Economics Simplified

Sometimes a graph is all you need (no apologies to the Beatles, who thought otherwise). See this.

To my chagrin, BK is headquartered in Florida, which is one of the lowest-priced places to live in the US, as an individual. The state corporate tax is a 5.5% flat gross tax, the fifth-lowest in the nation. So while BK could relocate to SD (no corporate income tax), they’re not doing too poorly in my home state. It’s the national corporate income taxes that kill.

So, what should we do on a national level? Lower the corporate income tax. This is an uphill battle, because the instant you give voice to this sentiment, a familiar crowd erupts in hostility, “Corporations are evil!” (Never mind the fact that corporations make nearly everything we wear, eat, drive, and so forth.) To counter this sort of thinking, I have a few points:

1. Corporations are nothing more than organizations of individuals. Some individuals in a corporation have more power and obtain more money than others because of the structure of the corporation. Everyone who works for a corporation chooses to do so and accepts its structure. In many corporations, the employees are shareholders and/or participate in profit sharing, so they have a direct interest in seeing the corporation succeed. Freedom of association allows for voluntary associations like corporations, and no individual can prevent another individual from voluntarily associating with others. So why do you hate someone else’s free choice of association? Making rubber balls for pets is not the same thing as lynching blacks, you know.

2. Why does the government deserve money more than the individuals who run a corporation, the employees, or the stockholders? Government is not intrinsically good and deserving of riches (unlike God), and it is far from efficient. People who perform the work should receive the benefits of their labor (whatever they are and however they are distributed according to the conditions that they have accepted). Whether it is a pizza delivery guy, a florist, a musician, the toy designer, a store manager, or the CEO of Starbucks, each of them deserves a reward for the work that they do; this reward is called “profit”, or “wages”.

3. Corporations create jobs and pay more when the people who run them think that the business environment makes it possible to do so. A big part of that environment is taxes. Lowering taxes increases the attractiveness of risk, because if a particular move fails, the corporation has more funds in the bank and more revenue to offset the loss. When more money goes to the government, businesses turn cautious and suck up to the government (i.e. crony capitalism). Crony capitalism rewards only those corporations large enough to obtain favors from the government, and these favors always undermine the free market. The government retards competition, hampers customers from choosing for themselves, and picks favorites. This economic meddling never leads to more jobs growth, rising wages, or innovation.

When businesses determine that they can take a risk, they open new stores; they develop new products; they invest in new technologies; and they purchase more products. Also, such an environment spurs people to enter the business world who have never done so before. These people bring new ideas, new products/services, and thus, new jobs. So, why oppose new ideas, more jobs, and more services? Do the opposed argue from their own lack of achievement, or desire for revenge upon some corporation that injured them in the past? Worse yet, do they oppose the idea of progress itself, favoring taxi unions over Uber?

In the soul of progressivism is a constant desire to control and to keep things as predictable as possible, because only in that condition can the rulers be sure that the distribution of money is accurate. The free market is uncontrolled and unpredictable and a little dangerous; this fear of injury and the fear of an unknown future are the things that torment liberals and animate all of their opposition.

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