Economic Misconceptions Don't Help The Poor. Sticking it to the rich and those who employ people

A Liberty Moment
09-06-2006

Howard Blitz
928-726-8050
Website: The Freedom Library


Elected officials and others express several common misconceptions because they appeal to so many individuals. For instance, lots of individuals think that taxing the rich will help the poor. It sounds good, but life does not work that way. By taxing the rich government provides less incentive for the poor to save since they will only pay more taxes as their income grows. Taxing the rich encourages the rich to spend more and save less. Savings, though, is what drives economic growth, and the rich have the means to provide the necessary capital from which savings is derived. Economic growth is a function of land and labor and it exponentially grows through capital (economic growth = land + labor x capital). With less capital the poor cannot earn a higher wage.

Lower income individuals also have a more difficult time to increase their standard of living through the misconception that pulling the wage payer down will somehow help the wage earner. Establishing minimum wage laws, government destroys the opportunity for the poor to even obtain a job in order to save, let alone receive higher pay, in order to move up the economic ladder. By sticking it to the wage payer, the wage payer just reduces the amount of help he pays so that he too can make a living. If the minimum wage increases high enough, wage payers go out of business creating even more poor people, including the wage payer.

Another misconception is that economic security is achieved through debt. The American tax system encourages and rewards such thinking so that few Americans can ever get out of debt. By not being able to reduce debt, economic growth is stifled and once again, government taxation policy destroys the very means by which the poor can become rich and the rich can be encouraged to provide the necessary capital in order for the economic pie to grow for more individuals in which to partake.

Still another misconception is that character and courage can be built by taking away an individual's initiative and independence. Two things happen when government officials handout money. One, money is coercively taken from those who earned it thereby destroying the initiative to earn an income and save. The second thing that happens is that the initiative of those receiving government funds to earn an income on their own is stolen and they become even more dependent on government for their source of funds resulting in less savings and less economic growth.

Government officials must do everything in their power to make sure that all government spending is constitutionally authorized and eliminate that which is not. In this way taxes can be eliminated or reduced in order that savings, the engine of economic growth, can be maximized resulting in both the poor and rich making the kind of living they desire.

Basic economic truths cannot be destroyed. They can only be tinkered with by government officials to the detriment of everyone. A free economy is not a zero sum game where if one benefits the other loses. That only happens when government officials interfere through their tax policies and regulations.

Individuals need encouragement to become the best they can be and that can only be done if government officials get out of the way and allow the individual to have the initiative and courage to save as much as they can in order that capital can be created so that the individual's labor becomes more valuable.

Fully understanding these and many other common misconceptions will greatly assist all in their quest of happiness.

Mr. Ricardo Valenzuela, advisor to recently elected president of Mexico, Felipe Calderon, president of Liberty Americas Foundation in Tucson, and former rancher, banker, and editorial writer, will be the featured guest at The Freedom Library Annual Education Forum November 2 at 7 PM at the Booth Machinery conference hall located at Araby Road and 30th Street. His topic, "The Future of Freedom in Mexico and its impact on Arizona and the United States," is a very timely one.

Scholarship applications continue to be taken by The Freedom Library for its education program in order for individuals to learn more about the United States Constitution. Remit a completed application by going to www.freedomlibrary.org, call 726-8050, or stop by The Freedom Library any Tuesday at 6 PM to give yourself an opportunity to earn a $1,000 scholarship. Individuals of all ages 12 and up are eligible. The public is invited.