"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance." ~ Murray Rothbard
So, after a couple of weeks I am back again. I've started and stopped three posts, which just aren't as up to snuff or documented the way I'd like. Since my last post, I've had a few requests to tone down the rhetorical device known as "swearing", and people would like to showcase some of my ideas to friends but are hesitant because of the language. Now, I'm one of these guys that think swearing does have a very useful and colorful place, as often I think it's the quickest and easiest way to make the point, but, as I understand it, some people would take exception. Alright, so I'm going to sell out a little and tone it down. I mean I don't need the colorful language to get my point across. I think it just happens when I get filled with all sorts of righteous indignation.
With that said, let me bring us around to the topic of today's discussion: the extension of the tax "cuts" or more properly understood an abstention on any further raise in federal income taxes. The progressives in congress, of course predictably initially wanted to raises taxes on everybody. I'm not entirely sure if it's because in their efforts to style themselves as helping the "little guy" they find themselves actually philosophically averse to to people actual making and keep the money they earn, or if it's simply a cynical political ploy to appeal to least common denominator class envy, or maybe it's because they are actually naive' enough to think that federal income taxes actually pay for the government (of course they pay some, but we wouldn't have these things called "deficits" if income taxes paid for everything). Furthermore, it's these same progressives who are loathe to cut any of the behemoth, despite the fact that we all know stories of government waste and stupidity (check out Citizens Against Government Waste and their report for 2010). And the fact that it's quite apparent that those in government are doing quite well, twice as well as their respective private sector counter-parts, in fact. In order to keep doing "twice as well" as the rest of us, apparently they think they need more of our money to maintain the lifestyle in which they've grown accustomed. Well. That's nice. But if you think that most people are going to sit back watch their wives have to shop at Walmart while the government employee's wives shop name brand, or watch the bureaucrat's children go to private school, while the rest of us send out kids to the public indoctrination camps, or if these civil servants think I'm going to sit back and take the bus, while they drive a BMW . . . I'm not sure I even know how to properly respond to that kind of magical thinking. But it's even more than that! There is absolutely no way to get back onto economic track by raising taxes. Let me repeat that: there is NO way to back onto economic track by raising taxes . . . on anyone.
So, enter stage left comes the progressives, attempting to style themselves as "reasonable" and make a "deal", a "compromise", by saying, that because the economy sucks so bad, they propose to only raise taxes on those making more than $250k per year . . . *sigh* . . . (here is probably where in the past you would have have witnessed a profanity ridden tirade, and with good reason). Ok, what, exactly are these guys thinking? The Republicans are correctly, and I don't often support anything the Republican party does, are correctly, refusing to go along with this nonsense unless cuts are also extended to those making more than $250k per year. Finally, bringing me around to the whole point of this post in the first place. I was reading an article on the subject this morning, I think on the abc website (who cares really), and I ran into this little gem in the comment section:
"Giving tax breaks to the wealthy has been shown to NOT improve the economy, at least in terms of consumer spending, which is the "engine" of about 70% of the economy. The reason is simple: the wealthy, a tiny minority (about 2%) are already spending as much as they want - a tax break will not increase their spending. A tax break for the middle class, and the poor, does cause an increase in spending on consumer goods (because they can now afford things...), and thus revs up the "engine" of the economy. If you look at how reactive the stock market is to consumer confidence, consumer spending, etc., you would have no doubt of this. The Reaganomic "trickle down" theory has been proven bogus by history"
And after reading that I knew, just KNEW I had to talk about this because this guy's piss-poor reasoning is not only laughably over-simplistic and wrong, but also seems to be the current working understanding of any progressive on this issue, as evidenced by the rest of these mouth-breathing, mental midgets as they parrot each other saying basically the same thing on any story you read about this, on any news website allowing comments after the story.
We need to first define what the real problem is with the economy. Is it a lack of spending? Sure, in the same way that a pneumonia patient is lacking for oxygen, but the pneumonia patient's problem is not really his hypoxia, in much the same way that out economic problem is not "spending". This is what we call a "symptom" boys and girls. The economic sucks because no one is spending money. Ok. WHY? Tell me why people are not spending any money? They don't have enough of it? Why is that? They are tapped making payments on loans they took out while irresponsible with fast and easy credit? Oh, you don't say? What? Some of these people don't even have jobs? Are you telling me that people without jobs, trying to make multiple payments are not able to spend money? Ahhhhh, so what we need are jobs then? How do we create jobs? Genie? Oh, the employers need to hire more people, make more jobs? You mean the people who make over $250k per year need to make more jobs? How do you figure they will do that if they are having to pay more money in taxes? How many jobs were you thinking that people making less than $250k per year were going to create? Have we had enough of the rhetorical question? (Don't answer that! It's rhetorical.)
Shall I connect the dots for those ladies and germs who still do not get it. The problem with the economy is not really spending. Spending is a "vital sign" if you will of how vibrant the economy is - if spending is up it's generally a sign that the economy is healthy, and if spending is down . . . but simply "spending" is NOT the economy. What the economy needs is 1) jobs and 2) a production base, and you can't get 1 without 2. Let me flesh this out for you a little farther. The only way to create real jobs is to start making real things again. The people that invest in and/or make things themselves are the people making over $250 per year. There is no way, unless they have the capital to do so that they will create any new jobs to pay people who will feed the gaping maw of the economy, and this means that with LESS money (how could it be any other way?) that will occur with a tax increase, they will hold off on expanding, investing, and job creation will continue to screech to a halt. In fact, MORE people will likely have to be fired, and that will be even fewer people able to "spend", if those making $250k per year are taxed more. Oh. The. I-ron-nee.
This isn't the new maths. This isn't complicated. This isn't rocket science. If you want the economy to come back, you need to have people who are working and making things. The only way to get people to work and make things is to allow those who do employ people more money to expand and do so. The way to do that is to cut their taxes.
This time, the party of "no" has it right. Till next time . . .
