Econ 101
A basic supply and demand curve. Read more on supply and demand here.
Inflation
HISTORY
is not a new thing, man-made disaster, around since at least since Ancient Rome
In order to pay for extravagant expenses, the 1st-century Roman emperor Nero debased the Roman currency, the denarius. How? replaced silver, which was valuable, with copper, which was not.
Rome’s corrupt governments debased the coinage on a regular basis. By 4th century, price of wheat was 2 million x higher than it had been in the mid-2nd century. By the 5th century, Rome was finished—overrun not by barbarians, but by INFLATION.
16tg century: English King Henry VIII did the same thing with England’s coinage to pay for wars, divorces, and debaucheries..”Great Debasement”, food prices soared, left it to his daughter, Queen Elizabeth I, to clean things up by issuing new, high-quality coinage, setting the stage for the emergence of England as a great power.
Continental Congress of the American revolution tried to print its way out of its money problems by paying soldiers with paper money.
1st US currency, the Continental dollar, was so over-printed that it became “confetti”, collapsing into HYPERinflationary oblivion.
Alexander Hamilton, 1st treasury secretary, saved the day by linking the US dollar to gold.
1920s: rampant money printing by the Weimar Republic in Germany led to hyperinflation, economic collapse, and rise of Adolf Hitler.
Argentina, once the most prosperous country in South America, has never recovered from its wild money printing in the 1950s
Zimbabwe, now one of Africa’s poorest and most corrupt nations, is infamous for its one hundred trillion dollar bill.
WHAT IS IT?
https://tippinsights.com/milton-friedmans-priceless-lessons-on-inflation/
Friedman: Inflation, he stated, is a monetary phenomenon. It is a problem of too much money buying too little goods in the market. A "rapid increase in the quantity of money than in output" leads to the state of affairs.
Friedman points out that the country's government ultimately has control over the printing of currency and, thus, the amount of cash reaching the people, absolving often-blamed greedy businessmen and crippling trade unions.
Governments often blame "worldwide inflation" for the country's economic situation. Friedman explains that such an argument no longer holds. He says, "That was a valid explanation before 1971 when we had a worldwide system of fixed exchange rates. In that case, inflation in one country would indeed tend to spill over into another because it would influence the quantity of money." He goes on to say, "But today, that explanation is not valid. As long as countries have variable floating, flexible exchange rates between their currencies, inflation is a national phenomenon and not an international phenomenon." The reasoning is easy to understand, considering that different countries are experiencing varying percentages of inflation. The current inflation rate in the U.S. is 7.7%, while in the U.K., it is 11.1%.
Busting the myth that inflation is a consequence of capitalism, he cites examples of communist countries that have dealt with similar situations despite their diametrically opposite economic system. In the same way, a strong trade union may successfully demand higher wages. Still, military-run countries, where such unions have no role to play, have not remained immune to the monetary phenomenon.
Friedman explains that large amounts of money come into the economy due to government spending and is the primary reason for inflation. National governments create large quantities of money to fund their expenditures. Most people are against taxes, so the administration must find money to fund its programs and initiatives. He explains, "There is no way you can do the one without the other. The real tax on the American people is what the government spends. If the federal government spends $450 billion and only raises $400 billion in taxes, who do you suppose pays that other 50 billion dollars? Do you suppose the tooth fairy does? You pay it, and I pay it, and one of the ways we pay it is by the tax, which we call inflation."
More money is often printed or borrowed from the public to meet the budget deficit. The excess money reaching the people gives rise to inflation. Friedman says that inflation is a tax imposed without representation and that nobody has to vote for it. And, of course, it's a marvelous tax from the point of view of a congressman trying to meet the demands of his constituents for more spending.
Moreover, efforts to create full or high employment rates also contribute to the situation. The stimulus flooding the market to create employment has a short-term positive impact. After that, the stimulus becomes the excess money chasing the same amount of goods, leading to higher prices. Friedman also makes it clear that unemployment or low wages are not ways to stop inflation.
2 types: non-monetary and monetary.
NON-monetary inflation…the rise of prices due to some external event.
When a hurricane slams the Gulf of Mexico, interrupting fuel production, the price of gasoline rises.
Over time, the market recovers and prices normalize.
