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Governments should invest in and subsidize service jobs

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thepresidentmaN
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Post: #1
Governments should invest in and subsidize service jobs

Opinions!

In the united states we offer huge tax credits and subsidies to industrial and agricultural products and jobs. We do this for many reasons like protecting job loss in these areas. It is often said we are losing our farming and manufacturing. I don't think that is completely true. We are simply automating all of these things and our output in these sectors is still growing despite the job loss. Yet we tax credit and subsidize these things like they would be gone tommorrow. And crop subsidies mostly go to corporate farms!

Instead of this, I say we offer tax credits and subsidies to where over 70% of our total employment is now. That is service jobs. When I say that I mean we tax credit and subsidize all service jobs to varying degrees to encourage better growth and job oppurtunities in those areas. We must also demand unionizing these jobs. With so many people being employed here it is sad that employees of places like walmart and McDonalds lack access to unions. I think a mix of tax credits, subsidies, and unions could provide a huge competitive edge to our (and other countries) service sector and really boost the service jobs which are currently low paying. The higher wages and competitive service edge would in turn slightly boost consumption and living standards possibly.

Sectoral employment in the us:
http://www.bls.gov/emp/ep_table_201.htm

Does anone have opinions?

04.02.2014 00:01
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chad7405
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Post: #2
RE: Governments should invest in and subsidize service jobs

thepresidentmaN Wrote:
Opinions!

In the united states we offer huge tax credits and subsidies to industrial and agricultural products and jobs. We do this for many reasons like protecting job loss in these areas. It is often said we are losing our farming and manufacturing. I don't think that is completely true. We are simply automating all of these things and our output in these sectors is still growing despite the job loss. Yet we tax credit and subsidize these things like they would be gone tommorrow. And crop subsidies mostly go to corporate farms!

Instead of this, I say we offer tax credits and subsidies to where over 70% of our total employment is now. That is service jobs. When I say that I mean we tax credit and subsidize all service jobs to varying degrees to encourage better growth and job oppurtunities in those areas. We must also demand unionizing these jobs. With so many people being employed here it is sad that employees of places like walmart and McDonalds lack access to unions. I think a mix of tax credits, subsidies, and unions could provide a huge competitive edge to our (and other countries) service sector and really boost the service jobs which are currently low paying. The higher wages and competitive service edge would in turn slightly boost consumption and living standards possibly.

Sectoral employment in the us:
http://www.bls.gov/emp/ep_table_201.htm

Does anone have opinions?

I think this is generally a good idea, but what America really needs is to get off it's ass and switch back to a manufacturing economy. We've become way too dependent on ourselves to do services and that's where we employ, though we lack the skill set and the initiative to do these jobs. Manufacturing has always driven america and its economy, and since we switched to services we've done nothing but fuck ourselves with high unemployment, high inflation in manufacturing areas since we don't produce it anymore, and stagnating wages and growth. We need to get back to our old ways and do something about this. I think the investments and subsidies should go to the manufacturing sector and the clean energy and tech industries where we excel, and actually do something manageable in the long term.

04.02.2014 00:24
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Titian
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Post: #3
RE: Governments should invest in and subsidize service jobs

My opinion? Haven't got one. But I do have knowledge:
Subsidies are stupid - extremely, utterly stupid.

Oh, btw, do yourself a favour and stop caring about your own nation's economy. Think universally (that is, about the ENTIRE market you are in (which - nowadays - is pretty much equal to nearly the entire world's population)). The beauty of free trade is that 1 and 1 can be 3 Zwinker2



EDIT:
PS:
But if we do assume for a second that subsidies could provide a net benefit then you might want to rethink your proposal;
If 70% of the labour force is employed in the service sector then the remaining 30% would have to provide for any net-gain service-industry might get.
I.e. since the government has to raise more revenue to pay for the subsidies the net-income of just about everyone decreases. Since you are asking for tax-benefits and subsidies (actually, you could forget about tax-benefits and simply increase subsidies accordingly or vice-versa) for the service sector, their net-income obviously rises.
Now, since such a large percentage is employed in services, the newly created pay gap becomes extremely large. As a result quite a lot of people will quit non-service sector jobs and move into that industry. You can figure out the effects following from that yourself.

Also, because of the huge amount of bureaucracy your proposal is likely to create, the dead-weigh loss for the economy becomes even larger.


"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

This post was last modified: 04.02.2014 00:38 by Titian.

