Posted by: James Atticus Bowden | October 23, 2010

Economic Propaganda vs Economics

Almost 15 minutes of your time.  Worth it.

Here is the same kind of thing in powerpoint.

Grow capital. Don't kill it with taxes.

Choose between the two Americas.  See which one is better.  President Obama proposes an American of hope and change based on income redistribution.  See what happens to the income of Americans under his socialist economics. Even if you support Liberal class warfare, look what happens to the poor and middle classes.  I named my vision of America, which is shared by millions of Conservatives and Libertarians, our Munificent Destiny.  See how capital growth provides more dignity, justice and hope for all individuals.

The starting stats came from a Heritage Organization posting on the web.  The multipliers are those I recall from graduate school economics (JFK School of Government, Harvard University, CL ‘81).  The unemployment factors are extrapolated from the latest Labor Department Bureau of Statistics on the web.

Here is how to see the two Americas.

Say the total income of the U.S. in one year = $100.00.  (Note that income is much different than wealth).   The distribution of income has the same starting point for the Blue Socialism and Red Free Markets.  It’s very skewed.  The rich are getting much more income than the poor.

So, going down the blue side, BHO and the Dems raise taxes.  Less than half of American workers actually pay income taxes.  Lower income workers pay social security, healthcare, and sales taxes.  Many of them get the money back plus a bonus, but it isn’t called ‘welfare’, in unearned tax ‘credits.’

Every dollar that goes into government produces less than 28 cents in services.  Estimate 25% in transfer payments, government jobs and contracts.

Then, adjust for the loss of jobs.  Every $150m in taxes kills 5,000 jobs.  Those workers drop out of all quintiles and lower the sum of the wages of the lowest two quintiles.  The result is that the bottom two quintiles don’t get ahead.  Some individuals will make more money from their government job or contract.  But, a greater number of individuals will lose their jobs and move down the income ladder.

Going the down the red side, we as a Nation create capital.  It’s what Milton Friedman described as the engine of our national economy.  Capital growth increased the per capita income ninetyfold (90 times larger per person) from 1870 to 1960.

If Constitutional Republicans swept Establishment Republicans and Democrats out of office in 2010 and 2012 in large enough numbers, then taxes could be cut as much as BHO wants to raise them.

Three quintiles get an immediate increase in income.  This fuels a 10% increase in the economy.  (If nothing is done – including no new taxes – the economy should grow by 3% or so).  The 10% increase was computed from the original income distribution – pre-taxes.

The growth of capital in the economy grows jobs.

Compare and contrast the results across the bottom row.  Note that the total U.S. income falls to $84 under BHO for the same population that has $124 with capital growth. Which America do you choose?

I described the Munificent Destiny in http://www.americancivilization.net/articles/2005/Americas_Munificent_Destiny.pdf

Likewise, I describe the cumulative effect of small increases in the overall rate of taxes  http://www.americancivilization.net/articles/2006/Harvard_Tells_the_Truth_on_Taxes.htm

I suggest how to follow the U.S. Constitution and move the federal failures of social security, healthcare and welfare to the states – in the example of healthcare for Virginia -http://www.americancivilization.net/articles/Virginia06/Putting_Taxes_To_Work_Commonwealth_Trust_Accounts.pdf

Finally, when I was a politician for 3 weeks in 2007, my watchwords were ‘Dignity, Justice, and Hope.’  There is a way to make these more real for many, more individuals.  Class warfare and socialism isn’t the way. Growing capital is the path to a Munificent Destiny.   A destiny as important for this century as Magnificent Destiny was for 19th Century America.

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Responses

  1. We gotta find a better catchphrase for this than “Munificent Destiny”, JAB.

    Of course, I don’t have a better phrase… 🙂

    • Shaun, if we dissect it – Munificent Destiny is precisely what I mean. But, if it doesn’t sell, then it doesn’t sell.

      This is where to go AFTER we restore the 1787 Constitution (as amended). It is where the USA can play a role in the world that is quite helpful. Pax Americana is part of it – for only for part of the world and doesn’t capture the generous opportunities created by the engine of capitalism.


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