Posted by: James Atticus Bowden | September 20, 2010

Again, It’s the Capital, Stupid

Capital, Capital, Capital

Some economists announced the Recession is over.  It’s been over since 09.   Who knew?

The socialist simpletons running the U.S. government made the Recession much worse than it ever had to be.   Let’s try to explain how the economy works, again.  You can read the late Milton Friedman or just follow this practical example.

Toss a handful of change on a table.  Add up the money.   That number equals the whole of the capital in the economy.  Every penny produces a job.

Let’s say that again.  Every penny pays for a job.  It takes capital to pay people.  Capital creates jobs.

Take a third of the change on the table away.

That is money held by corporations, banks, and the government.

The two-thirds of the money that is left is money held by Americans.  Our families.  When we spend the money or invest the money, we create jobs.   Capital creates jobs.

Now, consider taxes.  It doesn’t matter whose money you take.  You can take the quarters from rich people.  Or, just a penny from everyone.  It doesn’t matter.  Every penny you take off the table kills a job.   Killing capital killing jobs.

When you kill $5 Trillion in capital – since 2008 – you kill about 10 million jobs.

If you raise taxes on JUST THE RICH CAPITALIST SWINE MAKING OVER $250K A YEAR (sounds so much better if shouted in the original Russian), you kill more jobs.  Coming attraction in 2011, when taxes are raised on JUST the rich, more jobs will be lost.

Meanwhile, the coins left on the table create more coins.  Money makes money.  It takes money to make money.  Capital produces capital.  It can do it in an non-inflationary rate of 7%.   So,  let’s say the coins left after taxes add up to $1.00.    A year later they will equal $1.07 – a dollar and seven cents.  In ten years the money – and jobs – will double.

If only 60 cents is left after taxes, then a year later there will be 64 cents worth of jobs.   64 jobs is less than 107 jobs.  Destroying capital destroys jobs.

Cutting taxes – individual, capital gains, dividends, corporate, excise taxes – whatever kind you can name – creates capital.  Capital creates jobs.

If you think the taxes can be used to create a stimulus – a government make work job – reconsider.   It takes a dollar in taxes to create a quarter’s worth of jobs.   So, four people lose their jobs or aren’t hired to give one person their stimulus job.

Show this to your friends.  If  they understand it, ask them to vote the bums and establishment pols out of office.  If they don’t get it, find something – fishing, day time TV -to keep them busy on election day.

See if your elected politicians get it.

Capital creates jobs.  Taxes kill jobs.

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Responses

  1. It is funny how simple the truth can be. Yet some people will still refuse to listen. There was a time people worshipped idols made of wood, stone, precious metals, and jewels. Finally, almost everyone stopped worshipping such things.

    Yet the change is more imagined than real. Unfortunately, some people still want something to worship created by man, a god that they can control. So now they worship government and attractive personalities. And they still believe the promises of their idol’s priests.

    Therefore, the appearance of the idols has changed, but little else.

  2. CT: Thanks.
    The laws of economics are like the laws of physics. Scientific theories and laws are the same across disciplines.

    I over-simplified, but like gravity and the apple falling from the tree, I captured the essence in my P.E.

    Thanks again.


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