04.02.2014 00:29
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thepresidentmaN
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Post: #4
RE: Governments should invest in and subsidize service jobs

Titian Wrote:
My opinion? Haven't got one. But I do have knowledge:
Subsidies are stupid - extremely, utterly stupid.

Oh, btw, do yourself a favour and stop caring about your own nation's economy. Think universally (that is, about the ENTIRE market you are in (which - nowadays - is pretty much equal to nearly the entire world's population)). The beauty of free trade is that 1 and 1 can be 3 Zwinker2



EDIT:
PS:
But if we do assume for a second that subsidies could provide a net benefit then you might want to rethink your proposal;
If 70% of the labour force is employed in the service sector then the remaining 30% would have to provide for any net-gain service-industry might get.
I.e. since the government has to raise more revenue to pay for the subsidies the net-income of just about everyone decreases. Since you are asking for tax-benefits and subsidies (actually, you could forget about tax-benefits and simply increase subsidies accordingly or vice-versa) for the service sector, their net-income obviously rises.
Now, since such a large percentage is employed in services, the newly created pay gap becomes extremely large. As a result quite a lot of people will quit non-service sector jobs and move into that industry. You can figure out the effects following from that yourself.

Also, because of the huge amount of bureaucracy your proposal is likely to create, the dead-weigh loss for the economy becomes even larger.


Thank you for the reply. I wasn't caring about the US economy, I was caring about all the people with low pay who are employed in the service industry. I was just using the US as an example which I knew a lot about. I believe could apply this easily to many other first world countries having similar problems but I could be wrong. You are correct that this could cause quite a bit of bureacracy and people moving out of important manufacturing jobs to service jobs. With this in mind, I edit some proposals:

We keep tax incentives for industrial jobs, but drop agricultural subsidies for corporate farms. We don't subsidize service jobs but we do unionize them and provide large tax credits (which are simple to administrate) and only subsidize large projects for the service industry. Like chad said to make this non harmful to our manufacturing base we also find ways to further automate and expand our industrial base which keeps us competitive in the manufacturing arena. Also, just run a small deficit. You don't have to raise taxes to pay for this. Cutting farm subsidies alone would easily provide for a lot of this anyway.

04.02.2014 00:53
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BaktoMakhno
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Post: #5
RE: Governments should invest in and subsidize service jobs

Titian Wrote:
The beauty of free trade is that 1 and 1 can be 3 Zwinker2

Ahahah ha ha

I now have a new quote for my sig Smile

Do yourself and these forums a favour and read Steve Keens debunking economics. Realise that the methodology you are being taught is prescientific and then move on to some empirical data. Ha Joon Chang presents stuff which is fairly simple and an easy read.

I realize there is no real chance you will read this, but unlike debunking economics this is online and free. Its also the most accessible piece of economics writing I have ever seen. This makes it an astounding intellectual achievement merely from reasons of style, worth studying as part of developing your writing style even if you don't care at all about anything being said. I guarantee this will improve your uni marks, as will the content. Understanding how flawed the whole framework of neoclassical economics is, and how its internal culture works, will help a great deal in feeding your lecturers what they want to hear.
http://www.infoshop.org/AnarchistFAQSectionC


On topic, subsidies are good but large scale, dirigiste, state directed industry is much, much better. Three words when it comes to this stuff economies of scale.

The real world success stories are Japan, South Korea, Russia, China hell every nation to develop without being a major colonial power.

Money isn't real, its government enforced make believe. Taxes do not, in any meaningful analysis finance government spending. Titian, take your own advice to Helsworth and stop thinking in terms of money, and instead in terms of the practicalities of real industry.


"The beauty of free trade is that 1 and 1 can be 3" - Titian

"There is no conversation more boring than one where Globaltom speaks" - Triniterias

This post was last modified: 04.02.2014 04:24 by BaktoMakhno.

04.02.2014 04:09
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thepresidentmaN
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Post: #6
RE: Governments should invest in and subsidize service jobs

BaktoMakhno Wrote:

Titian Wrote:
The beauty of free trade is that 1 and 1 can be 3 Zwinker2

Ahahah ha ha

I now have a new quote for my sig Smile

Do yourself and these forums a favour and read Steve Keens debunking economics. Realise that the methodology you are being taught is prescientific and then move on to some empirical data. Ha Joon Chang presents stuff which is fairly simple and an easy read.

