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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy would a business owner expand and hire if he/she can't make more money?
How do you expect to employ more people if you don't encourage businesses to grow?
Every so often I see a post advocating a cap on earnings and I wonder if they've ever thought it through.
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The Magistrate
(96,043 posts)How many of these 'oh, my...something just seems wrong to me...' things do you try and keep going, on a daily basis?
dkf
(37,305 posts)HangOnKids
(4,291 posts)Oh for the love of all things HOLY please keep up on these posts Mag.
Maybe just maybe......
kestrel91316
(51,666 posts)seen a single post from her in support of any Dem or liberal policies.
Eventually pizza will be delivered. But this one's cagey. And thinks we're all really stupid, I guess.
Response to kestrel91316 (Reply #14)
HangOnKids This message was self-deleted by its author.
ProudToBeBlueInRhody
(16,399 posts)This election, as a lot of the presidential ones do, might push them over the edge.
joshcryer
(62,536 posts)That is all.
RandiFan1290
(6,710 posts)dkf
(37,305 posts)And I have no idea what the blaze is. Since you recommend it I will have to check it out.
The Magistrate
(96,043 posts)
pinboy3niner
(53,339 posts)
alcibiades_mystery
(36,437 posts)Brutal. When is MIRT going to clean up the riff raff on that one?
dkf
(37,305 posts)The connections seem to be missing.
The Magistrate
(96,043 posts)You find it a source of valuable commentary for your campaign of 'concern' ( read, insinuation against the President, and discouragement of Democrats and the left )....
dkf
(37,305 posts)And the only contributor I recognized was Monica Crowley who I have zero interest in and James Altucher who I really like.
I stepped into it by linking to the site but that was a really great piece by James. He always makes me think.
The Magistrate
(96,043 posts)But by all means keep putting this wreckage of your of reputation up top where ever more can see it....
dkf
(37,305 posts)And the funny thing is this site is my main source of info. If I've changed it's in reaction to what I read here...and I recognize that I have changed as it occurred to me how impractical people are.
As I've started to think beyond the reflexive positions I was raised with I feel a little lost. My family is where I was before, still staunch Democrats as I've grown more disillusioned with it all.
aquart
(69,014 posts)Unrestricted growth is called cancer.
unblock
(56,198 posts)those damn socialists shouldn't interfere with my right to try to make it $45 million!
LaydeeBug
(10,291 posts)
ksoze
(2,068 posts)dkf
(37,305 posts)ibegurpard
(17,081 posts)I've never heard a credible source talk about a serious proposal for income caps.
Secondly, a cap on profit or income does not equal unprofitable
dkf
(37,305 posts)ibegurpard
(17,081 posts)random musings by message board posters don't count
riderinthestorm
(23,272 posts)Firstly, I don't think I've ever heard anyone talk about a cap on profit or income. Nobody credible that is.
Regardless, lets suppose a huge tax burden was placed on my profits or income (if my small business WERE that profitable - ha).
What would I do when/if I reached that "cap"? I'd use my creativity to shield those dollars. My new ski chateau in Beaver Creek would become my "western" office - voila! Extra income disposed of.
Not enough whacked off to meet IRS limits? My trip through Europe would become a business trip.
Need even more $$ gone? I'd hire a crew of employees to do my yard work on my various holdings instead of relying upon a service.
All of these maneuvers actually generate MORE dollars in the economy.
leftstreet
(40,680 posts)
bullwinkle428
(20,662 posts)
hughee99
(16,113 posts)If you told a business (or an individual) they can only make X dollars a month (or a year), what's their incentive to keep working or expand if they make that amount before the end of the time period? Yes, they can work more, but if there's nothing in it for them, why would they?
peabody
(445 posts)If the owner doesn't want to expand then someone else will
see the opportunity and establish his or her business and pick
up the excess demand. The wealth is then spread to more
people rather than being hoarded by one owner.
hughee99
(16,113 posts)because they've made as much as they can for the year, how does someone else step in and start making iphones?
