Short Term Change, or Long Time Misery?
Editor RadioTalkingPoints
Short Term Change, or Long Time Misery?
Bruce Barlett (whom you can thank for inspiring me to write this
piece, along with George Shultz) contradicts himself by saying the
government is the engine that drives the economy, but then laments
that he did not support the stimulus spending package? Well, which is
it? The private sector creates the intellectual property that allows
government to print more money. So to say that the government is the
engine is like saying gasoline is the engine. The government has no
pistons, no rings, no lubrication, no timing mechanism, no throttle,
it is simply the fuel, it prints money.
Mr. Barlett was being interviewed on CSPAN regarding economic policy
from the 1970s through the present. He thought it was
“stupid” (paraphrasing here) that Republicans who sought to cut the
funding of the “beast” (members of Congress who have unlimited
spending habits) was to limit their power by cutting their ability to
collect taxes.
Like it or not, the Constitution of the United States was based on the
People having individual freedom, and the strategy of throwing out
irresponsible members of Congress who transgress that freedom through
the economic affliction by excessive taxation is not only smart, but
the most fundamental mechanisms of American government, and the United
States Government was intentionally designed to function that way.
So what happens during the election cycles? Economic chaos or
political representation? If you are seeing cycles of economic chaos,
does that not signal that your conservative side of the table is in
fact right, because it takes excessive spending to create that chaos?
So then we also have two conflicting sciences in the economic
community, we have currency rates, and taxation issues? Well, it boils
down to simple auditing, and the “keep it simple, stupid!”, is a time
proven one.
If you are just printing money because you can, your auditing of
spending will show you two things, waste, and growing deficit bubbles?
A growing bubble always pops, because sooner or later, whatever that
elastic material is, is going to go past its breaking point? If you
are printing money because you who have new intellectual property,
that generates more economic growth (responsible lending associated
with new business plans, services, or products) you will not find
deficit bubbles because your spending is constrained, and your tax
base is growing not shrinking?
Mr. Barlett also implied that the United States should emulate other
countries concerning value added tax rates, which usually only
accomplishes one thing, create a legal quagmire with so much
administrative costs that any alleged benefits are burdened by
compliance costs that not worth the endeavor, and are frequently
hidden from the public view (for metaphoric example, financial reports
that the cash for clunker program cost tax payers approximately $24K
for each $4,500 credit, or that each stimulus job created, cost over
approximately $299K to tax payers)? Carbon Credit trading is a form of
Value Added Tax (VAT)?
When you bury the tax collection system so that you don't notice how
much they are taking, are you really trying to hide how much they are
spending? So why go through all the hoops of hiding the collection
process? Because what do people historically do? They will figure out
the cheapest way of avoiding that tax collection process, and again,
we end up with politicians gambling with your future, because they
have introduced uncertainty into the life blood of government, the tax
system, by spending on what they predict what will happen, rather than
by economic reality.
Remember, the government is the gasoline, it is not the engine. People
are the engine, and we all have to be firing on the same page, the
same timing, and in the designed, factory recommended firing order
with all the proper parts, settings, and property trained mechanics to
keep it running right.
Properly trained mechanics include lawyers that do not seek to
practice law to earn money, but to practice law? That is why lawyers
and doctors (or so I am told) are paid so well? As an approximate
metaphoric example, do you want a lawyer in your town who says, you
can not build a tower holding poison gas that will fail, or do you
want a lawyer working for government who says that you should pay
taxes tomorrow because the weather is going to change while ignoring a
global warming and cooling periods centuries ago, medieval times? Well
of course the weather will change, that is why it is called weather?
That follows up with our ability and necessity to adapt and overcome
to change.
Why the tax cuts during the Reagan were so successful in my opinion is
simply this, the tax rate was as fair as we could get them, and they
were instituted by someone who was not willing to bluff, stick his
finger in the air, and see which way the wind was blowing. I think
President Reagan could have done even better if he had not faced such
opposition to enacting fair taxes (otherwise they would not need to be
cut).
