Groov wrote on Dec 25th, 2010 at 12:39am:My higher-paying skilled labor job in fabrication was eliminated because of a sick economy and other smaller companies taking the jobs for less. Their quality is terrible, but good enough to convince the customers to make a change.
I think most all of us are feeling the pinch.
There lies an underlying expression of consumer demand that is a driving factor in investment.
Cal Coolidge believed it was corporate productivity that would trickle down to all. His treasury secretary, Andrew Mellon, third richest of the time, conceived a plan of cutting taxes for the rich, which became known as trickle down econonics for the Roaring 20's. The windfall would spur production advances benefiting consumers.
However, this era was the rise of mass media and radio and ad men refined the craft of arousing new customer desires instead of just satisfying existing ones. The swelling new middle class began to afford luxury
buying eagerly, and on installment plans. This was also an era of upswing after WWI, comparable to the flying 50's consumer demand for new products after WWII.
Consumer demand has been an underlying driving force of corporate investment and credit lending. A decrease in taxes for the rich and corporations has not coincided with low unemployment, jobs, as consumer demand has. Countries with lower taxes in that area have usually higher individual taxes for persons living in that country. Not mentioned in an article posted in this thread is what other taxes Japan will raise to make up for its decrease in corporate taxes, most likely a consumption tax, they are also heavily in debt.
When lower corporate taxes don't coincide with strong consumer demand, jobs are not created so well. Presently, lowering corp taxes would seem a gamble not well proven without consumer demand.
The Mellon Bill passed in 1926, when consumer demand was peaking.
Also, in Cal's second term, he minimized the regulation of business and finance. With his spiritual beliefs, hoping that competition would not degenerate into a mere selfish scramble for rewards, in the expectation they would serve society as a whole. That didn't happen. Unfortunately human nature cannot be changed by an act of legislature.
Investment did actually overheat into speculation at that time, but it was the underlying consumer demand that actually cooled later, which made it not work.