I guess I don't really know that much about formal economic systems, such as capitalism. I know vaguely how it works, though pure capitalism has never been tried in any history book I've ever read. That's just as well, I suppose.I do know, however, the difference between good times and bad times. When I look back on the good times, it has always been a time in our history (of the United States, I mean) when people were working at good jobs and making good money and buying things for their families.
The bad times were when lots of people were out of work and a lot more were worried they might lose their jobs any day.
So, that's how I judge our economy rather than whether we are in a socialistic or capitalistic period in our history.
Right now, a lot of people are not happy. A lot of people are out of work. People don't have money to buy things for their families.
Now, a lot of you reading this are a lot smarter than I am with regards to economic theories, but it seems to me the top priority of our government right now should be concentrated on fostering an atmosphere that was conducive to creating jobs and putting people back to work so they could buy things (like food and clothing and maybe new cars) and be happy again.
Something else I know is that jobs are produced by small businesses and factories and contractors. Jobs created by the government for people to go to work for the government are top-heavy in the sense they are an expense, for the most part, which must be paid for by taxes.
Government jobs are necessary of course, but we should be mindful that it is not really productive for the government to simply "make work" for people and put them on the government payroll, taking the money to pay them out of the pockets of all workers. Better, it seems, to let private businesses hire people and pay the workers out of profits.
Again, where do private jobs come from? They come from private business owners who are willing to risk their savings, or risk borrowing money, to expand their businesses, or start new businesses.
Why would a government who should be wanting to increase employment ("good times") in our country instead try to stifle and cripple the very people who hire other people?
Right now, our government is about to (January 1st) raise taxes on the wealthy in this country - the people who have business and hire people to work in them. This tax increase is not going to make the wealthy go hungry, but it IS going to stop them from expanding their businesses and hiring people.
Capitalism is what creates wealth for everyone from the top on down in this country. It helps the wealthy buy another yacht and it helps Joe Plumber buy a new car and Christmas presents for his kids. Socialism, (social programs, I mean) on the other hand, is a necessary government expense to care for our needy citizens. Over-regulation stunts capitalism and can actually kill it. It is pretty sick in this country right now.
When you heavily tax the entities which alone are capable of creating "real" jobs (not tax jobs) then I say you are shooting yourself in the foot. When you create an atmosphere of uncertainty, no one is going to go out and borrow big money to open a new factory, especially if they are pretty sure the government is going to tax all the profits out of such an enterprise. So money sits on the sidelines, like it is right now, and waits for the return of certainty.
It seems to me our present government and crew have created that atmosphere of uncertainty. They are not dependable. No one knows what they are going to do next.
For a long time, I didn't understand how cutting taxes brought in more actual money into the government treasury. I think there are a lot of people in this country right now - Democrats AND Republicans - who still don't understand the magic of this paradox that capitalism produces. Otherwise they wouldn't be so quick to raise taxes on people who hire people, and would not be so sure that it was time to kill the goose who lays our golden eggs.
The magic is really quite simple: cut taxes and allow people to keep more of the money they earn, and that extra money will be spent and reinvested. People will make more money, and because they make more money, they will pay more in taxes, even though the tax rate is lower. With more actual money coming in, the government then has money to fund it's needed social programs.
The whole point of capitalism is to get a lot of money into circulation, through profits, and keep it there, and keep everyone spending it. Let people who want to create jobs, who are good at creating jobs, start hiring Americans again. Don't make them sit on the sidelines or, worse, take their money offshore and employ people in other countries. Let's build some factories HERE for a change. Insist that our government make it EASY for businesses to start up, expand, increase their incomes.
The current pervading atmosphere is one of spending, debt, government takeovers, and the stifling of free enterprise. Government is NOT the answer to our troubles.
The government is, or should be, good at making people play by the rules. Let's let them stick to that job, and otherwise get the hell out of the way.
What you said made a lot of sense!
ReplyDeleteI never thought about tax cuts actually increasing employment.
Cool.
Rolls eyes.
ReplyDeleteGuess how we got out of every depression/recession? Yep, taxing the wealthy to put money in the hands of poorer people (lower AND middle class) because it stays working in the economy instead of being squirreled away in banks (on and off shore).
Ironically, creating a recession (EVERY SINGLE ONE I know about, back to ancient times) has come from a concentration of money among the rich. That includes this one. That includes 1929 (and that depression was dealt with by a combination of war - which hasn't exactly been helping us here - and exactly the tactics you're decrying). Einstein said "We can't solve problems by using the same kind of thinking we used when we created them," and "There is a name for those who suppose that doing the same thing will produce different results. That name is 'Idiot'." It's a rule I abide by.
It's the top heavy thinking that gets us here, not the other way around. Though I appreciate (even if I don't agree) your view on governments in theory, in actuality, letting the bulk of the citizens in this country suffer because on principle seems like a bad plan to me.