MONETARY inflation: the distortion of prices that occurs when money loses value. Why is my weekly grocery bill, which used to be $100, now $200? Because your money is losing value. It’s not that bananas have suddenly become more valuable. It’s that your money has become less valuable.
can happen rapidly or slowly over time.
1970: a can of Coke cost a dime; a Big Mac 65 cents. 50 years later, Big Mac is $5, soda $2…products haven’t changed (MG NOTE: YES THEY HAVE TEY ARE SO MUCH WORSE FOR YOU WITH SO MUCH MORE CRAP NOW!). It’s the dollar that’s worth far less.
slow-motion devaluation of the dollar is why young people today can barely make rent when, years ago, their parents, who made far fewer dollars, could buy a house. Their dollars were worth much more.
Increased spending leads to inflation and the dollar losing value
Nixon: The worst thing he did was not Watergate….it was taking us off the gold standard in 1971, which Alexander Hamilton had put in place two centuries prior!!! This allowed the federal government to print dollars more or less at will.
Had the US dollar stayed connected to the gold standard, it’s estimated that today’s economy would be at least 50% larger
What is the dollar’s value linked to now, if not gold? Faith…the faith that the money you have today will be worth the same tomorrow, next year, the year after. But U.S. government prints trillions of dollars to pay for its outrageous spending so…?
The most devastating effect of inflation is its impact on social trust. Money was invented to enable trade between strangers by providing a mutually agreed-upon unit of value. It is a facilitator of trust. Without that trust, trade, social relationships, and life as we know it ultimately unravel.
We must once again link the dollar to a stable anchor; gold or some other trustworthy standard.
SOURCES:
https://www.forbes.com/forbes/2009/0216/015a.html?sh=55f74fa918bd
https://www.jstor.org/stable/4224593
https://www.nationalgeographic.com/science/article/120830-hurricane-isaac-labor-day-gas-prices
Inflation: What It Is, Why It's Bad, and How to Fix It by Steve Forbes
https://research.stlouisfed.org/publications/page1-econ/2021/12/01/a-dollars-worth-inflation-is-real
https://www.nasdaq.com/articles/money-printing-and-inflation%3A-covid-cryptocurrencies-and-more
The Free Market Will Set You Free
There is no substitution for free-market capitalism as a promotor of human prosperity
GDP per capita = world’s economic output divided by its population, considered best measurement of a country’s standard of living (below, the world’s)
^^ US surges first: 1776, Declaration of Independence, publication of The Wealth of Nations by Adam Smith and within 100 years, capitalism turns 13 colonies into the world’s largest economy
Western Europe shot up later during industrial revolution and after WWII, after embracing the free market
Eastern Europe takes off after released from socialism, China has some free market policies
“Capitalism is a system that begins not with taking but with giving to others.” -George Gilder
underlying motivation of every entrepreneur is to satisfy needs of OTHERS = success & profits, which leads to more innovation, expansion, employment of others, better products, more wealth for more people
“Nothing contributes so much to the prosperity and happiness of a country as high profits.”
Countries where citizens are generating healthy profits by their individual efforts are countries with a higher tax base, higher research and development, better public services, more robust charity and philanthropy, and ultimately greater happiness and quality of life.
“Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone.” — Frédéric Bastiat
Our conversations about government spending would be so dramatically different if we first realized that the government has no money to spend that it does not first TAKE from someone else/we the people
Whether it be confiscation (taxation) or debt (future confiscation), government spending, legitimate to the extent that it funds the necessities of government, is always an extraction of wealth from the private sector.
Government needs revenues to function. But beyond a certain point, who will spend the money more effectively: bureaucrats or the people who worked to earn it?! the government can and will WASTE our money and has ZERO accountability! they are not audited! they do not search for “the best price” for items/goods/services but instead line the pockets of their friends and pay 10000x what it should cost because it’s not their money to spend!
“Differences in habits and attitudes are differences in human capital, just as much as differences in knowledge and skills—and such differences create differences in economic outcomes.” — Thomas Sowell
NO attempt to manufacture an equal economic outcome can EVER succeed. This quote explains why: differences among people—such as their habits, abilities, attitudes, and goals—always lead to inequality. We are all different people!
No matter how hard governments may try, they can’t force people to be the same. This is called REALITY.
