5 Conservative Economic Myths Occupy Wall St. Is Helping Bust
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2. Rich people are “job creators.”
This is the old “trickle-down” idea -- that if you give enough money to the already-rich eventually some of that money will trickle down to the rest of us. This is also called the “getting peed on” theory of economics.
The basis of this thinking comes from the theories of Ayn Rand, who argued that society consists of “producers” and “parasites.” Rand’s fundamentally anti-democratic ideology says that democracy is a form of “collectivism” in which people who don’t want to work and produce use their numbers to steal from a gifted few who are the “producers” of goods and services. Rand’s followers claim that wealthy people are rich because they “produce.” The rest of us are “parasites” who “take money” from the productive rich, by taxing them. This revenue is “redistributed” to the parasites to pay for our “entitlements.”
They say that if wealthy people have more money they will use that money to start businesses and hire people. But anyone with a real business will tell you that people coming in the door and buying things is what creates jobs. In a real economy, people wanting to buy things – demand – is what causes businesses to form and people to be hired.
History – and a quick look around us today – shows that when all the money goes to a few at the top demand from the rest of us dries up and everything breaks down. Taxing the people at the top and reinvesting the money into the democratic society is fundamental to keeping things going.
3. Government and taxes take money out of the economy.
Yes, they actually say that government and taxes “take money out of the economy.” They argue that the money government collects is a) pocketed by politicians; or b) stuffed under a giant mattress; or c) is just wasted.
In reality the taxes that government collects are invested in the “public structures” that create the prosperity and lifestyle we enjoy – or at least did before taxes were cut. Tax revenue builds the infrastructure of transportation, courts, schools, universities, research facilities and other institutions that enable our businesses to grow and prosper and the consumer protection, safety inspection, water and sewer, health, parks and arts that help us live and enjoy our lives.
But there is a powerful reason for people to feel the government does seem to be providing value for the money it costs us: so much of the federal budget goes to military and military-related spending. Spending on wars, the "Defense" department (military), intelligence, nuclear weapons, veterans, and related budget items (including interest on money borrowed for past military spending) is a significant portion of the budget, and people instinctively feel that the country is not getting back services that match what they are putting in.
High top tax rates also reduce the incentive to be greedy and destructive, which can overcome many of us and make us do things we shouldn’t. Cutting top tax rates in the '80s forced a change in business models away from long-term planning and building wealth by building sustainable businesses over decades. Instead, since you could take home a fortune overnight, it made more sense to go for the get-rich-quick, sell-the-farm-style schemes so prevalent today.
4. Regulations Kill Jobs
Corporate conservatives say that “government just gets in the way” and costs money, which leaves less room for hiring. This is a corollary to the “business knows best” argument and to the idea that society consists of a few “producers” who are inherently superior to the masses of people. The thinking is that We, the People don’t know what we are doing, and businesses with their top-down structure will do the right thing more efficiently.