During his presidential campaign Obama stated that he wants to build the economy from the bottom up. Provide money to the poorest, I suppose, so that they can spend the money, and then as they buy goods it will somehow encourage businesses to produce more goods, and so on and so forth.
Since when does the bottom create jobs and produce goods?
Simple fact is that the creation of jobs and products comes from businesses, not from the bottom income earners. And the people who own businesses are in business to make a profit. That's the whole point of having a business, isn't it?
Profit increases with the success of a business, so business owners, in search of increased profit, will do what they can to ensure their business is successful. After all, the whole point of getting the better jobs, or having a business, is to live better, and living more comfortably goes hand in hand with an increased profit margin.
Obama wishes to deter our business owners from that kind of success. He wishes to hammer success more heavily with taxes - taxes that he will then use to try to pay for his expanding government programs, and from which he will dribble some change down to the people at the bottom hoping that it will grow the economy from the bottom up.
During the immaculate campaign, Obama promised tax cuts for the middle class, and everyone with income levels lower than the middle class as well (most of whom, when it comes to the lower end of the spectrum, don't even pay taxes - so really, for them it is not a tax cut, but another government check to go along with their welfare checks). But why does he want those folks to have that money? Why does he want to issue a check to people who don't even pay taxes? How is that a tax cut, and what does he think those people will do with those funds that he gave to them freely by taking it from the higher earners, and stupidly printing more money?
The theory is that they will buy products, which will then theoretically put people to work to produce more products, and so forth.
People, however, don't live like that. They live to their means. They buy everything on credit, sort of like the government does. So I am willing to bet you that what is going to happen when everyone receives their Obama Stimulus Checks from the IRS is that they are not going to go running down to their local Wal-Mart, or their local electronics store, and start gleefully buying things they had no interest in buying in the first place. They are going to apply those funds to their credit cards to pay down the balances, or they are going to pay down their furniture loan, or pay down their car loan, or pay down their mortgage line of credit, or they may just simply stick the extra money underneath their mattress and save it for a rainy day.
You don't create jobs from the bottom up. You create jobs by encouraging the people who create jobs to do so. And you don't encourage them with a whopping $3,000 rebate, either. Creating a job costs a lot more than that, and is not worth doing for a measly few thousand government bucks.
To create a job the employer must see it as something that will enable them to make more profit. Creating a position for an employee is an expense, and a very hefty one, at that. There are social security taxes, unemployment taxes, worker's compensation insurance payments, disability tax, health care costs, the cost of wages, the cost of the station this person will work at, and the cost of the equipment the person is going to use. A twenty or thirty thousand dollars a year employee is going to cost the company something more like $75,000 a year. So there has to be a profit incentive - and the profit incentive must be large enough to make creating the position worth it. One of the factors that will create a profit incentive is a movement of products that increases to the point that the employer must increase manpower to keep pace. But how do the products start moving?
The company is not going to just suddenly decide to start moving products without the promise of increased profits. A demand for the products must take place, and a bunch of people at the bottom paying their credit down and stuffing their money in mattresses, and not willing to buy products they cannot normally afford anyway, is not going to create that kind of demand. There has to be money freed up across the board to do this. The companies have to be willing to increase supply in the hopes people will buy, and they will need additional funds to produce more products. Then, when the supply goes up, the price will come down, which will entice more people to buy the products being offered.
But how will the buyers (from all income levels) be willing to buy more products, and what will free up more money for businesses so that they have the increased funds to produce more goods?
Tax breaks in the form of true tax cuts. If an owner has a tax cut they are going to reinvest it into their business with the hopes of increasing profit. Profits increase, remember, when their businesses grow. And if you raise their taxes, and increase regulations, as Obama is proposing, the opposite is true. They will see it as an increase in overhead, and they've got to cover for it, so they will increase the price of the products, use cheaper materials which comprises the quality of the product, and they lay off employees. And if the government intrusions become too steep, as the taxes and fees become too harsh and more burdensome, the business owners will just pack up and take their businesses out of the country where they feel they can make more profit.
That is what is going to happen if Obama's plans come into play, and that is dangerous for our economy.
And there is one more thing to think about. Do you think that Obama has taken into consideration the onslaught of bankruptcies that are lingering on the horizon as a result of the failed mortgages and increase of unemployment? Or do you think he will still continue to hammer those that produce jobs and products while redistributing the money to people who will do nothing with it but store it like a squirrel hording nuts?
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