Walter Williams spoke about the value of profit.
His excellent talk is given below.
Mr. Williams also wrote an excellent
article about the problem of imposing tariffs on foreign imports which
is linked to
here. Another excellent
article by Joshua Withrow makes it clear that instead of imposing
taxes on foreign imports we should stop imposing taxes on our own
Obama appeals to voters by saying he will
make the rich pay their fair share of taxes and not raise taxes on those
who aren't rich. He is following in the footsteps of France.
Why this is bad is shown in the video below.
This is a way of saying that he will redistribute
the wealth. A very good ad explaining the problem with this is
Here is another talk about what's wrong with Obamanomics and
And another excellent one a talk by Stephen Moore is included below.
States with higher taxes and generous
welfare programs have
more inequality in wealth than states that don't and residents flee
high tax states for low tax ones.
Raising taxes on wealthy
companies results in them creating less wealth and hiring fewer people.
It can even lead to their going out of business. Why not just
raise the taxes of wealthy people? That will induce the wealthy
people to leave. Why not take all their money if they leave?
The United States has such an onerous tax burden already that wealthy
are leaving. In order to stem the flight of the wealthy the U.S.
has imposed a financial penalty on wealthy people who decide to give up
their citizenship. So what? Why not collect all that money
for the needy? If you trap the wealthy by stealing their money if
they choose to leave than they might stay but they will have much less
incentive to create wealth since that wealth is taxed so highly.
If they flee then their wealth creating talents flee with them.
On Feb 13 Rand Paul gave a speech
in which he pointed out that the United States is
borrowing $50,000 a second. He said:
Trillion-dollar deficits hurt us all.
Printing more money to feed the never-ending appetite for spending
hurts us all.
We pay higher prices every time we go to the supermarket or the gas
pump. The value of the dollar shrinks with each new day.
Contrary to what the President claims, big government and debt are
not a friend to the poor and the elderly. Big-government debt keeps
the poor poor and saps the savings of the elderly.
This massive expansion of the debt destroys savings and steals the
value of your wages.
Big government makes it more expensive to put food on the table. Big
government is not your friend. The President offers you free stuff
but his policies keep you poor.
Under President Obama, the ranks of America’s poor swelled to almost
1 in 6 people last year, reaching a new high as long-term
unemployment left millions of Americans struggling and out of work.
The cycle must be broken.
There is a cycle here, people vote for politicians who
give them free stuff and as a result get poorer and more dependent on
Politicians get elected
who offer money for entitlement programs to get votes
People vote for Politicians who Give
Spending drains the economy.
People become poorer and
more dependent on government spending.
2010, for example, not even one of
the ten poorest large cities in the U.S.
had elected a Republican mayor since the
1980s. In fact, 8 of the 10 cities had
been led exclusively by Democrats for
more than half a century.
The common thread
running through each of these
economically decrepit cities is a
phenomenon that Harvard scholars Edward
Glaeser and Andrei Shleifer famously
Curley Effect,” after its prototype,
James Michael Curley, who served four
non-consecutive terms as mayor of Boston
between 1914 and 1950. This phenomenon,
Glaeser and Shleifer
explain, is the strategy of
“increasing the relative size of one’s
political base through distortionary,
Forbes magazine puts it
this way: “A politician or a
political party can achieve long-term
dominance by tipping the balance of
votes in their direction through the
implementation of policies that strangle
and stifle economic growth.
Counterintuitively, making a city poorer
leads to political success for the
engineers of that impoverishment.”
The Keynesian justification of
such borrowing, used by the Democrats, is that it stimulates the
economy. The problem with Keynesian reasoning is that it ignores
the downsides of the equation one of which is that money borrowed is money that has to be
paid back with interest. Businesses borrow money all the time and
often such borrowing does make it possible for the business to grow but
businesses who make bad investments overall go out of business and the
one's that make the good investments survive and grow. If the
government makes bad investments the economy of the entire country is at
risk of going out of business i.e. hyperinflation, huge interest, huge
unemployment, etc.. A business is likely to attempt to invest in
order to grow, a government is likely to spend money to get votes.
Such government spending usually bolsters welfare and entitlement
programs which grow and drain the economy. From the Keynesian
point of view that's not true at all, welfare and entitlement programs
give people money to spend according to the Keynesian argument which
stimulates the economy. Well if that's true why not print
trillions of dollars and make everyone a millionaire!
Another very important downside of borrowing is that
it allows bad policies to continue and so allows problems to grow.
A very simple way to explain that is to consider a teenager who goes on
a spending spree with his parents credit card. As long as he can
borrow with the card he can get his parents further and further into
debt. It's not until the card is maxed out or his parents get the
bill and stop him that he stops wasting money on drugs or expensive cars
etc.. Borrowing allows the U.S. government to give money it
doesn't have to countries that hate the United States such as Egypt and
Pakistan in an attempt to buy them off. It allows Obama to get
reelected while blocking the wealth from the Keystone pipeline and
making energy more
expensive. It masks the damage he is doing to the economy.