This doesn't always work that way.
peabody
(445 posts)and I can understand that. But from my point of view most things, unlike the iPhone, can
be easily done by other people. If a window maker decided he wanted to stop making more
windows because he's capped out at his profits then there would be other window makers to
pick up the slack. Yes, there'll probably be no iPhone makers to take up the excess demand
but people going without iPhones would be better than having a system where the wealth
gets overly concentrated with one company or one person. We could have it so that
excess profits from one year can be carried over into future years when the
company didn't hit its cap.
The argument--or more like the threat--that production would cease is similar to the threat
that if corporations didn't pay CEO's their exorbitant salaries then they wouldn't have good
people managing their companies. For once, I would like to see their bluff get called.
My guess is that there'll be a ton of people willing to run these companies for less and do just
as well or better. Same with production: it won't stop as long as there is demand for it.
hughee99
(16,113 posts)but what happens when the one pharmacy in the town shuts down because they've maxed out profits, you can't get your medication because the pharmaceutical company that makes it is maxed out, or your doctor asks you to wait until next year for the operation? If I work for a contractor who maxed out THEIR income and decides it's not cost effective to work for the rest of the year, then I'm out of a job too, even if I haven't maxed out my income yet.
I understand where you're going with this, but it's simply not workable. Production certainly wouldn't cease without the high paid CEO's, but there's plenty of examples of good companies being run by people who are bad at being a CEO, and eventually the whole company suffers, including the employees. A bad CEO can run any company into the ground. I'll bet if you put Bush '43 in charge of Apple, they'd be losing money within 5 years. No, most CEO's aren't worth what their being paid, but you're not going to fix that issue just by capping their income. Most of a CEO's compensation now isn't income anyway, it's given in the form of stock which isn't "income" until they sell it.
4th law of robotics
(6,801 posts)they hire more when more workers will make them more money.
More customers doesn't necessarily mean expanding will make more money. For instance if they had to have a certain size staff just to stay open but were mostly idle then adding a few more customers won't necessarily cause them to increase their workforce.
Like if you have a sno-cone stand that employs one person. He has to be there 8 hours a day or else the place isn't open. 90% of the time he's just sitting there waiting for customers. 10% he's actually working. If the customer base were to double (80/20 now) would that justify doubling the workforce?
riderinthestorm
(23,272 posts)The Sno-Cone stand may stand mostly idle from 9 - 12, then its jammed with say 60% of the total customers from 12 - 1 pm when school kids run down to the corner for a treat, then its idle again til 4 when a small after school rush occurs.
So if double the number of customers comes in from 12 - 1, or after school, and one person can't handle those rush hours, then yes, a second part-timer would make sense to handle the increased customers. If the business weren't able to handle all the customers and some were being turned away (lost $$ for the sno-cone stand), then you'd want to be able to satisfy that demand with more staffing.
Again though, the customers would dictate whether more workers would be required.
That said, the economics of it would also factor in - let's say the extra person meant 2 hours of extra labor for the part-timer at $9/hour. You'd have to have enough customers ($$) to cover that extra cost.
Furthermore, suppose you were at a kind of crossroads - the extra part-timer isn't really making you any extra money even while you are servicing more customers. You're breaking even. What to do?
As a small business owner, my thought process would be as follows: good service means repeat business so even while the second part time staffer may NOT be making me any extra money - my customers are happier. Which typically translates into MORE business in the long run.
And if I knew that my fixed overhead costs were going to remain relatively stable? No brainer - hire the extra person.
Voila! More customers = more job creation.
4th law of robotics
(6,801 posts)that companies in general view themselves as in the business of making money first and everything else second.
Right?
Which means that they would put profit over hiring more people any day if it came to that right?
So to convince them to hire more people it has to be in their best financial interests to do so. That is what the OP was stating and he's right. If a company could get by with zero worker costs (slavery I guess, or robots) and no change in profits they'd be quite ok with that.
Companies don't hire anyone out of altruism. And it's foolish to expect that to change.
If we want them to hire more we should make it more advantageous/cheaper for them. Like by covering health costs. Or ensuring more people have more money to spend.
riderinthestorm
(23,272 posts)"How do you expect to employ more people if you don't encourage businesses to grow?
Every so often I see a post advocating a cap on earnings and I wonder if they've ever thought it through."
You ensure the general population (ie customers) has more money to spend by paying them enough that they have some left over to spend. Or cover health costs for the population (customers) so they aren't paying so much on insurance. The OP is solely focused on the business needing encouragement to 'grow" (stated in the same vague RW terminology).