“If history could teach us anything, it would be that private property is inextricably linked with civilization.” — Ludwig Von Mises
Without property rights, freedom can’t exist. If individuals don’t have control over their property, then the state does. If the state owns your property, the state owns YOU.
Owning property gives people dignity. And people who own property will be far better stewards of that property than any disinterested third party.
All lovers of freedom should be staunch defenders of private property. Without it, a productive and free society is impossible.
“The free market is not a system… It is not something that Washington implemented. It does not exist in any legislation, law, bill, regulation, or book. It is what you get when people act on their own, entirely without central direction, and with their own property…” — Jeffrey Tucker
Nobody invented capitalism; it’s what free people do NATURALLY—exchange goods and services for their own benefit.
Before there are interventions, regulations, stipulations, and controls–there are humans acting, associating, cooperating, building, and creating. That economic freedom is what we call capitalism. Let it work!!!
When people are free to do what they want—within the bounds of the law, of course—they do their best work. Simple—and wonderful—as that.
“Under capitalism, man oppresses man. But under socialism, it’s the other way around.” — Russ Roberts
Human beings are flawed creatures. They will make bad choices no matter what kind of economy they’re operating in.
Some think we can avoid the dark side of human nature if we just get rid of capitalism. But all that does is replace one flawed actor, the individual, with another flawed, but more powerful actor: GOVERNMENT bureaucracy at best and a totalitarian monster at worst
SOURCES
https://humansandnature.org/how-capitalism-changes-conscience/
https://www.econlib.org/library/Smith/smWN.html
https://www.worldbank.org/en/topic/poverty/overview
No Such Thing as a Free Lunch
Somebody always has to pay - and that someone is usually YOU!
Monetary Theory (Milton Friedman): the growth or contraction of the money supply has a profound impact on a nation’s economy.
showed that the Great Depression was not a failure of an out-of-control free market, but an out-of-control Federal Reserve - the central bank of the United States
Instead of keeping the money supply stable in a recession, the Fed choked it off. This started a series of “bank runs”—people literally running to get their money out of their bank before their bank ran out of money.
The biggest mistake was that the Fed existed at all. No Fed, Friedman believed, no Great Depression. The free market would have figured things out on its own just as it had in previous economic upheavals.
the Fed’s members had no confidence in the market…their confidence was in their own ability to fine-tune America’s incredibly complex economy.
This confidence was misplaced. The Fed, and FDR, made one bad decision after another, and the Depression dragged on.
Friedman saw another grave mistake in the early 1970s. He made the bold prediction that the Fed’s efforts to print money to keep the country out of a recession would lead to something worse: stagflation, the combination of high inflation and high unemployment.
And that’s exactly what happened. Many economists who had previously dismissed Friedman now acknowledged that he was right. In 1976, he received the Nobel Prize in Economics, yet another vindication of his work.
LESSON LEARNED: TRUST PEOPLE AND THE MARKET, not the government!
Excessive government control, regulation, and taxation distorts incentives and puts money in the hands of politicians and bureaucrats who had NOT earned it and suffered NO consequences if their policies failed.
Other ways government intervention distorted the free market: protectionism increased prices for consumers and discouraged innovation; overregulation allowed big business with its lawyers and lobbyists to drive out small competitors; minimum wage laws led to fewer jobs for those who needed them most.
Friedman’s basic idea that millions of people working for their own purposes could make better decisions than a bunch of unelected bureaucrats who had no stake in the outcome.
low tax, light regulation as solution
SOURCES
https://fee.org/articles/the-great-depression-according-to-milton-friedman/
https://www.hoover.org/research/fed-failed-central-planner
https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-new-deal-prolonged-the-great-depression/
https://www.hoover.org/sites/default/files/uploads/documents/friedman-government-problem-1993.pdf
https://www.jpost.com/opinion/op-ed-contributors/milton-friedman-and-israel
https://www.mackinac.org/15465
Lower Taxes, Higher Revenue
The Laffer Curve illustrates the two most important things we need to know about taxes: how much money the government can raise from taxes and at what level of taxation the government might start getting less, not more, revenue.
First, because zero times any number is zero, if the tax rate is zero, then the government receives zero revenue.
Now suppose the government charges a 100% tax rate. If this happens, then no one would work. That is, why would anyone work when the government is going to take all the money that they make? And if no one works, the national income would be zero. This means that government revenue would be 100% of zero, or zero.
