Tag: income tax

The Least Immoral and Most Effective Tax

Jack Shields | United States

Ben Franklin once said, “In this world, nothing can be said to be certain, except death and taxes.” Indeed, since civilization formed, they have been a part of life. Today, taxes are everywhere: we have income, sales, and estate taxes, tariffs, and many more.

Despite most people thinking they pay enough or more than their share, many are quite happy to raise taxes on others in the name of ‘paying their fair share.’ And now, with the Democrats in control of the House Representatives, Representative Alexandria Ocasio-Cortez is already proposing a top rate of 70% to fund her radical agenda.

Which Form of Taxation is Best?

It is important to note that after the Trump tax cuts, the Feds collected a record amount of revenue. Moreover, the 1% who supposedly don’t pay their fair share already contribute 43% of the collected revenue. Meanwhile, the top 20% contribute 87% of the total income tax revenue. Rightfully, some conservatives and most libertarians despise the current state of high taxes. Because of this, Republican administrations and red states have slashed them when they had the opportunity. But in their noble goal, they have neglected the fairest one of them all. 

When examining which taxation method is best, the valid questions of whether there should there be taxation or should the government be spending this much are irrelevant. As of right now, there is spending and there is taxation. I will give neither justification nor disapproval for either. Rather, I will present the best possible situation in the status quo by examining all possible taxes. Obviously, we may need some other forms of taxation to fund all our spending, but we should still strive towards the most moral system possible.

Property Tax: Immoral and Harmful

Perhaps the most popular alternative method for red states without an income tax, such as Texas, is the Real Property Tax, a tax on real estate. In principle, a property tax may be on any good someone owns, not necessarily just land. This is immoral in principle and detrimental in practice. One of the most important rights an individual can have is the right to property and the fruit of one’s labor.

Placing a tax unrelated to the actual acquiring of such property effectively makes it not your property. Rather, the government owns it and you may rent it as long as you can pay for it. As soon you are unable to, you must give it back up to those who really own it.

If you work your entire life to pay for something, it ought to be yours entirely. When the transaction is complete, the government should not be involved, save cases of illegal misuse and other abnormal instances. No government should allow itself to take property that you worked hard to attain.

Tariffs and the Sales Tax

Among the protectionists of the Republican party such as President Trump, tariffs have been supported. Tariffs, however, act essentially as just another tax against the American people. They make better products cost more and lose us thousands of jobs.

Economically, they are a complete disaster. Free trade, which requires no tariffs, is the best way to improve the lives of Americans. Any economic system which places protecting the worker over pleasing the consumer is doomed to fail, and tariffs are a means by which protectionists hope to achieve their flawed economic system, and they should receive support.

The sales tax is also a popular idea among conservatives and libertarians as a way to get rid of the income tax. On the surface, this is a very appealing option. No income tax. No IRS. Seems quite nice. However, the problem is this is regressive and unfairly impacts the poor.

Take two individuals that live in a city with a 5% sales tax. Person A makes $20,000 a year and Person B makes $100,000. Person A has to spend all of their $20,000, essentially giving them an income tax of 5%. But Person B spends $80,000 of their $100,000, saving the rest. This effectively gives them a rate of 4%, as they pay nothing on what they saved. We should strive for the fairest rate and the regressive sales tax is not the best choice.

Taxes that Unfairly Harm the Rich

Just as we shouldn’t have a system that unfairly harms the poor, we should not have a system that harms the rich. But unfortunately, this idea is quite popular in two very immoral ways. The first of these is the estate tax, perhaps the most immoral one out there. The idea that when someone dies, the government gets to go in and take some of their stuff, is truly horrifying. It is one thing to tax someone as they earn income or are in the middle of a transaction. The idea, though, that a death initiates a need to take from the family is just wrong.

