Wednesday, November 10, 2010
The Economy
Let me first start by saying I am not an economist. I had to Google Keynesian economics just today. I am barely able to keep my own lights turned on and my house out of foreclosure. That being said, I have an idea. Stop me if the simplistic nature of my suggestion seems like a colossal mistake. Cut taxes on the wealthiest Americans. Gee, somehow I thought that it would sound smarter once it came out. No, it sounds just as stupid as when the wingnuts who ARE trained in economics say it. Do you know what happens when you depend on the wealthiest to "trickle" some down. THIS. This is what you get when you allow unbridled greed to be the only factor in your economic policies. The greatest wealth disparity since the depression. I don't even think the Politicians believe it anymore. They just have to kiss the ass of the mega rich in order to keep those campaign donations coming in.
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Let me try to explain why tax cuts for the rich don't help.
ReplyDeleteAssume the following conditions.
You have a wealthy man who owns a business making widgets. There is a certain demand for those widgets. If the owner of the business is wise, he has sized his business to meet the demand for his products. He can produce as many widgets as the public is willing or able to purchase.
You have a working and middle class public that really likes widgets but is financially pretty much tapped out. The only way they can purchase those widgets is to go into debt but they have already run their credit cards up to the max. So many of them do without new widgets.
The government "finds" a pile of "surplus money" that can be distributed in the form of tax cuts. some say give the biggest chunk of the tax cut to the wealthy man because he will use it to create more jobs. As I often hear, "Only the wealthy create jobs. I have never been hired by a poor person". Other people say use the money to help the working and middle class.
Consider the following scenarios.
1. You give the wealthy man a nice fat tax cut. He can now afford to hire more people and make more widgets. But why would he if there is no increased demand? Instead he buys a new boat and a beautiful new house in the Caribbean.
2. You give a big tax break to the working and middle class. They now have a few extra bucks and suddenly find they can afford to buy that new widget they have been wanting. The wealthy man sees increased demand for widgets and realizes he needs to increase the capacity of his factory so he can make enough widgets to meet the demand. He hires a few more people who now also can buy widgets. The widget factory's suppliers also see an increased demand for widget parts so they must also hire to meet their new demand. The wealthy factory owners see increased profits due to the increased sales so they are happy. In fact the widget factory owner can now buy a new boat and that house in the Caribbean his wife has been wanting. The government also starts collecting more tax money from the new workers and increased sales.
Pick the best scenario.