DO CONSERVATIVES AND REPUBLICANS UNDERSTAND HOW CAPITALISM WORKS?

by

Ed Dedelow

Americans are earning less and less and have been for the last 40 years and no one is connecting it to the rise in government control over consumer spending. It is as if they are brain dead or a shroud covers their ability to reason. The voters in Europe and now in the United States, however, have been vacillating back and forth between the liberal and conservative view points for years. The masses seem to know something is wrong and are waiting for someone with an explanation. Most politicians do not see the connection having found so many new ways to hide their takeover of the economy, they have lost track.

The decline in wages is, however, well documented and was recently noted by O'bama. If anyone uses the issue, the Democrats are likely to suggest that wage decline is a reason to "divide wealth" but their mention of it is quite rare. Perhaps knowledgeable liberals are aware of the affect government has on wages and do not raise the subject for fear someone will make the connection. Contrast this with Republicans and Conservatives who usually look for reasons to ignore wage decline, apparently so as not to cast blame on capitalism or the rich. Ironically when things are bad for a true conservative, they often blame themselves. Politicians have so convinced us to blame ourselves that they get a free ride and "government is" peddled as "the solution" never the blame. I've written about this subject before, but I am not making headway.

Anyone who understands capitalism should know that capitalism makes everyone richer, not poorer. So if the masses of people in a country are getting poorer, they should look for a reason not connected to capitalism. And hey, government is the only major force on the economy. Taxes included in our consumer goods now amount to 50%, the attorneys are getting another 6 to 8% (check your phone book, 10% of the pages are attorney listings) and Heritage Group estimated regulation costs of 1.1 to 1.2 trillion or another 10 to 12%. A call to Heritage Group disclosed that this figure did not include state regulation.

What aren't included are the billions of dollars of responsibilities that government has transferred to the private sector that do not show up as regulation or taxes. For example, the construction of water treatment, sewage treatment facilities and roads were once often paid for by government. Now, local roads are paid for with assessments on home buyers and builders whereas toll roads have taken the place of free ways formerly funded by gas taxes. Clean air and clean water are important but tax increases of 40% back in the 1960s and 70s at least partially funded this cost whereas today it is entirely paid for by private citizens and industry. The mandate on utilities to clean emissions is not something our grandfathers thought about. All this gets us up in the stratosphere where 75 to 85% of personal spending is controlled by government. This isn't obvious when we go to the market place. But what we don't see are the taxes paid by employers, the government mandated liability and worker's compensation insurance and the staggering Federal, state and local government mandated environmental and regulatory expenses paid by manufactures to bring products to the market.

Look at the old cars on the road. People once financed and drove cars for no more than 2-3 years. Today cars can be financed for 7 years and are driven until the wheels fall off. No vacations for this group. There was a time when 50% of home owners owned their homes outright. With all the extra work government has made for us we should all be fully employed. If you think that, then you are not seeing the impact that government expenses have on the economy. Government demands go up at compounding rates and the costs displace spending money for consumers and investment money for businesses. When that happens the market place gets disrupted. If you happen to throw in a financial crisis (one that government created) along with the threat that the burden of government will be increased (Obama care, Cap-and-Trade, higher taxes) everything goes haywire.

Normally, business offsets/assimilates government costs by reducing wages and benefits to its workers, exporting jobs, cutting staff or closing its doors. This happens in such a slow manner that the only ones who notice are the entrepreneurs losing their businesses and the workers losing their jobs and wages. This is the hidden tax, a wage and job decline in the private sector caused by the expansion of government. The economy is smaller (the reason the trade deficit grows) but the really rich have the finances and the knowledge to cope with "change" and to survive the economic interruptions. For liberals it is all reason to further tax the rich and grow government. This recession is bad. Obama and the Democrats have done little to incentivize the private sector and are creating fear not confidence. People are stashing their money in a sock, the Federal government is mostly stimulating state and local governments and businesses are cutting back on plans to expand. The outcome will be a compound impact on wages and jobs.

It is all so obvious. Capitalism means efficiency, efficiency means lower prices, which results in more money in the consumer's market basket and that translates into more jobs and a higher standard of living. NOT a lower standard, NOT lower wages, NOT fewer benefits and NOT a half trillion dollar trade deficit and a trillion dollar fiscal deficit. Perhaps the politicians and the economists (don't forget about the economists whose job it is to figure these things) will never get it and the conservatives will keep blaming themselves. Perhaps the rich want to believe they are paying all the taxes and do not want anyone telling them there is a hidden tax on wages. A tax the wage earner can feel but does not know exists. That is the reason voters keep vacillating from left to right. If no one figures it out, Conservatives will blame Democrats for creating dependent masses and destroying the economy, Democrats will think it was inevitable and Republicans will be blaming Conservatives for having such cockamamie ideas.

On the other hand, what if conservatives realize that government is stealing wages to grow government? What an issue. If conservatives used this as an issue, the only liberals left would be in Cuba, Venezuela and North Korea, oh, maybe France.