One of the biggest incentives for earning is to care for your family. One of the marks of a truly successful life, at least from an economic perspective, is having your family be financially prosperous because of you, even when you are long gone. The fact that this only targets the richest of the rich is irrelevant when looking at it from a moral perspective. When someone dies, there is no moral reason to go in and take their stuff. 

The Progressive Income Tax

The next favorite policy against the rich is the progressive income tax. The idea, of course, is that as you make more money, you can afford to lose more of your income. There are already a plethora of economic reasons why this is a terrible idea, and Thomas Sowell writes particularly well on the issue. The economic side has already seen lengthy discussion.

However, just as with the estate tax, the immorality of the system has seen little public examination. If an individual obeys the law and earns a sizable income, what right do you have to use the government to steal the money and use it for your own ideas? The idea that these rich people are evil and have no idea how to help people with their money is just wrong. Practically, do you really think Donald Trump and Nancy Pelosi are smarter with money than Bill Gates, who is using his billions to cure AIDS, or LeBron James, who is using his millions to send underprivileged kids to college? Of course not.

Morally, if your neighbor disapproved of the way you spent your money so he took 70% of it and spent it how he wished, we’d call it stealing (rightfully so). When the government does it, it is still stealing and still wrong. The point of taxation is to give the government a stream of revenue to properly execute its powers. If at any point taxation deviates from this goal in the name of any other, it is immoral. Surely, this is the poster child for this immoral practice.

Its Cousin: Sin Taxes

Special taxes against things which present a supposed moral problem such as alcohol or marijuana (sin tax) are essentially the cousin of the progressive income tax and are just as immoral. Taxing something, whether it be a whiskey tax or carbon tax, is just another way to legislate morality. Just like the progressive tax, this deviates from the goal of bringing in revenue.

The Flat Tax: The Most Moral System

With prevalent practical and moral issues with all the taxation methods listed above, the flat income tax stands alone as the most moral tax system. Of course, it is not perfect; any type of taxation is a necessary evil, after all. By definition, necessary evil is still evil. Nevertheless, it solves the moral and practical issues of the other systems.

Unlike the property tax, this only occurs right as you acquire money, and then you’re done. You don’t have to keep paying it every year. Unlike tariffs, it in no way interferes with free trade. Unlike the sales and progressive income taxes, it does not disproportionately affect the rich or poor. It is an equal percentage across the board, making it fair by mathematical law. Unlike the estate tax, it will not immorally take money from a family dealing with the loss of a loved one. And unlike the progressive income or sin taxes, the flat tax does not legislate morality.

If you raise the rate on one group, you have to raise it on all, making rate increases much more difficult and unpopular. This will help to ensure that taxation only funds the government’s enumerated powers. Thus, it will be moral (assuming, of course, that the enumerated powers are moral).

Because it is both moral and practically capable of raising a reasonable amount of revenue; the flat tax is clearly the system conservatives and libertarians should advocate for in their quest to end limitless taxation and government spending. 


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The Distortion of Liberalism

Joshua D. Glawson | United States

 ‘Liberalism’ originally meant a system that recognizes the freedom of the individual while ‘liberating’ them from the chains that bind them. Modern liberalism has gone far past this idea of freeing the individual from systematic oppression to what we see as the tyranny of the majority found in democracy. Modern liberalism suggests that whatever the newest idea of oppression is, it should be fought against at all costs, even when the data and evidence does not hold up, such as “women make less than men,” “ban straws,” “force businesses to trade,” and almost every other idea that constantly changes on an almost monthly basis. This does not mean their intentions are bad, or that everyone who is a modern liberal is ignorant. Rather, it is of the Kantian philosophy that suggests a government should pursue what is deemed noble, no matter if the outcomes are constantly terrible and oppressive in their own right. Modern liberals are willing to advocate the oppression of one group in order to suffice the needs and wants of another group. This perpetuates votes and a false sense of confidence in order to gain votes.

Simple Libertarian Concepts:

  • If your friend needs money to survive, is it moral for you to coerce others with the threat of violence and death in order to pay for your friend’s needs?
  • If theft is immoral for one person, it is just as wrong for a thousand people, a million people, or a billion people, etc. to steal from one person as it was for the one person to steal.

