Taxes, Tourists, Kias, Socialism and Stuff

For a large society to function properly, long-term, people must be able to earn an income to live on which is independent of the government. Or, conversely, a government must be able to get an income from outside sources other than it's own people.

Government cannot really solve unemployment by simply hiring everyone to work for the government. To avoid stagnation and the eventual gridlock that is pure socialism, there must be an influx of actual "new" capital into the system.

There are two groups of people who are working for the government. First, there are actual workers who go to work each day doing the business of the government. Second are the people who are receiving monthly checks from the government as benefits or help of some kind.

Mostly, a government gets the money to meet these various "payrolls" by (1) making some of it's citizens pay certain taxes, and ALL of it's citizens pay other types of taxes; and (2) by taxing everyone indirectly through the back door by making their money worth less.

We certainly have socialism, to a degree, a large degree, in the United States. That is as it should be, I believe (except I think the proportion is too large right now.) Certainly, some things can only be done by government, and, just as certainly, our more unfortunate brothers and sisters need us to help them get by. We help these fellow citizens by each of us giving some money to the government, and then having the government pass out that money in proportion to need. (Like Karl Marx said.) That's socialism pure and simple, and there is nothing wrong with it unless and until it gets totally out of hand.

Where the danger comes in is when the government tries to take too much upon itself and forgets that "fresh" capital - that which is not simply being recirculated by the government - is necessary for the survival of the system. The second thing that must happen in order for the system to survive is for the government to keep the money supply reasonably finite and not expand it until it is worthless.

What is "fresh" capital? Fresh capital is "outside" capital. It is money a person earns or receives from sources other than the government. And it is money received by governments that they get from sources other than their own citizens - for example by selling natural resources it owns. Examples? When tourists from Japan and Germany visit the U.S. and spend money to eat and sleep and travel and to get into our national parks, that's fresh capital. When Saudi Arabia sells oil to the world that it gets from under it's ground, that's fresh capital for Saudi Arabia. Saudi Arabia doesn't have to tax its citizens highly (or even at all, probably) because it has this fresh source of income. Saudi Arabia also, one assumes, does not have to make it's money worth less and less every day by "creating" more and more of it on the printing presses. [Incidentally, pure socialism would probably work in Saudi Arabia since the government is making enough money - now, at least - from the outside. Unfortunately a "royal" few are keeping most of it.] When a Canadian farmer sells wheat to some country elsewhere in the world, that's fresh capital for Canada. When China sells plastic toys to the world, that's fresh capital for China. When South Korea sells Kias in the U.S. (as President Obama noted in his recent jobs speech) that's fresh capital for South Korea. I might add that when a country agrees to protect South Korea or Canada so they don't have to pay for the size of army they would normally have to pay for, that is also fresh income for South Korea and Canada (or whatever countries do that.) North Korea could probably cut the size of its military by about 80% and use that money to buy food for its people, and all it would take is for North Korea to start being nice to the rest of the world. There are all kinds of possibilities for "fresh" capital generation. Don't buy U.S. Savings bonds - that's silly to lend yourself money and then pay yourself interest. Invest in British municipal bonds and make Londoners pay you interest instead. See? Fresh, non-governmental, capital for you and me.

Any money you get from sources outside your government is fresh capital. Any money your government gets from sources besides its own citizens is fresh capital. Fresh capital is an object of desire. Fresh capital creates "real" jobs and makes you pay less taxes and makes your money worth something.

In my opinion, one major goal of a government should be to facilitate the influx of fresh (non-tax) income. In my opinion, when the government "borrows" more money and uses that money to hire people (even through private companies) to build bridges and roads, those are fake jobs. They are fake because the workers are getting paid by the government (by proxy) and because the contractors are getting paid by the government (directly.) Good has happened but nothing fresh has really been produced. All this is just another example of the government "churning" tax money.

In order for socialism to work (we have already agreed - at least I've said it - we need some socialism) there must also be some capitalism, some incoming of NEW money. How do we do this? Well, tourism was a good example. Work it more. The government should facilitate tourism more, and it should also encourage private travel companies to aggressively seek out tourists from overseas. Each state has unique attractions. Each state should be working hard to get foreign tourists to come there, not only American tourists. Some already are, of course, but all could probably do more. And food. We need to go back to selling food to the world. We need to stop paving over farmland and start growing crops that other people in other countries want to buy.

And we need to start manufacturing goods for sale again. Somehow we (and most of the rest of the Western World) have got this complex in our heads that cheap is the answer and only China can do that. Well, cheap is NOT the only thing! Innovative quality products are the thing. We can sell farm tractors to the world even if they may be more expensive than China's tractors, if they last longer or if they can do things China's tractors can't do. Inventive countries can always stay ahead of, and beat, copycat countries.

The other night, President Obama made a speech to the nation about how to create jobs. One of the good points he made is that our goal should not be to see who can get to the bottom by making things cheaper than everyone else, but by aspiring to get to the top by making things that are better and and more innovative and thus more valuable to buyers around the world.