Don't Be Fooled By the "Promise" of a Recovery

by

Ed Dedelow

The promise of Capitalism that, if we work hard, our lives will improve. Recovery from the current recession, however, will not mean things will improve for everyone. Recovery will most likely mean that citizens merely adjusted to a new compounding in the growth of government. We absorbed (assimilated) another layer of government taxes and regulation. During this time of assimilation, citizens changed their market baskets, put off plans for retirement, rescheduled kid's education, and cancelled or changed plans for vacations. For others, it may have meant a more harsh reconciliation with new jobs at less pay, foreclosures and serious family disruptions. Meanwhile, businesses are adjusting to the citizen's new market basket by looking for ways to cut labor costs. In a capitalist society, private business either adapt to the consumer's spending plans or go out of business.

Government is changing too. Politicians are dealing with the problem of funding built-in increases in employee costs, programmed expansions and self expanding programs. Government is turning to new fees, new fines, new taxes and new legislation, to be paid by the private sector, to raise revenues. When the economy does improve, these new revenue sources will not be eliminated, they will be used by government to fund the next layer of its growth.

Government changes are not often made for the purpose of improving productivity in the private or the public sector. Changes are made to gain further control over the public and/or further enrich those who gain from its spoils. With government controlling 60 to 70% of the economy, it is THE key element of a stable economy. If government sucks too much revenue out of the market place too quickly, individuals and businesses will not have time to adjust their market basket. The additional load will cause economic disruptions and, possibly, recession.

I hear too much from talk show hosts about how bad big government is and yet how good things will be if we just stop its further growth. As if to say, we are at the perfect level of government, but if it expands further, we will be in trouble. Aside from telling us how great our country and our forefathers are, the talk show hosts do little more than complain of how much the rich pay in taxes. I guess, as long as there are a few rich people in the country, everything is ok. Has it occurred to these "conservatives" that the average citizen, even those paying no income taxes, may really be the ones paying the price for "BIG GOVERNMENT" through low wages and higher retail purchases?

If things are so good now, were there no consequences from the expansion of government over the past 60 years? Perhaps big government advocates are right-- government is the solution and government should continue to grow. Is that the lesson to learn? What are the consequences of an ever expanding government? Our forefathers ensured the right of free speech and the ability to reason. They did not offer a complete plan; they left the design to future generations. Compliment the Communists and Socialist who are at least moving forward with new ideas. Capitalists, on the other hand, simply defend the status quo.

Actions have consequences. If taxes are 50% of the cost of what we buy and another 10 to 20% is being controlled by government, in reality, the rich can pay only a small percentage of that. This is not a complaint against the rich; this is an observation on the consequences of government growth. Taxes, regulation and "user costs" flow through the cost of a product. In addition, from the first producer to the last retailer, the costs also include overhead, interest and investment return. Business profits are necessary to pay off debt and to entice lenders to loan money to expand the business or replace capital. These costs are a part of that capital. That is capitalism; and this is the only way it can work.

The easy approach is to say that consumers bear the load. That approach ignores the lopsided distribution in incomes. That distribution gives government employees and beneficiaries first rights on the economy's yield. That distribution places a greater burden on the private sector. This demand can cause recessions. When one side (government) does not incur the risks of the market place, then only one side (the private sector) will bear the burden. The adjustments businesses make to balance costs and to survive will always involve its work force. Whether a business is getting more efficient, transferring production elsewhere, or simply cutting wages, wages in the private sector will fall when the only product expanding is the government.

A little less stimulus please. A 50% tax on our products is not a stimulus; it is a burden laden on the backs of productive workers. There is only one way a country can afford a higher standard of living without relying on imports. The only way living standards can be enhanced and real wages increased is for a country to become more productive. Even the communists were smart enough to know that increasing productivity would increase consumptions. God knows our government has a lot of noble causes; however, causes ennobled for little reason are a burden not a benefit.

The only real equality in society is risk. Government workers should bear the same risks and have the same objective as workers in the private sector. They should be a part of a community striving for a better life, not a burden striving for their own causes. If a business spends too much, it suffers and may even go out of business. If a government spends too much, it raises taxes. This is the MIRACLE OF COMPOUNDING GOVERNMENT GROWTH. Citizens cannot be expected to have faith in the "PROMISE" of recovery unless we stop government growth.