Sunday, July 12, 2015
High taxes bad: Spending cuts good
They then measure this artificial stimulus to GDP--conveniently ignoring the debt it creates--and pat themselves on the back.
What this crowd doesn't understand is that business investment drives wealth and job creation, which is the only sustainable type of economic growth. That's because they hate business, capital markets, and wealth creation--except insofar as it can be milked to fuel their ideological policy objectives.
Leftists seem to have a lack of understanding of the very concept of productivity. It's a child's understanding of the economy - pay someone to do something, and he's got money to spend on other things.
The notion that the money to pay him is being taken from another use doesn't enter into the brain. Worse, it's virtually a given that taking that money and reallocating it will be less productive than leaving it alone.
Apart from the fact that government isn't as motivated to pick the most productive use of that money than the original owner, there is the vig taken by the bureaucrats to run their bureaucracies - bureaucracies that create no value.
The left seems to be working on developing a meme that major government spending cuts will be severely damaging to the economy. They're presenting it not as the result of an analysis, but simply as an "intuitively obvious" conclusion.
There are several current, living examples of increasing taxes without de-regulating rigid government rules and shrinking government size.
Growth in most of southern Europe has been very slow as companies fled for more economically freer shores. Reading their labor laws is key to seeing the mindset, but in addition, they have government ownership of business and subsidies to favored areas, along with extremely costly entitlements to a high percentage of the population.
In the past few years, Greece, Portugal, Italy, Spain and France have all raised taxes, but kept their anti-business regulations. Look at them now; France has been downgraded, Greece is in chaos, and unemployment is very high in all of them.
Our own states of California and Illinois are examples, as well. Taxing drives job creators out is the lesson we have going on in the United States, and these businesses are moving to states with less regulation and lower taxes.
How much evidence does anyone need to see what works and what destroys? It does not require an economics PHD from an ivy league school.
Our own government blithely goes on borrowing almost half of every dollar our government spends, and seems to think this can go on forever with no day of reckoning. The longer we continue, the more pain in the end when we reach a state like Greece is now experiencing, or what Argentina experienced a few years ago.
How can anyone ignore this and call themselves a representative of the people? To pay for the current year's expenses would require most of everyone's income.
Spending cuts at all levels, federal, state, local, frees up vital private capital that is currently tied up in the public sector. Consider the thousands of private sector contractors to government sector services, who are presently encumbered to the whims of the political wind. They really have no choice, in this environment, but to take what the government gives them, including poor response, shoddy administration and late payments.
For these, among other reasons, public sector dollars amount to a net zero or net negative, in terms of impact on the general economy.
It is much better to have those resources employed in the private sector, where decisions are based on real world economics, not Washington contrived economics. No guarantees, mind you, but eminently better than what you are seeing now.
And for those that brood over unemployed public sector workers, consider that we're stuck in the mire of double digit employment now, and that spending cuts would free some taxpayer dollars from having to pay future health and retirement benefits.
If that private production stagnates or contracts — as happened in the last recession in a big ways — then the only way government can grow is through deficits, tax increases and inflation; which is what we're seeing.
The fallacy of the left is that they seem to believe that the bigger they can make the government, the healthier they can make the economy. In reality, it is just the opposite --- the greater the percent of wealth taken from the private sector to run government, the less wealth is available to be invested and risked and applied to all of those millions of activities that comprise a healthy economy.
However, many on the left dislike, distrust, and even despise the private sector, free enterprise, and market capitalism.
Back in the day, John F. Kennedy understood that the best way to get more resources for the government to use was to grow the economy in the private sector -- hence, his historic tax cuts. But, the left today has the exact opposite viewpoint -- wealth creation is to be punished with ever higher taxes and regulation, and growing the public sector with debt is just fine.
The left just can't accept that the predicate to a fiscally healthy government is a healthy and growing private sector.
Government is a necessary evil. The only logical conclusion one can draw from this is that its size and scope should be limited. Thus, the Constitution.
Right now, the federal government is the biggest threat to the average U.S. citizen's economic well being. Over spending, over regulation, printing money, and crony capitalism all come from larger more intrusive government without bounds.
If anything, our Constitution should be more relevant today than it was in the late 1700's.
Posted by High Plains Pundit