Kill The Estate Tax To Save Jobs – Ep. 186

The Peter Schiff Show Podcast

Today we got the official numbers for Q2 Non-Farm Productivity and the consensus was that it would increase for the first time in 3 quarters; the prior 2 quarters we saw a decline in productivity So analysts were looking for a .5 increase in the second quarter Instead, we got a decline of .5 More importantly, this is the first 3-quarter consecutive decline in productivity since 1979 That was the Carter years - stagflation, the misery index, sky-high inflation, sky-high interest rates That was the last time we had a 3-quarter drop in productivity and President Obama is bragging about how great the recovery is and Hillary Clinton promises more of this If you look at the actual size of the decline over those 3 quarters, it's the biggest drop in productivity since 1993 If you look at the year-over-year decline, this is the biggest decline in productivity in 3 years Productivity is extremely important Politicians are all talking about higher wages - "We need higher wages!" You can't get higher wages without higher productivity. That is where higher wages come from Now, a lot of politicians want to substitute government decrees - they want to mandate higher wages Like minimum wage - we're going to force employers to pay this minimum wage All that does, is raise the bar; it makes it harder for unskilled workers to get a job in the first place Now employers are forced to pay a wage that may be well above the productivity that they can deliver In that case, they can't get the job Mimimum Wage doesn't just raise wages, it raises the bar Another popular way that politicians try to mandate higher compensation is by mandating benefits such as health care, sick leave, paid vacation days, or overtime The idea is that you're getting something for nothing - I voted for this guy and he delivered That's not how it works When an employer hires somebody, they look at the overall cost of employing that person, relative to the productivity required for the job If I am mandated to provide certain benefits, the costs associated with them are also mandated If you force the employer to provide benefits at a certain cost, how is he going to pay for it? What happens is, the compensation becomes a mix of wages and benefits Maybe the worker doesn't perfer that, maybe the worker just wants the higher wage The worker can't have it because the government took that decision away by mandating that a portion of the pay include benefits, whether the worker wants them or not The politicians hope the voters fall for the idea that they got something for nothing That's government for you. They always want you to think you're getting something for nothing But the something for nothing costs a lot more than you think because the nothing is not nothing In this case, wages go down so the benefits can go up Everybody would be better off if the government stayed out and let each worker negotiate independently with the employer for a compensation package that is most valuable to that worker But productivity is really the holy grail of higher wages If we really want higher wages we need to raise productivity and that's not happening If productivity is going down, wages are going down If you want wages to go up, you have to have higher productivity How do you get that? Less government, lower taxes, higher interest rates so we get more savings and more investment and less of all this speculation and paper-shuffling that we have in this bubble economy I want to talk also on this podcast about Donald Trump's economic speech yesterday I just want to focus on one aspect of it that has been getting a lot of press: the estate tax After you die, the government comes in, and if you have a sufficient amount of money, they take half of it Donald Trump is promising to repeal the tax, which is a great idea The inheritance tax is probably the single worst tax we ha...