Thursday, October 20, 2011

If You are Thankful for Your Job, Hug a Billionaire

OWS and the Obama administration are continuing their juvenile class warfare rhetoric designed to trick the stupid into thinking they really care about poor people and the middle class. But the more they talk about how much money they should allow the "millionaires and billionaires" to keep, the more they resemble a gang of thieves sitting around talking about how much stuff they should take when they break into your house tonight and how much they should leave in place.

A healthy society is a free society and in a healthy, free society there will be more millionaires and billionaires every year. This is a good thing and a sign of a prosperous society. In a static or declining society the number of millionaires and billionaires will stay the same or shrink year by year and that is not a good society for anybody to live in.

Millionaires and billionaires (hereafter M&B's) play an essential role in the economy and in a capitalistic society there is an incentive for them to invest their wealth in socially beneficial ways rather than hoarding it. The capital gains tax is too high in the US right now, which discourages risky investment in the kind of start-up companies that could employ more people if given a chance to succeed. But Warren Buffet wants to increase it further, which would be sure to increase unemployment. Yet he is seen by socialists as a hero! This is nonsensical.

Look, when a person goes to invest his money there are lots of blue chip stocks and bonds that offer low to moderate returns and little risk. There are also other possible investments in start-up companies or ones that want to expand. They offer a possibility of high returns but say 3 out of every 5 will go bankrupt. So in order for it to be worthwhile investing in the risky options the return on the investment in the 2 of 5 risky businesses that don't go bankrupt will have to be higher than the safe return on blue chip stocks and bonds. The rate at which this investment will be taxed is crucial. It is one of the big variables in deciding what is rational to do. It is a matter of math, not emotion.

So, if a country has lots of M&B's and a low capital gains rate, then its small businesses that want to start up or expand will have a ready pool of investment capital available and the result will be job creation, which is good for the poor and the middle class. But if a country decides to tax the M&B's down to middle class levels with high capital gains and other taxes, then the economy will stagnate, which is bad for the poor and the middle class.

Giving a few hundred dollars to middle class people, as Obama wants to do by extending the payroll tax break, does nothing to provide investment capital for small businesses. That money will get saved, used to pay down debt or, in the best scenario, spent on consumer goods. The most it can do to help the economy in the short term is to stimulate demand for consumer goods. But it cannot help spur investment.

The problem is that OWS and the Democrats are framing this issue in emotional/moral terms. They claim it is an issue of fairness. Do you want to help the M&B's save money or do you want to help struggling middle class families? But it is not that simple. What if the best way to help provide employment is to stimulate investment by lowering the capital gains tax? But that messes up the overly-simplistic narrative the liberals/socialists construct to justify higher the taxes needed to pay for increasing entitlement programs.

Every time I hear the "Tax the 1%" meme, I feel personally threatened. I feel as though someone is out to destroy the economy and create the kind of conditions in which I could, potentially, lose my job. The war against the rich is really a war against the middle class and it is based on emotional manipulation, rather than reason. The people who are involved in it may be sincere, but they are much too gullible.

Maybe economics should be a compulsory subject in high school and maybe we ought to start purging socialists out of our universities so that free market principles once again dominate the curriculum. OWS and liberal/socialist propaganda is getting out of hand and people are getting hurt.

In the meantime, if you are thankful for your job, hug a millionaire or billionaire. Or at least don't demonize them.

1 comment:

Unknown said...

Great blog you have here. This warm and helpful key points entails a great deal to me. Thanks for sharing.
_____________________
Jobs In Brisbane