Government can’t fix economy
January 31, 2012
So called experts giving even basic explanations and descriptions of our economy often result in complicated, perplexing, incomplete, inaccurate and convoluted jargon. This misinformation seems motivated towards camouflaging self-serving interests. Still, the true basic fundamentals of our economy are not all that complex.
Two rules are absolute; demand leads employment and, taxes result in a downward influence on demand. If demand increases, employment increases to meet that demand. If demand decreases, there is lower production resulting in a decrease in employment. Taxes remove money from the economy which reduces demand.
An ongoing dubious argument maintains that taxes should not be raised on the rich because they supposedly reinvest their excess earnings into the production of goods and services which increases jobs. The rich do not put more money into production simply because they have it. There must first be an increase in demand or there is no return on their investment. Placing a larger portion of the tax demand on lower incomes reduces the money they have to make purchases, a reduction in demand. Taxes curtail economic growth regardless of amount distribution amongst income levels.
The rich not paying their share of taxes is not concern for the economy but a simple manifestation of greed.
Bail-outs relieve corporations from a heavy crunch on their financial responsibilities. The huge corporation’s financial strength is preserved while, a downward trend in demand or unemployment is largely unaffected.
Recommended Stories For You
The government has done little to nothing of significance to reduce unemployment. The economy will continue to decline until it bottoms out and then slowly begin to recover on its own.