Let’s help the Democrats–a Socratic dialogue the Moron way

Posted: December 10, 2010 by Sean M. in Edumakashun, Fucking Markets, L.L.A.P.H., Moronosphere, Nanny State, Obama's Fault

No, I don’t mean helping them to win elections. I mean, let’s help them understand how money actually works.

I’m not an economist, and I rarely have any cash on hand (you jerks could go over to my little crapblog and click on the Google ads once in a while, you know) but I’ve listened to and read stuff by some experts, and the stuff what I’ve gleaned is after the fold…

Let’s say you earn a dollar. What’s the best way to maximize the amount of revenue the government can get from that dollar?

It depends. Who’s got the dollar? Someone who’s rich or someone who deserves it?

Nope. It’s the same dollar. Doesn’t matter who has it.

Of course it does. The rich guy probably didn’t “earn” it.

Let’s leave that aside for now. We’ve got a dollar. How do we maximize the tax revenue we can get from that dollar?

That’s easy. By raising taxes. The higher the tax on the dollar, the more the government takes in.

WRONG! *smacks Democrat with a ruler*

What do you mean? Higher taxes obviously mean more money for the government. If we set the tax rate at, say, 50 percent, we get fifty cents on the dollar.

Right. But, that fifty cents doesn’t get spent again.

What do you mean? It gets spent on unemployment benefits and welfare and subsidies for fur-bearing trout farms.

Yeah, but that’s all going back into the same hole–the government. If you have a lower tax rate, more of that dollar stays in the taxpayer’s pocket, and it gets spent in the private sector.

What’s the difference?

Well, more of the money gets taxed again. And again. Over and over. The money gets exchanged for goods or services, and someone makes a profit on the transaction.  Whether he or she invests or spends the money, those profits are taxed.  This does not happen when you just raise taxes on that original buck.

I don’t follow.

Okay, whenever the money changes hands, taxes get paid. If the tax rates are low, more of the money stays in the private sector, and there are more transactions. And more transactions mean that more workers can be hired, who pay more taxes than unemployed people.  Because those people have jobs, and they can spend money.  The money they earn and the money they spend is taxed.  Thus, every time someone uses the money that they haven’t given to the government–though it seems weird–more money becomes available to the government. Let’s put it like this: You get to kind of “spread the wealth.”  You like that, right?

But, um, what about those rich bastards who just sit on their money and grow ever more rich through their investments and interest and such?

That income doesn’t come from a machine that clones dollar bills (well, at least it didn’t used to happen that way), and most people who are very rich don’t store their cash in a money vault like Scrooge McDuck. Those people trust their money to people who will (hopefully) invest it in companies that produce products that people currently want or that create new innovations that people will want in the future.

So, wait.  Some of those things come from people spending their money overseas.  When does America get any of that back?  It’s not like we’ll ever see any of that money again, right?

You’re assuming that this is what’s called a “Zero-Sum Game.”  A lot of that money may come back here, since a lot of the world’s innovation originates here.  Well, it used to, anyway.

But why not just spend the taxpayer’s money on buying American companies and making them run more efficiently in the first place?

Because government inefficiency is rarely–if ever–the answer to anything. I mean, look at Amtrak.

But, Joe Biden loves Amtrak.

Exactly.

Your point being?

Ugh.  Why do we even try?

Comments
  1. Terry Phillips says:

    Individually, we are all service providers.
    How that service is utilized is critical.

    Wealth is created in ONLY two ways.
    1- By mining the earth for valuable resources.
    2- By manufacturing products.
    Sercvices in general, including govternment, do not create wealth. A best they support wealth creating activities.

    A nation that produces more than it consumes will have a constantly improved standard of living (USA, 1776-1976).

    A nation that consumes more than it produces will have a constanly lowered standard of living (USA, 1976- today), except …

    A nation with a wealth production shortfall can temporarily (years) maintain its standard of living by borrowing the surplus productivity of other nations, until its credit runs out (USA, any day now).

    Our accumulated productivity shortfall can be measured approximately by our national debt.

    Governments usually try to get out of (neutalize) debt by expanding (inflating) their monetary system.

    This has already begun. Follow comodity prices, with gold as a leading indicator. When inflation forces interest rates up, debt service costs go up and more new money is created to cover the tax revenue shortfall. This becomes a monetary death spiral (hyperinflation).

  2. doubleplusundead says:

    Hahahahahahaha…awesome.

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