Jobs to China

Good to see that you're in China perpetuating the very problem that will eventually destroy your GDP along with your Balance of Payments and eviscerate your nation's tax base. More or less guaranteeing insufficient domestic employment (or income for those still in a job) achieved through international Arbitrage of wages and leading to loss of domestic demand from an impoverished market and reduced services and infrastructure due to falling domestic tax revenues. You may enjoy the short term increase in profits by adding a few percent of value to finished products while adding nothing to the domestic manufacturing base - basically you're financialising (latest economic buzz word) - that is creating nothing but "soft" money. The problem with that is it doesn't create any local domestic wealth outside the transaction - so no "trickle-down. Leading to such anomalies as fictional increased GDP as total cost is included in the sales number while most of the money resides overseas along with the jobs. While this makes corporate profits look better it does, evidently, lead to poverty, strikes and riots.

The Chicago School is the major originator, ideological prothletiser and defender of Neoconservative Economic Theory and Free-Market Capitalism in general. It dabbles in manifold mathematical models which will provide any answer you want in order to prove itself correct. It has been the most influential economic model (monetarist, monetarism) of the past 40 years. Largely the product of the University of Chicago Economics Department this school of economic fundamentalist thought gained influence during the 1970s particularly through the scribbling of a professor Milton Friedman (Nobel Prize in economics for the theory of the "Natural Rate of Unemployment" and advisor to General Pinochet shortly after Pinochet had the elected guy in power painfully terminated). The gist of it is that - government regulation of an economy creates monopolies thus - markets are more efficient at allocating resources than government so -  government has no business managing aggregate demand leaving - government's only job is to maintain a constant, low, rate of money supply growth.  This school's greatest influence has been relatively short  - since Maggie and Ronnie - but dominant since the fall of the Soviet Union and capitalism declared unconditional victory. Sadly it hinges on total transparency in the market provided by self-regulation. So, even more sadly, as a result it doesn't work.

Your Enterprise minister guy has just complained that not enough businessmen care sufficiently about achieving a reduction in Corporation tax - even though no company with a decent tax accountant pays much of it anyway. He should consider that, just possibly, the electorate don't want companies to pay any less tax than at present - frightening thought it is for a corporatist to grasp that the majority of voters don't support higher corporate profits bereft of an accompanying and demonstrative benefit to them.

If investment in R&D doesn't provide the tax-payer that funded it with any benefit why should they spend the money on something that translates into overseas jobs and untaxed corporate profits? I'd like to know your justification for using public money to enhance jobless corporate expansion.   The present correlation between corporate profit and employment is one of higher unemployment and lower or stagnant wages - what are the chances of reversing this by lowering corporate taxes?

Where are the jobs?

Since we've been keeping records all economic recoveries, according to the economists, have been led by indicators of rising employment and a buoyant property market in a hand-in-glove type manner - on this occasion these ingredients appear to be totally missing. If we are to perpetuate the present Chicago School economic model surely this would include actually employing those who provide the market for goods and services and paying them enough to afford both them and a house. Sadly this is not the case. Meanwhile many stock-market listed corporations are announcing record profits. How is this possible one may ask. Globalisation is the answer. Around half of the income of a large part of the S&P 500 companies, for example, comes from overseas. Obviously employment and the attached personal income - along with the associated tax base - are not growing in line with corporate profits.

In reality this is not about to change any too soon. Union bashing and the reduction of workers rights are rampant. Wisconsin's anti-union legislation is only one example of retentive corporatist-infused political thinking removing the ability of workers to bargain for improved wages and conditions. Has anybody thought beyond the dogma as to who is going to support a recovery based upon the usual measurements? Isn't "Demand" part of the mix? "Supply" seems to have escaped the formula. Not only has Supply escaped but Globalized supply-chains confused government's statistical agencies to overstate the size and growth of domestic economies — most importantly the growth in productivity, especially in manufacturing. This misinformation has led to a malignant combination of political and corporate wills to hold down wages while blindly hosting the means of their own eventual economic destruction. 

If we continue to allow increasing corporate profits with no accompanying increase in employment or wages then the tax-base cannot support the public services expected from a government collecting taxes - the answer, so far, has been to demand an evisceration of public services and to continue to punish the workers - or middle class as they are now known. What economic model is this based upon? There are countries with strong unions - Germany for example. Funnily enough they appear to be in much better economic shape than the UK or US. Their unemployment is closer to 6% than 10%. Their wages have kept closer pace with corporate profits. Their wealth has, in fact, trickled down despite all the economic ingredients philosophically anathema to the True Believers of the World Bank, IMF, WTO variety.

Seems that a lot of the money given to the Banks to bail them out and "save" the world's economy hasn't made it's way back into it but instead has headed off into Commodities, Food etc. with the undesirable effect of making everything more expensive for the ever-growing number of, increasingly irate, low-wage-earners. Thereby exacerbating the problem. Everything that can be has been "financialised". Are we tackling this problem from the wrong end? It would appear, according to just not me, that the "Global Factory" models for finance, energy, manufacturing and production have run their course and are now counter-productive. Burdening "customers" with huge debt loads in exchange for dubious value - while "finance" maximises it's profit. Without some equitable redistribution of wealth it will only end in tears - the Arab street offers an informative example.

Tackling these weaknesses will require breaking finance's stranglehold over the economy by allowing governments to regulate and limit their more speculative and avaricious activities. I'd have never bailed the asshole out.