A tax cut is not something that the government gives to people. It is a reduction in the amount of money that a government takes away from people.

BTW, I think that there are problems with the centralization of wealth in this economy. However, centralization of wealth is generally an effect of the growing centralization of political power. Big government tends to centralize wealth.

When you look at the history of governments, you find that the overriding concern of big government is to protect the assets of the politically and economic empowered.

If someone were to strategically decrease the size of the government and removed the protection of the wealthy, we would see the gap between rich and poor diminish.

I think David did a good job of responding to your latest comment, so I won’t argue most of it. What I would say is that I agree with you about Republicans or Democrats giving benefits to the wealthy or to corporations. I’m with David on this – the government should not be sponsoring or subsidizing or favoring any businesses.

I actually had to re-read my original post. I had not intended to be talking about tax cuts, but I recognize that it sounds as if I am. I was really trying to challenge the assumption that Tyler pointed out – that “money earned by the wealthy is static.”

I’m sorry that you keep paying higher taxes every year – my taxes (as a percentage of income) have not increased – I must be rich. I do agree however that the massive debt that our government has incurred with decades of reckless deficit spending is a problem that will continue to grow even if we don’t actively increase the debt – unless we start getting it paid off. Those who are fiscally conservative need to start talking about that more. Using the logic of Bastiat – we cannot collectively maintain a permanent debt load any more successfully than I can individually maintain a perpetual debt load.

By the way – Jason’s comment about dollars was true. I don’t know anywhere in the world where the dollar does not have to return to the U.S. We can exchange the dollars for any number of other currencies, but the man who gives me euros for my dollars has to do something with dollars I gave him – even if he just gives the dollars to someone else who spends them here. Even if merchants in other countries will accept dollars as payment they must exchange those dollars for the local currency before they can spend their earnings unless they spend the money by purchasing from a U.S. enterprise.

And Jason’s statement about dollars is completely false, dollars can be exchanged for whatever currency the person desires. They don’t have to be used in America. And I could care less about other countries. I don’t want my taxes helping other countries, I don’t pay taxes to help other countries, I pay taxes to benefit the good ol’ U.S. of A. (probably the most un-liberal thing about me but that is how I feel)

And one other thought, the whole point of giving the wealthy tax cuts is to get the multiplier effect of them investing in our economy, that doesn’t happen when they invest in other countries. Sure they might still control the money we gave them in a tax cut but it isn’t doing anything to help our economy. Might as well be called welfare for the wealthy because that is what it is.

And every year we pay higher taxes and higher interest on this debt because people think blindly giving the wealthy more tax cuts will work when it doesn’t.

The natural state of money earned by the wealthy is static.

The natural state of money earned by the poor is dynamic.

A good book I’d recommend on this subject is “Economics in One Lesson” by Henry Hazlitt. It’s available as a free e-book here(pdf).

One other thought. When the wealthy invest in other countries they do not abandon their money, they still control it and eventually it will come back here (like the hoarding idea I included in the post). As for when they choose to live in foreign countries – first, America is not a prison so it is their right to leave; secondly, what about all the people from all over the world who come to visit us here and add to our economy – it’s not a one-way street transaction.

Thanks for the link. Interestingly it is not the economics that I am concerned with here any more than the ethics. The thing that concerns me (whatever the economic and ethical results) is the perception of scarcity that drives the desire for wealth redistribution. I think I will have to post my thoughts on scarcity sometime. I call it the Law of Abundance.

Marshall,

You raise a good question – what is our goal? I could argue that our economy is not the limit of my concern. In fact, my concern is the social implications of putting too much stock in cash – which has no real value, only assigned value – and in the idea that we do not have enough to meet our needs, or that we can solve poverty through government programs.

Poverty is a mindset as much as a lack of property – I know because I lived in the poverty mindset for years and the mindset did not change at the same time that our family income finally exceeded $10,000/year. The mindset cannot be changed by government programs and therefore those programs cannot be a lasting solution.

Imagine what would happen if every person worked in our country? We would produce more goods and services than we need but more importantly – work is good for a person emotionally. If every person were gainfully employed our society would be a better one even if our economy were suffering. Our crime rate would go down because there would be less boredom and desperation. (Please note that lower crime does not necessarily mean zero crime – I am not arguing that all crime is a result of unemployment.)