JOHN SHADDEG: Reps don't want to tax the job creators, because that will bring revenue down.
MIKE BARNICLE: What about the fact that unemployment benefits, pumped into the economy are an immediate benefit to the economy, immediate....
SHADEGG: No, they're not! Unemployed people hire people? Really, I didn't know that!
BARNICLE: Unemployed people spend money, because they have no money.
SHADEGG: Ah ha! So your answer is that it's the spending of money that drives the economy and I don't think that's right. It's the creation of jobs that drives the economy.
BARNICLE: Unemployment checks? People don't spend that money?
SHADEGG: No no. They'll spend as little of it as they can, 'cause they'll hold onto it as long as they can.
Of course the economist points out that no business-owner is going to hire people to make products he can't sell, because there's no one with money to buy them. That's why demand--the spending of money--drives the economy. This is one of the most basic of economic facts. But in the 1970s, the Wall Street Journal editorial pages became the propaganda center of a different view, so-called "supply-side" economics, which George H.W. Bush insightfully dubbed "Voodoo economics"... shortly before converting to Voodoo himself.
Well, we've now had several decades of supply-side, trickle-down Voodoo economics, and every single budget year has seen an increase in debt-to-GDP ratio. Every single one!
It. Just. Doesn't. Work. In fact, it gives Vodun a bad name.
Shaddeg is relying on the myth of the heroic entrepreneur, creating wealth out of nothing. Just like Bernie Maddof. And the truth is that the only people who create wealth out of nothing are scam artists. Entrepreneurs "create wealth" by filling a need. And even if it's a need that they themselves created (such as killing yourself with cigarettes), they still only make money if people have money to spend. It's just that simple.
There's another problem with Shaddeg's loopy logic, which seems almost too trivial to mention after this enormous whopper at the foundation of supply-side idiocy. But since it's so out front in the tax-cut debate, I figure I should mention it: tax cuts affect after-tax income. Business-owners hire people out of pre-tax income. Not only pre-tax income, but pre-tax business income, not personal income.
In the real world, business-owners increase their after-tax income by not hiring people until they absolutely have to. They are not in business to create jobs to help the economy out of the goodness of their hearts. That's why they outsource every last job they can. If anything, reducing income taxes on small business owners increases their motivation not to hire new workers, since they get to keep even more of the money they save by not hiring them.
But Saddam had WMDs.
p.s.
Experience is a dear school, but fools learn in no other. -- Ben Franklin.
Franklin was a wild-eyed optimist. |
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