Some days I just want to bang my head on the desk until the New York Times start making sense.
I just read another letter in the Portland Oregonian implying that the road to economic recovery is increased taxation and the creation of more government jobs. Where do these people come from? Are they from another planet? Where do they think the money to fund all their cherished programs and projects comes from?
I have a clue. In fact I have so many clues I’ll share them with those so obviously without.
The money to fund every government program and pay every government employee comes from the same place. Private Enterprise. There is absolutely no money that didn’t originate in the private sector. Not the government employee’s wages, not the public employee’s taxes, none, zero, zip, nada.
I am amazed with how many people that I meet that do not seem to be aware of this simple truth.
I was having a discussion with a co-worker one day about some program or another that our then-governor Kitzhaber was proposing. I’m not even sure what it was, but with his record I’m sure it was warm, green, fuzzy and expensive. My co-worker was really in favor of whatever it was, but I was questioning how it would be paid for. (rotten bastard that I am.) My co-worker told me “That’s OK, the government will pay for it.”
I just about came apart from together. I explained to him, without physical violence, (I’m very proud of myself), that the government, County, State or Federal, doesn’t have any money. The only ones that have money are people. He stared at me like I had completely lost my marbles. “Of course they do.” He said, “They pay us.”
We were both county employees at that time.
That’s when I realized that the end of civilization as we know it, was near.
At no level does the government generate wealth. Only private enterprise can do that. Do people think that the Feds just woke up one day and decided that X trillion dollars was the correct amount to have in the economy and put the order in to the Treasury to print that many bills? Some evidently do.
Right now all the newspapers are full of stories of legislatures trying to come up with funding to keep from laying off bureaucrats and the only thing they can do is talk about raising taxes.
Wrong approach. Everybody likes to point to the budget surpluses in the years 1996-2000. The deficit didn’t disappear because someone raised taxes; it disappeared because the economy grew faster than the politicians could spend it. But they did try, and are still trying.
The proper approach would be to see what they could do to make the State or country more attractive to private business. That would cause increased economic activity. People would have jobs, they would make money, they would pay taxes, tax revenue would go up. Businesses would make money, they would pay taxes, tax revenue would go up. The rich would get richer, the unemployed would get jobs. (all right, that’s probably not to attractive to the left.) Both would pay taxes, tax revenue would go up. What is so hard about this? This is not rocket science.
What happens when you tax things? You get less of them. When cigarette taxes were raised, people quit smoking. The cigarette tax revenue dropped, so they raised taxes some more. High taxes discourage investment too. Has anybody read the stories of how venture capital has dried up? You know all those amazing things they are coming up with in nanotechnology? They aren’t going to be built unless someone invests in them. How about all those wonder drugs and the cutting edge computer technology? Yeah, the government is doing research. Do you know what government research leads to? Research papers. Those research papers have to be put to use by someone, and it’s not going to be a government bureaucrat. In order to make something new, you must take risks and getting a government bureaucrat to take a chance would be like teaching your cat to take showers.
The Democrats are whinging to establish the kind of make-work projects that FDR had in the thirties. You know what? They didn’t work then and they won’t work now. Except that now, we would never be able to get rid of them. They would become full time, make-work, rocking chair jobs for life.
I am not an economist, nor do I play one on TV. I’m just some poor schmuck. According to my high school transcripts, I graduated with a 2.00 GPA, in other words, barely. Why does this stuff seem obvious to me and not to others, it makes me wonder if I am hallucinating or something? Am I in the Twilight Zone?
Remember, the government generated not one dollar that it spent, the money had to be taken, through taxes and fees, from an individual or company. It may circulate through the pockets of the government workers, but they did not generate it. It came from somewhere else. Private enterprise.