Obama gave a good speech today. It's been a while! He said trickle-down economics doesn't work, has never worked.
"Tax cuts for the wealthy, primarily those passed by Republicans in 2001 and 2003, lowered rates for the richest Americans to historically low levels — but those cuts were followed by massive deficits and weak job growth, not the economic boom conservatives promised."
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Another laughably ridicules platitude by our Nobel Prize winning POTUS.
If wealth does not trickle down from the businessmen, entrepreneurs, and other job creators, then it must come from the government and central planning, right? For example, China's incredible explosive growth came about by giving everyone a government job and paying everyone the same wage, right? This way everyone would be well motivated by a guaranteed paycheck. The opposite is true. The only way to CREATE wealth is to encourage WEALTH CREATORS. Once wealth EXISTS, it always winds up trickling down into the hands of the poor.
Lets take an extreme example. Imagine a farmer with 10 wives and 100 children. The family lives off the land for 20 years and builds a large farm with their bare hands. The farm has thousands of apple trees, grape vines, and tons of stored grain, hundreds of barrels of wine and whiskey. Nearby lives a bunch of educated common people who are jobless and eat rats to survive. The farmer now has grandkids but no homes for them or horses for them to take them to new farmland.
The farmer is a WEALTH CREATOR. The WEALTH CREATOR buys horses from the COMMONers using stored food. The WEALTH CREATOR hires COMMONers to create saddles and trailers to haul his grandkids and their belongings to new farms. He pays commoners to build houses using the straight pine he has grown. The COMMONers are happy because they don't eat rats anymore and their kids don't die of hunger. The WEALTH CREATOR gets RICHER and RICHER as he hires COMMONers to work his farm and he has them build more grain storehouses (capital).
The GOOD years. The WEALTH CREATOR plants twice as much land and doubles his wealth every year. COMMONers are still happy because they dont eat rats and their kids go to the new schoolhouse they built using the WEALTH CREATORs wood. Some COMMONers become WEALTH CREATORs as they invent saws, sawmills, and create diverse shops. WEALTH CREATORS double their wealth every year on average.
TROUBLE STARTS. A drought wipes out the WEALTH CREATORs crops. With no replacement, the WEALTH CREATOR is losing capital at an alarming rate. He must fire almost all the COMMONers to survive. He maintains a huge wealth store he plans to use revive his agribusiness when the drought ends in a year or two. The COMMONers lose any saved wealth in a few months and go back to eating rats.
HOWEVER PRESIDENT OBAMA COMES IN TO SAVE THE DAY!!!
He points out the WEALTH CREATOR aka RICH GUY has enough stored food to get them through the drought. He points out since the drought started the RICH have lost money but become ten times richer relative to the penniless COMMONers. In a very popular move he taxes the RICH guy and gives the grain to the poor. The RICH guy loses 35% wealth the first year but is confident he can rebuild when the drought ends. However the drought lasts another year. Alarmed, the RICH guy hides half his wealth in switzitown so he can rebuild when the drought ends. Meanwhile taxes go up to 50% to cover the shortfall but it is not enough to feed the starving children so the less wealthy are taxed too.
ENDGAME
Obama and the other politicians make mistakes handing out the grain and 50% of it winds up rotting (like in Venezuela). Obama claims that wealth does not trickle down from the RICH guy and has the government take over his farm since its production is so low. (like in Zimbabwe). The COMMONers, now less educated, blame the JOOZE who have somehow found a way to avoid eating rats.
The drought goes into its third year. The money is gone so everyone including the minor WEALTH CREATORs are eating rats. The COMMONers are accused of being “soft,” “lazy,” “un-ambitious,” and “un-imaginative.” (Obama Oct '10). Finally the RICH Guy moves away. He is left with 30% of his former grain stores. A new leader is elected who lowers the tax rates with the insane claim MORE tax revenues will be collected. (see Laffer Curve) The RICH guy returns and begins organizing a team of his former educated staff.
DAWN
The drought is in its 3rd year. The RICH guy has purchased another huge farm at a 80% discount with his remaining barrels of whiskey. He plants some of the land using a new wind powered irrigation pump invented by one of the COMMONers. The pump works out well and the RICH guy begins hiring back COMMONers to prepare for a bigger planting season. -BUT- the drought finally ends. Emboldened by lower tax rates, a strong educated staff, and the knowledge of how to operate in a drought, the RICH guy aka WEALTH CREATOR plants more land and hires more COMMONers than ever before. This is their first taste of an "ECONOMIC BOOM". The "lazy" people of yesterday suddenly become workaholics and it seems everyone is getting rich. Friendly business environment and low taxes and corruption encourage many COMMONers to try their hands at various businesses they dreamed about while eating rats a year ago. Some guy named BESEMER finds a way to make steel cheap. Another guy named EDISON finds a way to light up the farm so that the work day is longer and more productive. Both men become RICH guys. After a 20 year BOOM, the country has taken such a technological leap that it is no longer recognizable.
People forget the rats and think the BOOM will last forever. A Guy named PONZIII takes a sack of grain and gives back two an a week. Another guy named GATES takes a sack of grain and his company earns 10 sacks in a week. (Here is where government could finally be useful, by protecting us from PONZIII, but it is not easy to do without stopping GATES also)
You know what happens next.
Oil will not make Iraq rich. Only WEALTH CREATORs can do that. And the PEOPLE are the key to wealth creation, not politicians who win the nobel prize for making us feel good.
Teach your children that honesty, hard work, persistence, and education are the tools they need. Then give them the tools and set up the expectation for them to succeed
Thanks to all 3 people who read this.
Ronald Reagan created more jobs by increasing the size of the military, thereby increasing the size of govt.
The number of non-military employees of the federal govt is also smaller under Obama's admin.
"Big Government? Obama Has 273,000 Fewer Federal Employees Than Reagan"
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