The number one value of tax rates is not how much they are, but how
long are they going to stay there? When you don't know what the tax
rate is going to be, you can't make any budget decisions, which
freezes economic activity. When you have to price your goods and
services according to what you guess or predict the government tax
rates (or “regs”) are going to be, you are not planning, you are
gambling. As an employer, I don't want to gamble with your loyalty to
either me or my company.
And this is what happens, people don't guess correctly what the tax
rates are going to be, and then they try to manipulate the markets to
effect currency rates, because what is the first thing people will try
to do when your tax rates are not productive? They will do as much
business as they can overseas. And the United States practices this
theory when it give big tax breaks and incentives to foreigners who do
business in the United States and meet certain conditions (think
7-11). But that is not fair tax policy, it is exploiting a niche with
a limited effect.
All right, all the smart money is now overseas and effecting the
currency rates, then what happens? You've got artificial bubbles in
the labor markets. Some of those bubbles are fueled by cheap energy
prices, and if those cheap energy prices fall, you will have chaos,
especially for the countries with high energy prices who can not match
labor pay conditions (unions have no control over issues outside of
labor)?
So here is the Reagan economic success formula. Tax revenue grows
under a tax rate that is fair, and is not being inflated (through new
spending programs, or other methods). By the way, I want to thank
George Shultz for reminding us that thanks to Ronald Reagan, the world
does support perhaps the only real international treaty concerning the
banned use of materials that were depleting the ozone layer
(alternative solutions were available, and affordable). Population
growth means tax revenue growth.
There are too many people that distort the records of others because
they simply want to see if they can, if they work hard and long enough
at it? I heard a lot of talk about Mr. Bush and a company named
Halliburton (a silly company that does not even have a television
station or media outlet?) for no bid contracts, yet we see today that
the alternative party is supporting a rival conglomerate who is also a
defense contractor and positioning itself for no bid contracts
courtesy of the US government, General Electric?
There is nothing wrong with either Halliburton or General Electric,
but we are becoming apathetic to claims that either of them are “evil”
and that supporting one political party or the other has become some
sort of patriotic duty that defends irresponsible spending, and that
apathy will show itself on election days? So why should foreign
nations be dragged into such political dramas?
The world economy however suffers when we play such political sagas of
drama instead of focusing on currency rates that do not steal the
inherent wealth of a country, adequately reflect financial
responsibility, and provide a valid unit of wage for the worker of
that country to actually compete world wide, if and as long as it is
prudent to do so, for which I must remind us all, those who formed the
United States Government did not take such issues for granted, by
granting powers to Congress.
The United States currently uses three taxing systems:
Consumption taxes (sales tax),
Income taxes (Federal and some State)
Acquirement taxes (property and estate taxes combined).
Exploding deficits signals obvious over spending that is choking not
only personal liberty and freedoms, but our very sanity, and peace of
mind? That's why when Ronald Reagan heard the leadership of Iran say
they would not plant mines in the gulf, sank a ship that was dropping
mines in the gulf after photographing them doing it and taking mines
as evidence?
Government is the gasoline that recognizes the competence of political
leaders, bankers, and citizens who work together to recognize,
cherish, develop, guard, and grow economic activity through the proven
methods of personal responsibility, thrift, innovation, and the
ability to motivate the growth necessary to keep up with the pace of
population growth, and not barter it away as some sort of lottery
system or ponzi scheme, or though the imaginations of reparations and
wealth redistribution schemes that only promise short term change, but
long term misery.
With rumors of a foundation for all sorts of new taxes and regulations
to cover all sorts of the parts of our lives that range from those
that impact the environment to our health, we must recognize that
consent is one of the key ingredients of freedom, because anyone can
fire up the banana peels.
Being that this is the most exciting, most entertaining, fact finding,
idea busting, fun loving, egg shell mind crunching, invincible
smacketh downeth erectus among us, you can't see the truth coming, but
you know it is anyway, sonic boom of Conservatism, and, most powerful
keyboard in the world,
Do you feel lucky?
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