These Aristotelian principles, along with the Non-Aggression Principle (or the Randian ‘Non-Initiation of Force’), and several other principles are what is core to libertarian values, and the principles of the Libertarian Party.

Libertarians recognize that every law established by a government is backed by the threat of force, while understanding non-compliance can escalate the violence up to the point of death.

E.g. Eric Garner was killed by police because he was supposedly selling cigarettes on the streets of NYC, and he denied the allegations and was trying to talk to the police as they began arresting him. The officer was not charged, although choke-holds were also deemed ‘illegal’ for police officers to use on people.

Libertarians also realize that the freer people are, the more economic prosperity there is for the vast majority of people as opposed to other systems of governments and economics.


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Josh Hawley’s Wage Plan will Cripple the Working Class

By Ryan Lau | @agorisms

The 2018 mid-term season is in full swing, and Missouri’s senate race is heating up. Republican attorney general Josh Hawley defeated Austin Petersen, among others, in the August 7th primary. Since then, he has been in a tight battle with incumbent Democrat Claire McCaskill.

Too Close to Call, so Far

Recent polling suggests that the race is one of the closest in the country. Real Clear Politics lists a number of polls between the two, in which Hawley recently averages a slim 0.6 point lead. This, of course, is well within the standard margin of error, which is between two and five points. RCP also ranks Missouri’s race as one of only nine toss-ups in the country.

Given this knowledge, it is unsurprising that Hawley is seeking out ways to distinguish himself from McCaskill. However, he is quite unwise in the means that he selects. This Monday, the attorney announced his intents to create a bill that, if passed, would effectively become the second largest minimum wage increase in United States history.

The “Work Credit” Minimum Wage Hike

Interestingly, Hawley is not directly calling for an increase in the federal minimum wage. Instead, he desires a “work credit” for all those making less than the median wage. Specifically, the credit would take their wages and bring them 50% closer to the median. The very nature of this plan is a disaster waiting to happen.

As of May 2017, the median wage was $18.12 for hourly workers in America. In the same year, 80.4 million workers were earning an hourly wage, which amounts to a little bit under three-fifths of the total working population. Of these workers, only about 542,000 were earning the minimum wage itself.

That was How Much Again?

At the current $7.25 federal minimum wage, a worker would be compensated with an amount that brings them halfway to the median. In this case, they would receive a total paycheck of $12.69, where $7.25 comes from the employer, and the other $5.44 comes from the state. This means that in occupations without tips or other compensations, the lowest anyone could possibly legally receive is $12.69 for an hour of work. This is a 75% increase in the overall minimum wage. The only time that the government raised it by a greater percent was from $0.40 to $0.75 an hour (87.5%) in 1950, following the negative inflationary effects of high amounts of war spending.

If the median wage was $18.12, then it would necessarily follow that 40.2 million workers earned less than that amount, or that amount exactly. For the sake of simplicity, let us assume that the proportion of workers at all levels, from $7.25 all the way up to the median of $18.12, is equal. Of course, this is not going to be exact and may vary in one in direction or the other. Yet, the failure to estimate here would yield a calculation that is hundreds of pages long and nearly impossible to finish, as it would then have to account for every specific worker in the United States.

The Economic Burden

A simple average suggests that the typical wage worker in the bottom half makes about $12.69 an hour. Again, some variation may exist, but such variations are nearly impossible to find precisely. Hawley’s plan would take this wage and bring it halfway to the median. So, a bottom-half worker making an average of $12.69 would see a bonus of $2.71 per hour. This means that the worker’s total average earning will amount to $15.40 an hour: $12.69 from the employer, and $2.71 from the government.

