It galls me when liberals/socialists (libs/socs) of all stripes contend that trickle-down economics (a.k.a., supply-side economics) doesn’t work, never worked and will never work and point to the Reagan-era economic policies as absolute proof that their position is not only valid, but also unquestioningly correct. To that, all I can say is, “what a bunch of morons!”
The reality and the fact of the matter is is that the only economic policy that works to ENRICH everyone is trickle-down economics. The problem is that we have not had true trickle-down economics in many decades, if not for over a century. And, the abomination of the Reagan-era economic policy is a mere shadow of what true trickle-down economics really ought to be. What we had during the Reagan-era was a mixture of some trickle-down economics with a very heavy dose of socialism and massive overspending which then blew-up deficits and the national debt. And, for liberals/socialists (libs/socs) to point to this era as proof of the failure of supply-side economics is not only a travesty of reasoning, but also an incredibly heavy distortion of reality, truth and Justice.
The fact of the matter is is that Reagan did cut taxes, but he did not cut socialism to zero and run the most efficient and optimal federal government that he could have, not by a long shot. In order for supply-side economics to work, we not only require the lowest taxes possible for every citizen, but also the smallest federal government possible with no socialism and no budget deficits, small or otherwise. This is the only way we can insure that all available capital will be funneled back into the economy.
This is important, because this maximizes the opportunity and chances of innovation and creativity bubbling to the surface. The more that capital is made available, the more projects get funded, and, equally important, at a lower and lower cost. Let’s take a simple example. Let’s say that there is $1 trillion of new investment ideas that are waiting to be funded, but let’s say that only $500 billion of capital is available for investments (i.e., a proxy for our current situation). This means that not only will less than half of the potential opportunities get funded, the entrepreneurs will be charged an exorbitant fee to get access to the available capital. This means that fewer and fewer opportunities will get funded, at ever more increasing costs, which then excludes even more opportunities that otherwise would have been profitable and value-add to the economy.
And, as fewer and fewer opportunities get funded, it also means that fewer and fewer jobs will be created and for every job opening more and more over-qualified candidates will apply for these opportunities, which means that the least educated (also categorized as least skilled) workers will be shut out of the job market, which then causes the least able amongst us the most pain and suffering. This is what the libs/socs are doing to our society. By stupidly, irrationally and stubbornly insisting that FORCEFULLY taking money from the rich to give to the poor is the only way to create a more Just society, the ones that they are hurting the most are the poor, the uneducated and the unskilled. Don’t forget, the rich and well-educated will always find ways to survive, because of their wealth or their education or both. So, the ones that suffer in a “utopian” lib/soc society are the poor, uneducated and unskilled.
In addition to the lack luster job creation environment, fewer and fewer people will attempt to innovate and create due to not only the difficulty of funding, but also due to the expected poor returns on their time and money due to so many opportunities chasing the much smaller pool of capital available for investments and the astronomical taxes that would have to be paid for the catastrophe that is the abyss called “social programs.” This will then lead to further reduction in innovation, which then leads to fewer job opportunities, which then perpetuates the negative cycle even more.
In addition, even though $500 billion may be available to fund $1 trillion worth of opportunities, eventually, less than $500 billion of opportunities will be funded in any given year. The reason is the law of diminishing returns. For example, if the first $100 million of investments is expected to return 500%, by the time we get to the $499.9 billion level the returns are likely to be far less than 500%, so why should an investor make that incremental last $100 million investment? Why not wait until a better opportunity comes along next month or next quarter or even next year? Given that there are way more opportunities than money available to fund these opportunities, fewer and fewer opportunities will get funding, and something well less than $500 billion per year will get funding even though there is an available pool of capital that can fund up to $500 billion.
Ultimately, the lib/soc philosophy has only one of two endings in store for us: Greece or North Korea (or former Soviet Union). Either there will be so much dependency on government handouts that the private sector cannot fund the lunacy of the “public”sector and the economy collapses and the society disintegrates like in Greece, or we all starve to death under the heel of tyranny (popular tyranny or dictatorial tyranny, does it matter?) like North Korea (or former Soviet Union). The fact that libs/socs think that communism is an ideal, in and of itself, should tell you how idiotic, short-sighted and harmful their philosophy is to society.
Now, let’s take the opposite case. Let’s assume that the available opportunities for funding is still $1 trillion per year, but the available pool of capital is something in the range of $2 trillion, taxes are at its lowest possible level, deficits are non-existent and government debt is an after-thought, meaning we have a true trickle-down/supply-side economic environment — again, the Reagan-era economic policies was not a true supply-side economics environment. What should we expect to see happening?
