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Is it a good idea to promote consumerism to get us back to full employment?

Americans overspent for at least 30 years; the financial collapse exacerbated that tendency to overspend. Then the paradox of thrift kicked in as Americans began to pay down credit card debt; the result---consumerism took a hit at the same time the housing market collapsed.

If we assume we need to kick start the economy here is a way to get "the most bang for the buck". Suppose we allow every middle class American earning less than $100,000/year to deduct from their W-2 form every item they buy costing over $300 up to a maximum of $20,000. In addition they can claim charitable donations and medical expenses, but not home interest so that renters are not discriminated against in the tax code.

What this really means is that anyone earning less that $120,000/year would qualify. Such items as laptops, PC's, cars, refrigerators, stoves, etc. would all be deductible.

The lost revenue would be made up by the taxation of companies selling these items. This is the "cheapest" way to goose the economy.

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    Mar 11 2013: It is counter intuitive but the reality is that consumer spending is created by business not the other way around.
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    Gail .

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    Mar 11 2013: I think that what you fail to understand is that corporations are pass-through entities. They don't really pay taxes. They build assessed taxes into the price of their products and pass them on to their customers. (Think of all the hidden taxes built into the manufacture of a car - staring with the company that mines the ore, the company that trucks the ore to the dock, the company that runs the barges filled with ore down the Mississippi, the company that trucks the ore to the smelter, the company that smelts, the company that ships the smelted product to the machinists, the machinist company, the company that ships the product to the auto builder. (And this is only the metal part. Now consider the glass, plastic, wires, technology, etc.). Raise taxes on these companies and the products they sell cost more to you, thus making them harder to afford.

    You can't fix the economy with simplistic measures - which is why congress is in such turmoil.

    Consumers are becoming obsolete. Jobs (that consumers held) have been shipped over seas. Automation is also cheaper than humans. We set minimum wage but do not set maximum wage even though all research shows that disparity of wealth is the measure of how well or badly a society fairs in all areas, from infant mortality to crime to life spans to education to economic mobility - and on and on and on and on.

    Research the history of money and land ownership. Look at the pros, of course. But look at the cons. If you do an in-depth and honest study, you will eventually see that the problem is not at all like the problem that you are told exists. And when you do your review, study the federal reserve and national banking systems that put your very survival in jeopardy by being agents that transfer wealth from the poor to the rich.
    • Mar 11 2013: When I first wrote this, I prefaced it with the following comment:

      Isn't the head of the Federal Reserve, Ben Bernanke with his $3 trillion balance sheet, subsidizing Wall Street? No doubt you have noticed the run up of the stock market. What corporations are doing is parking their free money from the Federal Reserve in the stock market in lieu of investing it in the economy. Anyone relying on their savings accounts, bonds or CD's for income is being punished by Bernanke
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      Mar 11 2013: B-I-N-G-O!
    • Mar 11 2013: "I think that what you fail to understand is that corporations are pass-through entities. They don't really pay taxes."

      There are companies like Apple, Facebook and Google that don't pay any taxes at all and still Apple's products are very expensive.

      I think corporations need to pay more taxes and the market and competition will ensure prices are lower. This is already happening with e.g. smartphones where Apple's expensive phones have to compete with cheap phones from Samsung, HTC and Google with same or better quality.

      We also need to tax the top 1% with higher rates so we can distribute the wealth more evenly and fairly.
  • Mar 11 2013: Why low income individuals should be excluded?

    In order to increase employment or at least keep it from falling due to automation we can:

    - lower working week to 4 or 3 days i.e. "share" jobs

    - increase taxes for companies and 1% top earners, using the money to fund education and hire 3x as many teachers so that we can lower student-to-teacher ratio

    - encourage through tax breaks and other initiatives service-oriented economy

    - increase budgets so that more money is spent on prevention of substance abuse, marriage counseling etc. which leads to more employment opportunities for counselors and other workers

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    Mar 11 2013: No. It's a terrible idea actually. Do you know about The Impossible Hamster?
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    Mar 11 2013: No but unfortunately that is the way the world is working right now, unless anyone can propose an alternative.
  • Mar 11 2013: No