What are the problems in this theory? Its lengthy? 10 pts?

Businesses do not grow from their own profits. They grow from investors. Investors who expect large returns on their investments. Smaller businesses use creditors. That’s where profit margins come into play. A company that has a solid history of large profit margins looks like a great place to invest, no? Well here is the problem. If the business has those attractive numbers due to constantly reducing overhead(higher worker productivity, outsourcing, tax cuts and deregulation), that business is probably in a saturated market and isn’t getting much new money. Its trying to grow in order to dominate in an already saturated market. Hence the overall dismal job creation and sucky wages.

In order for wages to go up the job market must be tight. Punitive taxes on businesses that outsource will remedy this. If you don’t rely on American workers, you lose your access to the American market. Hows that for incentive?
Once confined in the U.S. businesses will be stuck competing with each other in a more fierce environment. Increased federal laws will rob the ability of businesses to bully State governments and Congress persons with the threat of moving to another state which will allow for more worker friendly labor laws. Unions will maintain productivity at reasonable levels, preserving jobs.

The higher wages and employment will increase demand for products, helping businesses. Competition for this demand will guard against high prices and spur innovation.
If businesses wish to increase productivity without hiring more workers that will open new territory in technology. The technology enhancing old jobs will create new ones and start new businesses.
There would be less new money to be made in saturated markets than in new ones. Businesses in saturated markets will profit by competing for demand, have more modest profit margins and deliver more modest returns to investors.
The highest yield investments will therefore be in new markets, pushing money into new technologies and innovations. Thereby generating REAL economic growth instead of fake economic growth to deceive and entice investors.
truth seeker I addressed that. Consumers will be stronger because they’ll be making more money.

Businesses grow from consumers. Without consumers, there is no business growth, and in fact, no business.

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2 thoughts on “What are the problems in this theory? Its lengthy? 10 pts?”

  1. Businesses grow from consumers. Without consumers, there is no business growth, and in fact, no business.
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  2. There is really only one flaw in the argument, but it is the one that dooms the argument to irrlevancy.

    Capital, whether as debt or equity is mobile in an international setting. If you decide to penalize companies for outsourcing jobs to less expensive labor markets, thus forcing the company to use higher priced labor than their international competition then the capital will flow to their foreign competitors who do not have such restrictions on their operating model. The US companies lose investment, are higher priced (and therefore cannot invest in the technology necessary to become more productive and ultimately become non-competitive, jobs, revenues, taxes all disappearing.

    It is the lack of forethought in business regulation that is stunning. Cap and trade will make US businesses look for legal safe havens from such costs. It will be a massive boon for those countries which are not subject to such costs.

    I watch these lawmakers who clearly feel they are smarter than the businessmen lecture the businessmen on how they should run their business when in fact the businessmen can’t possibly run decent companies due to the regulations that these people support. It’s disheartening, extremely disheartening. Lawyers, lawmakers and their arrogance will ultimately crush our economy.
    References :

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