I recall the first time I heard this expression. It seemed revolutionary to me and I had to ponder it. It made sense. The economy is a complex and intriguing beast. The very idea of creating wealth is at once obvious and mystical. Adding value into an economy enriches the initiator as well as the consumers. Look at the obvious benefit of industrialization. Goods became cheaper yes, and people were able to buy more, but leisure was also in the offing. Look back a few hundred years and the average rural family spent most of their day raising food and doing the chores it took to run a household. Almost everything they consumed came from within a few miles. Dinner items we take for granted were seasonal, if at all. Just doing the laundry was hours of labor. Many people spent nearly every waking hour just doing what it took to run their families and often the whole family worked together. That’s the reason for summer vacation in school, so children could help on the farm.
When you look at today it’s all different. Our children don’t work to help support the family and instead of working late and doing chores we’re watching TV, playing video games or socializing. Not only do we all have gadgets and cars but we have half a day for the most part to do other things besides work ourselves to death… except of course for crazy self employed people. Most significantly we only introduced federal income tax in 1916 and now those who have been the most successful pay half of everything they make to the massive government we grew.
If you think about it, it’s rather intriguing that our society has been so remarkably productive that we can pay such a large chunk of the wealth we create to an ever swelling tumor on our economy that we know as a government drunk with power and out of control spending… and even as the life is slowly being squeezed out of our economy we still live so much better than before. I’m sorry. Am I being dramatic? I invite you to make your own evaluation of our current and proposed budgets. I thought it was ironic that our president reflected the concerns of the nation and talked fiscal responsibility, then proposed the biggest budget ever.
I plan another post on the wrongs of Keynesian economics and to be fair George Bush also ran up a lot of debt. However Bush can be defended by pointing out the dot com bubble, 9/11 and two wars. That being true domestic spending still went up way too much so it’s not a good defense. However Americans are all too naive as it is congress who holds the power of the purse. In 2006 we got fed up with the Republicans spending too much and put the Democrats in control. I believe a survey showed 18% of Obama voters even knew who was in control in congress The point is for as bad as Republicans did… Democrats are making them look like amateurs.
The problem with all this spending is finding more money. Here’s the irony. Wealthy people already pay most of the taxes in the country. The bottom half pays no federal tax, even though you see things deducted that’s not federal tax. The top 5% pay almost all the taxes. The more money you make they more they have foreign and unusual carnal knowledge with your wallet. The ugly little truth though is that there aren’t enough rich people. If you took 100% of those top 1% earners income you could only run the government a few months. Excuse me, I mean that is how it used to be. As it happens now you can only run the government a little over half the year anyway. The rest was Chinese money, but now we’re just printing it like they did in Germany after WW I when they needed a wheelbarrow full of money to buy a loaf of bread.
Here in Oregon, to my shame and disgust, we decided to soak the rich recently. After all the rich can afford it, right? Oregon now has the highest top marginal tax rate in the country, but don’t worry. For years we have made it difficult for business which is why Portland is the leading test market in the country. If you can make money in Portland you should be able to clean up in any other city. However if you happen to make too much money in Portland, however unlikely, you can move to Clark county. You see Washington has no income tax. Right now it’s cheaper to get a residence there for tax purposes if you’re being hit by this new tax. We aren’t yet, sadly, but as of this year we plan to look for property in Washington instead of Oregon. When you add it all up you realize that taking home 40% of your paycheck means looking for ways to suffer less.
So getting to my subject, think of our economy not as a collection of classes. Think of it as the productive element that creates value and wealth and the public sector which inevitably falls into the category of an expense for the productive private sector. We need roads, bridges, water and police among other things government provides. The class distinction makes the appeal that government needs more money so who should pay. From each according to his ability to each according to his need. Well, actually that was Karl Marx who also said it was the duty of lessor races to die. The first question should be why does government need it.
Government needs more money because they get more. Let me explain. The average public sector job pays substantially more than the same job in the private sector and offers retirement 10-15 years earlier with sizable pensions. Government employees see raises several times the cost of living every year. In down economies public sector production goes down. Top earners who are disproportionally taxed earn less money and governments who are dependent on this income lose these high value assets as well as the unemployment factor. Governments budget for optimal economies and are ill prepared for less income. The solution is to tax more out of the economy.
