This is the second part of my attempt to explain the fact that this election is clearly a philosophical divide in the country. Both parties claim to strengthen the Middle Class, but both obviously see two diametrically opposed paths to getting there. As I ended the post on Tuesday, the more fundamental question is “Do more jobs come from more government or less government?” Recognize, that more or less government is really more or less taxes. Or, if it does NOT mean taxes, then it means less or more debt on the country. And, the core issue is which was will create more work, more jobs? Who, then, creates jobs–the government or individual people?
President Obama may have played his hand much earlier this year when he made the famous “you didn’t build that” comment. Now, I think he has mostly been taken out of context, and his secondary point (perhaps his main point) that all of community life (including businesses) are built upon a matrix of infrastructure that has been built and sustained by some form of government is true. Yet, to say it as he did was not merely a slip, but a more clear indication of his view…that government builds jobs, not individuals.
Do you understand that? For the government to claim (and it always does, Republican and Democrat in the White House—doesn’t matter…both make the claim) that IT CREATED JOBS means that it decided to spend government money (i.e., money raised by taxes) on something. It could be buying rockets or ships; it could be on expanding some social service (thus hiring more workers on the government payroll); it could be some sort of infrastructure building like repairing bridges or expanding highways. All of those end up meaning the government spent money.
Do you see the disconnect here? The government, even in those situations, did NOT create new jobs independent from the rest of us. Make sure you see the connection. The government has NO MONEY on it’s own. It’s not like President Obama has a Lemonade Stand and then he uses his own money to do things. The government has no independent money; thus it’s ability to “create jobs” comes through spending tax money….our money taken from us via income taxes or other taxes.
So, the question of government creating jobs is a question of either raising taxes or going deeper into debt. Presidents Bush and Obama have chosen to simply go deeper into debt.
The alternative is to admit that jobs are created mainly through regular people, what is called the private sector. Here, the simplest way to think about it is that if a business is successful, then it will grow in some way. As it grows, the owner has to grow to meet the demand—maybe hiring new sales people, or new customer service people or more workers making a product. They might have to build a new building or purchase more equipment. As they do those things, other businesses get to succeed as well…the builder gets to build more or the company that makes the equipment gets to make and sell more.
The main issue for us then is to determine what would help these private businesses do more—would having them give more of their money to the government or allowing them to keep more of it. In many parts of the world, the decision has been to let the businesses pay fewer taxes in order to encourage them to spend more in the home country. That is what the USA did under President Kennedy, and then again under President Reagan.
In other words, if taxes are raised, historically we can see that the private sector does worse. Well, we could argue, as long as government can create even more jobs, then the decline in private sector jobs would be offset by government jobs. But, keep thinking….if government jobs are dependent on people paying higher taxes on their incomes, and if the jobs are decreasing, the economy is weak still, then there won’t be more money coming in through taxes. In other words, as the government raises taxes, the income coming in would continue to not be enough money.
Sometimes it feels like some people believe that if we could confiscate all of the money of the wealthy, the supposed 1%, then all our problems would go away. They would not. Doing this did not work in France in the 1790s nor in Russia in the 1920s. Why not? Eventually, that money runs out and then the plan for “more government jobs” has nothing to stand on.
Do Regulations Help?
A corollary to this issue was broached in President Obama’s ad—he accused Romney of wanting to “roll back regulations on big banks.” Now, regulations are a fancy way of saying the government telling people how they can or cannot do something. Some regulations or rules we all agree are good, such as the Food and Drug Administration overseeing rules about our food. Yet, on the whole, the government’s determination to create more rules can become burdensome. The old phrases of “cutting through the red tape” emerged from the frustration people felt in dealing with the rules of government. “Red Tape” can be defined as “any official routine or procedure marked by excessive complexity which results in delay or inaction.”
So, while some general rules for the country can be useful, on the whole, history teaches us that the more power government gets, the more it uses that power to create rules or regulations that do more to hamper creativity and business creation than to aid the economy.
Obviously, the Democrats have come down hard on the side of “more government is good.” At their convention, a video played where the voice-over said that they do believe in government, that government is the only thing we all belong to.
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The problem here is that history has already shown that being “owned” by the government is never a good thing. And, further you can see historically that usually, more government = more inefficiency (if you’ve ever sat at the DMV, then you know this fact well).
But let’s focus in deeper on President Obama’s point—note how he says the complaint is that the regulations are only being rolled back on the big banks. Well, technically, it would be all banks, but his fear is that those banks, clearly controlled by “the evil rich” would then go out of their way to steal from us poor people. He is, then, alluding to the housing crisis that came in 2007 due to bad loans handed out to people who could not pay the loan owned.
We don’t have time here to go deeply into the financial crisis of 2007, but let’s just simply state that it was government agencies (Fannie Mae and Freddy Mac) who led the country into the economic disaster. And, that those government agencies were being run by Democrats. So, if there was a crisis there, he is talking about his own party, not the Republicans…though I will happily criticize the Republicans for being just as eager as the Democrats to get more people into houses, even though they clearly could not afford it.
In other words, as President Reagan once said back in his election race in 1980, the Democrats want to solve the problems of the country by having MORE government, when it was TOO MUCH government that caused the problems in the first place. Reagan, and to a lesser degree Kennedy (a Democrat President), saw that in order to have less government interfering, it needed less money. You give the government less money by cutting taxes. Saying that President Reagan deregulated which is merely a fancy way of saying that he cut back on the government doing a lot of actions.
Last point here—more government ALWAYS means less individual freedom. The government uses its power to control its citizens. Again, note, I freely admit that some rules we all agree with, such as a speed limit or seat belt laws. Yet, even those are rules that limit individual freedom. But wait, you might think…didn’t more government work under President Clinton? I mean, that’s what he is running around saying—when the REpublicans tried less government it was bad, but when Clinton ran things he had lots more government and the ’90s rocked. Well, that storyline is merely a creative rewrite of history, as I’ll show you next post.