The Wind in the Sails of the Economy

The more I ponder our economic woes, the more I come to the conclusion that everyday middle-class consumers are the wind that powers our economy.

 

Let me explain why I say that.

 

Certain politicians right now are making a big point of giving economic power to “job producers”. In other words, they want us to make sure rich people and big corporations can keep paying a lower percentage of taxes than a middle-class family, and be happy about that because of a belief that this means they will automatically create new jobs. However, I have not seen this happen. Instead, over and over, I’ve seen corporate executives say, “not enough people are buying our product, so we have no choice but to lay off workers.”

 

Bailing out the banks didn’t stop that behavior, tax loopholes didn’t stop that behavior, lower tax rates on corporations didn’t stop that behavior—and why should it have? If few are buying, paying more workers to make more stuff is not profitable. It could even reasonably be called wasteful.

 

Big business is all about profit. To a corporation, taxes are just a cost of business. If they can still make a profit, higher taxes on a business won’t convince them to stop participating in the economy.

 

Families, however, are about living and having a good life—now and on into the future. To a family, money isn’t an end—it’s a means. A means to food, shelter and clothing. A means to fun and beauty. A means to security.

 

If a family doesn’t have enough money to survive comfortably, they cannot participate meaningfully in the economy. If they don’t have enough to feel secure, even if they have a good surplus of income over basic costs they will dramatically cut back their participation in the economy, saving for a rainy day in the hopes that if they save enough, they will survive the next layoff, illness, or other disaster.

 

As a result, and in contrast to a business, taking more taxes from a family that's already scared or struggling has a dramatic effect on that family's ability and willingness to participate in the economy.

 

It’s not the “job producers” that drive the economy. They’re just the people at the wheels of our figurative sailing ships. With no wind to fill the sails the guys at the wheels may have power and prestige, but the ships drift. For the ships to move, you need to fill the sails with the wind of commerce. For the ships to move, you need millions of people buying things.

 

For the ships to pick up speed, you need the breeze created by money freely and joyously changing hands.

 

So sure—squeeze the middle class and the poor. Give the money to the steersmen, who will save it up hoping for a sunny day in the future when they can use that cash to make more profit. After all, we're doing just fine drifting around, right?

The Wind in the Sails of the Economy

The more I ponder our economic woes, the more I come to the conclusion that everyday middle-class consumers are the wind that powers our economy.

 

Let me explain why I say that.

 

Certain politicians right now are making a big point of giving economic power to “job producers”. In other words, they want us to make sure rich people and big corporations can keep paying a lower percentage of taxes than a middle-class family, and be happy about that because of a belief that this means they will automatically create new jobs. However, I have not seen this happen. Instead, over and over, I’ve seen corporate executives say, “not enough people are buying our product, so we have no choice but to lay off workers.”

 

Bailing out the banks didn’t stop that behavior, tax loopholes didn’t stop that behavior, lower tax rates on corporations didn’t stop that behavior—and why should it have? If few are buying, paying more workers to make more stuff is not profitable. It could even reasonably be called wasteful.

 

Big business is all about profit. To a corporation, taxes are just a cost of business. If they can still make a profit, higher taxes on a business won’t convince them to stop participating in the economy.

 

Families, however, are about living and having a good life—now and on into the future. To a family, money isn’t an end—it’s a means. A means to food, shelter and clothing. A means to fun and beauty. A means to security.

 

If a family doesn’t have enough money to survive comfortably, they cannot participate meaningfully in the economy. If they don’t have enough to feel secure, even if they have a good surplus of income over basic costs they will dramatically cut back their participation in the economy, saving for a rainy day in the hopes that if they save enough, they will survive the next layoff, illness, or other disaster.

 

As a result, and in contrast to a business, taking more taxes from a family that's already scared or struggling has a dramatic effect on that family's ability and willingness to participate in the economy.

 

It’s not the “job producers” that drive the economy. They’re just the people at the wheels of our figurative sailing ships. With no wind to fill the sails the guys at the wheels may have power and prestige, but the ships drift. For the ships to move, you need to fill the sails with the wind of commerce. For the ships to move, you need millions of people buying things.

 

For the ships to pick up speed, you need the breeze created by money freely and joyously changing hands.

 

So sure—squeeze the middle class and the poor. Give the money to the steersmen, who will save it up hoping for a sunny day in the future when they can use that cash to make more profit. After all, we're doing just fine drifting around, right?