Now, $2.71 may seem like a pretty small number, and on the face, it is. However, this number is not a one-time payment and must go out, under Hawley’s plan, to every worker in the country making less than the median. Some, depending on where they fell, would get more of a bonus, and some would get less of a bonus. But just how much of a burden would this be on the American people, including the lower-class workers?

Given a 40 hour work week, and 50 weeks worked per year, the numbers are staggering. In a single day, each of these workers would receive a check for, on average, $21.68 per day. In a week, the number increases to $108.40, and in a year the costs to pay a single worker would average out to $5,240.

A Massive Expenditure

Multiplying the figure times the number of workers earning below the median wage reveals the sheer horror of the plan. With 40.2 million workers receiving an average of this amount, Hawley would create an additional $217.8 billion in expenditures. This is equal to an immediate 5.3% increase in federal spending and would add over $2 trillion in debt in two years. The program is over four times more expensive than Trump’s massive military spending increase in the 2018 budget. It also happens to be more than the military spending of China and Russia combined in 2017.

Money Isn’t Free, Mr. Hawley

Hawley risks serious economic problems if he continues to add more to the national debt. Though the Republican Party has long since abandoned fiscal conservatism with few exceptions, this idea threatens the very nature of fiscal conservatism as a whole. It is entirely possible that rather than increasing the national debt, Hawley may instead propose to increase taxes. If he balances the plan, then he would need to raise $217.8 billion dollars annually. However, the money does not come from thin air, though the U.S. Treasury may suggest otherwise.

Currently, there are 138.1 million active workers in the United States. Most likely, they would bear the brunt of this fiscal burden. If divided equally, them each taxpayer, including the lower income earners, would owe $1,577 at the end of the year. So, of their great gift, the working poor would instantly pay 30% to the state.

This, of course, is a bare minimum. Realistically, that rate would be much higher, because the government does not operate at 100% efficiency. To collect, manage, and distribute the money, they would need to collect, manage, and distribute even more. Government efficiency is low, and even at two-thirds efficiency, that rate increases to 40% from 30%. This tax rate on their bonus is actually much higher than what they already pay on their current incomes, which varies from 10 to 12 percent.

May it be Even More Dangerous?

Moreover, it is unclear whether Hawley supports this idea for salaried workers. In his op-ed, he merely states that all workers below the median should get a significant pay raise. If Hawley implemented the same thing for salaried workers, who generally earn more money per year, he would be facing an even greater economic crisis. As the debt counter reaches for the sky, more debt is not the answer.

Unfortunately, this is not where Hawley’s ineptitude stops. Last week, he actually said that not only should below-median workers see pay raises, but every worker in America. Though he emphasized helping the poor, he did not exclude a single American worker. If he follows through on this, then the state will be handing checks to millionaires. It is immoral and coercive to tax the country to aid the poor. But it is morbidly wrong to tax the country to aid the rich.

Though Hawley fails to state where this money will come from, the options are increased taxes or increased debt. The country can currently afford neither, as debt shoots past 75% of GDP. Hawley’s plan will take an already volatile economy and make it much worse.

Taking, Giving, and Taking Again

Rather than increasing taxes more, Hawley should be focusing on why the people are poor in the first place. The fact of the matter is, minimum wage workers are not taking home $7.25 an hour. Subject to a 12% tax rate if they work full time, that figure drops to $6.38. Hawley identifies the problem that the poor do not have enough money to live comfortably. Where he fails is the solution. When the government is taking money from the people, the solution is not to give the people money back, just to take another 30% of it.

Let’s look at some of the numbers again, with the same $12.69. In the 12 percent income tax bracket, that average worker only takes home $11.26 while the government collects $1.43. They then see a bonus of $2.71 come their way in the form of Hawley’s plan. But, in the end, the government needs to take 30% of it to cover the costs. As a result, the worker hands over another $0.81 in income tax hikes.

