Most workers are fine, but strong unions created insurmountable problems in many industries, including automobiles. The threat of strikes if high wages, generous benefits, and highly inefficient work rules were not implemented severely restricted how management could respond. Yes, management could have accepted strikes, but the unions probably would have weathered them and come back with the same demands. The companies would haven lost money druing the shutdowns and only delayed giving the unions what they wanted. Unions do a lot of good for wage earners, but eventually made many industries too expensive to continue. The steel industry is one where this occurred. The Detroit 3 are also similarly afflicted. There are many other auto manufacturers in the USA, but none are unionized except for VW, I believe. Lower wages and significantly more efficient work rules make their cost structure much more attractive. This is not a knock on much that unions did inthe 20th century. Much of what they did saved lives and enhanced quality of life for their members.
I am not surprised that the Camry is at the bottom of the list. We own a 2003 4Runner and a 2011Sienna. The interior trim of the 4Runner is better. Both vehicles have been quite reliable, but the 4Runner has a more solid feel. The Sienna seems to be about the same quality as the 2006 Chevrolet Uplander it replaced.
In the university city of 70,000 where we live, the Subaru,Mazda, and Nissan dealerships have folded. On the other hand, the Hyundai dealer is doing well and a big new Kia agency just opened. A VW agency also just opened after not having a VW dealer for 10 years.
@Same
I agree with everything you say about the potential for American workers. The corporate tax structure is not a cut and dry argument for low quality goods. Toyota builds autos here under the same tax system. Cat builds here as well. Back when the corporate tax levels were at 70%, quality goods were built. All coporations are exempt from paying any tax, I repeat, any tax on profits they reinvest to make more goods, and improve the quality including paying salaries. They pay zero taxes on any funds they can show is a reinvestment into the corporation.
The 35% is after all operational costs are paid. In general, most corporations don’t even come close to that figure and only those who run companies into the ground were affected by this higher tax rate. Ask anyone who owns a small business who employ the majority of our workers what their actual profit is. It is very low. If they play their cards right, they conform to tax laws, build up their business over the years by reinvesting, , live like a king using exemptions, then take a one time capital gains tax exemption when they sell and retire. In the mean time, they have helped lot’s of people and built better products by reinvesting. So, tax rates are arguably good or bad depending upon your theory, but only affect the book sales of the economists who promote them. The lower capital gains and corporate tax rates are promoted by those who want to retire at age 30, several times over.
When the owners cannot get immediate high profits, they do move production over seas. But, Toyota has moved sales here and been very profitable. So, it’s how a business wants to play the game, or game the system. It is not cut and dry. and mainly applies to manufactured goods which depends upon third world labor. The taxes could be zero and they would still move plants over seas to maximize profits. Corporate tax structure is side issue and not the whole reason.
One of the biggest reasons to move manufacturing abroad, is lower labor cost directly artibuted to benefits for workers. American auto makes cars in Mexico for example becasue benefits are low, they don’t offer healthcare. They have them made made too in Canada because benefits costs are a low for the manufacturer by as much as 30% over here because of universal healthcare and the cost is born by the individual after salary in the form of payroll taxes. So, it’s more labor cost then corporate taxes.
“The lower capital gains and corporate tax rates are promoted by those who want to retire at age 30, several times over.”
And tax rates for the rich, as well as the rest of us, are the lowest they have been back to the Eisenhower administration. Well, except the rich. The marginal tax rate was above 90% in the 1950s, and is about 35% now. Yet the rich still whine about how high tax rates are, and how much better life would be if we just lowered rates a little bit more. If any of you don’t think lower tax rates have benefitted us thus far, why would we think that lowering them further will do anything but increase the national debt? We need a tax increase and a cut if federal spending at the same time to start working on the national debt.
We even have people running for office spouting off for zero capital gains tax. Now, I don’t know about you, but even though we get some minimal amount of break and larger every 50 years from some capital gains break , my entire salary like many of the rich and famous, does no come from capital gains. But, if I do contribute big bucks to the reelection of a candidate, I can get him to support these zero tax illusions, or just as bad, flat taxes. It’s the old trickle down philosophy. The one Geo. Bush Sr. called voodoo.
It’s the rich conservatives who complain about how much tax hey pay. And then say things like the founding fathers would be turn over in their graves if they knew how much tax they had to pay.
Yet when this country was founded…only land owners and businesses paid taxes. I’d LOVE to have the tax system from that time period…my tax rate would be 0%.
Most workers are fine, but strong unions created insurmountable problems in many industries, including automobiles. The threat of strikes if high wages, generous benefits, and highly inefficient work rules were not implemented severely restricted how management could respond
Total BULL (at least in the auto industry)…
The unions had very little with demise of the US auto industry. 99.99% was management and their ridiculous bonus structure that caused management to make decisions for their own personal interest (bonuses) and not for the good of the company.
The steel industry is one where this occurred.
The demise of the steel industry had to do with the unions not allowing the companies upgrade their equipment. Then when layoffs and shut downs starting to occur some 20 years later…the unions were screaming for the companies to upgrade…but by then it was too late.
“The demise of the steel industry had to do with the unions not allowing the companies upgrade their equipment.”
I disagree. There were upgrades at the plant I worked in from the 1960s through the early 1990s, and it was a unionized plant. That was the case in my company, though it may not have been in others. And there were other plants that saw upgrades during the same time period at my company. If you are correct, I think it must have been a very local thing. It certainly wasn’t industry wide.
