Obama’s hidden-tax heist (How the Fed masks Obama's Spending effects)

Washington Times ^ | 12/26/2012 | Richard Rahn

[SeekAndFind]

How is it possible that the government can spend almost twice as much as it takes in without having high inflation? The fact is that over a long period of time, it can’t. In the short run, which can be a few years, the government can paper over its fiscal irresponsibility by expropriating most of the productivity gains in the private sector through regulatory and central bank actions. This is precisely what has been happening in the United States.

The reason real, after-tax, per capita incomes have been able to increase year by year for most Americans for the past two centuries is that productivity has been growing — that is, the amount of goods each worker produces per hour has risen steadily. The reason productivity rises is that workers tend to be better trained, the amount of productive capital per worker rises, and there is a steady flow of innovation, which reduces costs and improves goods and services.

To understand productivity growth, look at the advances of farm and construction machinery — which enable one worker to do more, better and with greater safety. Wal-Mart, Amazon and FedEx have made amazing developments in reducing distribution costs by instituting better equipment and systems. Magnify these individual company and industry gains throughout the economy, and the result is a steady national gain in worker productivity.

Over the past few decades, worker productivity growth has averaged more than 2 percent. Most of this gain eventually ends up in worker paychecks, with some being siphoned off to support people who are not working and pay for various government schemes. Even so, for the quarter-century preceding 2007, after-tax, real (inflation-adjusted) per capita, disposable income grew at about 2 percent per year.

[blueunicorn6]

I guess it must be in the nature of man to believe that other people see the world the same as us and have our same ambitions and goals. Every day, I see Republicans writing here on Free Republic about how the Democrats behave so illogically. Do they? Or is it just that they have different goals? You may want decisions made that are best for our country, but does that necessarily mean that Democrats want the same thing? What if all they want is what’s best for them and the Democrat party? Should we treat them the same as people who want what’s best for our country? Should we expect the same things from them?

“Understand yourself and understand your opponents, and in one hundred battles, you will not be defeated.”