All economy is driven by creation.
With that being said it is easy to see why so many are against this "stimulus" package. But there are those who rail against the inevitable truth of my opening statement and so for them, two simple analogies....
#1) Joe and his nine friends each have $10 dollars. There are ten people who, together, have $100. The government comes along and takes $1 from Joe each of his friends. Then, the government then gives that ten dollars to Doug by creating a "job" for him. Now there are 11 people who, together, only have $100.
#2) Joe and his nine friends each have $10 dollars. There are ten people who, together, have $100. Joe and his nine friends pool $1 each to create a company that produces something. This company makes enough money to pay back Joe and his friends the $1, plus hire Doug and pay him ten dollars. Now there are 11 people who, together, have $110.
The government cannot drive economy because in reality, it doesn't produce anything. There are things that the government mandates the production of, but it does so on the financial backs of those that it taxes. It is not real creation or real growth. It is simply the transfer of wealth from one person to another.
Obviously, my analogy is terribly simple. It doesn't take into account things like, corporate taxes, or market fluctuations, or interest on loans etc. But I hope that it shows the idea of taking trillions of dollars from the market place only to turn around and inject them right back into the market place really makes no logical sense. You've not created any growth or stability, you've simply taken (or borrowed) from yourself (or future generations).
1 comment:
Let's pretend that our economy can be reduced to eleven guys with a small pile of ones and tens. What do you do with analogy #3?
#3) Joe and his nine friends each have $10. Joe and his friends decide that their economic future is too tenuous to invest their money in a new company, so they hold on to their $10. The government does nothing. So Joe and his friends have $100. The unlucky eleventh guy, who lost his job because Joe's group wasn't satisfied with making $95 between them and thought it would be better to earn a little extra money by firing the eleventh guy and replacing him with someone from China, has $0. You don't believe in welfare, social security, or any other form of social safety net, and since Joe and his friends don't want to give up their money in taxes, they are similarly opposed to charity.
Sometimes the free market, and your apparent blind reliance on the charity of the wealthy, ends up with a person starving to death in a box in an alley. While this may be acceptable to some, I simply do not understand why it is acceptable to you.
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