Cavuto on Business

I was just watching Neil Cavuto’s show, with Ben Stein and a couple economist making all kinds of silly statements about the economy. Ben for one said it’s a full employment economy, as if anyone who wanted a job could get one. Wow, that makes me very happy that I got my Bachelor’s in technology rather than economics.

These guys are talking about all kinds of stupid things from a purely academic/theoretical viewpoint with no regard to what actually makes the economy work. What upsets me most about these guys is that when you give them an opinion based on fact, not theory, they ridicule you for not knowing their theory.

Case in point: The real push behind America’s former economic run, and current woes. Getting away from all kinds of abstract, debatable reasoning, the economic run of the Mid 1990’s followed the technology boom of the 90’s. It’s true to say that reports of technology sales increases lead reports of major economic upturns, and vice versa. Of course Ben Stein is too well educated to see such simple things, just as he’s too well educated to see that I’ve been looking for a job for 2 years!

You hear a lot of things mentioned as evils on that show, like protectionism of course. Ben Stein says it’s good for us to have China providing cheap labor, because it allows us to buy cheap goods and boost the economy (probably through increased sales). But if you look at the 90’s, nearly all semiconductor technologies were coming from the U.S., and today they’re well spread globally. But that in itself isn’t the entire reason why the boom ended: It was preceded by decreases in SALES.

Whenever a major, useful new technology is introduced, everybody worldwide runs to get it. The people who get it last are the people who have the least use for it. In the case of computer technology, it was third world, non-industrialized nations, which mostly still lack the proliferation of this technology. In the U.S., most people did NOT have computers in 1992, but DID have computers in 1998. And those who bought them in 1992 had to replace them before 1998. But 1998 is about the time we reached the point of diminishing returns for the average buyer: Most systems built in 1998 are STILL powerful enough to do what the majority of people do on their computers; check email and edit documents. So computer sales fell off. Gateway nearly died. Dell nearly died. Digital nearly died and was bought by Compaq, who was later bought by HP.

Dell had to reorganize their infrastructure in order to maintain profitability. If you call a Dell tech support line, you’re routed to India. Many major companies have done the same thing. India’s economy is on an upswing, low and behold the U.S. economy in NOT, in spite of “leading economic indicators”. Any large gains we see will be tempered with many small losses.

I don’t see how anyone in their right mind can credit Clinton with the strong economy of the 90’s. Otherwise, you’d have to credit Reagan for the strong economy of the 80’s. And then when you say Clinton had the best policies, followed by Reagan having the best policies previously, you’d be left with the fact that the divergence between those policies cancels out your argument. Although I don’t remember the 80’s marketplace that well, it seemed at the time that home electronics pushed the economy forward in the mid to late 80’s, and that the decline of profits there pushed the economic downturn. Many major electronics stores, overextended by their perception of growing demand, went bankrupt when demand could no longer support their previous growth.

You might think my single product philosophy a bit too narrow minded to be taken seriously, but remember, growth in a SINGLE INDUSTRY can lead to growth in ALL industries. People building computers usually need cars, low and behold when computer sales were up, car sales were up. But that relatively small number of people couldn’t support the large upswing in car sales: Rather, they also needed homes, home builders needed cars as well. Not only that, but home builders also needed computers! Spread that across ALL industries, because people who have more money tend to spend more money. A dollar a bottle for water doesn’t seem so frightening to a person who has thousands of dollars in savings. You didn’t need a new TV, but the flat screens certainly look nice. Guess what? TV salesmen also drive cars, own computers, and live in houses! On and on it goes.

I see the next long-range economic upturn will come when the next product revolution comes. Hopefully this fine nation will own that product revolution, as they did in the 90’s with computer technology, in the 80’s with entertainment technology, in the 50’s with home appliance technology, in the 40’s with automotive technology, all the way back to the late 1800’s with textile technology. Or perhaps the next revolution will belong to India or China, and we’ll be the cheap, well educated labor force everyone looks to exploit.


<font color=blue>Only a place as big as the internet could be home to a hero as big as Crashman!</font color=blue>
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You should apply for a columnist/commentator job at a magazine (internet or paper) or a paper. (You could start by sending then in to papers as reader's responses).