My point focuses in on the customers. No business will ever "grow" if they don't have customers FIRST.
Edited to add that if economies operated as a slave economy, without any customers at all - all workers were slaves, there'd be very, very little money for the business to make at all. Since very, very few people would have the ability to buy the company's products there'd be no demand at all.
4th law of robotics
(6,801 posts)no demand no growth. That's been true forever.
markpkessinger
(8,912 posts)At a certain point, if customer service declines too much, customers will go elsewhere. Sometimes, an employer will find itself in the position of having to hire additional workers just to maintain the level of service existing customers expect. And small businesses certainly (if they have any smarts at all) will take a longer view of things like this.
SickOfTheOnePct
(8,710 posts)I'll gladly pay more (within reason and ability) to get better service.
Ikonoklast
(23,973 posts)bonuses and inflated their stock options...but did NOTHING to grow the business.
Every so ofter I see a post advocating crap about earnings and I wonder if they've ever thought it through.
Watching Mitt/Ryan crash and burn must be terrifying for you.
The stink of desperation is palpable coming from their supporters...that is, the stupid ones that are left.
kestrel91316
(51,666 posts)you do everything you can to destroy our middle class clients' ability to afford our services??
I'll be waiting for your response.......
(crickets chirping)
anneboleyn
(5,626 posts)Guy Whitey Corngood
(26,848 posts)
HangOnKids
(4,291 posts)
FSogol
(47,623 posts)
Barack_America
(28,876 posts)It is conceivable that there still exist motivating values other than the almighty dollar.
sinkingfeeling
(57,835 posts)in order to do so would require more people to build x, then they would hire first and worry about making more profit later. I guess now days, the objective of company's is solely to make money and not about producing x that all people would want to own.
DemocratSinceBirth
(101,852 posts)Now I didn't go to Wharton like Donald Trump or Harvard Business School like Willard Romney but what I would suspect is most businesspeople hire staff in the expectation of growing to meet increased demand which will result in higher profits.
jmowreader
(53,194 posts)Employers rarely hire ahead of demand. Corning hiring people to make optical fiber before people were using it comes to mind. Companies hire because demand overwhelms current staff.
DemocratSinceBirth
(101,852 posts)Who is suggesting business owners do that?
riderinthestorm
(23,272 posts)I have great plans to "grow" my business but there are two giant factors that mitigate that growth:
1. Customers (as mentioned above - this is primary)
2. Health insurance - premiums are through the roof. If we had universal health care, that would go a long way towards helping me stabilize that cost, forecast ahead (because right now, I have no way of knowing how much my premiums going to be next year or the year after that), and determine improvements and "growth".
Injecting capital into my business only means I have more overhead (loans) to pay back. Without customers I have no way of making those payments.
Egalitarian Thug
(12,448 posts)How is it that none of these "lower taxes encourage business" mavens ever own small businesses?
You are, of course, absolutely correct. Businesses hire for one reason and one reason alone, there is more demand for what they sell than they can provide with the people they have.
Xyzse
(8,217 posts)First off, you have to make sure that your questions are a little bit more valid. Let's try it.
[font color=red]Why would a business owner expand and hire if he/she can't make more money?[/font]
There are currently no caps on making money. In fact, there are no bills currently going for a maximum salary, and saying that such is the case is laughable. So no, even if that question is valid it is missing the point. Besides, most business owners would not hit the range that would be taxed more.
Currently the only ones who will be affected by any proposals being bandied about by the current crop of Democrats would only hit the larger ones that are able to leverage breaks for themselves any how, not the mom and pop stores out there.
What you must realize is that with the tax cuts given to big business, it is not being used to make more jobs in America. It goes to the following:
1 - Jobs outside of America :: No matter what, it is still cheaper to manufacture outside the US so given more money and tax breaks the incentive is to ship jobs overseas.
