Rodrigo Gómez Aguirre

Sociedad y Política de Estados Unidos

20-02-2013

Americas Jobs Report
Hanging in

http://www.economist.com/blogs/freeexchange/2013/02/americas-jobs-report

Tax cuts on middle-class and tax increases on the wealthiest seem to be working and making effect. Payroll employment rose by 157,000 in January from december, such as, unemployment rate decreased from 7.9% to 7.8%. These fiscal policies have not stopped hiring employers as exepected. Suprisingly, all the statistics about employment were overcome in 2012, making a healthier laboral enviroment in the US. Likewise, labour was higher than expected in the household survey. Another interesting statistic is that since October, household employment has stagnated and before didn’t grow much. As well, the private sector has managed very well, however, politicians fail to reach consensus about “the threat of $85 billion in federal spending cuts that will be triggered if Congress or the President do not replace or delay the sequester, due to take effect on March 1st.”

As always, the debate among republicans and some democrats is that some agree in a free market with non state interference or like Mr. Obama, who believes in more state regulation in the market, higher taxation for the wealthiest and cuts for middle-class. This fiscal actions were taken since 2008 financial crisis due to the abuses and wrong actions from banks and mortgage funds. The President decided to save them, but in his conditions, in order to avoid a massive unemployment, as well, he increased the federal investment budget, social security services and education. Capitalists disagree in this measures taken by the President, and as capitalists I’m refering to Obama’s adversaries, the republicans, and why not some democrats. As recently Senator Marco Rubio said that, Mr. Obama only wants to spend more money, not supposed to take a dime from déficit and has an obsession with raising taxes. Also, Mitt Romney argued in the last presidential campaign, that if these fiscal policies were executed by Obama, entrepeneurs will be discourage to invest by the high taxation made for them.

I think republicans believe all capitalist principles, such as; it’s an expression of the value of individual freedom, the best mechanism for coordinating complex economic systems, that it creats incentives for risk taking an innovations, as well as, economic growth and prosperity, and that state regulation in markets inteferes with the free market and undermines these virtues because the state should only be a night guard.

However, during George Bush’s administration, a total free market policy was applied and things got out of control. Contrasting with capitalism, that says that after making mistakes the market will find it’s way to stabilize. But it didn’t, it just created a concentrated economic power, inefficiency and market failures. This leads to an important accumulation of wealth for few companies, translated into personal fortunes, who, sooner or later, ends up controlling the market. And as we know, more small and medium business create more jobs rather than having only megacorporations, because the later ones tend to maximize their profits.

Americans should know and remind that, besides the economic and fiscal policy, what makes a country grow in terms of economy, are the good or bad investments taken by the wealthy. So Obama should think either if it is a good idea to disincentive the people or companies with wealth. Till the moment that hasn’t happend yet, but posibly, an emphasized taxation would chase them, creating a capital flight to countries with better fiscal conditions.