I realize there is no real chance you will read this, but unlike debunking economics this is online and free. Its also the most accessible piece of economics writing I have ever seen. This makes it an astounding intellectual achievement merely from reasons of style, worth studying as part of developing your writing style even if you don't care at all about anything being said. I guarantee this will improve your uni marks, as will the content. Understanding how flawed the whole framework of neoclassical economics is, and how its internal culture works, will help a great deal in feeding your lecturers what they want to hear.
http://www.infoshop.org/AnarchistFAQSectionC


On topic, subsidies are good but large scale, dirigiste, state directed industry is much, much better. Three words when it comes to this stuff economies of scale.

The real world success stories are Japan, South Korea, Russia, China hell every nation to develop without being a major colonial power.


Thank you for your reply. I read over what you suggested. I provide a friendly counter-argument to some things:

Note: I see capitalism not as Dog-eat-Dog like many economists, but rather as a system where an individual is free to become an entrepreneur, innovate, and compete with others in a way that helps the consumer. ( Lots of competition pushes innovation and lowers prices, an excellent example being the car industry in the 20,s and 30,s and the home computer industry in the 80,s and 90,s, the huge amounts of competing businesses nearly doubled the rate at which their respective technologies advanced while lowering prices like the model T or the commodore 64) Business is not about abusing the consumer or poorly paying customers. Under capitalism the average wages rise and a wealth of goods are available to the people. All the state has to do is make sure no one exploits capitalism and that there is a safety net for the poor. Other than that it has no place in the economy.

State-directed industry is highly inefficient and performs poorly compared to an honest small to mid sized business (corporations do no better). This is because the state is so far removed from the market, slow to change, and inexperienced to the ways of the free market and consumer demand that any firm they direct or own besides certain ones (public services are a good example of a good state owned firm) will do terrible compared to private enterprise. ( on a side note unregulated private enterprise does poorly as well) Private enterprise does so well because in the spirit of competition companies create innovation and find ways to sell their product or offer their service to the highest number of people for the highest profit. Once they achieve said profit they spend it on shareholders and on the company to expand and make a greater profit in the future. (NOTE: If there is no competition or the managers are corrupt capitalism and by extent neoclassical economics fail and it becomes corporatism A.K.A communism by another name) The profits which are reinvested in the company and the competition drive individual firms (which can adapt to changes quickly in the market) to produce the best stuff for the lowest price ( assuming we have healthy regulations and adequate competition). The state fails at this because state directed industry crowds out the competition from the seemingly unlimited funds and their ability to never go bankrupt thus eliminating their need to innovate. This ensures that although everyone gets this good it will be of poor quality compared to a private enterprise which over time achieves the same thing with better results. ( not perfect results obviously but better)

Another thing I would like to counter-argue is that Russia is a failure story. Endemic corruption, terrifying poverty, poor civil rights, and thousands of issues plague Russia. As long as that Putin idiot is ruining his own people Russia will continue to be stuck. Honestly, it would be better off with Gorbachev still running the place rather than Putin.

There are some things I agree with you on though.

04.02.2014 04:52
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thepresidentmaN
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Post: #7
RE: Governments should invest in and subsidize service jobs

TriniSary7 Wrote:
Bureaucracy isn't a problem as long as it doesn't grow beyond it's task. Even the capitalists are not a problem if they have no heir. Again, the Soviet Union was not as efficient at making consumers goods. It was a leader in heavy manufactures. The Soviet Union perished for it's leadership, not it's bureacracy or even it's alterable mode of economy. It's mode of economy was a competitor at some points.


Indeed, the Soviet Union was an economic powerhouse in the areas of heavy industry and agriculture. Second only to the United States which was also a leader in heavy manufacturing as well as light manufacturing and agriculture.

EDIT: It is true that there in one way to run an economy. There are problems and successes of all systems.

04.02.2014 05:12
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BaktoMakhno
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Post: #8
RE: Governments should invest in and subsidize service jobs

Thanks for your reply Prez.

I advocate a empirical approach to economics modeled on the scientific method. I detest the just so stories which are used to justify a market economy. To understand what a joke market ideology is, one needs only look at the one economic activity where performance has really mattered. War.

When a country is seriously threatened the ruling elite throw ideology and their struggle against their own population out the window and subordinate everything to the need for greater effectiveness. How was the second world war fought? Through large scale state directed development. A free market approach would have been pathetic, feeble and laughably absurd. When push comes to shove no one with any real power, no one who really understands how the world works, takes the free market ideology seriously.

