Skip to main content

The Cost of Government is What It Spends, Not What It Taxes

The cost of government is the quantity it spends, not the quantity it taxes; that cost representing the financial burden imposed upon those who pay the taxes and all who transact within that economy or through its common currency. 

Therefore, the argument against tax cuts requires further context to appreciate why tax cuts have failed and will continue to fail to deliver economic growth, especially where those tax cuts promote or serve excess indulgence and cheap speculation. In short, it’s not that tax cuts are inherently destructive, or that reducing the tax liability of the wealthiest in society “doesn’t work”; rather, the fact is that the public debt is so high that the country simply cannot afford those tax cuts without defaulting on its debts or — which is the same — covering them through inflation.


It’s not that tax cuts are inherently destructive to economic growth, but that the deficits run higher by profligate government spending, the protracted low interest rate policy, and the onerous obstacles to real business investment have coalesced to favor stock buybacks and stock market speculation, which disproportionately advantages the wealthy without the kind of capital formation which otherwise benefits the lower classes; combined with an inflationary monetary policy undermining the real incomes and paltry savings of the lower classes, imposing artificial risks upon laymen ill-equipped to manage them and ill-suited for activities as unnatural and unintuitive as stock market speculation, these are some of the primary drivers of decadence and economic inequality. Note that this is not a symptom of capitalism but the consequences of a controlled economy. 


Free enterprise, on the other hand, actually offers the greater benefit to the laborer, whereby capital formation increases both his absolute and proportional share of the total production. The reverse of this happens where capital is decreased, where capital is syphoned from business investment toward ends unaccountable to the payers. 


The truth is that it is only through savings and scaled production, accomplished through economic efficiencies and labor-saving devices, and thereby the business investment of those managing a surplus of wealth, that capital increases and new enterprises are possible; a process specifically promoted by reducing the tax burden on those who invest in capital formation. Contrary to the socialist myths, insofar as the capitalist increases his absolute share of the total production, the absolute and proportional share of the total production going to the laborer will also increase. It turns out that the socialist is so confused that he has it entirely backwards. Indeed, it is the capitalist, not the laborer, who stands to benefit least in proportion to the increase in total production; ironically, it is in the opposite case, where capital is decreased, that the laborer stands to suffer most.


It was the French economist Frédéric Bastiat who so neatly summarized this phenomenon: “In proportion as capital is accumulated, the absolute shares of the total production going to the capitalist increases, and the proportional share going to the capitalist decreases; both the absolute and proportional share of the total production going to the laborer increases. The reverse of this happens when capital is decreased.”


This matter involves a multitude of issues, and it is essential to account for the complete context and overall conditions in the market before rushing to judgment. 

Comments

Post a Comment

Popular posts from this blog

Trump Victorious in 2024 Presidential Election

As of this hour, former President and now President-elect Donald Trump has secured his second term as the forty-seventh President of the United States. Trump’s victory comes after winning key battleground states Wisconsin, Michigan, Nevada, Arizona, Pennsylvania, and Georgia.  As for the popular vote, Trump was victorious there as well, winning by a one-and-a-half-percent margin. Despite these results, it’s evident that there remains a significant social and political problem in the United States, where politically-motivated violence, social unrest, crime and general instability have become rampant over the years since the death of George Floyd.  However, I’d say the fact that it was even this close is ominous for the years ahead. This was as clear as it gets for an election, that the incumbents (both Biden and Harris) are wholly unfit for any office, that they present a real and present danger where they’re allowed within twelve thousand miles of a school zone, let alone any...
Post a Comment
Read more

From BC to AD to AI

Artificial intelligence is bound not only to render the ordinary human being boring by comparison, and in many cases practically unnecessary, but to dispose human beings to hostility toward each other where any dares pose a question or raise a concern instead of taking it up with a chatbot (or AI interface); such a course of action eventually assuming such a regular place in human affairs as to stand in entirely for human discourse and daily interaction.  This is not only a very real possibility when considering the future course of human ‘civilization’; it is more than likely imminent or already upon us.  It is left to be seen just what this will look like, just how this will play out, just what tolerance the species (and even beyond) has for such extremes which this technology is to bring about. Likewise, it remains to be seen whether a heavily-indebted society facing never-ending and unavoidable taxes (i.e. taxes on property) can even be expected to retrain and retool for t...
Post a Comment
Read more

It’s Time to Make Things Right

Some people are late to the conversation. Some think that there’s still room and time for dialogue, that those who don’t get it are still within reach, that they can still be ‘saved’; that, if we are clever and cautious enough, if we just assemble a tighter and more comprehensive argument and package it nicely enough, reason will finally prevail, and that the uninitiated will surely accept the truth when it is finally perfectly and plainly laid before them in the clearest of resolution. This is not just a pipe dream but a complete misreading of the room, a special kind of ignorance to the “godless ideology,” as Virginia Delegate Nick Freitas has described it, “that kills babies in the womb, sterilizes confused children, turns our cities into cesspools of degeneracy and lawlessness… and [led to the assassination of] Charlie Kirk.” Remember this: less than a year ago, half of the country was wholeheartedly prepared to vote for a senile dementia patient, Joe Biden, for the simple reason t...
Post a Comment
Read more