2 - It is used for buy-outs to get rid of competition :: This is important, and you can see how this happened with big banks and larger companies. Instead of splitting apart and making themselves far more optimized what they did was buy out their competition, which then lessens the amount of jobs out there because they are now a bigger company so they can get rid of redundancy at the cost of jobs, conpensation for mid and low level employees(this is through benefits and salaries)
3 - It is going the Bain way, where companies the one bought out gets put in to debt and it goes to executive compensation(bonuses) which don't really go circulate in the economy. They get stuck in investments and sits there. I know it is good to make your money work for you, but Jesus H. Christ, sometimes these things go beyond the pale.
4 - So it mostly goes to bigger established businesses which then stifles innovation. Innovative companies are then unable to get a break from government as subsidies goes to those that don't need it. For example, gas companies and larger industrial farms.
5 - It allows bigger companies to cut jobs while making current employees work harder for much less.
So what problems do that cause(Tax cuts and breaks heavily in favor for the wealthy)?
1 - It reduces competition since this is corporate socialism/welfare. Larger established businesses can kill off start ups and eat up small business to reduce their competition, through leverage.
2 - Reduces the number of available jobs. Bigger companies do not need to hire as much or create more jobs. They have already fixed costs and only replace cogs that break down. It is the creation of businesses that create more jobs. Particularly those that have lasted 3-5 years. A small company that has lasted 3-5 years are usually those that are poised to expand. Expansion is what causes job growth, and Obama's plan is geared towards those types of businesses. Romney's plan heavily favors those that are already established. Those things will just look at their competition and see if they can buy them out.
3 - It stifles regular employee paychecks. Since people don't get compensated as much, they earn less, which then doesn't allow them to buy goods and services from companies, which then is the reason businesses fail.
[font color=red]How do you expect to employ more people if you don't encourage businesses to grow? [/font]
The idea is to create an infrastructure to allow businesses to grow. The Republican plan merely funnells wealth upwards which is a top heavy approach that is bound to fail.
By perhaps creating a living wage, where people earn more they can then buy goods and services which would create more demand. At the moment, we have a glut of productivity and supply with much less demand.
That can be remedied by infrastructure spending and having those that would actually use their money to circulate in the economy to work.
Sure, some tax cuts are necessary but at the moment you really need to figure out where the money goes. Most of the money now goes to subsidize big business and defense rather than actually helping out the common man who pay in to government through their taxes.
Yes, it can be argued that the rich also pay more in to the tax system and increasingly so lately. However, you also have to note that that is because you can not f-ing bleed a turnip. If people don't earn enough to pay in to the system, only those that could will. AND if those that could siphon up most of the nations wealth through leveraging the system by the given tax cuts and loop holes that they get, where large corporations do not pay taxes and people hide their wealth out of the country, then that is money out of the US and goes elsewhere like China.
Please note, the US was made GREAT by the infrastructure that was put in to it. Which means Education, Transportation Infrastructure, business subsidy(Yes this includes Big Pharma who doesn't share their profits back even if we tax payers subsidize their research), and the Idea that when much is given to you in life, much is expected of you in return. That is the basis of Citizenship.
Any how, feel free to completely disregard any of those points. Unless one experiences things directly or walks on someone else's shoes one can not understand how good they have had it.
rsweets
(310 posts)markpkessinger
(8,912 posts)... you should also include communications infrastructure in your list. The existing infrastructure that enables Internet-based communciations of all types is seriously sub-par in the U.S., especially when compared with other developed nations. It is significantly more expensive and at the same time slower. If this country is to remain competitive, it will require some serious investment in upgrading that infrastructure as well.
porphyrian
(18,530 posts)Earnings caps don't automatically make businesses fail.
Guy Whitey Corngood
(26,848 posts)This has to be some of the most successful trolling I've witnessed in my 11 years on this site. Kudos to you.
Response to Guy Whitey Corngood (Reply #42)
devilgrrl This message was self-deleted by its author.
smokey nj
(43,853 posts)Aerows
(39,961 posts)It's the same shit. "I'm a corporate hack that shills for supply side economics because I hope I can retire in 5 years if I screw enough people over."
Pure Republican philosophy.
Guy Whitey Corngood
(26,848 posts)success for this troll. We may not be fooled by it. But apparently the admins don't see it.
Response to Guy Whitey Corngood (Reply #66)
devilgrrl This message was self-deleted by its author.
Guy Whitey Corngood
(26,848 posts)The Magistrate
(96,043 posts)Nowhere near the ambiguous and ambidextrous 'herschel', though. That critter was the whole magilla and more....