Although the national debt has increased $5.9 trillion during Obama’s
insists that he cut the deficit by 2.5 trillion dollars. He's not
willing to admit the disaster he is creating.
One of the factors that brought about the economic
mess that we're in were bad loans made by American banks. The
Community Reinvestment enacted under Carter and made more aggressive
under Clinton was
responsible for these loans.Obama is on the record personally
helping sue one lender (Citibank) into lowering its lending standards.
appears that the only thing that will stop U.S. government spending
beyond it's means is economic disaster.
The economy which will probably lead to the most
overall wealth is one in which the costs people pay for commodities correspond
to the real costs of those commodities. Often there are hidden costs
which are not reflected in the cost of the item. The hidden costs of
cigarettes for example are the costs of medical care of cigarette smokers who
develop cancer or emphysema. Oil purchases from Iraq , had hidden costs
for the United States. The oil money made it possible for Iraq to build a
powerful army. The United States had to send a large army to the Middle
East to fight Iraq at a huge cost. If this cost were reflected in the
cost of Iraqi oil it would have been more economical to buy oil
elsewhere. As a result Iraq would have less money with which to build a
powerful army and the United States might not have had to spend money to fight
Iraq at all. Saudi money is funding the spread of radical Islam in the
United States and the rest of the world. As a result the United States
went to war with Afghanistan at immense cost. A glimpse of the cost
to the United States in the future of the growth of radical Islam can be seen
by looking at France today which has become a violent antisemitic society with
demonstrations of hostile Muslims yelling "Kill the Jew".
The market is driven by costs and if the costs
paid are not close to the real costs than hidden costs will build up and the
overall price paid will be higher and so overall wealth will be lower.
In theory governments could impose taxes to bring
the cost of items closer to their real costs. For example they could tax
cigarette purchases to pay for the hidden medical care costs.
Unfortunately there are hidden costs of government taxation as well. The
government usually is not an efficient organization and is expensive to
run. Government taxation means more government money and more government
power. This may be undesirable as it may lead to infringement of civil
liberties. The imposed taxes by government may not bring the costs closer
and may even bring them further away from the real costs.
There are economic laws that are common sense that politicians ignore.
For example Obama is
passing laws to make it more expensive for American companies to
hire overseas. Problem with that is that then the cost
of making products goes up and the American companies can't compete with
foreign companies that use cheaper labor and go out of business.
You can pass minimum wage laws and suddenly there are
You can tax foreign goods in order to encourage local
businesses and then foreigners tax your goods and you lose business.
In addition the higher cost of living from higher costs of goods force
local companies who use those goods to charge more for their products
and can force them out of business.
You can pass laws setting the costs for products and
suddenly companies stop making those products because they lose money by
When the government decided to take money from some Americans and
give it to other Americans so their kids could afford to go to college,
demand went up. This meant that costs went up.
Ironically then subsidizing in order to bring done
costs led to higher costs. This led to a vicious cycle in which the
government subsidized even more. Mr. DeMar wrote:
The universities began to realize that with more money available to
families, they could raise prices, hire more staff, and build more
buildings. When costs rose, politicians screamed that something needed
to be done, and, of course, the solution was to make more money
available. This isn’t the solution; it’s the problem:
Like anything the government subsidizes with
money taken from some people, we get more of it: poverty, babies born
out of wedlock, substandard housing, welfare, and welfare recipients.
Trump wants to bring back jobs by imposing tariffs on other countries and devaluing the currency.
Free trade generally helps the economy as explained by John Stossel in
an article called
The conventional wisdom is that China manipulated it's currency so that
Chinese goods were cheaper than American ones so all the jobs flowed to
China. There are various problems with this. If the Chinese
yen is devalued by the Chinese government Chinese businesses need to
charge more for their products to make ends meet. So why are the jobs
flowing to China?
Lets consider what would happen in a free market situation. Lets
say the Chinese are charging less for their goods than Americans are.
In a free market the American companies that were charging more would be
in danger of going out of business. In order to save their company
they would cut the salaries of their employees so that they could
compete. Employees would work for any salary because otherwise
they would have no money at all.
What happens in the American economy. Union contracts may make it
difficult if not impossible to cut salaries. If they cut it to
much their employees would go on welfare.
Where does the money come for welfare? From taxation and borrowing
and money printing. Who do we borrow money from? We used to
borrow from China. Borrowing is bad. We still have to pay,
and we pay interest and we lose jobs. Who do we tax.
Companies who otherwise would have hired and made money.