This, of course, does not factor in the efficiency, so there goes another $0.27. All in all, that’s $1.08 gone from the $2.71. And, they already lost $1.43 from the initial income tax. Altogether, the state would take $2.51 from the average worker per hour, just to give them back $2.71 an hour and call it an act of generosity. I hate to break it to you, Hawley, but a net of $0.20 per hour is not an act of generosity, nor is it even a significant figure.

A Great Big Immorality

It is wrong to take money from individuals for any purpose. However, even when you ignore this moral principle, a scathing immorality remains. This program would, if it was lucky, give a tiny bit more than the government would need to take. The complex system of giving and taking only makes life harder for Americans on tax day and grocery day, too.

Of all tax and wage ideas out there, this is perhaps one of the worst. It expands government massively, so much that they would likely need a new agency to administer the program. At the very least, it would swell the Department of Labor’s budget. In either sense, it is unfit to exist. Taking money from the people, wasting it, and giving about the same amount back is not unlike breaking your neighbor’s arm, and then paying his medical bills and sending him a batch of cookies while you caringly help him recover. No amount of alleged kindness can take away from this great wrongdoing.

A Proposal for Prosperity

Thankfully for working-class America, there exist a number of much more successful plans to put more money in their pockets. But sadly for working-class America, few politicians, least of all Hawley, are talking about it. Ultimately, though, one point sticks out in particular as a method of surefire success.

It is time to at once abolish the income tax on poor Americans. Just as a cigarette tax is a deterrent to smoking, an income tax is a deterrent to working. When those who struggle so much to get by cannot keep what they earn, it makes survival and comfort both that much harder. If lower-half Americans had that average of $1.43 an hour back in their pockets, they would have much more social mobility. With an extra $2,860 a year at a forty-hour week, the possibilities are endless.

By freeing up that extra income, these individuals can begin to buy things that are lower on their priority lists but still very important. For example, there may no longer be a decision between hot water and a child’s birthday present, or healthy food and a good education. If a family budgets well and has all of these, maybe they can start to save, and truly move up the economic ladder for the first time.

Manageable Economic Costs

Of course, when taxes decrease, spending must also decrease in order to balance the program out. Unlike Hawley’s plan, however, this one has a real solution in order to create balance. By eliminating the income tax for those earning less than the median hourly wage, the government would lose $115 billion in annual revenue. But this is only slightly over half of the burden of Hawley’s plan. And, it gives working-class Americans an average of over seven times more additional money than Hawley’s ($1.43 vs $0.20).

Hawley, in his editorial, does not in any way suggest how he plans to pay for the program. This plan, however, accompanies necessary and easy cuts in federal spending. In a 2017 report, Senator James Lankford asserted that the federal government wasted $473 billion that year. Surely, different members of the Senate would contest that some of the spendings were necessary, or at the very least, not known at the time to be an eventual waste.

Common Sense Budget Cuts

Waste spending will always exist. However, eliminating just 10% of this waste covers $47.3 billion of the total costs. Removing the unnecessary $52 billion increase in military spending yields $99.3 billion saved. Further, it is feasible to remove the $4.4 billion increase to the Department of Veterans’ Affairs and $2.8 billion increase to the Department of Homeland Security, as well as eliminate the TSA’s entire $7.6 billion dollar budget within the DHS’s remaining funds.

This totals $114.1 billion, which is only $900 million short of the cost of removing the working class income tax. The remaining money, naturally, comes from the Internal Revenue Service. Considering they are handling almost 30% fewer clients, they surely could survive after a less than 10% budget cut. Taking away just $1 billion of their $11.5 billion in expenditures yields a net savings of $100 million. At the same time, working-class Americans will be saving money. By eliminating more waste, that positive figure can reach even higher.

American Fiscal Success is at Stake

Without a doubt, Josh Hawley’s plan is destined to grow government while hurting the working class. Moreover, it may even give taxpayer money directly to the wealthy, based on one statement. At the very least, it cripples the working class and then acts as a gift.

