Economic voodoo

By Jim Killebrew

[July 19, 2014]  During the past six years the economy has been slowly recovering from a recession. The hype has been the recession is over and recovery has come back strong regarding jobs, wages, lack of inflation, retirement earnings and other factors the government uses to measure economic stability. The current Administration has tried to use great sums of money to infuse into the economy in various capital ventures hoping to “stimulate” the economy to create jobs and economic growth.

The problem is the government in not a producer of any product and is not in the business of supply and demand. Simply put, the government does not produce a product or service that generates income. Money comes to the government by confiscation of that money by the government through laws and regulations imposed on those who work for incomes. Most Americans know that process as income tax, corporate tax, user tax, property tax, or some other kind of tax imposed on the individual with an income. A portion of each individual's income is handed over to the government even before the individual is paid. This is the information printed on the individual's check stub that is labeled income tax, FICA, Medicare, State income tax, and in some cases city or county taxes. If the individual tries to hide or prevent the government from taking the income from the individual, the individual is punished with fines or imprisonment.

Once the government has possession of the individual's income the representatives of the government freely spend the money as they see fit. They oftentimes spend the money on special interest groups that directly or indirectly benefit the public official who has the authority to spend the money. Special projects in public official's districts are funded as an aid to help the public official be re-elected to the office or position numerous times in order to keep the power of managing the money confiscated from the individuals with income.

When the government officials decide to use a portion of the money confiscated from individuals for "infrastructure jobs" or other special projects, those jobs usually do not produce further income. They are never sustaining nor self-sufficient to the point of reducing the need for more public money. Moreover, the stimulus money for specific jobs usually require an oversight structure that pays individuals to supervise, manage, administrate, direct or otherwise act as a form of Chief Executive Officer of the funding stream. For each dollar of the stimulus money used to stimulate spending through the application of some sort of infrastructure job, a significant percentage of each dollar is used for the oversight structure.

When the stimulus money is used to pay for services in the federal, state or local community, it automatically becomes a job that cannot be sustained unless the money from the stimulus source is continued indefinitely. When the stimulus money runs out there is generally no mechanism in place that will carry the job forward in the future. Therefore, the person holding that job will usually be laid off and will join the ranks of the unemployed again.

When the government wants or needs more money it simply takes more money from each individual wage earner. Taxes are raised and a greater percentage of the individual's wages are confiscated. It is done in hundreds of ways. Products or services that people want are identified and the government levies a new tax on that product or service. In addition to the individual's income or wage being taxed, the government taxes the money the individual has left. The government does that by requiring businesses to collect taxes like sales tax charged on each item of product or service they sell and turn that tax money over to the government.

Businesses usually cannot afford to absorb the higher taxes the government imposes on their products or services, so the amount of tax the government imposes on those products or services is added to the cost of those products or services. Then when the individual purchases those products or services the business charges the cost of the product or service and the tax. The business keeps the earnings of the service or product to replace the purchased product or service, and then surrenders the taxes collected for the government over to the government. Therefore, the government, through laws and regulations has forced each business in the United States to serve as a tax collector for the government.

The government officials have developed a windfall profit scheme for themselves. Through the enactment of laws that have the authority to put citizens in prison for many years, they can extract as much money as they want from the average citizen who works for a salary. They can, and do, tax almost everything that exists. All people pay taxes to the government. Each person who works to make a salary pays first right off the top of their check by the use of "payroll deductions." The portion the government believes is their "fair share" of the individual's salary is taken even before the individual is issued their check. If the individual does not have enough taken out and falls short of what the government has decided as their "fair share" at the end of the year the employee makes it up by paying more lump sum taxes. If the payroll deduction number has been too low in the government's opinion, the individual must pay a fine to the government for not deducting enough. If the individual overpays by having more deducted throughout the year and it requires a "refund" at the end of the year, the government will also fine the individual for causing them to have to issue a refund.

In summary, the federal government is comprised of the President, Congress and the Supreme Court. There are 535 members of the United States Senate and House of Representatives. The Congress makes the laws and the President signs them into law. The Supreme Court judges if they are consistent with the United States Constitution. Those few people make up the entirety of the law-making process. They are responsible for the thousands of taxes and the spending of the individual's tax money.

Government stimulus does not really work that well since the money is taken from individuals who earn a living by working and making a salary. By taking money from the workers and giving, or redistributing, it to others who do not work to make a salary only tends to de-motivate the workers and at the same time kill the incentive to work in the individuals who do not have jobs. This pattern has been seen in most of the socialistic societies throughout the world.

Since the government only has money that was taken from individuals who are wage earners, there has to be a limit on what is spent. As the government spends more and more of the individual's earned wages, there is a slow-down in the economy since the government does not produce any product that is renewable and sustaining. The government does not build wealth; it only spends confiscated wages earned by others.

Most people can see and experience the effects of this process; less jobs, people having temporary jobs, more part-time jobs, and products costing more money than in the past and favorite products purchased for the same price but receiving a lesser amount. Has anyone bought a product in a box or package that is much smaller with less product but at the same price? This is simply another form of inflation.

When the government officials talk about the economy having been improved they are usually referring to those with wealth. For those who have been defined as “middle” class, the cost of living has increased and net income has decreased.

[By JIM KILLEBREW]