on someone else. That means that the increased tax burden will pass on to the middle class that Obama wants to help, either in the form of lost jobs or in terms of increased prices which threaten to negate the value of the tax breaks that the middle class would get.

The question is simple: What will Obama do to protect the jobs that people have? A three percent tax break won't mean much when you lose your job...

And I don't think either party will have any impact on the situation. This is paying the piper for things that corporate waste and political ass kissing bought. I don't think either candidate is capable of fixing the problem in a four year term.

But how is that supposed to offset the 3% break that the much larger middle class is getting? That makes even less sense...

But that will only work as long as these people get to keep their jobs. Perhaps a federal sales tax (like the GST here in Canada, I don't believe that I'm advocating that) might be a more appropriate way of leeching off the required money from the economy. It taxes consumption of goods (perhaps a lower rate for necessities, but a higher rate for luxuries), not income. The Rich will still pay more tax than the poor/middle class, but it doesn't take money out of the pockets of the rich because they are rich.

So the guys that Obama wants to tax more will find ways to weasel out of it? How wil he afford the tax breaks for the middle class?

Assuming that they still have jobs and that price increases don't eat up the majority of that tax break.

But you forget that the Economy was sitting in the port-o-potty when it got knocked over. Where is the financing to improve the home improvements? Until there is confidence in the economy, that growth is not going to happen. And again, I don't see either candidate righting the ship in a four year term.

Remember that Joe the Plumber expects his boss to retire, and does not expect to be able to retain his job as a plumber to capitalize on what you say is going to happen.

 

That makes absolutely no sense. Cutting taxes for the middle-class will not "shrink it" but will give it more income, cause it to grow.

I'd heard that his business was far less than the 250K income. That means that it would be easier for Joe to buy his boss's business since he would quailfy for a tax decrease.

It depends on the corporation. Some of them benefit greatly from government expansion - coporate welfare - whether through government contracts (like defense) or entitlement programs - like the drug companies.

But that's not really the issue. Why do you think some of the most successful businessmen support Obama, like Warren Buffett, Steve Jobs and Bill Gates? There are corporations that do well in a high-growth economy. Corporations that take a defensive postition would be hurt by a tax increase, because they are not taking care of their businesses by growing their customer bases. Successful business is all about growth and that means taking care of your customers and managing expenses. Taxes are a small piece of the expense part of the business, but material and labor costs are far greater. Here's the part you don't get, but it's what every successful business does, when you let the average person keep more of his income, he has more to spend - that's how a business grows, by an increase in customer spending.

Why do you think business spends billions of dollars every year for advertising? Or that there are electronic counters that count how many people walk through the doors of businesses everyday? They measure that count against their average ticket sales. That tells them not only how many people come into a business but how much of their income they are willing to spend there - and they can compute that out over the lifetime of an average consumer.

Gnarff - You want to talk economics? Fine. Most who work in business know that this is a consumer driven economy. Why do you think businesses watch the Consumer Confidence Index so closely? Your ideas about an economy went out with the Industrial Revolution - those ideas are not about a high-growth economy, but an attempt at holding on to a market position. In business you don't want to hold your postition, you want to gain market share and increase income by managing your profit margins and expenses - and by taking care of your customers. Go ahead and make a dumb business decision like trying to "sluff" off a small expense like a minimal tax increase onto your customers. See where that gets you - less market share, that's what - which will probably mean less income.

In the 90s the Republican Party was all about cutting taxes for the middle-class. They said two things: Let the average person keep more of his income, and he will spend it (WHICH WILL CREATE JOBS). Second, it will give him more incentive to be more productive. I not sure what has happened to the "old" Republican Party, but it has obviously changed that opinion, if Joe is an example of the "New Republican Party."

I missed this one:

Do have good credit? If you do, walk into a Home Depot store this afternoon and tell them you want to install a new wood floor, or some new kitchen cabinets, or some new plumbing fixtures. See how fast they come up with the financing to get you into your project. Now, if you have bad credit, lots of luck...

 

Giving the middle class a tax break is a dandy idea. However doing it at the expense of the 250K+ crowd is counterproductive as it results in higher prices to the middle class and there goes the tax break. This has always been my observation as my client base isn't the middle class, but people with higher income. Whenever something costs them money, they don't like it and adapt to get their money back.