Romney Gains Support from Cisco's CEO

A large corporation has spoken out about the opinion towards the 2012 presidential election.  CEO John Chambers of Cisco Systems has openly supported presidential candidate Mitt Romney because of his plans to lower the current 33% corporate tax (as stated in the most recent debates, Romney hopes for 15%).  Chambers explains how much cheaper running a business in other countries, including China, Russia, UK, and Canada.

The belief that cutting corporate tax will bring jobs and corporations back to the United States is bold, and seems highly unlikely even with lowered rates.  Countries including China and Russia hold far lower wage levels that even if the corporate tax were to be cut in half, there would be so much uncertainty surrounding whether there would be a financial benefit to bringing companies back.  The United States would surely benefit from job creation, but the bigger question would remain to what would happen to funding of the government in the long run.

As stated in the last post, the percentage of money being put into the education system in America is at a low.  The best way to build on our human capital is giving Americans the best opportunity to succeed and innovate.  This is where economists need to push the realization that the costs of cutting tax money will ultimately harm the economy and the citizens of the US.  This election could effect greatly the outcome of the United States over the long run.  

Again, we fall back to the dispersion of wealth in the United States.  We need to recognize that the rich are getting  richer, while the lower and middle class are being left in the dust.  If these levels of income inequality continue to occur, there will be major problems for the country as a whole.  I truly understand where people believe that having corporations return to the United States could benefit our country, but if only 1% are reaping the benefits of the economic growth, will there be sustainability in the US economy?

Reference:

1. Smith, Aaron. "Cisco's Chambers Backs Romney for President". CNN Money. http://money.cnn.com/2012/01/26/news/economy/davos_chambers_romney/index.htm?iid=SF_E_River

Income Inequality...When Will the Separation End?

Income inequality is one of the topics that I have been looking over the last few weeks in my journal entries.  Last week, the Economist published an article giving the details on who exactly the 1% entails to, given the recent release of presidential candidate Mitt Romney.  One of the big stats in the data is the differential in job positions by the 1% from 1979 to 2005.  

There has been a rise in lawyers in the 1% along with a substantial rise in the financial industry.  The belief is that those who have now gained vast sums of money are innately able to invest in the market to further build their wealth.  The article continues to discuss more about the consequences that occur because of the amount of money invested by in the financial industry.  

In my post on higher inequality and intergenerational mobility (1-19), we see that generation to generation inheritance creates heavy income inequality.  The 1% are able to invest their money and put their family in positions to exceed far beyond what most can even imagine.  Also, the Economist discovered that members of the 1% are more likely to marry within the other members of the 1%.  This leaves the wealthy even better while the middle class shrinks.

Another article that I fell across from a while back was Joseph Stiglitz article on the development and damage of the 1% (written in May 2011).  This came before the Occupy movement began, but explains the reasoning for anger amongst the lower and middle class of America.  While many supporters of the current capitalist system believe the growth in America is strong, that remains to be seen only among the 1%.  

The trickle down effects that are believed to exist have not been working over the past decade, and statistics could support that this has been a problem for even longer.  Among those fighting to protect the rich, numerous government officials entering today are heavily supported by these corporations, and many are part of the 1% themselves.  To think the government were supposed to be protecting and serving the rights of the majority in America.

Now, with this continuous trend of increased differential in incomes, there is a lot to stand by that the United States needs to switch things up.  The amount of tax money that is going into the education systems are at an all time low.  And the worst part is that many government officials want this percentage to be cut even further.  America was built for opportunity for all, but by not only cutting the funds in secondary schools and four year institutions, community colleges are taking heavy hits.  This seems extremely poor considering the fact that many of minds can be garnished after secondary school once students have started to mature.  

For the sake of our country, it would seem wise to invest in the proper places, and not that this income inequality is not going to benefit our economy.  The costs will surely sink the benefits of the corporations that are trying to get tax free to bring growth the economy.

References:

1. "Income Inequality: Who Exactly is the 1%?". The Economist. http://www.economist.com/node/21543178
2. Stiglitz, Joseph E. "Of the 1%, by the 1%, for the 1%". Vanity Fair. http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105