My son and his wife just had their first child, and he recently asked me what books he should get to read to his son.
I thought about it for a minute, and suggested the works of a renowned thinker who lived around 600 B.C. Before you say that ancient philosophy would be wasted on a child, I told him to get a children’s version of the works of Aesop.
Even though our liberal/progressive/Democrat (LPD) friends continue to insist that we have evolved as a species, reading Aesop will show any but the most obtuse observer that we really haven’t. Aesop continually shows us that there is a strain of humanity that “wants what it wants, when it wants it” and assumes that making such a statement is equivalent to postulating a law of nature. And just reading any recent news reports illustrates his point.
The new and current LPD “natural law” is illustrated in the “spread the wealth” mantra. But it hearkens back to two of Aesop’s fables. The fable about the ant and the grasshopper comes to mind, as does the one about killing the goose that lays the golden eggs.
It’s the latter that demonstrates beyond any doubt that the LPDs have tested positive for stupid.
In 1819, in McCulloch v. Maryland, Chief Justice John Marshall agreed with Daniel Webster when he stated “the power to tax involves the power to destroy.” Now we have a Congress dominated by LPDs, who show that they also have tested positive for stupid. Taxes, higher taxes, and still more taxes (even when misnamed as fines or penalties) is a guaranteed formula for economic collapse, followed shortly by societal decay and national disaster.
They are, as so imaginatively illustrated by Aesop, trying to kill the golden goose. And in this reality, the golden goose is the real engine of wealth creation — small businesses. Without the engine that creates wealth, there will be no wealth to spread around, regardless of how anyone thinks that is supposed to happen.
Small business creates most jobs in America. In fact, small business creates most jobs in every economy around the world. When a small business succeeds, wealth is spread around. But it is spread around in terms of payrolls, rents, and purchases for raw materials and inventory. It is not leeched out of the business or from the pockets of the producers in exchange for nothing more than a warm fuzzy feeling of self-righteousness.
It is spread around in exchange for goods and services. Each party to the wealth transfer has to give value in terms of those goods and services in order to receive value in terms of fungible wealth. Seems like a simple concept. After all, kids exchanging baseball or Pokemon cards in the schoolyard don’t seem to have a problem with the concept. Of course, Nancy Pelosi or Henry Waxman might want to regulate that at some time in the future. Nothing coming out of the hallowed halls of Congress would surprise me anymore.
The reason that small business is so crucial to our economic well-being is, to put it simply, that it is small. That sounds like something that is too simplistic to be believed, but hang with me for another minute or so.
Imagine a small business with 50 employees. Business picks up for this firm because it offers a unique product or a better value for its customers. As a result, it needs to increase production by 10%. Simple solution: hire five more workers. Five more jobs are created. Ten percent more wealth is distributed in the economy.
Now assume a large business. It has 1,000 employees. Business picks up by the same 10%, but now the solution is not so simple. Does it try to hire an additional 100 employees? Can it find 100 people who have the necessary skills? Does it spend vast sums training them? What will be the cost of wages and the cost of health care and other benefits? How long will it take them to function efficiently? Or would spending the same amount of money on automation, which doesn’t require the “fringes,” be a better solution?
A large business, with greater access to lines of credit, has the option of investing in automation. A small business is not as able to automate, and thus avoid hiring, because the cost of automation is far higher than the initial cost of hiring more workers. So workers are hired and trained, and the wealth is spread to a much greater degree than it would be by purchasing the equipment needed to automate.
That’s the way it is today. Adding heavy tax and regulatory burdens to small businesses — i.e., payroll taxes, health care costs, and so on — is a guarantee that small businesses will begin to view the hiring problem in the same terms as large businesses. By making employees more expensive to hire, the Congress and Mr. Obama are doing exactly what is needed if their goal is to kill the golden goose.
The LPD dreams will lead inevitably to less hiring, more unemployment, and fewer entrepreneurs willing to risk their own hard-earned wealth to grow a new company. Like the thin line between genius and insanity, there seems to be a similar border between dreams and nightmares. It makes me wonder how Aesop would craft a story explaining how someone else’s insanity could give you nightmares.
Today small businesses are structured to readily absorb new employees, such as those who are currently unemployed or coming into the job market from schools. This spreads wealth more efficiently than anything ever dreamed up by an LPD.
Under the plans currently gestating in Washington, this growth will be severely retarded, if not destroyed completely. This will lead to even higher levels of unemployment and greater strains on the limited resources that we, as a compassionate society, can afford to provide to those who are euphemistically referred to as “economically dislocated or disadvantaged.”
Current LPD wish lists in Congress, which would include cap and trade, ObamaCare, and card check legislation, all result in massive increases in small business taxation or regulation. And as we said before, the power to tax is the power to destroy. The destruction of small businesses is tantamount to the destruction of the economic strength of the nation and the social fabric that offers true hope to all of us. This is a change that no one really wants unless they are determined to utterly destroy America.
In both cases, politicians should take heed. Newly hired employees vote. Automated equipment doesn’t.