Eliminating the income tax for these Americans, however, keeps their money in their pockets. It boosts the economy, as they will have more disposable income. It also gives them seven times more than the work credit plan. Surely, American fiscal success rests on the backs of the workers, and it is time to stop crippling them and start allowing them to reach never-before-seen levels of success.


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Income Inequality is Real, and That is a Good Thing

By Joshua D. Glawson | United States

Income inequality exists in the world as a necessary characteristic of money and economics itself. If money is a measurement of the value one brings to the market, naturally there will be differences in income. If that money was inherited or gifted, it still shows a measure of someone’s value preceding the new owner. As a matter of trade, some businesses or individuals will benefit greater than others based on many varying factors and combinations of these factors such as, but not limited to, location, production costs, selling prices, customer service, convenience, and so forth. Sometimes one’s success can equally be based on luck or happenstance in relation to others competing for the same business. No matter the case, markets are naturally unequal, and that is okay.

In a state of nature, resources and abilities are also unequal. Some people live in areas of plenty of clean water, have the right access to metals, good climates for year round agriculture, etc. Some people are also stronger, more attractive, smarter,and work harder.

These are all dependent on either decisions of choice or genetics that play a crucial role giving luck or disadvantage to individuals’ varying situations. How one deals with that given hand is what makes the biggest difference to their success and producing more bringing greater value to them as an individual. So, whether it is in the state of nature producing inequality from one’s genetics and location, or their success and hard work within a marketplace, inequalities will naturally and necessarily exist as a fact of the world and human nature.

In fact, mankind’s nature is that of being poor and destitute. We are not born with strength to survive on our own, we are not born with fur to protect us from the weather, and we are not born with the immediate cognitive ability to take care of ourselves in a world full of danger. We are born into whatever life our parents had prepared before us and are humbly submitted to their care and direction, or to that of whom takes care of us. Humans were not born with a world of comfort, we had to make it, and we continue to work towards making it more comfortable for ourselves individually.

Some people are able to do more than others at progressing out of their given situations. However, just because one person does better does not mean someone else is doing worse because of that success, it simply means the one doing better is, well, doing better. In an economy, this is reflecting the concept that the marketplace and economy, as a whole, is dynamic, not static.

Many of the advocates of combating the so-called “immorality” of income inequality do so based on the model of a static economy. This is likened to a pie, where there is only a limited amount of financial resources, and when one person takes a large slice of the pie, it leaves others with less. In short, the people who believe in a static economy model believe there is a limited amount of capital, labor, and resources.

There is, indeed, a natural limitation of resources such as land, materials, food, etc. Capital and labor, on the other hand, are both nearly innumerable in the right hands, especially when it comes to human capital – that is the human skill set and knowledge one has and is able to teach to others. It is for human capital that most people go to school: to learn, to make more of their reason, and to better their capacity to make do with the world around them.

Because of this ability to learn, retain and spread knowledge, and to do more with what is around, the economy is not static, but rather dynamic. Economies are constantly changing through human capital and trade. They are never static. It is better to see the economy as a constantly growing and shrinking, pulsating, pie where human capital and trade are adding and removing the slices while filling in the empty spaces. The economy expands and contracts, there are booms and busts, fat years and skinny years, all with “winners” and “losers” in trade.

When in competition with one another, there is growth in the marketplace, providing more for people to benefit from and consume. What individuals gain from competition in the marketplace is their ‘fair share’ if it was acquired without coercion. This is the essential part of human flourishing, i.e. capitalism. ‘Capitalism,’ better yet ‘free trade’ or more specifically ‘laissez faire capitalism,’ is the free and voluntary exchange of goods and services.

Capitalism, or whatever is nearing capitalism, has done more for the betterment of humanity than any other system; it is mankind’s greatest creation and strength. Not only does it provide the necessary goods and services most lacking or most desired, but it also enables the exchange of ideas through a ‘marketplace of ideas.’ This means good products, bad products, good ideas, and bad ideas, all competing against one another, so to speak.