So the 2 dots as per below and the hump can shfit left or right depending on the tax rate
If the curve slopes downward it implies something remarkable -- something that few of those who push for higher and higher taxes want to admit. It means that when tax rates are high, if you make them higher, you’ll actually bring in less revenue to the government.
So where is the hump? That is what economists argue
New evidence suggests that the hump occurs at a much lower tax rate, something around 33%, according to Christina & David Romer, economics professors at the University of California Berkeley. Christina Romer was the chairman of President Barack Obama’s Council of Economic advisors, published in the American Economic Review
The study examined how national income responds to tax rates
no matter what your politics, you should not want tax rates to be above 33%
Everyone of every political persuasion should pay attention to the Romer and Romer Study and its important implications!!! read it here https://eml.berkeley.edu/~dromer/papers/RomerandRomerAERJune2010.pdf
They suggest that if we decrease tax rates, government revenues might actually rise.
Minimum Wage (see ^Free Market Will Set You Free)
hurts small business, not helps - cuts hours, cuts people, raises prices, sometimes flat tip fee/no tips, less % in pockets
Ex) NYC raised the minimum wage to $15 an hour, 75% of owners reduced employee hours, and 47% eliminated jobs.
The large majority of data-driven economic studies demonstrate that significant increases in the minimum wage also increase unemployment. When wages increase, people are often willing to work even though employers can’t afford to hire them, leading to a demand-side inequality causing higher unemployment.
A high minimum wage makes many employees simply too expensive to employ, or forces employers to cut their hours.
Minimum wage increases reduce the profit margin that all employees contribute to a business. Increasing the minimum wage makes many employees too expensive to employ or reduce the hours they are employed, which is also a pay reduction.
A 2015 study by the Manhattan Institute estimated that a $15 minimum wage would kill over 6 million jobs.
The people most hurt by the minimum wage are those who most need entry-level jobs—young and low-skilled Americans.
During the Great Recession from 2006 to 2009, increases in the minimum wage accounted for 43% of unemployment among young and low-skilled workers.A mandated higher minimum wage can hurt those who already have jobs through reduction in benefits, hours and training. For those with jobs, increases in minimum wage often lead to the reduction in benefits and employee hours.
A person’s wages should be determined by what they can offer employers and what employers need—not by the whims of the government. The same principles of supply and demand that control the market place, also naturally apply to the job market and wages.
A higher minimum wage hurts the poor more than anyone else. Because a higher minimum wage increases unemployment among low-skilled workers, it adversely affects the poor by making fewer jobs available for them. Past increases in the minimum wage made some lower and middle-class people poorer and led to an increase in the overall poverty rate.
MG NOTE: 1/3 of rubios just closed in LA due to min wage hike to $20/hr
SOURCES
https://www.econlib.org/library/Columns/y2015/Murphydisemployment.html
https://www.wsj.com/articles/andy-puzder-minimum-wage-maximum-politics-1412543682
https://media4.manhattan-institute.org/pdf/ib_36.pdf
https://www.nber.org/papers/w21830
https://www.econlib.org/library/Enc/MinimumWages.html
https://www.econlib.org/library/Enc/Supply.html
https://www.nber.org/digest/jan98/minimum-wages-redistribute-income-among-low-income-families
Capitalism vs Socialism
Proponents of socialism claim it’s more democratic than capitalism and, thus, morally superior…actually the opposite is true.
Michael Moore: “Democratic socialism means everyone has a seat at the table and everybody gets a slice of the pie.”
Nathan Robinson, Why You Should Be a Socialist: the moral imperative is to place the economy under the control of “the people.” …claims that socialism is vindicated through its roots in popular consent; if a majority of people, working through elected representatives, declares something to be a public entitlement (college/healthcare) then they are justified in extracting resources from those who create wealth to pay for it.
^^fails to understand how both socialism and capitalism operate in real life: big government providing relatively few significant avenues for participation and control for “the people,” while the free market involves the dynamic and significant participation of people as consumers.
Fundamental problem with democratic socialism is its assumption that in a free-market system, the economy is not under the control of the people. Individuals in a free market economy are not only citizens; we are also consumers. The consumer, like the citizen, is a voter. As voters, citizens vote once every two or four years; as consumers, citizens vote many times a day — with money which costs all the time and effort they put in to earn that money. Only some citizens are eligible to vote at the ballot box, but every consumer votes in the marketplace. When citizens participate in a system of representative democracy, their views are filtered through the politicians who represent them. Consumers vote in a system of DIRECT democracy (with their dollars).
Capitalism & democracy are inherently linked, BOTH placing the power of the country in the hands of its citizens.
Rather than operating through “greed” or “exploitation,” free markets function by satisfying the wants of others. The most successful entrepreneurs are those who anticipate our wants even before we have them. In this way, capitalism harnesses self-interest to make things or provide services for others.
Capitalism leads to economic DEMOCRACY, empowering citizens to direct and shape the economy. Socialism always leads to the economic DICTATORSHIP of the elite, who makes decisions about what they think citizens want and how much they should pay for it
Both capitalism and democracy empower citizens, rather than the governmental elite, to direct the country and thus share an inherent link.
In a socialist economy, the GOVERNMENT has the ultimate power—the customer is a powerless peasant. In capitalism, the CUSSUMER is king!
In capitalism, the customer is free to make choices about what they purchase, thus directing and shaping the economy. In socialism, the customer is powerless, under the control of the government.
Socialist failures - Venezuela, eventually ran out of essential items, citizenry in desperate conditions
Socialism’s proponents often try to distinguish “democratic socialism” from socialism, but the results are the same.
In socialist societies, self-interest is not eliminated but is instead focused on gaining political power.
The more capitalism, the less “socialism” you need…in America 2017, a policy of lower taxes and less government regulation led to a robust economic expansion.
Unemployment, notably among minority groups, was at generational lows in 2018…economic expansion gets people OFF welfare and INTO work.
End of 2018: unemployment rate at a 40 year low for all workers, unemployment rate for black workers was 6.8%, lowest rate in 45 years.
Socialism works against its proponents’ own interest, yet it’s gaining popularity with younger Americans. In a 2015 Gallup poll, a larger percentage of respondents under 30 favored socialism over capitalism.
Free enterprise is an economic system in which few restrictions are placed on business activities and property ownership, and where there is minimal government involvement in commercial interactions.
Countries with the most economic freedom earn more than six times the annual earnings of countries with the lowest level of economic freedom.
Socialism cannot succeed because it tries to control the billions of complex economic decisions made by millions of people every day.
Socialist governments attempt to control millions of people’s complex economic decisions through regulatory schemes, tax policy, labor regulation, etc.—all of which can only hurt the economy.
Entrepreneurship leads to increasing private sector knowledge. Increasing knowledge leads to growth and wealth.
Socialism isn’t about free choice, it’s about concentrating power into the hands of government elites—ultimately through force.
Socialism is the concentration of power into the hands of government elites to achieve the following purposes: central planning of the economy and the radical redistribution of wealth.
Socialists often try to hide their method of enforcing socialism, by using terms like “sharing” or “helping people,” but socialism is ultimately imposed and enforced through government force.
Socialism inevitably involves growing government, thus shrinking the autonomy of the private citizen.
SOURCES
https://www.newsweek.com/capitalism-creates-social-justice-opinion-1505465
https://www.nationalreview.com/2013/09/democratic-capitalism-michael-novak/
https://www.nationalreview.com/corner/venezuela-runs-out-toilet-paper-katherine-connell/
https://www.cnbc.com/2018/01/05/black-unemployment-rate-falls-to-record-low.html
https://www.aei.org/articles/why-free-enterprise-is-about-morals-not-materialism/
https://www.wsj.com/articles/SB10000872396390444914904577621083163383966
https://fee.org/articles/most-socialists-cant-even-define-their-own-ideology/
Bankrupting of America/Out of control spending (on both sides)
The federal government spent unprecedented amounts of money during the Covid crisis. During the Covid crisis in 2020, Congress passed and President Trump approved $900 billion in government spending in a pandemic relief package.https://apnews.com/article/donald-trump-politics-coronavirus-pandemic-2a2645e52fda774ae8f1443b4dffc82e
When Joe Biden entered the White House in 2020, he called for $1.9 trillion in additional spending. https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president-biden-announces-american-rescue-plan/
President Biden called for that nearly $2 trillion in spending despite $1 trillion of the previous Covid relief money having not yet been spent, and even though the economy was already well on the way to recovering. https://www.gao.gov/products/gao-21-551
Biden then quickly asked for another $1.1 trillion for “infrastructure” spending, which including giveaways like electric car charging stations for Tesla owners.https://www.youtube.com/watch?v=jehraVHcWKg oh and Nineteen Republican Senators joined the Democrats in supporting the “infrastructure” spending. https://www.senate.gov/legislative/LIS/roll_call_votes/vote1171/vote_117_1_00314.htm?congress=117&session=1&vote=00314
In 2020 and 2021, Progressive Democrats sought to spend more money than the U.S. spent on the Revolutionary War, the Civil War, WWI and WWII combined.
In addition to the $1.1 trillion “infrastructure” bill, President Biden put another $3.5 trillion in spending on the table for an array of progressive agenda items, including free child-care, free community college, student loan forgiveness, expanded Medicare and Medicaid, and vast subsidies for “green” technology. If that government spending were enacted, the total spent over the course of the pandemic would amount to around $6 trillion.https://www.democrats.senate.gov/imo/media/doc/MEMORANDUM%20for%20Democratic%20Senators%20-%20FY2022%20Budget%20Resolution.pdf
The $6 trillion in spending in 2020 and 2021 is more money (adjusted for inflation) than the U.S. government spent on the Revolutionary War, the Civil War, World War I, World War II, the Louisiana Purchase, the Transcontinental Railroad, the Interstate highway system, and the Moon Landing combined. https://sgp.fas.org/crs/natsec/RS22926.pdf
When governments resort to printing money to pay their own debt, inflation follows. Runaway inflation leads to financial ruin. In Germany after World War I, the debts were so high and the currency so debased that women had to bring wheel barrels full of bills to the grocery store to pay for food. https://www.bbc.co.uk/bitesize/guides/z9y64j6/revision/5
Inflation is a prosperity killer—it shrinks what you can buy with your paycheck, and it eats away at your savings. In the 1970s in the U.S., prices rose so fast that the economy crashed and unemployment soared. The situation was so grim that economists created a misery index: inflation plus unemployment, which hit 20%. https://www.investopedia.com/terms/m/miseryindex.asp
Capitalism is the most moral form of economics
Free market capitalism forces corporations to choose between working to satisfy their customers and use their resources efficiently, or dissatisfying those they serve and going out of business.
The government undermines the power of the people to determine a corporation’s fate when it dispenses corporate subsidies and handouts. Such “crony-capitalism” is antithetical to free markets. https://www.aei.org/publication/the-case-against-cronies-libertarians-must-stand-up-to-corporate-greed/
“Free market” does not mean “pro-business.” Rather, it means “pro-consumer.” https://www.forbes.com/sites/artcarden/2010/09/20/free-market-doesnt-mean-pro-business/
In a free market, the economic pie is always growing. In a socialist economy, the pie is fixed and the government slices it up. The free market is a positive-sum game. In any free market transaction, both people receive something that they value more than the thing they are giving
In other words, both sides are better off after transacting than they were before. https://fee.org/articles/capitalism-understanding-its-secret/
When all parties are free to act voluntarily, without coercion, every trade is, by definition, mutually beneficial. https://www.econlib.org/library/Enc/FreeMarket.html
It is the government, not the free market, that creates zero-sum games in an economy. Mandated government redistribution of resources—such as sugar and ethanol subsidies—is a coercive action that benefits some by forcibly taking from others. https://www.econlib.org/library/Enc/EthicsandEconomics.html
Capitalism is inherently moral because it promotes voluntary, mutually beneficial actions between individuals. A free market capitalistic system creates an environment in which people only make financial and business choices they want to make, without coercion (governmental coercion being a fundamental part of all non-capitalistic economic systems). https://www.econlib.org/library/Enc/FreeMarket.html
Mutual betterment, not selfishness, is the foundation of capitalism.
Capitalism is based on voluntary, mutually beneficial transactions. Non-capitalistic economies are based on governmental coercion.
Any economic choice made between two people in a capitalist system is, by definition, one that each person believes will benefit them.
Capitalism is not really a system at all, but the absence of a governmental system controlling our economic choices.
Capitalism is based on the idea that if you help others, in return others will help you. A
Capitalism believes in “power to the people.” Socialism believes in “power to the government.” A free market system with minimal corruption can only work if there is limited government in which the people, not the government, decide which businesses survive. https://www.cato.org/sites/cato.org/files/serials/files/cato-journal/1995/11/cj15n2-3-3.pdf
Government bailouts and subsidies distort the people’s consumer-based influence over businesses. When the U.S. government bailed out GM and Chrysler, it punished other automotive manufacturers who had been successful in the market. https://www.aei.org/publication/the-essential-lesson-of-the-auto-bailout/ The move cost the American public at least $9 billion and was ultimately a form of legalized theft designed to protect the government’s favored car companies. https://www.politifact.com/factchecks/2015/jan/22/barack-obama/obama-says-automakers-have-paid-back-all-loans-it-/
Big Business does not care for capitalism and competition. Big Business prefers that Big Government protects it from market forces.
Capitalism is inherently altruistic. Socialism is inherently selfish.
Capitalism makes people ask, “What can I provide for others?” Socialism makes people ask, “What will others give me?”
Do The Rich Pay Their “Fair Share”?
The top 10% of all earners in 2012 paid 70% of all federal income tax, while earning only 48% of all national income. https://taxfoundation.org/article/summary-latest-federal-income-tax-data-0
America’s progressive tax system is the most progressive—higher rates for higher earners—in the developed world. https://www.washingtonpost.com/news/wonk/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least/
In 2012, the top 1% paid 38.1% of all federal taxes, but took home only 21.9% of all income earned. https://taxfoundation.org/article/summary-latest-federal-income-tax-data-0
The “One Percenters” in America are far fewer and make far less on average than most people think. The average income for a household in the top 10% in 2012 was about $150,000. The annual income for the top 1% was $400,000.
At the start of 2016, America had fewer than 2,000 billionaires. https://prod.forbes.com/billionaires/#version:static_country:United%20States
Economists generally agree that consumption (spending), rather than income, is the best measure of standard of living, suggesting that a progressive tax—which taxes income, not consumption—isn’t the fairest possible tax system. https://www.hoover.org/research/mismeasure-inequality
In 2012, the top 1% paid a larger share of taxes (38.1%) than the bottom 90 percent (29.8%). https://taxfoundation.org/article/summary-latest-federal-income-tax-data-0
Read: UCLA economist Dr. Lee Ohanian and tax expert Kip Hagopian on income inequality and fair taxation “The Mismeasure of Inequality”. https://www.hoover.org/research/mismeasure-inequality
Read: UCLA economist Dr. Lee Ohanian on taxes and economic growth. “Prescott and Ohanian: Taxes Are Much Higher Than You Think” https://www.wsj.com/articles/SB10001424127887324469304578142790851767144
When tax rates for the rich are too high, the economy suffers, which hurts the poor the most, and these negative effects can be long-lasting. https://www.kansascityfed.org/publicat/econrev/pdf/13q1Edmiston.pdf
Academic studies indicate that high taxes have a significant negative impact on economic growth. https://taxfoundation.org/article/what-evidence-taxes-and-growth
The rich already pay more than their fair share. Having them pay more would hurt them a little bit, but it would hurt the poor a lot.
America already has the most progressive tax system in the developed world, in which the rich pay far more than the percent of the wealth they bring in. https://www.washingtonpost.com/news/wonk/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least/
The most negatively impacted are the very people progressive income taxes are supposed to help: the poor. https://www.epi.org/publication/bp243/
America’s tax system is already more progressive than even those in progressive “role model” countries like Sweden and Germany.
The U.S. tax system is substantially more progressive—higher rates for higher earners—than even those in places like France, Denmark, Sweden and Germany. https://www.washingtonpost.com/news/wonk/wp/2013/04/05/americas-taxes-are-the-most-progressive-in-the-world-its-government-is-among-the-least/
The rich pay more than their fair share of Social Security and Medicare taxes. Social Security and Medicare payroll “taxes” are really an insurance payment that guarantees future services. http://economistsview.typepad.com/economistsview/2011/03/social-security-is-not-welfare.html
Social Security benefits are capped, meaning higher-wage workers get back less as a percentage of what they paid in than lower income workers receive.https://www.hoover.org/research/mismeasure-inequality
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