Thursday, December 27, 2012

How Keynes Got it Right and the 'Right' Got it Wrong!

by Len Hart, the Existentialist Cowboy

Many have proposed a 'flat' tax. It sounds good but isn't! Flat taxes are not really 'flat'. Ten percent of the income of a poor or middle person is a much, much greater burden than is the same percentage against the income of a millionaire. The difference is that merely keeping a roof over the family's head and food on the table is a MUCH bigger percentage of income/wealth for a poor or middle class family.

The very, very wealthy, in fact, find it difficult to spend all their wealth. What is left over after the cost of maintaining a villa in Spain or a swanky lodge in the Alps is invested in enterprises that earn even more wealth. Moreover, even Libertarians --if pressed --may admit that 10%, 20%, 30% percent, indeed, any percentage of a poor person's income is a much greater burden than almost any rate on the income of a millionaire! Among the many reasons this is so is that mere necessities --food, water and to varying degrees, shelter --are not only fixed, they will always amount to a much higher PERCENTAGE of a poor or middle class budget than that of the budget of a multi-millionaire or richer.

Libertarians, however, will maintain that income tax is immoral because tax policy may have the effect of re-distributing wealth and income. My reply is that when just one percent of a nation's population owns more than the rest of the population combined, it is time to raise taxes on the very rich.
The whole system is pure criminal as from the installation of the Federal Reserve Act in 1913 by Democrat Woodrow Wilson. Not only the American people suffers, the whole world has been sandwiched by the private banks behind the central banking system.

--G. Edward Griffin, Legalized Plunder of the American People
The best argument against a flat tax, ironically, has come from a so-called 'libertarian' who wrote:
That 10 percent is a greater burden on the poor than is 10 percent on the very rich is the very reason that income tax is immoral --as it is currently imposed upon us.
Alas! The Libertarian does not go far enough. A flat tax of any sort will penalize the poor while enriching the rich.

During the 'Great Depression', the American comedian Bob Hope was asked to comment on it. He quipped (and I paraphrase)
"..I looked up the word depression. A 'depression' is a hole. I looked up 'hole'. A hole is 'nothing'. So --if you think I am going to waste my time talking about nothing, you have another think coming!"
There is nothing mysterious about depressions. They are defined by 'negative GDP growth' from which follows negative job creation rates --not to be confused with mere slowdowns or periods of slow growth. Thus depressions are disastrous for the poor. The very, very rich can actually benefit from them by buying bargains that are beyond the reach of the poorer or middle classes. The 'ruling elites' are capable of rigging markets with cleverly timed 'sell-offs'. They have the luxury of buying back in at bargain prices.

A 'depression' is a period of 'contraction'. In the U.S. every recession/depression at least since World War II has occurred during a Republican administration. That is but one reason I am not now nor have I ever been a Republican.

If FDR had been either a Republican or what is commonly called a 'libertarian' (in the Ron Paul sense of the word) the U.S. would have eventually collapsed. Even so, it may have required the U.S. entry into WWII following the Japanese attack on Pearl Harbor to get the U.S. into the war. As a stimulus, 'war' created millions of new jobs and put women to work where --earlier --their presence had been unknown. The image of 'Rosie the Riveter' is still symbolic of the period. The good effect is that women would never again consent willingly to 'second class' citizen status.

As for Keynes, he would not have been surprised by the American experience. He was, after all, famous for his proposal that in times of increased joblessness, the government may do well to bury 'pound notes' in a landfill and let 'private enterprise' dig them up.

If it's all about jobs, why wait for a war to create jobs? A 'liberal' administration has a responsibility to society overall --not just to the 'ruling elites' who finance his campaigns. Rather, a liberal and/or progressive regime will support a more egalitarian society, in fact, a more efficient society as a result.

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