Now go back to what I opened with. Wealth is created by adding value, and those who consume benefit from that value as well as those who provide it. Those who provide ride that demand and expand their business thus providing income to more people. In simple terms adding or taking away money from the private sector will grow or shrink prosperity regardless of where it is done. However the irony is where it makes the most difference. When small amounts of money are given to large numbers of people it makes a small difference in the overall distribution of wealth. However reducing or increasing the tax burden of the wealthy is quite different. Why?
There is an old saying. Serve the classes, live with the masses. Serve the masses, live with the classes. By and large most wealth is accumulated by offering a small value to a large number of people. The more this is encouraged the more the engine of prosperity is stoked. The more wealth and the the more easily accumulated by the common man striking out in a business the more he spends with other businesses and the more likely he is to hire people and support more families with is work. The more families well supported the more spent at various businesses.
In simple terms, pulling money out of the productive public sector for government is essential to a point. Past that point it becomes wasteful. At a point beyond that it becomes such a drag that it threatens, well… to kill the goose that lays the golden eggs. Remember that story? When our economy slows our citizens need to tighten their belt. we need to do with less. Our government, if you think about it, no longer seems to really operate at our discretion. It holds us hostage. It requires us to feed it’s excesses and if we do not then we are hauled before the courts. Occasionally because of restrictions some wise people set on our government they must ask for consent to further consume the bounty of our work. Recently Oregon demonstrated they don’t get it and want a worse economy… soak those filthy rich.
The saddest thing about soaking the rich, aside from those who end up losing their life’s savings as many did recently, is that while the rest manage to get by with less… the people who can least afford to get by with less are now looking for work because they are now too expensive to keep on the payroll. But the truth is that it doesn’t matter whether you are rich or poor when hardship befalls you. It is all difficult, and all the more offensive when it happens because of class warfare and in the guise of offering the essential services we require as a society while in fact disregarding the simple law the rest of us live by. If you can’t afford it, cut back!
Please educate yourself on our economy and become active to preserve our prosperity and way of life. When government attempts to divide us to take some of our money we need to remember that we are all in this economy together and we all need each other to have as much of our money as possible to promote the prosperity of our economy. We need a rising tide. Sinking the lead boats is not going to get ours out of dangerous waters.
This entry was posted
on Tuesday, February 2nd, 2010 at 12:33 AM and is filed under social commentary.
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Both comments and pings are currently closed.
A Rising Tide Lifts All Boats
I recall the first time I heard this expression. It seemed revolutionary to me and I had to ponder it. It made sense. The economy is a complex and intriguing beast. The very idea of creating wealth is at once obvious and mystical. Adding value into an economy enriches the initiator as well as the consumers. Look at the obvious benefit of industrialization. Goods became cheaper yes, and people were able to buy more, but leisure was also in the offing. Look back a few hundred years and the average rural family spent most of their day raising food and doing the chores it took to run a household. Almost everything they consumed came from within a few miles. Dinner items we take for granted were seasonal, if at all. Just doing the laundry was hours of labor. Many people spent nearly every waking hour just doing what it took to run their families and often the whole family worked together. That’s the reason for summer vacation in school, so children could help on the farm.
When you look at today it’s all different. Our children don’t work to help support the family and instead of working late and doing chores we’re watching TV, playing video games or socializing. Not only do we all have gadgets and cars but we have half a day for the most part to do other things besides work ourselves to death… except of course for crazy self employed people. Most significantly we only introduced federal income tax in 1916 and now those who have been the most successful pay half of everything they make to the massive government we grew.
If you think about it, it’s rather intriguing that our society has been so remarkably productive that we can pay such a large chunk of the wealth we create to an ever swelling tumor on our economy that we know as a government drunk with power and out of control spending… and even as the life is slowly being squeezed out of our economy we still live so much better than before. I’m sorry. Am I being dramatic? I invite you to make your own evaluation of our current and proposed budgets. I thought it was ironic that our president reflected the concerns of the nation and talked fiscal responsibility, then proposed the biggest budget ever.
I plan another post on the wrongs of Keynesian economics and to be fair George Bush also ran up a lot of debt. However Bush can be defended by pointing out the dot com bubble, 9/11 and two wars. That being true domestic spending still went up way too much so it’s not a good defense. However Americans are all too naive as it is congress who holds the power of the purse. In 2006 we got fed up with the Republicans spending too much and put the Democrats in control. I believe a survey showed 18% of Obama voters even knew who was in control in congress The point is for as bad as Republicans did… Democrats are making them look like amateurs.
