No Consumer Left Behind

To the extent that the actions of a few on Wall Street have resulted in a recession nationwide, I feel it is justified to nationalize the solution by taxing the wealth that was created as a direct result of the manipulation of the housing prices. The government can properly redistribute these tax dollars to put people back to work so we can rebuild our national infrastructure. While it is certainly true that the private sector is more efficient in creating jobs to better accommodate consumer demand, because demand is lagging, it is more useful for the Government to spend money lowering our unemployment rate rather than allowing those resources to be wasted otherwise.

When many people discuss capitalism, they do so in the context of crony capitalism, which does capitalism a disservice. We have abandoned the basic principles of true free market capitalism that Adam Smith once envisioned as a path to guide our great nation to sustained economic prosperity. In a perfect market system without market inefficiencies, sticky wages and an economy propped up with debt and credit and in an economy in which the middle class worker is able to share in the economic expansion without resorting to such debt, then a conversation about some sort of redistributive tax structure at certain times during the business cycle would be irrelevant. However, because our national economy operates within a much larger international economic and monetary framework on a global exchange, it is important that we enact policies to ensure middle class and working Americans are able to continue to fuel such demand that sustains such growth.

Prior to the great depression, Henry Ford demonstrated an understanding of this concept that employees were also consumers unlike some of his other competitors at the time. Mr. Ford was able to understand the value of human capital beyond its basic economic application of labor inputs and outputs. He understood that his employees were also likely consumers of his products and in order to create a larger market for his products, he created a reciprocal relationship between his employees or producers who were to also become a large portion of his consumers by compensating the adequately, thus enabling the producers in society to share in the fruits of their labor without resorting to running up debt.  

The main problems we are facing can be attributed to a lack of income mobility resulting in income inequality and human capital being either underutilized or not utilized at all due to a pervasive economic environment of fear. Following the Great Recession and global economic uncertainty, banks are cautious about lending and companies are not hiring. Some politicians suggest we need to cut taxes because the private sector is better able to create jobs. Also, more money in the hands of people will theoretically increase consumption, thereby stimulating demand and creating jobs. However, as we have seen in the past with these tax cuts, consumers will likely use this money to pay down debt or save otherwise for future consumption. Therefore, because such market inefficiencies exist in our Keynesian economic system, we must be flexible in ensuring that the our middle class working base of consumers is able to consume what we produce. After all, if such a distorted system that favors corporate subsidies and central economic planning lends an unfair advantage to the financial sector of the economy and the top 1% at the expense of the real working class economy, then how is it not justified to provide some sort of economic stimulus to ensure we have sustainable demand to keep pace with production?

What we have now are wasted resources or wasted human capital collecting unemployment checks. We can either allow the wealthiest 1% to continue hoarding and saving millions upon millions of dollars that they made largely but not completely due to the speculative drive on wall street from the housing bubble or we can enact policies to tax and collect some of that money, repatriate savings from foreign bank accounts, and inject some of that money into our national economy so we can start rebuilding our infrastructure.

Ron Paul even suggested that the speculators and the people on Wall Street who took advantage of the housing bubble at the expense of the working class need to be taxed heavily in order to provide some sort of redistributive justice because he understands that in such a flawed monetary and economic system that we have today, then it is only fair to compensate the working class and the poor for the deteriorating value of the dollar.

In Ron Paul’s perfect capitalistic market Gold Standard paradigm in which we would not spend more than we take in and allow the market to dictate our standard of living, then maybe this discussion would be irrelevant. However, because we have a central banking system and we operate on a global scale, we must consider policies that accommodate global market exchanges and market functions. Finally, because we have an imperfect market system favoring central economic planning, then we must also take in consideration how such a system may cripple consumer demand and result in stagnant economic growth if not fine-tuned with proper economic stimulus.

People also view

Leave a Reply

Your email address will not be published. Required fields are marked *