Newton's Laws stated that "for every force, there is an equal and opposite reaction".
If we raise taxes on the "Rich", they spend less and have less incentive to work at the margins (say you put in a 10% surtax on income above $250k per year... many of the folks making $251k to say, $500k might decide that is better to go fishing than to work the extra hours only to pay far more in taxes. No, this won't disincentive a $10 million per year pro baseball pitcher or movie star, but their contribution to the economy is not as great as the multitude of high earning little guys and their $300k incomes). They spend less on EVERYTHING, and this in turn harms the business and incomes of all of the businesses that serve these people AND the TAX REVENUES the taxing authority was trying to enhance.
If you increase payments to people for unemployment, etc... they have no incentive to take a lower paying job. In my life I have worked as a garbage man, building painter, gas pumper, landscaper, driver, ditch digger for sprinkler systems, repo man... I did what I had to do in order to make a living. I have been broke twice and "rich" 3 times, and if I go broke again, I will do whatever it takes to make a living. None of these "menial" jobs were all that bad, and most paid a living wage (though I never had a "wage" with the exception of being a garbage man and paper collator, mostly I just hustled to turn my hand at what ever someone was willing to pay me to do.) Being from the working class, I never turned my nose up at anything.
(Where is it written that you are guaranteed to make $40 per hour for no skill and less risk, with 5 weeks vacation, get as fat as a house, smoke, drink, do drugs, have your healthcare paid for (by whom?), fail to save for a rainy day and then complain about your life becasue it is raining? Let's face it, this describes a large percentage of the unemployed industrial AND financial services workers. Clearly, I am not running for office... and if you were looking for feel good, politically correct discussion... well, you came to the wrong blog.)
The cure for all the West's economic problems is to let the correction (in the larger sense of the word, not the stock market) run its course. People's expectations NEED to be corrected. If that were to occur, we might actually get through Peak Oil, Climate Change, the housing crash, and all of the other myriad and self created issues that the collective WE have done to ourselves.
But talking like that ain't going to get people elected. Guys who want to get elected need to "Keep Hope Alive" (hope for what?), "Feel Your Pain" (then you are not doing it right), and promise "Change" (fear not, "Change" you can believe in is coming).
Mish Shedlock recently posted an article saying that "Deflation is the Cure", and needs to be embraced - though I doubt he will be elected anytime soon, either - and I believe his point to be essentially correct.
The folks on the Left want to deny Newton's Laws and the guys on the Right lied to us about everything and spent like the Left would have. The bill for the "Free Lunch" just arrived at the table - and both sides are pointing for the waiter to give it to the other.
The People's Republic of California is going to go the way of the Soviet Union.
BTW... So far, the only idea I have received of my challenge to the Left as to how to save California is that Obama Administration is going to bail them out. I hope you guys can do better.
Yours for a better world,
Mentatt (at) yahoo (d0t) com
3 comments:
Just read more of Mish's deflation stuff. I agree with him until the real monetization gets rolling. Prepare now.
Regards,
Coal Guy
It's gonna be years before all that bank bailout money gets loaned out. We won't have inflation for years .. perhaps a decade.
There is two kinds of deflation .. the good kind, caused by efficiencies and better products and services (and therefore lower prices), and the bad kind, when businesses are desperate to pay their fixed costs and start selling stuff cheaper and cheaper and cheaper, till profits go to zero & they finally go belly up.
As to the piece today, the rich (who tend to also be older) are spending less NOW, or are wasting the money they have. My retired parents are in the top 3% of income earners, and are getting WAY more back from social security than they ever paid in. They want to rehab the house .. AGAIN! New doors, kitchen, front windows isn't enough! What waste! All these businesses that cater to the rich (Porsche, caviar, jewelry, spas, skeet clubs, sailboats, etc.) What a waste.
I myself, a Federal employee, work for the rich in this country .. the ones who pay the taxes. The bottom 50% pay no taxes. They are just along for the free American ride. So I know how important the rich are to my existence. However, as George Bailey said, the average people do most of the living and the dying in this country, and is it so bad to let them live and die in a house with a couple of bedrooms and a bath? Most of Europe heavily taxes the rich, and they are all doing just fine. They even have real health care to boot! :)
(Thanks for the mention about me saying Obama would bail out California -- he probably will.)
Since you are busting out some fundamental laws, you can't do better than Euclids which could no doubt also be applied to the various arguments:
Common notion 1.
Things which equal the same thing also equal one another.
Common notion 2.
If equals are added to equals, then the wholes are equal.
Common notion 3.
If equals are subtracted from equals, then the remainders are equal.
Common notion 4.
Things which coincide with one another equal one another.
Common notion 5.
The whole is greater than the part.
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