Home > Critical Thinking, Current Affairs, Dystopia, Musings, Reason, Secular Religions, Skepticism > Why Reducing Taxes On The “Rich” Does Not Create Jobs

Why Reducing Taxes On The “Rich” Does Not Create Jobs

Ever wonder why “trickle down” eCONomics does not work? While the idea of letting ‘deserving rich’ keep more of their ‘hard earned money’ so that they will reinvest it to create more jobs sounds plausible, our experience in the last 30 years suggests otherwise.

Lowering taxes on the rich is linked to job loss, not gain.

But why is that so? Why would the ‘deserving rich’ not reinvest money to create more jobs?

Let me enumerate the reasons-

1. Since the ‘deserving rich’ are scam artist sociopaths with a single-minded focus on making more money, they tend to choose the quickest way to do so.

For the last 30 years, the quickest way to make more money has been through financial shenanigans. Investment in the creating, developing and making real things simply cannot give you the returns that various financial products can. How many real life business can consistently grow over 10-20% per year?

2. We reward failure in financialism, but punish it in everything else.

Even before the bailouts of 2008-2009, the governments of western and many eastern countries rewarded failure in financialism with more money. In contrast we do not bail out or assist failed companies that make real things or provide real services. Combine this with the higher returns mentioned in the previous bullet point and you can see why investing in the real world is not worth it.

3. The ‘rich’ are zero-sum sociopathic control-freaks who interpret their luck as manifest destiny.

Having someone else make a decent amount of money causes immense pain to the ‘rich’ even if they were to benefit for the labor of said person. This is probably one of the least talked about reasons why the rich do not create jobs even if it benefits them.

They also lack to ability and willingness to support innovation, unless they have no other choice. The ‘rich’ are not welcoming of change and thus the best way to effect change is to eliminate the rich, their kids and grandkids.

4. The sheeple in many western countries are stupid enough to believe that the rich are deserving and rational.

Many morons actually believe that giving more money to the rich will make everyone prosperous. But why would an obsessive money concentrator (rich person) want to redistribute their ill-gotten money? Greedy sociopaths cannot behave like normal human beings.

I would add that a small percentage of the population (about 10%) who are upper-middle class also believe that they are on the threshold of becoming rich, and therefore act as unwitting shills, pimps and gangsters for their masters.

Comments?

  1. May 13, 2011 at 6:24 am

    Exactly.

    Read the books “Snakes in Suits” by Dr. Robert Hare and Dr. Paul Babiak as well as “The Sociopath Next Door” by Dr. Martha Stout.

  2. sth_txs
    May 13, 2011 at 6:46 am

    If this issue really bothered you that much, then you would admit we need to reduce the federal government to Constitutional functions, abolish the federal income tax, and abolish the Federal Reserve.

    That would put much wealth into the hands of the working people. I don’t disagree with what has happened, but when you have corrupt government and corrupt monetary system, that is one of the results.

  3. Webe
    May 13, 2011 at 7:40 am

    Don’t disagree, but the common sense angle here is so simple even a retard can understand. If giving money to the rich could alleviate poverty, did poor people come about due to a scarcity of rich people? Obviously money will trickle down faster if you put/leave it in the hands of those that don’t have it than indirectly by way of the rich who have to spend it first.
    It obviously stimulates the economy much more if money goes to those who need to spend it immediately. In terms of economics, redistributing wealth is actually much more important than the income aspect. If there is a banana republic in which one copora owns all the land, employing all the poor people to grow pineapples, the best way to move forward is obviously to give everybody an equal plot of land and make the best of it.
    Another example: If you go to some poor village in a famine, what would happen if you give tons of grain to the village headman, who is already the only one with food to spare? Nothing good. Since he already has enough, he can hoard the grain as long as he likes, exacting the maximum price for any exchange. He could easily expand his harem to include everyone, making slaves of anybody who wants to live. At least, if the natives are stupid enough not to modify the “property” relations and get rid of the bastard.
    Human society only works if people need each other and exchange for muutal benefit (not just money: food, attention, conversation, stories, sex, whatever).

    Pity the rich, who have only gold to eat; lucky for them there are always peasants willing to give bread in exchange! (Russian maxim)

  4. May 14, 2011 at 9:10 am

    You appear to elide the difference between ‘giving’ money to a class of people, and taxing them less.

  5. JHB
    May 14, 2011 at 10:47 am

    But why would an obsessive money concentrator (rich person) want to redistribute their ill-gotten money?

    This makes it sound like the wealthy are like Scrooge McDuck, sitting on top of dollars bills, just playing with paper all day. Back in reality, wealth is never “distributed.” It is *created*. And that requires investment, not the Keynesian BS of paying people to dig holes and fill them up again, and hope the magic multiplier, through the principle called “somehow,” gives us computers and iPhones and whatever.