Your two examples are of industries where most of the technological development was done by the state directed military industrial complex. In the first half of the 20th century automotive technology was primarily developed by the state for military purposes. Who had the best armour? The motherfucking USSR. Computers were developed by the state as military technology.

What evidence do you have that state run industry is less efficient than the private sector? In industries involving serious capital small businesses cannot compete with larger ones. Most industries tend toward monopoly. Exceptions to these general rules are few and far between. Economies of scale. The advantages they grant far outweigh any problems caused by bureaucracy.


"The beauty of free trade is that 1 and 1 can be 3" - Titian

"There is no conversation more boring than one where Globaltom speaks" - Triniterias

This post was last modified: 04.02.2014 05:32 by BaktoMakhno.

04.02.2014 05:23
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thepresidentmaN
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Post: #9
RE: Governments should invest in and subsidize service jobs

BaktoMakhno Wrote:
Thanks for your reply.

I advocate a empirical approach to economics modeled on the scientific method. I detest the just so stories which are used to justify a market economy. To understand what a joke market ideology is, one needs only look at the one economic activity where performance has really mattered. War.

When a country is seriously threatened the ruling elite throw ideology and their struggle against their own population out the window and subordinate everything to the need for greater effectiveness. How was the second world war fought? Through large scale state directed development. A free market approach would have been pathetic, feeble and laughably absurd.

Your two examples are of industries where most of the technological development was done by the state directed military industrial complex. In the first half of the 20th century the automotive technology was primarily developed by the state for military purposes. Who had the best armour? The motherfucking USSR. Computers were developed by the state as military technology.

What evidence do you have that state run industry is less efficient than the private sector? In industries involving serious capital small businesses cannot compete with larger ones. Most industries tend toward monopoly. Exceptions to this are few and far between. Economies of scale.


Thank you for your reply as well.

Good questions and counter arguments, BaktoMakhno. I will be happy to offer a counter argument to your counter argument. The first automobiles where made by inventors in the 19th century and they marketed in the 1880's before any states even had an interest in the technology. (I used to be fascinated by both cars and computers) States didn't devolop the automobile they took some principles of it and took it a separate direction (as in tanks) (however states did develop planes a lot) the 20's and 30's were a golden age for automobiles because their were so many companies they really pushed the development of the automobile. Computers on the other hand were invented by the nation state mostly but they sure were not perfected by them. Computers if still left to government hands would have been never accessible to the consumer. The home computer revoloution was made possible by the innovation of the many companies competing. Commodore sold 30 million Commodore 64's by the end of the 80's ( a record which has never been beaten). The great thing about compters was there was no standard format back in the 80's. There were commodores, Sinclairs, and others running on the Motorola's chips and with custom Operating systems and programming languages for each. Then enventually the IBM PC on the intel 8086 running MS-DOS. The total lack of a standard pushed scientific development hugely. No government could have ever copied the 80's in computer technology. It is not the government that should run these things. The government should be there to prevent monopolies from forming. I have no real iedahow to stop that in many cases but that should be our goal. We shouldn't replace capitalist monopolies with state owned monopolies.

Also, it is true that small businesses cannot compete with larger ones. So they don't. They simply do their stuff out of the big companies way. Remember if you were a big fish like big corporations would you honestly go to every town and every city to destroy every single small business that offers similar goods or services to yours? They mostly ignore each other until eventually that little business grows big enough that the big fish (corporation) notices it. That is when it is the government's job to stop the big fish from killing the mid-size fish.

Though you are right that during war the state is best. But war is awful and we are all better off without it anyway IMO.

04.02.2014 05:43
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thepresidentmaN
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Post: #10
RE: Governments should invest in and subsidize service jobs

In light of Recent discussion I think the subsidies and tax credits should focus on the promotion and unionization of low paying jobs in the service and industrial sector and focus on offering incentives and subsidies for small and medium sized service jobs to come out with great new innovations which will offset the loss caused by increased wages and maybe even cause profits to grow which can increase wages. I think we should still focus on promoting service jobs (By that I mean raising their wages and the international competitiveness of our service sector but not encouraging people to dump industrial jobs. Agricultural jobs pay so well it wouldn't make a difference.) However we should be discretionary in how and who we promote and of course find ways to tie industry and services closer together so we can promote both at the same time. Also we must keep development grants and subsidies to poor farmers but cut subsidies to corporate farms.

04.02.2014 06:21
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