The Myth of Government Spending

There's this myth in conservative circles that government spending is somehow a bad thing. Nothing could be more wrongheaded. Money spent becomes part of the economy. It's economic activity! Every dollar spent is income to someone, and they will spend it as well, on wages, raw materials, whatever, it gets spent and re-spent, thus enlarging the economy. Not only is there nothing wrong with that, it's very beneficial. The Great Depression was ended by government spending.

Because money flows uphill, even if a source of funds for government spending is taxes on the wealthy class, in the form of repealed tax cuts, for example, they end up with it right back in their pockets anyway. May as well tax them on some of their income and send it around again, to the benefit of everyone.

The measure of economic health is not how much money is held, but how much money is spent -- circulated. It's the circulation of the money that equates to prosperity, not the holding of it. If an economy stagnates, it is the responsibility of government to spend enough to rev things up again.

All the conservative complaints about entitlements and socialized medicine and all their carping about what an unfair burden taxes are for industry, this is all a smokescreen born of stupidity and ignorance born of greed. Government spending is like a giant goose laying golden eggs for everyone. Why kill that?

Consider the opposite extreme. What if economic conservatives could have their way and "starve the beast" called government. No spending by government at all. What then? Roads crumble, buildings collapse, water becomes undrinkable, the air becomes unbreathable, airplanes crash into each other, schools close, people become restive, riots ensue. If you think market forces would prevent those kinds of consequences, you're dreaming or on drugs.

Market forces would cause those effects as greed drove every corporation to pillage the marketplace. The wealthy class would provide services, but only for itself, leaving the vast majority to fend (badly) for themselves. Think this isn't so? Look at the Katrina debacle. This is how government responds to social crisis when that government is run by people who don't believe in government. Which victims got their insurance payments and their houses rebuilt in the Gulf Coast region following Katrina and which ones got screwed? You know the answer. The government stepped aside and the wealthy class took care of its own.

Extremes are not healthy on either end of a spectrum. Overtaxing would be counterproductive because it would rob businesses and individuals of incentive and discourage entrepreneurship. There's a happy medium to be found in tax and spend. It's up to responsible government to find that happy medium.

Probably most taxes should come from corporate revenue rather than taxes on wages. A corporate revenue tax would not have to impact corporations adversely because the taxes would simply be passed on in the price of goods. This is fair, as long as wages are not taxed, because the end user has to pay the costs anyway. What do you suppose people would do with the extra money in every paycheck if they weren't taxed on income? They'd spend it! What a bonanza! For rich and working poor and middle class alike!

As economic stimulus, tax cuts should therefore be applied at the bottom of the economic ladder and taper upwards, with the super wealthy getting no tax cuts at all. They'll still get richer because working people will spend the extra money and money flows uphill.

Doesn't this make a lot of sense? Yes, but economic conservatives have to see past their greed. They have to realize that everyone including themselves can become wealthier through government spending and tax cuts for the working class.

This is not socialism, it's capitalism. Sensible capitalism. This is not advocating collective ownership by the people of the means of production, which has been shown not to work. It is healthy capitalism where the legitimate needs of all sectors of the society are taken into consideration and prosperity is boosted for everyone, not just for some. This means that government spending and government regulation of industry and the marketplace are necessary. The wealthy class has to see past its own greed in order to make that a reality.

What politician will step up to the plate and propose these policies?