Economy
05
Dec

Creating Jobs by Government

Published in: EconomyPDF Pdf Print Print Email Email next

U.S. President Obama speaks to business leaders in Washington

How can Government create jobs?

President Obama spoke at White House jobs summit, on Thursday, about trying to create new jobs.

"I'm confident that people like you -- who built thriving businesses or revolutionized industries or brought cities and communities together and changed the way we look at the world and innovated and created new products -- that you can come up with some additional good ideas on how to create jobs," he said.

"I need everybody here to bring their 'A game' here today," Obama added, challenging the participants to come up with "fresh perspectives" and "new ideas."

They don't need any new ideas to create jobs. Just undo what they did. No more wasteful government spending and cut taxes. It is always wrong to think that government should create new jobs to grow the economy. First of all, it is not the government's job to create new jobs and, secondly, the government never works more efficiently than the private sector.

The government will "create" jobs by taking money from the private sector and assigning jobs that may or may not be profitable. Although the government is able to create jobs, these jobs do not necessarily stimulate the economy. Free market and cometition is what will stimulate the economy. In the private sector, only those who can make more profit are able to afford hiring new employees. People will invest in good companies with the potential for making profit. This is how the economy grows and it is not "fresh perspectives" nor "new ideas" from President Obama. When the government takes our money to create new jobs, they are also taking away opportunities for investors and company owners to create more profitable jobs and to hire new employees.

ABCNEWS: White House Jobs Summit: Real Progress or PR Stunt?

Add new comment
 
25
Nov

Tax Burdens, Around the World

Published in: EconomyPDF Pdf Print Print Email Email prev
 next

The New York Times reported tax burdens around the world.
According to the organization for Economic Cooperation and Development (OECD), United States had the fourth smallest tax burdens, at 26.9 percent, after Korea, Turkey, and Mexico.

The New York Times asks, "Think you pay a lot of taxes in the United States? Try moving to Denmark." as if we don't pay enough taxes. Do we pay enough taxes or is something wrong with the data?


The percentage of tax burden is calculated by dividing tax revenue by Gross Domestic Product (GDP). If we think of the United States as a company, the GDP is the market value of all final goods and services made in a year, i.e., annual sales for the company. Tax revenue for the government is the tax amount paid by the company. OECD calculates tax burden by dividing tax expense by annual sales.

If ABC company doesn't make any profits, they don't have to pay taxes even though they have big sales. In other words, increase of GDP does not always increase tax revenue because tax amount is calculated based on profit. Just because the USA has the low percentage doesn't mean that the USA has small tax burdens.

One more point. Do you know how to calculate GDP?
According to Wikipedia, GDP is calculated as follows.

GDP = private consumption + gross investment + government spending + (exports − imports)

It means that the more Government spends, the more GDP increase!
The more GDP increase, the less tax burden for OECD calculation.

NY TIMES: Tax Burden, Around the World

Add new comment