Will the Plundered Ever Just Shrug?
While politicians in both U.S. political parties have reduced the remarkable art of job creation to a function of their election, the reality is altogether different. Politicians can't offer anything they haven't taken first, so when it comes to jobs, it's essential to remember the investors and producers in the private sector whose often Herculean efforts make our work a possibility.
Indeed, we need to consider what must occur so that the vast majority of us to have a workplace to go to each day. Once considered, it's a fair bet that government activities meant to plunder our job creators will horrify us all.
On the jobs front, for those of us who work but aren't self-employed, the amazing deal being offered us can't be stressed enough. In securing work, we're basically being told by an owner to come to work for wages that are guaranteed.
More to the point, a business owner is telling us that he or she will front the money necessary to run a business, craft the products that will sustain it, and hire lawyers and accountants to steer the business through myriad rules and regulations.
The owner offers all of this knowing full well that if the venture fails, he or she will likely suffer a drastic wealth decline. Or, if the business proves successful in time, the same owner will likely labor for very little to no pay on the way to success. As for us workers, we'll be guaranteed a salary no matter what.
Of course there are no jobs without investment, and while entrepreneurs frequently put at risk a great deal of their own capital to start the companies that employ us, it's often the case that profit-interested investors offer up the cash necessary to fund our work. Entrepreneurs can't innovate without free capital.
This is important when we consider what the vast majority of economists believe about the act of saving. Blinded by the naïve view that excessive spending is the driver of economic growth, they seek tax and monetary policies meant to ensure just that. Consumption is the False God they worship.
In elevating what they shouldn't, they ignore the greater truth that pure consumption would ensure a stagnant society free of the savings-driven innovation that actually builds wealth. The origin of all wealth is saving.
So while economists decry savers, logic tells us that their profit-interested willingness to delay consumption is what drives the kind of capital formation that makes good jobs at good wages possible. Savers, contrary to popular opinion, are society's ultimate benefactors.
More to the point, savers delay the fulfillment of their near-term desires so that we can have jobs.
So how is it that the politicians who allegedly love jobs treat the producers and investors who might be better described as "job-givers"? Not very well.
Considering those who save, any investment returns achieved due to delayed consumption are already taxed at 15% in the United States. One purpose of the capital-gains tax is to stimulate consumption.
And if President Obama allows the 2003 Bush tax cuts to lapse, the penalty on savings will rise to 20%. In short, the very individuals whose pleasure-delaying parsimony makes our work possible will see 1/5th of any future returns (consider here that the stock market is down this decade) confiscated by politicians who regularly campaign on job creation platforms.
Of course that's not the only way in which the political class plunders the abstinent in our midst. Indeed, emboldened by the same economic commentariat that believes consumption to be so important that the act of saving/investment should be taxed, politicians seek through the U.S. Treasury dollar devaluation on the false assumption embraced by most economists that cheap money is the path to prosperity. Not only are job-creating savers taxed if their investments succeed, but as evidenced by the dollar's collapse this decade, their delayed consumption is similarly taxed through currency devaluation.
What about the business owners? First off, the aforementioned 2003 tax cuts covered income too, and if allowed to lapse as expected, the vital few will see their level of federal taxation increased from 35 to 39%. The simple message to business owners is that if they succeed, their work will be penalized at higher rates.
Will the higher rates of taxation redound to society's job givers? Not by a long shot.
Indeed, it can't be stressed enough that our federal government today is largely in the business of separating the productive from their gains so that the least productive can have more than they produce. As President Obama said back in 2008, "I think when you spread the wealth around, it's good for everbody."
To put it more simply, society's producers and savers will get to keep less of what they earn so that the ineffective, indolent and wasteful can have more. This has revealed itself most notably, but not exclusive to, bailouts of various failed businesses, unemployment benefits with no end in sight, and the propping up of wasteful governments globally.
Looking at this from the perspective of successful job providers, they're being fleeced by the tax man to subsidize their competition through bailouts, forced to pay higher wages thanks to jobless benefits which drive up the cost of luring workers from the sidelines, and in funding the IMF with their taxes, they're essentially supporting more government waste so that they can pay more in the way of taxes in the future.
All this seems to be working at least for now, because despite the government's treatment of our best and brightest, we're an entrepreneurial society and we'll likely remain so. Still, the actions in Washington beg the question of when the plundered in our midst will give up and join the plunderers.
If so, if the plundered essentially "shrug", the corrosive and false notion of taking from the doers to give to the takers will be exposed for all to see. The absurd gig will be up. Job-loving politicians beware.