Ken's Project Blog

September 4, 2011

The Three Levers and Two Parties of Government

Filed under: Politics,Taxation — Ken @ 10:09 am

The government only has three levers to manipulate the economy: regulation, taxation, and investment, and investments are tied to taxation (to pay for the investments).

One party feels the path out of our economic malaise is to increase investments, with a generous helping of tax increases (primarily by eliminating tax ‘loopholes’), the other thinks that lowering taxes and reducing government regulation are what is needed.

The Republicans feel that letting individuals and corporations keep more of their own money, by making private investment & risk taking more valuable, there will be an increase in both, raising our GDP/economy.

Democrats favor increasing taxes to fund investments by government, believing those investments will spur private industry to grow and raise our economy out of it’s doldrums – despite numerous examples to the contrary (cash for clunkers, investments in ‘green’ jobs, etc.).

In the final analysis, Democrats seem to believe that the best way to grow the economy is to increase taxes, feeding the ‘engine of efficiency’ known as the federal government to coerce private industry to grow despite increased regulations and taxes. Any attempts to point out that this strategy has failed (repeatedly) in the past is met with cries from the left that previous attempts were underfunded, and that what is called for now is even greater investments by government. Republicans feel that those that created industries, created jobs, are the ones that best know how to grow not only their companies, but also the economy.

The only jobs the government can create are ones it directly funds, requiring ever-increasing taxation to fund job desired job increases – remove the funding and the government-created jobs disappear. Jobs created by the private sector, on the other hand, generate tax revenues.


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