Entries Tagged 'Jobs' ↓

Will Trump’s Mexico Plan Work? Yes, But…

The Mexico plan

Trump’s plan for Mexico is to (A) stop US manufacturing corporations from moving to Mexico, and (B) bring back those jobs to the United States.

Steps in Trump’s Mexico plan:

(1) Deport as many illegal immigrants as possible in the US from Mexico back to Mexico

(2) Persuade US corporations in Mexico to leave it and bring  back jobs to the US by giving them huge tax breaks and subsidies

(3) Build a giant Wall all along the US/Mexican border

(4) Levy a huge tax (like a 20% tariff) on imports of goods from Mexico into the US

What does each step accomplish?

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Will We See Inflation in 2017?

Now that the US Presidential election is decided, it’s time for us all to try to anticipate what it might mean for each of us. For some, inflation would be a good thing; for others it won’t be. You know what it would mean for you.

Many people, and particularly investors, seem to be convinced that Fed raises in interest rates will bring on inflation. Why? That’s what has happened in the past.

But we are in a whole new world right now. A world that will be hugely shaped by Donald Trump and company. And by robots which Oxford University experts expect “will replace almost half of all American jobs in the next two decades.”

During his campaign, Donald Trump counted on corporations’ ability to step up and provide new jobs for Americans via funding infrastructure projects using their own money.

Trump soon ran into trouble, halving his estimated spending on new jobs from $1 trillion into $500 billion. My last post, “The Emperor Has No Clothes,” explained why even that estimate might be too much.

The Fed is hoping that an interest-rate rise in the cost corporations pay to borrow capital will bring on a cycle of new investment by corporations. But right now, making capital more expensive will not encourage corporations to spend more.

As of spring 2016, 99% of 2,000 US corporations were deeply in debt. Only 25 large companies hold half of all US corporate cash. Even the amount of cash the richest companies hold is nowhere near the billions of dollars needed for new jobs. Continue reading →

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The Emperor Has No Clothes

“To every thing there is a season, and a time to every purpose under the heaven:” (Ecclesiastes 3)

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President-elect Donald Trump has been releasing his economic plan piece by piece each week. I want to put four of those pieces together here to show why Trump’s economic jigsaw puzzle won’t work.

Here are four major parts of Trump’s plan to “make America great again”:

  • Infrastructure projects funded by private investments to create new jobs
  • A 35% tariff on foreign imports by US corporations
  • A tax amnesty of 10% for US corporations who bring foreign earnings home
  • Tax cuts up to 15% of actual income for the wealthy

Why can’t they work? Could some of them work? The answer to both question is “no” — and for the very same reason.

US corporations deep in debt

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