The common mantra amongst just about anyone that knows the economy is that Capatalism is good because it shoots productivity through the roof. This is true, allow people the chance to make there own fate and they are highly motivated to make something of themselves.
Also the common mantra amonst most neocons and people that are pushing for tax cuts for the rich is that it will create more jobs. The way to create more jobs is for rich people to get to work. To invest that money and expand there business and to hire people. They arent going to get any richer unless they work harder! They arent going to get richer unless they deserve it!
Instead of trying to give them everything they want, why dont we start taxing them harder, to give them an incentive to work?? This really isnt that radical of an idea, its something these same people have been doing to the working class of people. Paying them less so they work harder.
Can anyone explain to me why giving rich people everything they want, and allowing them to gain wealth and riches beyond measure, will create more jobs?? Especially considering that is counterproductive to the basic rules of capitalism??
Or is our economic model better represented by capitalism for the poor, socialism for the rich?
One:
Basic rule of economics, 'Subsidize what you want more of, Tax what you want less of."
If you tax income, people will be a disincentive to work as hard. They will instead find a balance point of best effort for return. If income is created by work, and productivity is an indicator of the quantity of work, taxes decrease the incentive to work as hard, because a laborer keeps less of their money, an investor will risk less, creating less investment capital, and an entrepreneur will risk less because the return is smaller.
Therefore, taxes are NOT an incentive to work as hard, or as much.
Two:
A graduated tax code creates even GREATER disincentive.
The harder I work, the more I pay. I will instead find the "Sweet Spot" for maximum profit for minimum work. It's the 'Law of Thermodynamics" for economics in many respects. Money is lost at every step of the process through taxes and costs. You can only make the system so efficient, and if you put more strain on the outcome, the quicker the activity will cease.
Three:
Nature rewards the most efficient. They conserve the most energy, and do the most work with the least energy.
The same is true with economics. The goal really is "Money for Nothing", but since that is as impossible to achieve as a perpetual motion machine, you look for the best efficiency... or rather return on investment. If you create a disincentive like taxation increases for productivity, achievement, volume or success, it will quickly dwindle.
Four: The government is not bound by profit motive and therefore is inefficient and unaccountable to failure.
All business must be profitable or fail. Government, because they have a monopoly on force (through the law, courts and military) can forcibly extract wealth from its populace to cover its shortfalls. This means it is not accountable for bad planning and management or even function and design. They just use guns and jails to get what they need from their citizenry till the population revolts, or they become so weak, an outside force conquers them and replaces them with a more efficient and successful model. Often this is to the detriment of all people in the nation.
Five: Government activity does not grow/increase work unless it provides a tangible product, but it is the worst possible method to achieve it.
In other words, a government gold mine would increase national wealth, but it would be much better handled through another private vendor with a profit motive. Since government is not accountable for doing things right or efficiently, they can screw up as long as they can keep being subsidized. This creates an apathetic government class who feels insulated from responsibility or accountability for their actions. This leads to an attitude of privilege or entitlement that is ill deserved since it is spawned by their own general incompetence. Combine this with the fact that 99% of all government jobs are nothing more than shuffling paper for the sake of its own existence, this is even worse. "The bureaucracy is expanding to handle the needs of the expanding bureaucracy." Growth without increased function or purpose ultimately leads to death as certain as Cancer.
Six: All government involvement are a net drain on the economy.
Like entropy, money is lost at every stage of development, production, marketing and distribution of a product. Government one of the largest net drains on any industry. Every tax removes more money from efficiency like sand in oil. If it's only minor impurities, the machine can tolerate it, but over time the wear will damage it. The more government involvement, the less efficient every process is in an economy. So the least government is the best government.
Seven: Government jobs DECREASE overall wealth of a nation.
How is a government job funded? By taxes. This means money comes out of the market to maintain them and therefore is unable to be invested wisely to increase the overall wealth of the people in the nation. But what about the taxes government workers pay, you say? That is just recycled back into the system. It's not self sustaining, see point Five.
Also, most government jobs are visciously aware of their own fragility and therefore are tenacious in their efforts at self preservation. That's why Reagan so blithely pointed out that the nearest thing to immortality on Earth was a government program. Once started, they create a base of people who will fight tooth and nail for their very survival and growth despite their actual functionality. If you had a bureau of farm management, the managers would shut down all the farmers first before endangering their own jobs to preserve the cash leaving them with no real work, but they'd all be paid for it. This is the nature of all bureaucracies run amok.
So there you go. Seven points debunking your argument of why taxing the rich, and why growing government is bad. It does the opposite of everything you think it does.
Of course, I don't expect you to believe a word I say, but that's okay. It's more for the benefit of those who still can be saved.
