May 30th, 2006

default

Antique's Roadshow And The Secret To Everything

So, not having cable, and summer reruns on TV means I channel surf more often.

On PBS on mondays, there's the Antique's Roadshow, one of those "reality shows" that showcases our decadence and why the terrorists hate us. And between horrible horrible Marylin Monroe memoribilia and actually interesting original print of the official Lewis & Clark expedition map, was a letter from Ulysses S. Grant to someone about his political career. And one line that the appraiser/expert read that made me depressed (for reasons that should be obvious in a few moments) was Grant's philosophy about taxes and lowering the deficit. He wanted to lower taxes to reduce the deficit.

Everyone on the leftern side of the political spectrum has their opinion of such an idea, and that opinion is almost unilaterally "That's stupid, we need more taxes to pay off the deficit."

Except that it never ever works that way. This is post-Civil War economic theory, and every time it's tried, we increase our federal tax revenues, and can put more money towards reducing the deficit.

But many lefties (particularly the ones in office, because they say it the loudest, but surely some of those who have voted for them, too) cannot wrap their minds around this concept. It's really simple. Why do businesses have sales?

Why do they lower prices? Logically, it makes no sense, from a vacuum. You're selling a product or a service for 100%, and are making a certain amount of money; why would you decrease your prices? You'll decrease your profit margins!!!

But when you start including other variables it makes perfect sense. These variables are called people. People who weren't willing to spend 100% are willing to spend 80-95%, plus the people who are willing to spend 100% are now inside the store. Because they're spending 80-95%, they now have 5-20% extra to spend on more things. Not everyone will do this, but some people have the diet food mentality: just as they now eat twice as many low-fat cookiees as regular-fat cookies, they spend twice as much at reduced prices. So the store is now not only making 100% or (usually) more like 180% sales, which more than makes up for the slightly reduced prices.

The same sort of principle applies. When the government takes less money from people, those people are more likely to feel freed to spend money elsewhere. And since the government has diversified their taxes including skimming some from most sales transactions, the more money that gets spent, the more they actually rake in.

Which is why there's talk of removing the income tax every so often, but never among those who could do it. If you make $18,000 a year, and you spend $12,000 in the "requisite outgoes"; food, clothing, utilities, shelter, car note, gas, whatever, movies and entertainment, etc. That leaves $6,000 for . . . what? Taxes? Savings? I know what I'd rather, but too many people still are stuck in the ridiculous mindset that "more taxes mean more money for the government!" When immediately after the American Civil War, there was a president who at least understood it.

This was a century and a half ago.

My how things improve.

Aaron "The Mad Whitaker" Bourque
  • Current Music
    No More Mr. Nice Guy by Alice Cooper
  • Tags
    ,