n America efficiency is king and the elite speak the language of utility. But to many of us economics is Thanksgiving and Black Friday; and these two days in November seem to serve as a fruitful analogy for trying to break through the bipolar psyche of American political economics. Thanksgiving Thursday families in Southern Colorado and around the country come together to share a meal, to break bread, and to take care of one another. Communities sponsor food drives and soup kitchens provide food and shelter for less fortunate families. This is the intrinsic welfare function in our community, the deeply held American value for equitable distribution of resources among free people.
You’ve heard of welfare, but have you ever heard of welfare capitalism? Welfare capitalism is what historians call the practice of companies offering employees privileges and services that the labor market did not demand. Today, benefits like sick days and health insurance are standard with most employment contracts. During the 1920s, the heyday of this practice, the public hailed companies that offered these things for their generosity. Today, these kinds of benefits are taken for granted.
Small businesses, those with fewer than 500 employees, fuel the economy. According to the Office of Advocacy of the U.S. Small Business Administration around 60 to 80 percent of all new net jobs created are because of small businesses. Small businesses haven’t quite warmed up to the idea of accepting American Express, but aren’t complaining about the message the promotion is sending consumers.
Early in the industrialization of the American economy, Henry Ford learned first-hand the importance of thinking broadly about business success and profit maximization. Facing increasing worker turnover due to the monotony of his innovative assembly line manufacturing methods, Ford made a bold and controversial gamble of doubling the wages of his disgruntled workers and shortening the work day from nine hours to eight.
President Obama’s tax proposal would allow the Bush tax cuts to expire on “the rich” (singles making more than $200,000 and couples making more than $250,000). The top federal income tax rates for these payers would rise from 35% to 39.6%. “But you can’t do that!” scream the Republicans, “You’ll hurt the job creators!” “No, we won’t!” cry the Democrats. So who are these “job creators?” Is it valid to claim that increasing the top rate will hurt small business and the economy? As with most things political, the truth lies somewhere between the two rhetorical extremes.