    How does that work out in reality?

    In a profit-AND-loss system, the rich can only stay rich by making OTHER people happy. Which means putting money in places where it benefits others. Most class envy ironically is directed at the conspicuous consumption of the wealthy, but it is the production, supply-side that ought to be fundamental to the analysis. Those who think we can consume things before we produce them (Keynesians, Marxists, and other vermin) are analyzing the problem at the wrong end. It is as if we can create demand for houses by burning houses, create demand for cars by destroying them, etc., which isn’t hyperbole — think of cash for clunkers, or the stimulus bill hiring road construction — that’s destruction, not production.

    You are either a scumbag or an extermination-worthy self hater? So which is it?

  6. PT Barnum
    May 14, 2011 at 11:51 am

    In a profit-AND-loss system, the rich can only stay rich by making OTHER people happy.

    JHB, I say that this statement is unquestionably wrong. Do you care to defend your idiotic jabber?

    • May 15, 2011 at 9:20 pm

      Milton Friedman’s trickle down economic model does not work. If it had, we would not have the disparity of income and wealth that we have today, since he was Ronald Reagan’s economist and established the current conservative economic model. Part of that model is what is called starve the beast. That is to reduce tax revenue at the same time as increasing spending at a rate 3 times the loss of revenue. Reagan increased the national debt 184% with his tax cuts and increase in military spending. Clinton altered this slightly to create a surplus, then George W then completed the task of bankrupting the nation by further reducing taxes, mainly to the wealthy. At that same time unemployment started to escalate.

      Thus more money going to the rich, but declining employment. Why? Well there are several reasons.

      After WWII, American as the only non-destroyed industrial nation, so we were the supplier to the world. There was not competition for American companies. But by 1970, Europe and Asia had completed their rebuilding with more advanced technologies than our legacy infrastructure. The began to compete in the world with goods and service we only made. The baby boomer generation was just entering the job market from high school and college. Also computers started to be used extensively in corporations. This resulted in reduction in demand for labor. Then the oil output reach it maximum, supplies have been declining ever since, resulting in increased energy costs. In the ’80s robotics also displaced millions of jobs. Add to that Reagan’s and Bush tax and regulatory changes it made it cheaper to farm manufacturing to developing countries, e.g. India and China. This also had the benefit of destroying the labor unions in the private sector. This reduced the amount of union money available to the Democrats for elections.

      The continuation of this conservative Reagan Revolution is the attack on public employee unions, the last bastion of support for Democrats. If they get them out of the way, then they can have virtual monopoly in buying the elections at all levels of government. This was outlined by Karl Rove to the CPAC convention.

      Part of the economic model of Rove and Friedman is that if you create huge unemployment and allowing business and government to go bankrupt is that you reduce the labor force to a wanting class. When China and India wages then climb beyond the new low for American labor, then they will move production back to America and they will have a cheaper labor force.

      One problem America is experiencing is the exodus of those who have specialized training and skills. They are finding better employment in developing countries. China is hiring large numbers of our smartest and brightest. That brain drain will impact our ability for ingenuity in developing markets, such as renewable energy and super nano computers. China is has just built the fastest and smallest computer and a leader in renewable energy technology.

      Another factor is the continuation of immigration form all countries, but not the smartest and brightest. So we are adding to the labor force without the creation of enough jobs. America must generate nearly 1 million private sector jobs each month to reduce unemployment to 4.5% and to absorb the number of people entering the labor force.

      With the economic collapse of the retirement funds of many baby boomers, they are now having to work longer and thus not opening up job positions to younger workers seeking work. If they raise the age to 70 to receive Social Security, you will further exacerbate this problem.

      In order to improve our economy and reduce total national debt, taxes must be indexed for the upper income. Corporate tax should be at around 27% after eliminating all special interest tax credits and deductions.

      Food for thought…

  7. MeMyselfI
    May 14, 2011 at 12:59 pm

    If you tax or regulate something you get less of it. Period.

    Why are there *any* taxes or regulations on the employment of workers? Because the government wants less of it. This is to keep inflation down (wage/price spiral).

    This is pretty basic stuff.

    Yes, supply/demand *seems* like a cart and horse problem… on paper. In reality it’s not. If you get government out of the control and taxation of employment you’ll get MORE of it, which will result in greater demand for ALL goods – and also a wage/price inflation death spiral… *unless* you control the spiral some other way.

    NOW, that being said… why is our government behaving like this? They’re deliberatly keeping employment down, wages down (by importing cheaper labor), and otherwise sucking money out of the system *AT HOME* as fast they can print it (by allowing energy to skyrocket, for example).

