Thursday, November 1, 2012

The Argument For More Government Spending & Higher Taxes

The following video I came across today is a concise and well put together video that argues the case for higher taxes and more government spending. Just as I re-posted a similar argument from a reader of the site yesterday in Rebutting The Broken Window Fallacy: Reader Comment Discussed, I want to post the video here today as another view on economic policy. It is important to hear from both sides of the argument, and this is almost 180 degrees opposite of what I personally believe is the correct economic policy a country needs to create long term strength.

The video begins by saying that the greatest period of economic growth came at a time when tax rates in the US hovered close to 90% for the wealthiest portion of the country. The producers appear to argue that America grew at an amazing clip during that period because of these high tax rates.

America at that time was a global manufacturing powerhouse, with a strong sound currency, composed of a nation of savers. Due to these factors I believe the country grew in spite of the higher taxes, not because of them. If the government had stepped out of the way, it is almost unimaginable to think about how much more the US could have accomplished during that period.

They next go on to discuss the evil "savings" of the rich. I discussed this topic in detail yesterday. A country strengthens because of its savings and weakens because of its spending, something that unfortunately has become lost on this generation of economists.

They then go on to say that a business that produces an economic good would never "survive" on an island by itself without a government. I hope I do not need to take the time to explain this laughable notion. A young child could explain to someone why someone producing a tangible good or service on an island is more beneficial than an entity that feeds off that production. That a grown adult could say such a thing is a travesty and an embarrassment to to the country.

They finish by saying that we need to look to Europe to see the terrible impact of austerity. I look at Europe and see the region beginning the first stages of withdrawal from their government spending drug addiction, something the United States has not even begun to do. There is always pain in the short term when you stop pumping the in the drugs. Right now it appears that the US is making the "brave" decision to spend and print more. In the long term it will show that it is only setting up the country for a far greater disaster.

The Bottom Line: Jobs from Softbox on Vimeo.