Although I'm not fully agreeing with you on all accounts (of this post and earlier ones on similar topics) they are good reading and it is a waste to have them in the other/other section only (if you have not already posted the stuf elsewhere), too little exposure. So get them distributed to other sites or bundle your texts together (make them fully consistent) and try publish a book.



BigMac

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Crashman is a VERY smart guy, he has my respect and admiration

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jesus, 4.85$ an hour???


thats gross. i remember in canada , in the last 5 years a bag of chips went from 80cents to $1.25. thats quite a percentage increase

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i hate our society... in THEORY, communism is the way to go. not communism where people get oppressed and everyone has their jobs chosen for them, i mean a society where everyone shares


all the old-farts are gonna get their panties in a bunch over that one!

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You're right, that is not 6%. Hmm, I don't know where I had heard this then. Either way, the inflation rate on both products I talked of (the one Phial mentioned), are subject to serious price inflations.

I have no clue if the government even CARES! I don't know when Statistics Canada will reveal their next findings.

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Obviously you've bought the democratic party line on this rather than looking at the facts. I'm tired of telling people this: That myth is false. If you apply a 3% tax break across the board, it might save a millionare thousands of dollars while saving a middle class worker only a few hundred. That's because millionare's PAY more taxes. I'm actually for an income TAX CAP of 38% federal, permanently. That's because with state and local taxes, and no FICA (assuming you're millions come from investments and you don't have wages to pay FICA on), a 38% federal tax will work out to around 50% income tax including state/local taxes, and I don't think anyone deserves to pay more than HALF of their money in income tax. But that 38% rate would push your taxes to nearly 58% if you paid state income AND FICA, as some wealthy employees do. Anything beyond this would be considered a PENALTY for being successfull and discourage professional achievment! I also think the scale needs to be adjusted better and start at 1%. Think about it, 1% income tax on people barely breaking out of poverty (say, a family of 2 on 20k/year) and a 38% tax on people making more than, say $100k/year for a family of two. Cut some of the loopholes so that billionairs still pay 38% tax. Unlike the Libertarians, who want 100% of your charitable contributions deducted, I think it should be 50%. After all, if you're going to GIVE FROM THE HEART, it's supposed to COST you something.

The whole democratic party mantry "Tax cuts only went for the wealthy" is a complete lie. They went across the board. In fact, I received a DONATION from the IRS simply because the $1200 tax break for a child was applied to EVERYONE, even those too poor to pay tax! That's right, I paid no taxes last year and the IRS cut me a check for $1200. You can't get much nicer than that, it looks to ME like the TAX CUTS went mostly to the POOR NON-TAXPAYERS. The Dems won't tell you that, and the Reps can't pull their head out of their arses long enough to defend themselves on this issue.


Minimum wage is $5.15 an hour. Been that way for around 10 years as I recall. That's federal, some local areas have forced their own rules (I heard some major city imposed a $6.50 minimum wage because the federal minimum wasn't being raised in a timely manner). I think minimum wage should be $8 an hour.

I think that ALL imported products need to be taxed in order to keep american workers competitave. I'm not talking about a major tax here either, 8% would probably be enough. I think corporate taxes need to favor American owned businesses, so that foreign firms can't simply take the money and run. Think about it, how is it possible that Toyota can build cars cheaply in the U.S.? Could it be that the untaxed profits go back to Japan, where those in charge pay their income tax to the Japanese government, even though they made their money here? If the money comes from U.S. taxpayers, taxes on it should go back into the U.S. tax system.

Your whole view on a minimum wage increase being denied as a favor to wealthy business owners also comes out of the Democratic party's playbook. Fact is, the Reps think they can decrease the jobless rate by encouraging business to hire a lot of cheap workers rather than a few good workers. They may not be right, I don't agree with them completely, but it's certainly not the scam you play it to be. The fact is that there needs to be a balance between minimum wage and cost of living, which is why I propose $8 an hour, rather than, say, $12.

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I did look at the facts. And the facts are that the dividend tax break and the estate tax repeal benefit practically only the wealthy, and the rest of his tax cuts, although they do benefit the middle class, benefit the rich more than the middle class. I read from several sources (which include those that were for the cuts) that if they are made permanent, in 10 years like 50% of all the tax cuts will go to the wealthiest 1%. I understand that because the rich pay more, they will get more back, but I think it is very devious that these cuts were pushed as middle class tax cuts when in fact they were not.

Frankly put, the rich do not need the money back. Why does Bill Gates need to save $16 million a year in dividend taxes alone? Why do the wealthies 1% need to get more money back, when they will only put it in the bank? If you wanted tax cuts to boost the economy, you give the money only to the people who will spend it. You give it back to the middle class. I do not feel it was worth the added billions to our national debt in order to give most of the money back to the richest people in the country.

Yes, it is $5.15. I only had .85 in my head because I read about a plan by some Democrats to raise the minimum wage by $1.85. My mistake.

I never said Republicans deny it as a favor to big business, I said they would oppose it because they would see it as a hindrance for these businesses. They think it would be harder for businesses to maintain profits if the minimum wage were higher, and they think it would discourage business and bring the economy down. But, the opposing theory is that giving people more disposable income means they will buy more stuff, and boost the economy. If either one works, I personally think it is a better thing to do to help the workers earn a decent wage. I think it is fair for the minimum wage to be $10-$13 an hour, as it should be if it were constantly adjusted for inflation from the date it was created.

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"There's more to life than profits."
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No, I did not distort any facts, I read them and came to a sound judgement. The estate tax always only applied to very large estates in the first place, having a $675,000 exemption in 2000, before Bush's tax cut. Therefore, if your father's estate was worth $675,000 or less, you would pay no taxes on it, even before what Bush did. Most middle class people do not inherit estates that are valued at what the estate tax was meant to tax. The estate tax cut/repeal really has no bearing at all on the lives of middle class Americans.

I realize that, but the dividend tax cut acounted for a large sum of lost revenue for the government. Also, the way most middle class people keep their stocks (IRAs, 401K, etc.), many middle class people are actually completely exempt from this cut while rich people who own a lot of stocks get the benefits of it.

I agree with you. The problem I had with Bush's tax cuts were they did not really help who Bush said they would, they were done at a very bad time, and by the looks of things they haven't worked like he said they would. But, I do feel that people who have more money than they could ever need should pay more taxes because, frankly, it pretty much doesn't effect them at all.

Well, that's just silly because taxing the wealthy more doesn't affect their lives as much. A person who pays $1 million in tax on $2 million in income is affected much less than a person who pays $20,000 in taxes on $80,000 in income. You agree with that don't you?

[/quote]You have to remember that MOST moderately wealthy people got their through a lifetime of achievement, not an inheritance.[/quote]

I don't think you are completely right there. I think most people who are in the extreme-rich elite in this country are there because they were born into a situation that made such a life more accessible. I think that this country does have an aristocratic-like class that gets rich based on who they are and not what they do.

Well, again, I would hardly consider someone who earns $100,000 a year to be wealthy. They are upper-middle class. But again, I never said that 80% tax rates are ever warranted. You have said ludicrous things in this post as if I would agree with them. Why would you do that? I feel that most people, earning somewhere in the neighborhood of $100,000-$200,000 (I don't really know an exact amount) or less a year should pay no income tax at all, and people who earn more than that should pay taxes because they can easily afford to do so, and such taxes don't greatly affect their lifestyle, and doesn't really give them a bunch of extra disposable income that will help boost the economey. Middle class people with extra money means they will spend that money. Rich people with more money means they will just have more zeros on their bank acount or stock portfolio.

That is possible that such a think could happen. But, I think that companies will soon see increased revenues because more people will have more disposable income to spend on things, therefore the extra labor costs would balance out with extra revenues.

$8 is enough to get by, but I don't think letting people just get by is good enough. We will always need low or unskilled workers to do menial jobs (until we have robots to do it ), therefore I think it is only fair to make sure these people can still have a good life for themselves. Not everyone can go to college and get a degree, because even if they did there would be a shortage of skilled jobs and people with degrees would end up taking the minimum wage jobs because there is nothing else to do.

--
"There's more to life than profits."
<font color=red>"Like what?"</font color=red>
"Like, you know, Slurpees and stuff."
<A HREF="http://images.southparkstudios.com/media/video/707/slurpees.mov" target="_new">South Park</A>