The problem with all this spending is finding more money. Here’s the irony. Wealthy people already pay most of the taxes in the country. The bottom half pays no federal tax, even though you see things deducted that’s not federal tax. The top 5% pay almost all the taxes. The more money you make they more they have foreign and unusual carnal knowledge with your wallet. The ugly little truth though is that there aren’t enough rich people. If you took 100% of those top 1% earners income you could only run the government a few months. Excuse me, I mean that is how it used to be. As it happens now you can only run the government a little over half the year anyway. The rest was Chinese money, but now we’re just printing it like they did in Germany after WW I when they needed a wheelbarrow full of money to buy a loaf of bread.
Here in Oregon, to my shame and disgust, we decided to soak the rich recently. After all the rich can afford it, right? Oregon now has the highest top marginal tax rate in the country, but don’t worry. For years we have made it difficult for business which is why Portland is the leading test market in the country. If you can make money in Portland you should be able to clean up in any other city. However if you happen to make too much money in Portland, however unlikely, you can move to Clark county. You see Washington has no income tax. Right now it’s cheaper to get a residence there for tax purposes if you’re being hit by this new tax. We aren’t yet, sadly, but as of this year we plan to look for property in Washington instead of Oregon. When you add it all up you realize that taking home 40% of your paycheck means looking for ways to suffer less.
So getting to my subject, think of our economy not as a collection of classes. Think of it as the productive element that creates value and wealth and the public sector which inevitably falls into the category of an expense for the productive private sector. We need roads, bridges, water and police among other things government provides. The class distinction makes the appeal that government needs more money so who should pay. From each according to his ability to each according to his need. Well, actually that was Karl Marx who also said it was the duty of lessor races to die. The first question should be why does government need it.
Government needs more money because they get more. Let me explain. The average public sector job pays substantially more than the same job in the private sector and offers retirement 10-15 years earlier with sizable pensions. Government employees see raises several times the cost of living every year. In down economies public sector production goes down. Top earners who are disproportionally taxed earn less money and governments who are dependent on this income lose these high value assets as well as the unemployment factor. Governments budget for optimal economies and are ill prepared for less income. The solution is to tax more out of the economy.
Now go back to what I opened with. Wealth is created by adding value, and those who consume benefit from that value as well as those who provide it. Those who provide ride that demand and expand their business thus providing income to more people. In simple terms adding or taking away money from the private sector will grow or shrink prosperity regardless of where it is done. However the irony is where it makes the most difference. When small amounts of money are given to large numbers of people it makes a small difference in the overall distribution of wealth. However reducing or increasing the tax burden of the wealthy is quite different. Why?
There is an old saying. Serve the classes, live with the masses. Serve the masses, live with the classes. By and large most wealth is accumulated by offering a small value to a large number of people. The more this is encouraged the more the engine of prosperity is stoked. The more wealth and the the more easily accumulated by the common man striking out in a business the more he spends with other businesses and the more likely he is to hire people and support more families with is work. The more families well supported the more spent at various businesses.
In simple terms, pulling money out of the productive public sector for government is essential to a point. Past that point it becomes wasteful. At a point beyond that it becomes such a drag that it threatens, well… to kill the goose that lays the golden eggs. Remember that story? When our economy slows our citizens need to tighten their belt. we need to do with less. Our government, if you think about it, no longer seems to really operate at our discretion. It holds us hostage. It requires us to feed it’s excesses and if we do not then we are hauled before the courts. Occasionally because of restrictions some wise people set on our government they must ask for consent to further consume the bounty of our work. Recently Oregon demonstrated they don’t get it and want a worse economy… soak those filthy rich.
The saddest thing about soaking the rich, aside from those who end up losing their life’s savings as many did recently, is that while the rest manage to get by with less… the people who can least afford to get by with less are now looking for work because they are now too expensive to keep on the payroll. But the truth is that it doesn’t matter whether you are rich or poor when hardship befalls you. It is all difficult, and all the more offensive when it happens because of class warfare and in the guise of offering the essential services we require as a society while in fact disregarding the simple law the rest of us live by. If you can’t afford it, cut back!
Please educate yourself on our economy and become active to preserve our prosperity and way of life. When government attempts to divide us to take some of our money we need to remember that we are all in this economy together and we all need each other to have as much of our money as possible to promote the prosperity of our economy. We need a rising tide. Sinking the lead boats is not going to get ours out of dangerous waters.
This entry was posted on Tuesday, February 2nd, 2010 at 12:33 AM and is filed under social commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.