Posted by: James Atticus Bowden | August 19, 2010

It’s the Capital, Stupid

I

Capital creates jobs.  Killing capital kills jobs.   I learned this at one of the most liberal grad schools in the country (micro-economics, macro-economics, public finance, government and business in a mixed economy).  I reinforced that learning with reading Milton Friedman and Thomas Sowell, and others, on economics.  Basic economics isn’t “rocket surgery.”   There rules of thumb for some economic relationships. 

The rule of thumb 30 years ago was that $150 m in taxes killed 5k jobs (1 job = $30k @ yr). 

Let’s say the average job is $50k now. 

The housing bubble was $2 trillion.  Going way beyond that, the U.S. Government – the President and Congress – have destroyed another $5 trillion in wealth from the stock market alone.   The capital was killed, crowded out or withdrawn from the market by Government spending, borrowing, take-overs, taxes, threats of taxation, healthcare costs  – all things socialist that are Obamanomics.

$5 trillion (5 x 10 to the 12th) in lost capital divided by $50 thousand (5 x to the 4th) = 10 to the 8th or 10 million jobs.

Obama acknowledges losing at least 8 million jobs.  He blames Bush.  Jobs were lost because capital was killed, stupid.

Here is another explanation.   A dollar in taxes spend on ‘stimulus’ jobs produces less than 28 cents on the dollar.  Let’s call it a quarter.  If one job is produced by the “one quarter” in un-constitutional federal public works, then 3 jobs are lost.  

Remember that one “dollar” in taxes equals the capital that supports 4 jobs.  So when 4 jobs worth of capital are taken from individuals and corporations in taxes then 4 jobs are killed.  The government creates 1 job with the spending.  So 4 jobs are killed and one created or 3:1 loss to gain.   Look at the July jobs report that 500,000 Americans lost their jobs in one month.  Look at government taxes and spending.  Fix the blame there.

Obama has owned unemployment since the Summer of 09.   The lag time from most public policy to macro-economic effect is about 6 to 9 months. 

The way to start re-creating 8 to 10 million jobs is to cut taxes.   Cut spending.  No more bailouts – even for Fannie Mae or Freddie Mac.   Cut regulation and restrictions on producing energy. 

And, when we feel strong as The People, restore the Federal Government to its Constitutional limits.  

Until then, never forget, unemployment follows the capital.  Kill capital and kill jobs.  Create and build capital to create and build jobs.

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Responses

  1. Nicely stated with clarity and impeccable logic. Now if we could only get those elected to think. In the same vein. Can you say turnaround?


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