Tom Woods · PO Box 701447 · Saint Cloud, FL 34770 · USA
FROM HIS EMAIL BLAST OF 2019-Jan-16 10:26PM
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Here’s my unfashionable opinion: I believe in tax cuts for the rich. (I believe in tax cuts for everyone.) I believe the rich are human beings with rights, and not cash cows to be milked by people who had nothing to do with the creation of their wealth.
Now what follows is just for you, and not for your social-democratic friends, who will listen to what I say and respond with, “That’s trickle down, which doesn’t work!”
Those people are anti-intellectual and can’t be reached. What I’m telling you here is for the sake of your own understanding, not theirs.
Here is how wealth is created, and why confiscating the incomes of high earners is so destructive.
When firms increase and improve the equipment and machinery at the disposal of workers, those workers’ labor becomes more productive. Imagine someone using a forklift (as my father did), as opposed to stacking pallets with his bare hands, or producing books with modern equipment as opposed to a 16th-century printing press. The amount of production the economy is capable of is thereby increased, often dramatically, and this increase in production puts corresponding downward pressure on consumer prices (relative to wage rates).
There is nothing natural or inevitable about the availability of this productivity-enhancing capital equipment. It does not fall out of the sky. It comes from the wicked capitalists’ saving, and the allocation of the unconsumed resources in capital investment.
This process is the only way the general standard of living can rise. Only in this way can the average laborer produce the tiniest fraction of what today he is accustomed to producing. It follows that only under these conditions can he expect to be able to consume the tiniest fraction of what today he is accustomed to consuming.
The increases in the productivity of labor that additional capital brings about push prices down relative to wage rates. By increasing the overall amount of output, such increases raise the ratio of consumers’ goods to the supply of labor. Put more simply, improvements in the production process that lead to an increased supply of consumer goods make those consumer goods cheaper and easier for people to acquire.
That’s why, in order to earn the money necessary to acquire a wide range of necessities, far fewer labor hours are necessary today than in the past. Thanks to capital investment, which is what businesses engage in when their profits aren’t seized from them and when savings are available to them to invest, our economy is far more physically productive than it used to be, and therefore consumer goods exist in far greater abundance and are correspondingly less dear than before.
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And, he has a list of how productive has cut the “cost” of certain items in terms of the work hours needed to acquire them. Very impressive.
“Tax the rich” is code for make everyone poorer by preventing “capital formation”. Zero interest rates have wiped out savings by what’s left of the middle class. If there is no “capital investment” because the “rich” are tax and unable to invest, then where does “capital investment” come from?
I know “the money tree” that grows in everyone’s backyard!
Today’s politicians and bureaucrats need to go to the figurative guillotine before the USA has its own version of the French Revolution. Can these people possible be this stupid about economics?
TANSTAAFL (“There Ain’t No Such Thing As A Free Lunch” From Robert Heinlein’s classic)
Or are they just blinded by their “power”?
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