We heard today that President Obama has called for the highest level of taxation in U.S. history. Another story tells us that the American middle class has dropped from its perennial number one position as the world’s wealthiest. The two are different faces of the same political policies.
Our government can and does, print money by the trainload. You can’t eat it, wear it nor live in it; money isn’t wealth. At today’s prices, a beefsteak is a little piece of wealth and you can eat that. Once. But the government’s printed dollars don’t provide more beefsteaks; they just increase the number of dollars the steak is worth if you wish to eat one. Inflation, right? We’ve increased one side of the equation while holding the other side, constant. So the increased dollar side has gone up while the stable, steak side has not changed and therefore, one steak equals more dollars. Pretty simple.
We’ve been doing two things in this ballpark: We’ve been printing more dollars at the Fed for the government to spend and we’ve been raising the wages of government workers. Back before WWII, government workers were paid less than those in the private sector, but the superior job security and benefits balanced the two. After the Democrats unionized government work, that changed; now government workers are paid better than those in the private sector and they still have the superior job security and the benefits. Private sector workers retire on 401k plans; government workers stil receive pensions. Paid for by the taxpayers, including those now lesser paid private sector workers. Nowadays, for instance, the average bank regulator earns more than the average banker. The world of not so long ago, is standing on its head.
So the government is taking a lot from the workers in the economy to prop up its spending. The dollars it takes are unavailable for investment into wealth-making businesses. The business profits that the Left so hates, represent new wealth; they are the price of value added. The government’s dollars represent value subtracted from the economy. And the more value the government subtracts, the less wealth the economy produces.
Less wealth to share, is a lower standard of living, as the American middle class is now discovering. As the old saw has it: “You can’t spend yourself rich.” (Even when politicians tell you otherwise.) And it is worse than that; the U.S. now competes with lower-wage countries that put a lid on market prices for goods. Such competition is made more severe by U.S. government policies that raise American price by expensive regulation imposed on producers and by raising the costs of both energy and labor. Another round of labor cost increases is embedded in the present minimum wage increase being pushed. America is pricing itself out of what was once, its own market.
People are trying to camouflage these effects with a developing “inequality” campaign, on the theory that burger flipper s0mehow deserve the same wages as nuclear physicists. Voters may have to learn the hard way that, when you average the wage of the physicist with that of say, twenty burger guys, nobody earns much, especially after the government bureaucrats are paid. Americans will learn, though they don’t seem to be learning yet.
All this goes together; we’re seeing various faces of a single phenomenon. Government has devalued the dollar to support overspending. Prices have gone up as more dollars chase the same amount of wealth. Prices rise, government workers and government take more from the private economy. Living standards of producers decline as government takes more. And voters expect those who have done this to them, to be somehow, saviors. …