- Sep 12, 2008
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Rich folks like the rest of us like lots of money. Most of them, except for the minority who inherited it and only spend it, want more. And they are very good at acquiring more by doing things that produce more revenue for themselves. The build factories that make widgets or provide other useful services. Money in the hand of a competent businessman breeds more money, and the only way to make money is to hire lots of folks like me to assist in the breeding, gestation and birth of ever larger piles of wealth.
Government programs, assuming the best intentions (usually a bad idea) only suck money into various black holes where it is spent on consumption, never to be seen again. Government programs create very little that produces anything other than consumption. Armies consume huge amounts, but the point of a military is that anyone who wants to mess with us checks out our aircraft carriers, out bombers, our tanks and changes their mind. Cops likewise. Any random burgler checking out a jewelry store or a car sees the police car cruise through and decides to chill. And for those crooks who don't get the message we have jails and prisons to keep them away from the rest of us for long periods of time. But nothing is created.
Keynsian economics preaches about something called the Multiplier effect. Every person's consumption is someone' else's production. And in order to produce, you need to consume the production of someone else. Before you can buy a loaf of bread, the baker needs to consume flour, the miller needs to consume wheat and the farmer needs to consume tractor parts etc. And the baker does not live on bread alone. He likes cheese, meat, vegies, etc. The Butcher and the milkman like variety as well. All this consumption lead trade is a healthy economy.
When you pour government spending into a government program, it supposedly is better for the economy than a tax cut because people immediately spend it on whatever, whereas tax cuts supposedly just go into savings. There is a huge literature on 'consumption functions' among various income groups. If there is the assumption that rich folks will do nothing with their money except put it in the mattress and sit on it, and the poor will immediately go out and blow it thereby improving the conditions in the mattress, pharmaceuticals and record industries.
However, the rich do not put the money into mattresses. They put it into stocks, bonds and inventory for their business. Folks who have wealth like to breed it into more wealth. it goes into factories, where production lines are extended, costs are cut by better newer machinery and, since marginal revenues are increased for each additional unit of out put, more output is needed and for that you need employees. Tax cuts result in greater efficiencies and more jobs. Government spending is just results in waste at best. A new government program means a new government nanny giving you a new government lecture on what is best for you. Government spending does not increase wealth, but does decrease human freedom.
So, what are my interests in any election. I want a nice paying job. And I don't like begin lectured. So therefore tax cuts, even though I don't see a penny of them personally, are more my interest than the most grandiloquent government spending program, which will denude another forest and provide me with another set of shackles.
Government programs, assuming the best intentions (usually a bad idea) only suck money into various black holes where it is spent on consumption, never to be seen again. Government programs create very little that produces anything other than consumption. Armies consume huge amounts, but the point of a military is that anyone who wants to mess with us checks out our aircraft carriers, out bombers, our tanks and changes their mind. Cops likewise. Any random burgler checking out a jewelry store or a car sees the police car cruise through and decides to chill. And for those crooks who don't get the message we have jails and prisons to keep them away from the rest of us for long periods of time. But nothing is created.
Keynsian economics preaches about something called the Multiplier effect. Every person's consumption is someone' else's production. And in order to produce, you need to consume the production of someone else. Before you can buy a loaf of bread, the baker needs to consume flour, the miller needs to consume wheat and the farmer needs to consume tractor parts etc. And the baker does not live on bread alone. He likes cheese, meat, vegies, etc. The Butcher and the milkman like variety as well. All this consumption lead trade is a healthy economy.
When you pour government spending into a government program, it supposedly is better for the economy than a tax cut because people immediately spend it on whatever, whereas tax cuts supposedly just go into savings. There is a huge literature on 'consumption functions' among various income groups. If there is the assumption that rich folks will do nothing with their money except put it in the mattress and sit on it, and the poor will immediately go out and blow it thereby improving the conditions in the mattress, pharmaceuticals and record industries.
However, the rich do not put the money into mattresses. They put it into stocks, bonds and inventory for their business. Folks who have wealth like to breed it into more wealth. it goes into factories, where production lines are extended, costs are cut by better newer machinery and, since marginal revenues are increased for each additional unit of out put, more output is needed and for that you need employees. Tax cuts result in greater efficiencies and more jobs. Government spending is just results in waste at best. A new government program means a new government nanny giving you a new government lecture on what is best for you. Government spending does not increase wealth, but does decrease human freedom.
So, what are my interests in any election. I want a nice paying job. And I don't like begin lectured. So therefore tax cuts, even though I don't see a penny of them personally, are more my interest than the most grandiloquent government spending program, which will denude another forest and provide me with another set of shackles.