I’m still reading “FDR’s Folly”, which not only decisively demolishes any residual beliefs poorly informed people might have that FDR helped this nation economically–on the contrary, he nearly turned us into the Fascist State many of his top New Deal advisors wanted, and would have but for the Supreme Court–but also eerily prefigures what Obmama is trying to do now. What FDR did in the 1930’s–not let a good crisis go to waste–Obama and his Communist czars are trying to do now, using the same language, the same imbecilic economic and social theories, and which will end in the same result.
I will deal with this at length elsewhere. For now, let me make one point he made that I hadn’t considered.
Inflation is always wealth transfer. I make that point often, and did in my last post. If prices are going up, SOMEBODY is taking money from the people paying higher prices. If oil goes up, and the cascade effect causes anything that is moved by truck, train, plane or boat to go up, then either the oil companies are increasing profit margins, or the cost of oil exploration has gone up, which has created business and wealth for oil explorers. If, due to cartelization, the production of oil has simply been slowed intentionally, that is still effectively a profit margin increase, and the obvious solution is decartelization.
How would we break up OPEC? That is actually an interesting question I won’t address here.
Getting to my point, taxes increase the cost of business for employers. Take the Social Security Tax. We pay 6.2% of our income, but so do our employers. This cost has to be factored into the cost of doing business. Consequently, it necessitates, directly, an increase in prices charged. So our government takes money from us by force, supposedly for our own good, and thereby causes everything in America to cost more.
Self evidently, this inflation is a wealth transfer from the private sector to the public sector. All of the homes that public sector employees buy, all the cars they drive, all the 401K accounts, and pensions, and boats, and vacations, and anything they consume: we pay for it. Our wealth becomes their wealth.
With about 2.0 million civilian employees, the Federal Government, excluding the Postal Service, is the Nation’s largest employer.
The postal service–which in my understanding has to be constantly underwritten by taxpayers, but which does in fact provide a useful service, and which is clearly Constitutional–employs 596,000.
Consider this: Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation
Multiplying $123,000 by 2 million gets me 248,000,000,000. This is the amount of private wealth that is transferred from the private sector to the public sector every year.
The subtle point I want to make here is that every dollar in taxes paid to support these workers–some of whom we plainly need, like the military–is not only diverted from private investment and following sustinable job creation, but also causes the cost of services and products to rise correspondingly. Your net profits are sales less costs, and taxes, being a cost, necessitate higher sales prices.
This point is ineluctable, and worth pondering. There has been so much stupidity over the last 100 years. Maybe, just maybe, we can reverse it.