The Mammonites
Lee Emmerich Jamison
Re: http://news.yahoo.com/s/afp/20070124/bs_afp/useconomybudget_070124203818
The report referenced above shows the budget deficit narrowing dramatically in spite of huge increases in Federal spending and what the Democratic Party once referred to as catastrophic reductions in revenues (i.e., tax cuts). How does this happen? It's not hard to understand, really.
People who worship false idols can't comprehend reality. Now, there is a perfectly rational explanation for their picture of the world. One can trace all the dots and make the picture come out the same way every time. If the founding premise of their world view is false, however, the whole structure will be wrong. No matter how compellingly logical it may seem.
The false idol of the Democratic Party is money. If you can pass out money you have something. If you can take money home from some organization, government program, job, or criminal enterprise you have self respect. Listen between the lines and you will hear this idol being extolled left and right by Democrats.
Soon you will be hearing of the efforts of Democrats to raise taxes on "the rich" to "increase government revenues". When they are successful at raising taxes there will be a short term increase in revenues soon offset by slowdowns in the economy- which will be blamed on "the rich".
Here, from an actual experience, is how that seemingly paradoxical effect happens: My brother, some years ago, started a company manufacturing caulk both for direct sale to the construction industry and for sale through retailers. So as not to burden the company with high management expenses he made his salary $12,000 per year and lived in my parent's home. Sales were good and the company was growing (and incurring the huge capital expenses that come with growth), but to the Federal government, under a law dreamed up by Democrats years ago to punish "the rich" my brother's tiny salary, 120 square feet of living space, and old Honda Accord represented a scheme to avoid taxes. The I.R.S. forced him to pay more than $60,000 in taxes on his $12,000 income.
Did my brother pay those taxes? How could he? His money was tied up in big pieces of machinery, huge tanks of plastic polymer, powdered limestone on trains from Georgia, and shipments of caulk tubes from Canada, to name just a few things.
The COMPANY had to pay the taxes. That meant that two people who might have worked for the growing company went without jobs. Companies don't hire people to dispose of excess income. They hire them to make or do what the company sells. Losing two people meant the company could not make as much product, probably on the order of $50,000 to $100,000 less per employee. Those products sold at wholesale would have produced at least twice that much in sales downstream. That would have provided further tax revenues and produced at least an extra two productive jobs, in addition to freeing up such assets as investment capital which, because of loss of sales, remained tied up in the company. Of course this meant some other person who wanted to risk his own money and hard work making or doing something people need or want just had to keep slaving for "the man".
The other side of the ledger was not much prettier. We've got four people who were either out of work or working in less stable situations than they might have been in. And for what? For a benefit to the government of $60,000. Say they would have earned about $30,000 each, on average. Was the government going to cover that? Not with half that much money. As a matter of fact government pass-through is so bad that about $45,000 stuck to the bureaucracy, which provided about one new "job". The three remaining un-, or under-employed had to haggle over about $15,000 available for assistance. All the while, though, NOT ONE USEFUL THING was produced. Nothing happened to put a roof over a head, clothes on a body, or food on a table.
The product of work is stuff like food, clothing, and shelter, and the human services that make the process of getting these necessary things from one person to another. Money is just an imaginary form of lubricant for that exchange process. If I knew I were going to be stuck on an island for twenty years I would rather have the work product than the medium of exchance any day.
Deficits are narrowing today because scenarios like the one above are less frequent in a time of lower taxes. More people are employed making real, useful stuff. More people, even more "rich" people, are making- and paying taxes on- more money. Fewer people are on the dole not producing what they must consume. (Now, if we could just do something about all those government people not producing what they consume...)
That is what Democrat office holders don't understand. By raising taxes and enacting flagrantly punitive measures like the Alternative Minimum Tax they choke off growth and productivity in the area that counts. Higher taxes mean LESS STUFF. They mean FEWER JOBS. Then, when the employer fires people because the government sapped the company of the money that could have paid them, they blame "the rich".
They also mean that if you are in a job where you actually make something or do something useful there are more people invisibly sitting at your table sapping the product of your labor away from your family.
What the high priests of the money god have to say is easy to understand, easy to repeat, deeply seductive, and, well, false.
Welcome to the Religion in Economics 101 course. It lasts two years and there will be a big test at the end.
