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Friday, January 23, 2004
Watching Howard Dean attempting to explain his economic priorities, it suddenly struck me why the left hates Profits so much: Because on some level, whether they’ve ever thought it through or not, they truly believe that when profits are taken (rather than made, or earned) they wind up in a bank vault or an offshore account somewhere and are never seen again. When wages are paid - especially when they're above the market equilibrium price for labor - workers go out and spend the money immediately, on food and housing and medical care and the taxes necessary to keep society functioning (actually taxes get withheld ahead of time, so workers are less likely to notice their impact) and the money circulates through the economy, making everybody wealthier.
Profits, in contrast, are not reinvested, or paid out to shareholders, or taxed, and then taxed again at a (now) lower rate, or spent, or anything – they simply vanish from the economy, never to be seen again except by the rich or their accountants. And then poor underpaid labor has to go back and, starting from scratch, create more profits that are simply sucked away again.
Larceny, Rinse, Repeat.
This applies to tax cuts, too. When the middle class gets tax cuts, they spend them. When the wealthy get tax cuts, the money vanishes and the government has to run deficits to pay for elementary schools and college tuition.
And they wonder why people continue to "vote against their economic interests" rather than trusting them to run the economy.
posted by Kelly | 1:11 PM link