Some people believe that we don’t have a spending problem and that the more the government spends the better the economy is stimulated. I have a few objections with these beliefs.
Government can’t spend anything that is not first confiscated from someone or some organization that earned it. Government revenues were at some point earned income for someone. When the money becomes government revenue it is no longer available to invest in the economy in any way. Earned income that is not mutated into government revenue is available to stimulate the economy by those who earned it. It can be spent on personal expenses such as food, shelter, clothing, or recreation. Another possibility is that can become savings or investments, or it can be pumped back into a business. As that money is used by the one who earned it, it can become income for someone else. It is genuinely stimulus.
Without getting too deep into the waste fraud and abuse that is synonymous with government spending, government spending doesn’t stimulate anything. It has been drained form the economy and could be best used by those who earned it; government is not capable of spending it wisely or effectively.
Currently 40% of all government spending is borrowed. Government is spending money that doesn’t exist. Government is spending beyond its ability to collect revenues. Failed businessmen and women understand that nothing good comes from spending more than you have. Spending borrowed money costs money. Some of the debt is purchased by other countries buying treasury notes and bonds and will earn interest financing our debt. We are paying a premium to spend money we don’t have in a misguided effort to spend our way to prosperity.
Scenarios like this are where the phrase “spending money like a drunken sailor” comes from.
Spending into prosperity is a foolish enterprise. In the history of the world no one has ever spent more than they earn and thrived in the process. It has never happened and it will never happen.
Our government needs more revenue. And history has showed us how we can get more revenue. Reducing tax rates generates more revenue. Increasing tax rates does not.
Increasing government regulation and making it more difficult for businesses to operate and take risks reduces profits for business. Profit is necessary for a number of reasons. Profit leads to increased earned income for companies and individuals. The more profit a company has the more money it spends in order to make more profit. More profit increases earned income for business and individuals. Profit stimulates the economy in real and long lasting ways.
Fiscal responsibility leads to more profit. Profit is good, profit is healthy and profit is part of success.
The free market is good for the economy and good for business. Profit is the result of hard work and an understanding of business and the economy. Politicians either through deliberate action or as a byproduct of the message they are sending to the voters indicate that profit is selfish and evil. This is a clear signal of how wrong those politicians are. Profit is good, extraordinary profit is better. Profit can be the result of the abuse of the public and on occasion it is. (Evil Profit) Profit can also be the result of hard work, imagination, perseverance and integrity. (Good Profit)
I have not done a scientific study of Evil Profit vs. Good Profit, but I’m confident that for every instance of Evil Profit you can document I can document 1000 instances of Good Profit. On a sliding scale of pure evil and pure good, each organization will fall somewhere in between. Adolf Hitler on one side and Mother Theresa on the other; no organization will match the model, but there will be far more Profits that are closer to Mother Theresa than they are close to Hitler.
Profits are the fuel of the Free Market Economy. Let there be fuel! The Free Market works best when government stays out of it. Government can’t do anything towards growth and prosperity except get in the way.
Profit is Good. Extreme Profit is Better. Government hinders or prevents profit; government never, ever enhances or increases profit.
Profits and Success are Superman.
Government is Kryptonite.