Guy Whitey Corngood
(26,848 posts)nanabugg
(2,198 posts)Ever heard of the "company store."
The wealthy elite (either inherited, embezzled, scammed, or earned from investment) own the company store. They own the buildings and infrastructure that businesses use (and the rent they charge is TOO DAMN HIGH, the fees for garage and building/mall services are TOO DAMN HIGH. Most of these folks are dual or non- citizen owners and stock holders who use our current tax system, with its huge business subsidies and tax write-offs to actually pay little or not taxes. They cry about our high tax rates on businesses compared to other countries but numerous studies have shown that the ACTUAL taxes paid by businesses in the US are comparable to the taxes paid in other countries. The BIGGEST difference is actually wages and benefits paid to US workers. So these uber wealthy business owners and corporate elites, rather than pay decent wages with decent benefits choose to take their profits and companies outside the US where they can pay slave wages and practically no benefits to poor workers. When these workers begin to ask for better wages and benefits they do what they did in Spain and France...close down and go elsewhere. Leaving migrant workers in their countries in squalor, angry, protesting, and poor. Because the large corporations and big businesses are able to do this, the really small businesses are left paying the real tax margins that make it difficult for them to thrive without significant help from the government.) Well I am getting disorganized in writing this because it makes me angry...but you get my drift. It is much too complicated point out every little detail of what I know about how businesses operate in this country. But there are TWO things that this country needs quickly from the Dems if they are ever able to be in control of things again:
A reformed tax system that eliminates the huge tax breaks that big businesses get even though they move their businesses off shore to avoid paying the little taxes that are left.
A standard, national election system with standard voter registrations and rules that apply in all 50 of the states. The states can do what the hell they want to do for their own state and local elections but the election of the President, Vice President and Congress should have a standard election process.
ibegurpard
(17,081 posts)because
a: too many people are out of work or b: those that are working don't make enough to spend.
no one would be talking about caps on earnings if these greedy motherfuckers weren't trying to drive the American working class to the same level as the people lining up for $6 a day jobs in China.
You better start trying to find some ways to do some minor redistribution of wealth a/la the New Deal or your days are numbered. That's not a threat...that's just the historical trajectory of a society when inequity gets too bad.
lumberjack_jeff
(33,224 posts)How do you expect businesses to grow if their customers are broke?
Besides, accepting the la-la land premise ("earnings cap?! I quit!"
for a moment: A business that closes on September 15th because the owner has reached his or her "earnings cap" won't have any customers on January 1st because someone else has stepped into the business void to fulfill customer demand.
If business A chooses not to grow, business B will. Someone will fill the customer need, there's nothing sacrosanct about business owner A. Unlike the economy in general, I truly don't give a shit about individual business owners.
Aerows
(39,961 posts)But they don't make more money if people aren't spending more money. Oh, I'm sorry, did I interrupt your supply-side economics? Allow me to retort. Unless people want to buy things, things don't sell. Unless people have money, they don't want to buy anything but food and keep a roof over their heads because that is all they can afford.
Oh wait - novel approach. People have enough money to provide a roof over their head and food. They can afford to demand, and that means your business has to increase output. It does. You hire more workers. They increase output. You cry because you have to actually take care of your workers because suddenly, you are in a demand side economy. You are lazy. The guy down the street loves the demand side economy, hires your workers because he is willing to pay them, produces a bunch, is productive and has a productive staff, and you suddenly have to get off of your lazy supply-side economics ass.
Any questions?
PowerToThePeople
(9,610 posts)Duh.
bad troll
uponit7771
(93,532 posts)
bemildred
(90,061 posts)They will then recognize other values besides making themselves a few more bucks at someone elses expense.
quaker bill
(8,264 posts)Under any rate schedule, more money is always more money. Under a very progressive rate schedule like the 1950s, more money is not as much more money, but it still is more money. A maximum wage is bad policy, progressive taxation is just fine.
The corollary question is if income distribution gets too skewed toward the top, from whence comes the demand that causes the business owner to expand. Businesses do not expand in a vacuum. In my business if I do not believe I can sell the product, I stop making it.
LeftyMom
(49,212 posts)It can't always be that easy.