Wherever there is competition, the differences in wins and losses are easily recognizable, and this is the actuality of ‘income inequality,’ as it pertains to economics. There are those that consume, those that produce, and those that act in a mix of the two. If one is unsuccessfully producing, producing very little, or producing nothing at all, for purchase in the marketplace, their financial prosperity will tend to dwindle.

Yet, when someone does well, it does not necessarily mean someone else will not also do well in the same marketplace or area. Nevertheless, this ‘competition’ is not for a limited amount of potential capital, or money, it is the competition for what is already there and what can be potentially made. If the market is filled with too much excess of currency, the currency is inflated and worth much less. Money must be earned and exchanged to produce wealth and enrich the marketplace; investments also count as earning income.

Generally speaking financial success requires a few key principles. Among these are capital, taking risks, investing, hard work, patience, diligence, and good business sense. Opportunities arise from ability and effort, along with economic freedom (Don Watkins, Yaron Brook, Equal is Unfair, New York, 2016, 114). In fact, to maintain wealth is rather difficult for individuals and generations of families.

Unlike what capitalism naysayers might believe, the wealthy tend to not stay wealthy, and their accumulated income does not stay within families very long. According to Spanish economist and professor of economics, Dr. Juan Ramon Rallo, “three decades are sufficient to lose almost everything,” and the world’s wealthiest people in the 1980s are no longer on the Forbes list, nor is anyone from their family (Juan Ramon Rallo, Anti-Piketty, 2017, 31-35). So, Rallo points out that the wealthy are not getting wealthier.

No matter the case of idealistic capitalism bringing wealth into fruition in the marketplace, some people do in fact establish and gain wealth through other means. The most significant and obtrusive way some are gaming the system of economics is through the coercive powers of government, e.g. cronyism, rent-seeking, labor unions, coercive monopolies, etc.

As the work of James M. Buchanan and his contribution to political choice theory demonstrates, the vast majority of individuals, in the worlds of public and private sectors, do what benefits themselves the most. This is to say that politicians in the public sector do what will enrich themselves just as much as those in the private sector. Simply taking someone from the business world and putting them into the political world does not remove their horns to produce hallows, nor vice versa. The biggest difference with the political and private sectors is that in the private sector losses are easily felt and remedied; whereas in the political sphere, everyone pays the cost of bad politicians and it usually goes unpunished and without remedy for a very long time.

The marketplace is still providing more for individuals and fighting abject poverty throughout the world by allocating the costs of labor to lower socioeconomic regions of the world. Lower costs for labor help to create the same goods with lower sells prices, while simultaneously helping to relieve the problems associated with extreme poverty.

According to research by Dr. Mark J. Perry at The American Enterprise Institute, a study of home appliances from 1981 to 2013 shows that appliances are “cheaper, better, and more energy efficient” at an increasing rate (Mark J. Perry, AEI, 2015). As for fighting against abject poverty, in 1990 nearly “47% of the world population lived on less than a dollar a day,” and by 2012 only 22% of the world population survived off less than an income of $1.25 per day, which was equivalent to $1 per day in 1990. That is nearly 700 million people pulled out of abject poverty and into better living conditions (Jean-Philippe Delsol, Anti-Piketty, 2017, 8).

This is not to say that people are not still struggling, or that these same people in their given situations can afford the home appliances, but it is a drastic and positive improvement in the quality of life that comes with having an increase in income through nearing free trade market practices.

With marketplace solutions through free trade, more people can be lifted out of poverty. More people see income increases, as has been historically and empirically demonstrated time and time again. Nevertheless, there are still some that are gaining a significant amount through immoral and coercive means with government assistance. It is this, specifically, that I am most concerned with. I am not concerned with vast amounts of wealth being accumulated through peaceful and voluntary means of exchange between consenting people. I am, however, concerned with utilizing governments, specifically within the United States, for coercion over the market, disabling true competition and free trade.


