Thursday, June 21, 2012

There Is Only ONE WAY To Improve The Economy

I am going to shovel away all the crap being spewed out by politicians, pundits and hacks and make one, clear point: the ONLY way to grow an economy is by CREATING more wealth. And wealth is only created by producing more products and services that add to the GDP.

NOTHING else can grow an economy. Consider the word "grow". In order to grow, the size must be increased.

I hope even liberals can grasp that simple concept. It makes the rest a lot easier to comprehend.

When you add jobs that create products and services, the economy grows. But if you add jobs that do NOT create anything new, then those jobs do not help the economy because the GDP is not growing.

But it gets worse. If the non-producing jobs are public service, then it not only does not grow the economy, but actuallys harms it.

Mr Obama's "jobs bill" would use taxpayer money to hire a million more public service workers who will not create anything new. Moreover, every dollar we put into a public servants pocket is a dollar that first had to be TAKEN out of the economy from someone who DOES create product. In other words, we would simply be taking money out of Peter's pocket and putting it in Paul's pocket, without ever creating anything new that adds to the GDP.

Sure, we need teachers, cops, firemen. But a recession is NOT the time to expand on those jobs, because it only makes things worse. If the guy making products can keep his money, he will use it to buy other products, which induces growth. But if you take his money away and use it to pay a public servant, that does not induce growth.

Certainly, that public servant will spend some of that money on goods and services, also.  But much LESS, because the IRS will take back a chunk of the public servant's income.

Consider - you take $50,000 out of the economy by taxation in order to pay a teacher's salary. That's $50,000 that the taxpayer could have spent on goods, but now cannot. Then you pay it to the teacher, and the teacher has to pay the IRS $15,000 in income and FICA taxes. So the teacher only has $35,000 to spend on goods and services. The net result in just this one, small example shows that $15,000 has disappeared from the economy. In addition, the $50,000 the teacher was paid did not result in growth because no products were created.

When liberal hacks try to convince you that a "jobs bill" will help the economy, and those jobs are public service jobs, you know they are full of crap. The only jobs that will grow the economy are jobs that create wealth by creating products.


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