I thought the demise of the steel industry had more to do with plants that all of a sudden became obsolete in favor of smaller more diverse plants. Big big decision then to have to dump a plant and make a huge investment that may or may not pay off when you can just buy from overseas.
I don’t have a problem paying a proportionate share for tax but I do have a problem when 40% of the population don’t pay income taxes. Everyone should have a dog in the fight no matter how small. Its very very dangerous to have a growing population that does not contribute to the pie.
Federal tax revenues are at a record:
The deficit is caused by too much spending.
Dag, you’ve made some excellent points.
Insightful, you’ve “nailed it”. We don’t have a revenue problem, we have a spending problem. However I would argue that HOW the revenue is spent is as big a problem as the amount that’s spent. And THAT discussion has been going on for decades. My feeling is that far, far too much of our tax dollars are appropriated to long term obligations that were made to capture the votes of special interest groups, and far far more is being spent on one-time handouts to garner votes. In short, the pols are using our tax revenues to get and to secure their positions. And they’re committing them far faster than we can possibly provide them… thus, a multi-trillion dollar deficit. And we would have this IMHO regardless of international trade balances, international monetary policies, and other factors often blamed.
Taxes were intended to support the federal government and for national security. Their use has wandered far from that purpose.
^
Unfortunately, much of that spending is to pay the bills from administrations that insisted on more and more borrowing, rather than engaging in “pay-go”.
As a major example, the Iraq War–whose total cost is estimated at somewhere between $800 Billion and $1 Trillion–was essentially “put on a credit card”. Never before in the history of the world did a nation institute a tax cut during time of war, and the result is that this unnecessary war caused a sizable national debt to become even more massive.
http://www.usnews.com/news/articles/2011/12/15/what-did-the-iraq-war-cost-more-than-you-think
In Fiscal 2013, the Federal government spent $211 Billion on interest payments for all of the debts run-up over the past decades. Unless somebody can magically make those massive interest payments disappear, there will continue to be too much spending.
I’ll never live to see it disappear. It’s impossible to eliminate a $17-trillion debt in the time I have left.
@mountainbike I agree; shoving the debt problem on your grandchildren is no way to responsibly run an economy. Ronald Reagan changed the US from the world’s largest CREDITOR to the largest DEBTOR. George Bush’s military adventures made the situation worse, and now Obama is furthering it. Only Clinton managed to briefly balance the budget.
The US has been living by and large beyond its means since the late seventies. When Norwegians ( from a country with no debt) visit the US they marvel at the low prices and level of consumption. Little do they realize these people’s grand kids and their kids will be paying for all that.
@Bing, minimills grew because they produced low grade steel that could be made from scrap. Things like nails and rebar were the original products. But they have never been able to produce high carbon or high grade carbon steel grades. Those are made in integrated steel mills with blast furnaces and basic oxygen furnaces. European manufacturers subsidized their mills to maintain employment, and over time Asian manufacturers became the main suppliers of most steel products. Mittal Steel is the largest steel manufacturer. It was originally an Indian company, but moved to Belgium after buying Arcelor. There are still a few integrated steel manufacturers in the US, and they make things like auto steels and coated products (tin, galvanized).
Can’t really argue but the Norwegians would sure start to grumble if their oil revenues all of a sudden took a dump and everything wasn’t paid for them. Agree though the feds are kinda like the wife who told the husband he’d made a mess of the finances and maxed the cards out and took the job over. Only to open up more cards and max them out for different purchases though.
“now Obama is furthering it”
According to none other than Forbes magazine, that is not true.
Here is their article, detailing how Obama’s spending is the smallest in terms of growth since the Eisenhower administration. The King of the Deficits was…of course…our old friend, The Gipper, and both Bushes spent prodigiously also–albeit much less than Ronnie did:
http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/
Obama is a piker when it comes to spending, with the growth in federal spending on his watch coming in at less than half of the numbers during the Clinton administration:
And, if you just want the comparison chart, here is a link to that:
Overall, it seems that our tax rates our close to the average European tax rate, but we get less in return. The return being healthcare, education, public services and social security. When I look at the big picture I can’t help but think that there is a hole somewhere.
@VDCdriver’s last chart isn’t at all surprising. Pres. Reagan spent hot and heavy to end the Cold War, Pres. GHW Bush spent a lot on the 1st Gulf War, and Pres GW Bush spent an astonishing amount on the 2nd Gulf War and the Afghanistan War. It seems reasonable to put the continued expenses for those two wars on W’s tab even though he is no longer in office. Reagan’s spending did finally do in the Soviet Union, and GHW Bush was forced to declare war by Hussein. I’m not sure about GW Bush’s wars. Iraq II was shortly after 9/11, and I think his heart was in the right place. Unfortunately, his head, and that of his close advisors, were not in the right place when they campaigned so hard for tax cuts with two wars in full swing. That, plus the Republican Party’s stand on health care and their lap dog tricks for their banker masters and uber-rich masters has just about convinced me to leave the party. I can’t convince myself to rejoin the Democrats, though.
@Bing A sudden drop in oil prices does not affect how Norwegians live. The government will just invest less.That part of the oil revenue, after paying for all those services, is invested by the government because someday the oil will run out, just as the cod ran out years ago. Norway’s government owns many companies and is a major international investor.
It’s like making $200,000 per year after tax and only living on $125,000 and investing the rest.