Saturday, January 19, 2008

Economic Stimulus: Republicans, Democrats Are Both Wrong

There are two basic perspectives on the way to “stimulate” the economy. Of course that is Dependant on whether you are of a democratic or republican persuasion. Neither will actually supply long term economic correction. It might help to take a look back at the earlier post here.


Simply stated the Republicans think if you don’t collect as much money from the tax paying public, they will spend it on stuff that will create jobs, which will put more money into the pockets of more people who will spend it, and in turn create more jobs and prosperity. The problem is that in the end tax savings money either goes to back to rich people who don’t need anymore big screen TV’s produced by some company in , or it goes to a family that has already bought the big screen TV and uses the money to pay it off. If they don't they just go further in debt and creating a bigger problem. Effectively this will not correct the problem. The problem is that people can’t afford to buy food shelter and clothing and other things that they need. They also can't afford the things they don't need but they want it anyway. That has not stopped people from charging these desired goods and services. If you did take a peak at that economic model, then tax reduction will only contribute to the pool of already stagnate cash flow. Smaller amounts might make it through a few cycles before eventually being dumped there.

The democrats have the brilliant idea of taxing people more. They especially have their eyes set on people in the upper income brackets. If reducing taxes leaves more money to the wealthy, then increasing is a way to force them to give up some of that wealth they are hoarding. The problem is that when the government bureaucracy takes money, they are the ones tasked with spreading in a way that is fair and “stimulating.” Most of their ideas are to put it back into t he system by extending unemployment benefits, food stamp, and welfare programs. The trouble is that this is just bailing out the Titanic with a sand bucket. Look, if you are on welfare, having an extra 6 months of free food, you are not going to create jobs by doing what you have already been doing for the past year. At best you are going save the jobs of those people who are already working for 6 more months. Brilliant. So when that runs out you are further in debt and the problem still exist. Referring to the economics model again, one can see that taxes operate outside the economy. Ultimately they just end up returning cash flow back to the same pool as it had left. Unlesd you tax the rich until the system represents more of a communistic model, it will not correct our current crisis.

If congress wants more money to allocate, it could first try not spending money it doesn’t need to spend. Money spent on wars and special interest programs. The government itself is in debt, and it wants to help us out? Bring home the troops, stop spending money like a drunken sailor abroad, and start forcing companies to pay tariffs where labor is disparaging. I am not asking to give the America laborer an advantage, just give him a level playing field.

The economic stimulus that the economy so desperately needs is not one of redistributing the actual dollars. It is one redistributing the actual wealth in a fair and democratic way. Those of you who have read my posts before know that my biggest stump is one that reorganizes the wage compensation in this country. Only when the top and bottom are forced to have relative growth can congress do anything to get a handle on the economy. A minimum percentage as a replacement for minimum wage is no longer a suggestion, it is now a requirement.

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