Submitted by Looking Glass
Theories like ideology are “rooted in the material conditions of life, but despite what we are led to believe or want to believe there is no unilateral or universal relationship between the…the relations of production and the political and legal superstructure. The structure of society exerts a determinative effect upon the ideas which assume prominence.
Economics like self-interest is not morally neutral. Economic estimates premised on the broad generalizations contained in “rational behaviour” simply cannot account for the plethora of ambiguities inherent in the human species. For this reason estimates could result in over-optimistic conclusions and misguided policies. Some people suggest business tax-cuts, concessions and cuts in personal income tax are needed to resuscitate the economy.
Proponents of tax-cuts, essentially those favouring the supply side economics approach, view them as positive and necessary. Tax-cuts they maintain enable people and business to put in more effort, work harder, save and invest more at home. As the economy grows there will be more income and profits to tax. This would allow government to recoup revenue lost through the initial tax-cuts and facilitate deficit reduction. In addition it would induce people to change their behaviour in ways appropriate and beneficial to the society. But will tax-cuts and concessions lead to economic growth and employment?
Tax-cuts and concessions in a mercantile import and tourism dependent economy may produce some low wage employment, but the substantial gains from work, savings and investment suggested by the supply-side advocates may be exaggerated. Tax-cuts and concessions by themselves are insufficient render businesses competitive; facilitate expansion and high wage job generation. In some cases, tourism for example, the real benefits accrue outside the country. On the other hand it does not follow that business will use the tax-cuts/concessions efficiently or in ways beneficial to the country (See Things We Could Do). There is little indication that business is sufficiently inclined to take the risks (associated with innovation) necessary to produce more goods and services competitively. To realise such gains in the medium term the economy would have to be restructured with an emphasis on import substitution rather than export manufacture. In the interim government will have to reduce spending, introduce wage cuts and or freeze wages in order to service debt and deficits.
It is imperative, indeed crucial that we make better use of our limited natural resources; in this case land. A country unable to substantially feed its population is doomed. Except for St. Andrew, thousands of acres of arable land are up for sale. For example; about 239 and 303 acres for $50m and $75m in St. Lucy; 344 acres for $60m and Pleasant Hall in St Peter, 80 acres in Joe’s River and 270 acres for $13m near Sunbury in St Philip. At Merricks 54 and 45 acres cost $28m and $12m. It appears the latter has much to do with ownership, politics and morality (stay tuned). The land will be bought by foreigners to build hotels, villas and homes for foreigners, not to grow food to feed you. Most of the jobs generated will be low income and temporary. Social consequences apart it will result in higher prices/costs all round to you. That my friend is the other side of foreign investment
Given the state of the economy and the mindset of the people tax-cuts will likely lead to increased deficit and debt. As it stands the depth of people’s response is insufficient to generate the levels of productivity and growth needed to make up for the revenue lost to government through tax-cuts. Some categories of people will put in more effort and work harder. Others will work less. Some will be forced to work for less just to get or keep a job, in which case the some benefits from work may cancel out. Much the same holds true for savings and investment. Nevertheless people need to reduce consumption of imports, downsize their lifestyle and settle for less for a while. Government cannot over-tax the poor to support economic growth and development. Perhaps it is time to call upon the super-rich, the affluent and the unproductive upper classes. A tax hike would not necessarily injure personal and business in the short term.
The blogmaster invites you to join the discussion.