Thursday, March 13, 2008

Pushing a Rope

For a moment I will ignore the idea that Democrats and socialists are “in business” for power and will take them at their word that they are trying to improve the standard of living for the poor and middle classes.

My advice to them is thus, “You are going about it all wrong.”

If they really wanted to lower the costs of living, increase the standards of living, and provide more leisure time to the poor and middle class, they would endeavor to increase the standard of living for the upper classes. The surest way to do this would be to lower or eliminate taxes. I am not going to qualify which taxes – there are plenty to choose – but will at least mention the elimination of income tax on labor.

When many think of “economic centers” they oft think of Zurich, London, and perhaps Kuala Lumpur and Dubai. Hong Kong once topped the list but prior to the Chinese take over in 1997, the city experienced a mass exodus of money to other cities.

Why does no one think of San Francisco, Dallas, or even New York? Of course there is the New York Stock Exchange and the businesses on Wall Street. Are global companies competing for office space in the city though? I think soon-to-be-ex-Governor Spitzer ensured that none are.

By lowering taxes and “being friendly” to big businesses, we ensure the vitality of the smaller businesses that require them.

This works quite the same on a personal level too. Big businesses will keep their headquarters in cities that are good for their top executives. (While they may be incorporated in Delaware or Nevada, they only maintain a post office box there.) This means exclusive neighborhoods, nice roads, low property taxes, low luxury taxes, and the like.

Initially, when areas like these are being built, that means a lot of construction jobs and later a lot of service jobs. Those in construction and service industries are also kept employed. Many will start their own businesses around their work experience. This does not even include the accounting firms, large for the big businesses and small for individuals, the churches, the pizza deliveries, and the landscapers that support them.

When those very wealthy have more of their money, they will either invest in these smaller businesses or buy luxury items. They do not take money from the poor and middle classes but instead give it to them directly. They expect something in return (other than a vote) and that is Not Bad. (I know, I said I was going to ignore the “in it for the power” bit.) They may even give it to charities of their own free will.

It will not sit well with the envious but doing this means that there will be a greater gap between the rich and the poor. However, it will mean that most of the poor are well to do as well. (Some people will always be poor regardless of how much money they have.) It means that the standard of living for the poor is higher than that of the middle and upper classes of countries with high taxes.

It will also mean that while the a poor man sits in a working, air conditioned car, he will see more luxury cars, private jets, and four star restaurants on his drive to work. While he is eating his breakfast, lunch, and dinner, he will read about celebrities flying to Africa to “get away from it all.” While he watches his wide-screen television, he will be bombarded with commercials for things he still cannot afford.

Try as I may, I still cannot believe that this is a problem.

In a free market economy with no or low taxes, the wealthy pull the others “up” with them. Little effort is required to make it so.

In a socialist economy, great effort is needed to make even the smallest improvements.

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