    The reason is simple… we’re fighting WWIII against China and the battlefield is monetary policy. We’ve been preparing for this for DECADES. Changes to the CPI calculation… changes to unemployment calculations, etc. All put in place to dupe the sheeple into believing everything isn’t as bad as it *really* is.

    All of this preparation allows us to print money. It is the “gun” we have to the heads of the Chi-comms. If they don’t play ball and allow their exchange rates to move as they should, then we’ll make their holdings of US assets worthless.

    And, we’re doing this without explaining it to the general public (of course). Indeed, we’re doing it on the backs of the general public.

    One false move and it turns into a shooting war. Won’t it be fun when 10’s of millions of excess Chinese men start rampaging all over the middle-east and south-east Asia. Yeahhooo….

  8. PT Barnum
    May 14, 2011 at 5:31 pm

    More jabber:

    If you tax or regulate something you get less of it. Period.

    Indeed, tariffs on steel dumping by the British built American steel. Then tariffs were removed and American steel collapsed… oh, you live in a fantasy world. Okay.

  9. May 15, 2011 at 9:54 pm

    As a business owner, a lower tax rate for me does nothing for me hiring more employees. I can either invest it in growth markets, such as those in developing countries with stable governments, i.e. China and India.

    Increase in demand for my product is what would trigger me to hire new employees to increase out put to match demand. With that said, if I could develop a market in China or India for my product, then maybe that increase demand may create a need for more employees. But if that growth was significant enough, I would probably build a plant in those countries and close the one I have here in the states. I would then import my product to the states for the this smaller market.

    So the Republican’s can give me more money, but it won’t do a thing to create jobs here. I have enjoyed the reduced taxes since “W” reduced them for me. But it has not done helped me hire more employees, because I don’t need more employees.

    Now as for the regulatory issue. The New Deal regulation established a stabilized financial industry. Most insurance companies were mutuals, thus the policy holders owned the company. Retail banking, stock brokerage and insurance. At that time we had Savings and Loan companies that held most of the home mortgages in America. When Reagen deregulated the mortgage industry, the Savings and Loans started to fail and it took government with Fanny Mae and then Freddy Mac to buy all these mortgages that the S&L industry held. It just got worst after than, especially when Freddy and Fanny was privatized, but the taxpayer is still guaranteeing the mortgages held by them.

    Had we not deregulated the financial institutions, we would not have the collapse we had in 2008. However, we probably would have an increasing unemployment problem, for reasons stated before.

    Regulation in itself is not necessarily bad. They need to constantly need to be updated as times change and technology changes. And the agency needs tighter oversight than has been done in the past 30 years.

    Over regulation is not healthy, but no regulation is equally unhealthy to the economy.

  10. Webe
    May 16, 2011 at 4:11 am

    I agree with Bob. The economy is a cycle, and only works if various feed-back loops and forces are in balance. Balance is the most quintessential economic concept. It is obvious that prosperity cannot obtain if the forces of production (including investment!) and consumption are not in balance. You can only get something from people by producing something they need, and they can only pay for it if they can offer something you need. Henry Ford’s idea was to pay his workers enough so that they could eventually buy one of the cars that they were producing: otherwise you run out of customers.

    > Back in reality, wealth is never “distributed.” It is *created*.
    No one talked about “wealth creation” before Ronald Reagan: before that wealth was accumulated or produced. The economy is completely dependant on what used to be called the “bounty of nature” or creation (land, water, minerals): that is the basis of wealth. On top of that is layered social wealth, obtained by monopolizing or exploiting or improving (whatever) that which is at hand. Throughout history, a lot of wealth has be gained by conquest and built by slaves, only to be subsequently confiscated or sqaundered by others. Partisan talk about “how some ‘create’ wealth only to have the government ‘redestribute’ it is a narrowly provincial and myopicically ideological approach: without society and some system of government there could be no rich.

    >You appear to elide the difference between ‘giving’ money to a class of people, and taxing them less.
    If you tax them less they ‘get’ to keep more, so you are ‘giving’ them more and they are ‘giving’ up less. The king of France used to ‘earn’ a lot from all his land (all of it was his by rights, and so also what it produced, even the metal in the ground). The serfs ‘earned’ very little, although the king needed to ‘give’ them enough to survive. But that’s not the point. The point is what ‘flows’ and ‘trickles’ should be encouraged to optimize prosperity: My contention is that a flow into a full lake will generally produce fewer results than flows to where there is no water; teaching someone to read will have a bigger effect than giving me my 804th book.

  1. May 15, 2011 at 1:18 am
  2. June 1, 2011 at 3:03 pm
  3. September 19, 2011 at 1:00 am

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: