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Wednesday, November 11, 2009

Money is not like Energy, How Democrats Are Destroying Our Economy

By Douglas V. Gibbs

As a kid you learned in science class that energy never increases or decreases in amount, it simply transfers. The sun provides energy for the plant to grow, then the energy transfers into the animal when the plant is eaten. Later the animal releases the energy in its activities, and waste. The waste, then, transfers the energy into the ground for the plant to use, and et cetera. So, the idea is, if energy increases in one location, somewhere else there is less energy.

The politicians, leftists of the Democrat Party in particular, seem to think that money is like energy. If someone becomes wealthy, then there must be somebody at the bottom doing without. Money, however, is not like energy. Someone becoming successful does not take away from somebody at the bottom. For each success there is not a non-success.

Money is created when value is created. When a car comes rolling off of an assembly line the value of that vehicle is added to the economy. With that additional value money increases as well. Therefore, what increases the wealth of a nation is production and manufacturing.

Opportunity arises in America because the ability to produce is available to all of its citizens. This is the point of conservatives; don't limit the successful, but make the opportunity for all to become successful available. With more success comes more jobs, and a vibrant economy. The goal, then, should be to make it as easy as possible for citizens to reach a level of success.

Government, and those that wield its power, seem to think that success is finite, and that such power should only belong to them. They have convinced the populace that all of those rich business people have taken away the money that belongs to the poor, and that anyone who makes a big profit is the enemy. What they don't get is that there is plenty of wealth and success to go around, if the government would just step out of the way and allow the free market to do its bidding.

The successful, also known as the wealthy, have figured out how to use the market to their advantage. As a result of their success, they have grown large businesses that add value to the economy through manufacturing, production, transporting, or providing goods. From their successes rises other businesses, like the service oriented ones. Through that process, in order to assist them in their endeavor of creating goods, or providing services, jobs are created. When the business grows, more value is fed into the economy, and more jobs are created. Successful people then become "economy builders" and "job creators."

Leftists have determined it is unfair that those rich people are doing so well, and that there are some that are not. So, their strategy to make things better for the folks at the bottom is to take away from the economy builders, and heavily regulate their activities. Unable to grow, and with less money to expand, they produce less products, and hire less people. So tell me: How is that good for the folks at the bottom?

Meanwhile, upstart businesses, the possible wealthy folks of the future, are unable to get their new entrepreneurial attempt off the ground because government has buried them in fees and regulations, leaving us with less opportunities for a economy building, job creating business to participate in the market. Once again: How is that good for the folks at the bottom?

One of the tools for encouraging economic growth is cutting taxes, and not just cutting taxes for certain groups, but cutting taxes all the way across the board. We experienced evidence of how well cutting taxes works in the eighties when Reagan cut taxes, and we not only pulled out of a recession caused by Jimmy Carter's leftist policies, but we experienced an economic boom of prosperity unseen in America for a long time. That period of prosperity, directly influenced by Reagan's tax cuts, showed us how less taxes for folks means a lot to our economic participants.

When the rich receive tax cuts, most of them will use some of that money for their endeavors, be they investments, or a business they own. The market, with this new money, enjoys an increase in production, therefore pumping more value into the economy. As production rises, prices drop, and consumerism rises. With the increased demand for the less expensive product more people are needed to produce the products, so jobs are created. The company, then, enjoys a greater profit, and the lowered taxes wind up resulting in increased revenue because of the success of the business sector.

The tax cuts for the middle class and the poor is where the extra money comes from that encourages the consumerism to rise. As money in their pockets increases with the tax cuts, and the prices come down on products they always hoped to be able to purchase because of the tax cuts on the wealthier business owning individuals, the middle class and poor begin to spend more money. Also, as some of these people become more involved in the consumer end of things, some of those folks take the extra money from lower taxes (and hopefully relaxed regulations) to start a new business, some of which will become intricately involved in the market by adding value to the economy, and ultimately creating jobs, as well.

Higher taxes, government regulations, and the government take-over of sectors of the private industry kill these opportunities. Pumping money into the system without production as a companion, as the Obama Administration is doing now, creates inflation. Inflation kills economies.

The result of inflation is a rise in prices. By continuing inflation, the government will then be able to confiscate wealth, and destroy the Capitalist System. Soviet Communist leader Lenin stated that inflation was the perfect tool to destroy the free market, and serve as an income redistribution system.

Makes you wonder if Obama is driving up the debt, and creating inflation with his influx of fiat money into our system, by design.

Rather than utilizing Capital Goods in acquiring or producing Consumption Goods, the government is trying to force the system to follow its direction. In a society that needs goods to consume, of which are produced in the free market by profit-driven incentive, with government involved the production of goods becomes forced. Rather than the creation of goods in an economic environment wherein the individual is encouraged to produce the maximum quantity of goods for profit, the government desires to force the production of goods or services with the worker doing so because it is "good for the common good." Though I cannot disagree that a vibrant economy is good for the common good, it is the individual hope for increased profit that motivates the worker to produce Consumption Goods, not a deep-down belief they they ought to.

Big Government then takes it a step farther, hoping to enforce fairness and equality. The idea, in order to achieve this equity, is to redistribute wealth from the wealthy to the poor (when in reality it redistributes wealth from the people to the government). After all, remember, they argue that money is like energy, and if the wealthy are rich, it must be because it was taken away from the poor - and of course, how unfair is it that some have succeeded, and others didn't? The process, ultimately, is the use of government to divide wealth, and distribute it in the manner the government believes to be the most fair. But, as is consistent with human nature, government will cut a bigger piece of the pie for themselves, and their power will increase as the opportunities of the citizens decrease.

Liberal Leftists see profit as a bad thing. They also believe their template is what's best, and if anyone tries to take a separate individual path, they must be punished. That is why Democrats are punitive in their thinking. For example, in the Health Care Bill that is making its way toward the Senate, there is a provision that punishes citizens for not having health care. The punitive actions by the government against people who don't get health insurance can be a fine, or jail time.

Conservatism believes the best way to build an economy is to incentivize, rather than being punitive. It would be more beneficial to individual freedom, and the market, if the health insurance products were allowed the freedom to be sold across state lines, and if the products were built in ways that the consumers desire. By loosening the restrictions placed on the industry by government, with the incentive of profit, the insurance companies will become more competitive with each other and it will drive prices down. In the case of providing catastrophic coverage, payments by the patients themselves will become more common, so doctors, in an effort to compete for more patients (profit-driven once again) will increase quality and decrease the cost to the consumer.

All economic models, be they Health Insurance, the auto industry, banks, or other goods or service oriented businesses, best function on a model of less government intervention, profit incentive, and competition against businesses of like-nature.

In short, the answer to recessions, inflation, and job creation is less government involvement. Government is not the solution. Government is the problem. The housing crash was caused by government manipulation of the market, and our problems now are being caused by the government taking control of the private sector while pumping money into the system without value from production and manufacturing entering the market too. Money is not like energy. There is enough for all of us to be successful - but there won't be if the government keeps siphoning it all for themselves, and takes control of every aspect of our economy.

Government intervention of this kind is unsustainable, and if leftist policies continue to run our economy, the ultimate result will be a collapse. And if there is a collapse of that kind of magnitude, complete government control in the form of a totalitarian system will follow.

Money may not be like energy, but power is, and once the government transfers all of the power to themselves, the individual citizens will be left with none.

We are all created equal, but what we do with our opportunities is our own individual business.

-- Political Pistachio Conservative News and Commentary

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