You want to know what else is amazing? Republican presidents have increased the deficit more than Democrats (even if you include FDR)this century by a huge margin- do the math. Huge amounts if you include Hoover. The data's out there. Look it up.
@Angelika - I always make sense to the common thinking man. (Or woman.) :) You never thought of that because you were too busy hustling people to do your Walmart boot shopping for you. So.
ReplyDelete@Stephanie Barr - Welcome back. Missed you.
Well, I was just saying that I felt better when I was working and had money, back in the day, than I did when I was having to pinch pennies and deny myself all the time. For me, being employed was better, that’s all. I never really matched it up with this or that president, they have all sucked pretty much.
Although I realize you are the final word on such things, many lessor economists cite WWII as getting us out of the depression rather than taxing the rich.
Me? You are right about me thinking people are the answer and not the government, over and over and over again. So I am one of those idiots you describe, as you say.
I mentioned the war, Max. But all the economists I've read credit the otherwise unthinkable public spending done in support of the war for the recovery rather than the actual war itself.
ReplyDeleteInteresting article on this topic today: http://www.nytimes.com/2010/09/06/opinion/06krugman.html?src=me&ref=opinion
I'm not trying to call names, just pointing out why I see things differently (i.e. since every economic cataclysm I know of is caused by or fueled by concentration of money in by the few), I'm willing to think making sure the upper echelons can hold on to their money while others suffer is a recipe for recovery.
I didn't write the quote, just noting that I make a point of learning from history as Einstein advised. And sometimes that goes against what can look like "common sense." Not that I, personally, think preserving today's obscene imbalance in wealth, in any way, counts as "common sense."
However, I will rethink my process if you can point to an economic collapsed caused by too much money in the lower/middle classes while the "rich" were left wanting.
And thanks for missing me. I managed to crank out nearly a quarter of my novel this past weekend so my absence has not been in vain.
ReplyDeleteI'm in agreement with both Max and Stephanie, not totally, but...
ReplyDeleteThe thing that gets you out of recession is exporting.
The jobs that matter economically are those that are involved in actually making things that other people pay for.
As you say, government can say "We're creating 50,000 new jobs!"
But if those new jobs are in the myriad government make-work schemes, now let me see... those people who organise "team bonding days" for government offices, oh no, i'd better not get started on the way in which govt departments pour money down the drain, taxpayer's money.
Truth is, every one of us who picks up and buys some item or produce made overseas, is exporting money.
Look at the cars going by. Look at your fridge, your television, look at all those imported goods paid for by exported money.
And ask yourself, what are WE making to sell to those countries and get money back in?
The answer is "Not enough".
Tax the rich?
Not a bad idea.
I'm all for the creators of wealth enjoying the fruits of their labours.
But people who shuffle money, earning vast bonuses and commissions, what are they actually making? Nothing. It's imaginary industry.
Futures trading? Like betting on the horses, only more respectable.
Let's ask ourselves, why do we pay rappers and ball-throwers vast sums of money?
Ohhhh I've lost the thread here. It's when I see vast wealth in the hands of the Paris Hiltons and the gangsta rappers that I feel suddenly communist. Oh yes, Comrades, line the millionaires up and give them a job hewing coal and tilling the soil.
Tax the rich, lessen the tax burden upon the poor.
Set them to work making things.
Sell overseas.
I do think Soubriquet has at least one other point I agree with.
ReplyDeleteWe need to get back into the business of creating things. The service industry now provides nearly three quarters of the GDP. People who don't have jobs don't need services. Clearly, this is a spiral to nowhere.
I think it's important to get people working at something now (repairing crumbling infrastructure is fine), preferably learning skills that will be useful in making something else in the future because, if we're not doing that, making something, we'll be doing this again. Much sooner than we like, even if we survive the current crisis.
We do need to start producing actual products again, so jobs stay in our country.
ReplyDeleteHow do you argue with someone who thinks putting money in a bank is "squirreling it away" and taking it out of the economy?
ReplyDelete"Squirreling it away" is putting it under your mattress. Renting it to others is hardly taking it out of the economy..
The money to fund WWII was raised in very large part by selling war bonds to decidedly unwealthy Americans. That was hardly taxing the rich. I don't think the rich had enough money to finance a war such as WWII even if you taxed them at 100%. Ummmm.... did you think WWII has been paid for? Just asking.
ReplyDeleteLet me see if I am properly grasping this economic theory. All recessions, not to mention depressions, have been caused by one segment of the population having more money than the rest of the population? Have I got that right? :)
ReplyDeleteDo you think money being rented does as much good as money used to provide a job?
ReplyDeleteWhy yes, yes I do think that.
ReplyDeleteIn fact, the person who rents the money from you very often uses it to create jobs.
ReplyDeleteThere, now. I think I have all my comments located under the proper post now.
ReplyDelete