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October 03, 2004
Where does the money go?
When a person gets money, they can do four things with it:
1. Purchase products and services.
2. Save it so that others can invest it, or invest directly.
3. Donate it.
4. Burn it or bury it.
The first three produce jobs. Not only do they produce jobs, they produce jobs that deliver desired value. Value as a product of service, a return on savings and investment or a social, religious, political or community goal.
The rhetoric of the campaign implies that the expectation is that the money earned will be burned or buried so that it had better be quickly taxed so that it can be better invested by the government.
The best way to get out of debt is to grow income as rapidly as possible while holding spending down. That is what happened at the end of the 1990's. Growth that exceeded government spending growth generated taxes that drove the deficit down. That process can be repeated by continuing to drive economic growth up while holding the growth of government down.
This is a simple concept demonstrated to be quickly effective. It is beginning to work now. But it is not being explained nor defended. All the explanations concentrate on benefits for the wealthy and how bad that is. Not much at all on the demonstrable fact that wealth generates more wealth for more people, thus driving up employment, standards of living and ultimately, tax revenue.
The wealthy should be treated like a herd of dairy cows. Keep them happy, healthy and well fed and milk them often. Don't slaughter the herd.
Posted by creagb at October 3, 2004 08:20 AM