Given that the pool of money is far greater than the opportunities available for funding, we should expect to see that the required returns on investments should start to shrink, making it much more worthwhile for entrepreneurs to take the risk to create new industries/businesses. In addition, given the low tax environment, both the investors and entrepreneurs should enjoy additional benefits. Both of these situations would encourage more entrepreneurs and innovators to step forward to take a shot at their American dream.
In this process, we should find that more and more jobs, at an accelerating pace, will be created, which should then turn the job market from an employer to employee market. Meaning employers will have more and more of a difficult time hiring, while employees will have an easier and easier time getting employed. This means that wages should start to rise and fewer and fewer jobs will be taken by over-qualified candidates, which then helps the unskilled, uneducated and otherwise unfortunate laborers in our society to have a shot at employment. This also will lower the cost of capital to entrepreneurs, which then encourages more people to take a shot at the American dream, which then creates more jobs, et cetera. This then perpetuates the positive virtuous cycle. And this is exactly what we want/need. The sad fact is that we, as a country, have been moving away from the creation of this virtuous cycle for decades, and even have lost sight of how we became the richest nation in the history of mankind. We must not only recollect our history, but we must recreate it in order for us to maintain our economic leadership of the world. Otherwise, we WILL go the way of Greece, and countries like China will eclipse our achievements and take over the mantle of economic leadership, relegating us to the has been pile.
This simple scenario, in a nut shell, is the virtue of how true trickle-down economics (a.k.a., supply-side economics) work, and why it is the engine of wealth creation and rising living standards for all. However, it is a very delicate process and can easily be manipulated and poisoned by the selfish, greedy, short-sighted and irrational people such as the libs/socs. One way to manipulate and poison the system is to play a game of chicken, which the libs/socs have been doing for decades. Slowly, but gradually, they force higher and higher taxes on the wealthier segments and use the money to subsidies the poor. The libs/socs do this for many reasons, one of which is it make them “feel” good that they’re doing “good” for less fortunate people. Others do it for more directly selfish gains, such as lib/soc politicians that use popular sentiment to get elected and re-elected. And, finally, the poor do it because they are generally ignorant and uneducated and, so, are convinced by the argument that taking stolen money is not only their right, but also good for “society” and our economy. This last influence is the most nefarious and poisonous to our country, precisely because it spawns other equally ridiculous and irrational arguments like, “why shouldn’t I steal from the rich, they can afford it!,” “give me MY money!,” “money is the root of all evil!,” etc.
Another game of chicken comes in to play when the economy faces crises. The libs/socs blame the wealthier segments and the “capitalist” system for the ills that we suffer, and they will be ardent in their belief that we are a capitalist society. They HAVE TO/MUST argue that we are a capitalist society, so that they can blame capitalism and the wealthy for the failure of our economic system. If they were to admit that we haven’t had a true capitalist economy in decades then the failure of our economic policy would have to reside with them, and they can’t have that. Second, libs/socs will use the so called “failure of capitalism” to exact more wealth from the rich, because the poor are suffering today. But when good times return and the poor no longer need as much assistance or subsidies, the libs/socs will argue that we shouldn’t roll back any programs, because “WE” can “AFFORD IT!” So, the best that we can achieve is a balanced budget or a small surplus at the federal level. They will continue to play this suicidal game until the economy completely collapses, but will continue to blame the so called “failure of capitalism” to exact who knows what then. And, trust me when I say, we not only don’t want to find out, if we get there it will be too late.
The other game of chicken that libs/socs play is: How much can we take from the rich without them withdrawing from investment activities that create additional wealth? This may be the most dangerous aspect of their lunatic policy, because when the line is crossed, it will be too late. And, it will be too late because of the sheer size of the bloated government budget due to the massive spending on so called “social programs.” If you want to know what this means, jast look at what happened in Greece and magnify it to the scale and impact the collapse of the US economy will have on the world.
Therefore, before the libs/socs blow us up eternally, we have to correct for their lunatic, irrational and short-sighted policies. However, to correct for the decades of mistakes upon mistakes made by our ancestors, who listened to libs/socs, it will inflict great pain on us. Nevertheless, the mistakes must be corrected and righted, never to be allowed to rear its ugly head ever again. Make no mistake about it: The pain that WILL be incurred to correct the suicidal libs/socs policies are going to be extremely painful. However, make no mistake about it: The pain that must be incurred to correct for the lib/soc stupidity is NOT an indication of how bad the cure is for us, but how awful the suicidal policies of the libs/socs agenda has been for our country and economy. Regardless, we must correct for their suicidal, short-sighted and idiotic policies. This will be the “sacrifice” that we need to make for our future generations. As an aside, one of the best effects of a successful economic policy is that such success naturally reduces the need for social programs like Obamacare, welfare, unemployment benefits, medicaid, food stamps, etc.
