Show Me the Money

 

Recently the Democrat demagogues have been stirring their lynch mobs with calls for confiscation of wealth, everything from a 70% tax on income above 10 million dollars of income per year, called for by Alexandria Often Confused, to the outright confiscation of wealth, a wealth tax, called for by Princess Lizzie Warren.

Dan Snyder bought a big boat. God knows why.

Alexandria Offers Coffee!, an expert in energy and economics, self declared at least, wants the money to fund her brave new green energy program. Warren wants Dan Snyder, owner of a professional football team, to sell his new $100,000,000,000 yacht, and give the money to the government to buy health insurance for the homeless.

Both of these proposals are classic dilemmas designed by their proponents to force us to make a decision between a presumed evil, wealthy people, and a presumed good, a special egalitarian program. If we were to enact the proposed 70 %, who is to say the government should spend it on Alexandria’s Overtly Contrived energy program? What analysis has been done to show that is the best use of the money? And why does she get to decide simply because she proposed the tax? Most of her life she has made pretty awful life decisions. I mean, considering how highly intelligent she is, shouldn’t she have a list of patents and trademark corporations, that she has created? As devoted soldiers of the underclass who believe that a barista is just as smart as a PhD or successful startup owner, shouldn’t we demand that a consortium of all baristas together should decide how the government spends money rather than let one barista make those decisions?

Furthermore, we are presuming that government spending of the money better serves the public good than leaving the money in the hands of the billionaires. We are assuming that a government controlled by demagogues, like Native American Warren, who yank the chains of the public with their rhetoric, and get their own chains jerked by every populous action group which they must appease, can make appropriate and wise decisions. By the nature of politics, they cannot, and by the nature of demagoguery they must not.

Is it possible that this hurdy gurdy catalyst of, and response to, the masses is not the best course of action? Of course, everyone knows about Venezuela. Most have heard about Cuba, Cambodia, Russia, Nazis, and Fascists. All appealed to and orchestrated the masses, but before you go where they went, you might consider where you are now. Is your life better and is your future more optimistic where they went?

But certainly even poorly executed good intentions are better than affluent showoff yacht buying? Well let’s look at it.

A 100 million dollar yacht is probably a one off; it’s definitely not a mass production item. Hence engineers, architects, accountants, foremen, and other professional people would work on it during its construction and get paid. Skilled craftsmen like carpenters, welders, plumbers, electricians, clerks and others would work on it. Unskilled people would also work and assist the skilled workers. Other people, working for the suppliers of wood, steel, pipe, cable, and the associated appurtenances would be employed. A dry dock would have to be built and maintained. All of these people working on the project or assisting would receive money and would go home and buy things, and then other people would work to supply those things, and those other people would buy things, and eventually the laborers on the farms, in the mines, in the forest, etc. would get paid and buy things. A dollar paid for the boat gets spent over and over again throughout the economy helping working person after working person.

But let’s say that the owner of the boat building firm is greedy and wants to siphon off a lot of money. Well he faces the possibility that the neighboring boat builder at the dock up the coast won’t be as greedy as he is and will siphon off less. Hence to get the job the boat builder must keep his graft down. In any case, what he siphons off for himself won’t be stored in a mattress, it will be spent on his own indulgencies or it will be invested. In either case, it goes back into the economy helping working people.

The alternative is that the government confiscate the 100 million and spend it on the poor. Well at least some of it that is not absorbed by the government agencies would reach the poor, i.e. the chronically unemployed, possibly we should say the professionally unemployed, an occupation that is passed down generation after generation-something that was never meant to be when welfare started.

So what? When the government steals money from the people who earned it, doesn’t the government spend it and the same multiplier effect happens? Well it might and might not. Depends what the government spends it on. Give it directly to the poor, mainly nonworking, and likely the multiplier effect is dampened: No high level expensive projects involving highly skilled people, no highly skilled paid people also buying expensive things, only poor people buying basics with the part of the money they actually do receive from the government. This money spent by government supports not working, as opposed to money spent by industry which attracts the nonworking into taking jobs and working. In the short term welfare allows the nonproductive person to eat; in the long term that person, nor their children’s children’s lives never change for the better.

Furthermore, the industrious nonworker might go underground and engage in antisocial activities. You know they have their government “trust fund” check and they also have their dope or gambling, or whatever underground business untaxed income as well.

Back at the government agencies there is potential graft and simple inaptitude (not my money-I don’t care) of the government officials. Ask yourself how come elected officials were not rich when they took office and their salaries don’t pay that much, but 10 years later they are multimillionaires.

Here’s a real life example of the government’s use of taxpayers’ money: The High Price the State Pays for Low-Rent Housing by Dan Walters

In this case, and it probably is not exceptional, the government housing contractor was awarded close to 200% of the price of a better unit in the area: The government paid $378,000 per unit in ugly project housing versus $200,000 which could have bought a house nearby. This does not mean half of the contract money was bled off in graft and corruption, indifference, or what, but there certainly is a low return on the dollar for the taxpayers.

Warren promises that unlike in the past, giving the government more money will actually improve people’s lives, at least it has always improved the lives of the elected officials.

But let’s assume that the $178,000 excess fees per unit did end up in someone’s pocket, won’t he invest it and spend it just like the capitalists in the yacht building venture? So we still get money circulating in the economy, right? Yeah, but would you prefer that someone in the government contracting business gets to spend dollars you were taxed, or would you rather spend those dollars on something you want? The capitalist yacht builder has a lot more money than you, but unless you are buying a yacht he didn’t take it from you. Not so with the excess waste in government. Also the capitalist is generating a demand for workers. Government assistance of nonworkers encourages more nonworking.

But so what, the poor need to be cared for regardless. I agree, but launching rhetoric about grabbing more money from wealthy people (just remember that the wealthiest person is none other than Uncle Sam) and throwing it willy nilly into inefficient programs does not solve the problem; clearly it HAS NOT solved the problem. I suggest that before you demand more, you pilot a bunch of programs and track their benefit to cost ratio and when you have a program that is very successful, come back and convince us to fund it. But right now, the Trump economy is currently reducing the welfare rolls to the lowest in about half a century by simply enabling industry to offer the better alternative of higher pay through employment. And that is one reason why the demagogues hate him.

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