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Keynesian Economics: A Misleading Policy

By Jack Parkos | United States

Imagine a kid doing chores for his parents. One day there isn’t a lot for him to do, so the parents make a huge mess for him to clean up. Does this make sense? Of course not. But, this logic is similar to the Keynesian school of economics. Keynesianism has taken over both American parties and severely hurts the economy.

What is Keynesian Economics?

During The Great Depression, economist John Maynard Keynes developed a new school of economic thought. He hoped that his Keynesian economics would bring an end to the decade’s stagnant economy. Keynes’s theory focuses on demand-side economics. Keynesian economics asserts that a mixed-market economy will be the most successful in the long run.

Governments employ this by increasing both spending and the money supply. Keynesians would argue that the government should spend on programs such as infrastructure in order to boost the economy.

The Critical Flaw: Increased Spending

Despite such common adherence, Keynesian economics has a number of key problems. The first of which deals with spending increases. The money for this spending must come from somewhere, and it usually lands on the taxpayers. Otherwise, US debt levels just increase even more.

The wealthy, who play a key role in economic growth, often see the worst of tax hikes. The government taxes those who provide jobs and products, then uses for the money on a bridge, for example. The idea here is that government created jobs and a product. However, they only did so by robbing the same opportunity from a private company, which is more likely to use the money more efficiently to provide a greater number of jobs and better services. Allowing all classes of wealth to have more disposable income will simply lead to more economic growth.

Keynesian Economics and Government Monopolies

Keynes often criticized the free market, claiming it created monopolies. But government is also capable of doing this. In fact, the creation of monopolies is a huge fault of Keynes’s theory. A government, with its reckless spending, can easily create monopolies and ruin private businesses, which only spend more if profits increase.

On the other hand, the government has a tax farm of millions of citizens. Thus, it can take money from any one of them, or simply print more of it. For example, Keynesian economics would have the government spend more on infrastructure. But what happens to the companies that the state does not fund? They will likely lose business, even though they may be the best ones for the job.

On the other hand, government services are usually subpar and inefficient. There are just some things government can’t provide that the market can. Government is not meant to produce, it is meant to protect rights. A business owner, to keep customers, has to make an effective product or service. This forces him or her to improve the quality of service.

State services simply do not work the same way. Don’t like the service? Too bad. They don’t need to rely on supply and demand. Rather, they can tax people or drive further into debt and provide a subpar service. We have established that under Keynes’s model, there will be more state services. This will be an atrocity! Instead, the state should seek to lower taxes and lower spending in order to improve the economy.

The Danger of Increased Money Supply

The last and possibly the most dangerous part of Keynes’s model, increasing the supply of money. Simply printing out more money will not help the economy but will do the opposite, it will cause inflation which hurts the economy. This has happened a lot in history.

Hyperinflation in the Weimar Republic

The most infamous example of this is 1920’s Germany.  The problem started when Germany abandoned its gold standard during World War 1. After the war, the Treaty of Versailles forced Germany to pay reparations that they simply could not afford. The government then printed out more marks to pay off these reparations, but this caused hyperinflation. Money became worthless to the point where Germans used it for kindling. Children would use paper money to make toys to play with. If someone went to the store with money to buy two loaves of bread, they would only be able to afford one by the time they arrived. In fact, by late 1923, 1 US Dollar was worth a staggering 4.2 trillion German marks. The German Mark was worthless.

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Of course, hyperinflation will not occur every single time money is printed. But history repeats itself with many other examples of hyperinflation. Zimbabwe also tried this and, like Germany, saw hyperinflation in its economy. Keynesian economics would suggest printing more money for the economy during times of recession. However, history shows this does not work.

The Keynesian School of economics suggests increasing spending, debt, and taxes. It also replaces market services with the government and calls for the risky activity of printing money. Most of the last century’s policies have been Keynesian. Without a doubt, they have raised taxes and sent the country further into debt. Hope, however, is not lost. By looking towards more free-market schools of economics, the American people and state may create a freer and stronger economy.


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