Therefore, anyone who has studied the economic history of the US and knows how to extrapolate those lessons to modern times should know that the only economic system that works to benefit the country as a whole is a capitalist system, i.e., trickle-down economics, o.k.a supply-side economics. Some have remarked that capitalism is brutal, uncivilized and inhumane and site things like the age of the robber-barons and the slums of modern cities at the turn of the 20th-century to make their point. They go on to state that unions had to fight to improve the lives of average Americans and fight against capitalism to improve the lives of average Americans. This is, at best, a distortion of the truth and, at worst, a complete and deliberate mischaracterization to discredit capitalism so that libs/socs can pursue their agenda.
The reality of the matter is is that the economic environment at the turn of the 20th-century, the Industrial Revolution, and the age of the robber-barons is not capitalism, but what I have come to characterize as Gangland economics. Meaning, what the libs/socs like to characterize as “capitalism” is actually unbridled competition or, more descriptively, Gangland economics, where anything and everything goes and the strong have the right to brutalize the weak. This is not capitalism, because unbridled competition or Gangland economics ignores fair-play, Justice, and equal access — not equality, but equal access. This last point needs more clarification: Equal access means equal access to regulators, lawmakers, the Justice system, customers/clients, suppliers, logistics, employees, capital, and other functions of business. This does not mean that all businesses have to be equal in revenue, profit, product quality, productivity, marketing access, advertising access, among others. And, equal access does not mean equal results. Also, jast because a small business must have equal access to capital, it doesn’t mean that small businesses will pay the same cost of capital as the largest company in the industry. But what it does mean is that a small business owner has the same access to similar people who make loans and investments, but not necessarily at the same terms as big businesses get. The equality comes in the access to capital commensurate with the risk/return of the businesses, because that is what should govern the terms of the loan or investment, not how big — as measured by assets, revenue, profit or any other measure — the company is or isn’t.
In reality, any true capitalist would argue for the most SENSIBLE and the SIMPLEST laws, rules, and regulation possible that would create fair-play and equal access in the economy and the business world, and where Justice dominates the arbitration of competition. This is true capitalism, not the crap that the libs/socs would have us believe. Again, they try to sell the wrong bill of goods, because otherwise, they’d have to admit it is their failure over, at least the last 50 years or so, that has led to the failure and crippling of our economy. It isn’t rocket science.
The bottom-line is that the ONLY WAY to help everyone raise their living standards lies in establishing a true capitalist economy with fair-play, equal access (NOT EQUALITY), and Justice in mind. This includes setting up the simplest, yet most effective, rules, regulations and laws that help perpetuate and maximize opportunities (not profit) for everyone, small and big, rich and poor. Then we should leave it up to the individual competitors to figure out how best to maximize their profits.
In particular, a true capitalist/trickle-down/supply-side economics is the key to helping the poor and raising their living standards. One great examples of the power of true capitalism/trickle-down/supply-side economics can be seen in the computer industry — hardware, software, it doesn’t matter. How many jobs have been created by the proliferation of technology companies? It would not be an exaggeration to say that jobs created due to the computer industry numbers in the millions, if not the 10s of millions. Imagine what would have happened if the likes of Apple, Cisco, Dell, HP, Intel, Microsoft, Oracle and others never saw the light of day. So, anyone who thinks that social programs were responsible for the advent of the technology industry should be thrown in an insane asylum and the keys thrown away. Yet, the libs/socs want to continue robbing the rich of their income/wealth to blindly throw it into an abyss to make their short-sighted selves feel better! It is utterly preposterous.
If we want to help the poor and raise their standard of living, we must maximize capital available to individuals for investments and minimize all leakage. This is one of those rare times where a zero sum game does apply, meaning a dollar spent on so called “social programs” is a dollar taken away from investments and job creation. Also, what the libs/socs don’t realize is that by minimizing taxes, those that believe that charitable donations are good for our country can, if they freely choose to do so, donate their money to charitable causes that they deem worthy. Therefore, no one loses in a true capitalist society. And, as more and more wealth is created, more and more people have more choices as to where they want to spend their money. This then maximizes individual freedoms and preserves inalienable rights without the necessity of enslaving one group for the sake of another.
When will the libs/socs learn? I wonder!
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