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Old 01-24-2019, 09:56 AM
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Lumara Lumara is offline
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Thumbs up A Real Government Shutdown Would Help the Economy

This piece explains how reducing the size of government would save a lot of money, and I agree. Everything this author wrote here is logical.

Quote:
In an editorial last week entitled, “Shutdown Slows Down the Economy,” the New York Times suggested that President Trump’s partial shutdown of the federal government is hurting the economy. It’s a point that many people on the left are making.

They are wrong. Actually, the best thing that could ever happen, from an economic standpoint, is a permanent shutdown of all of the non-essential and illegitimate functions of the federal government, and there are many.

Keep in mind that we are dealing with two separate sectors — the private sector and the government sector. The private sector produces wealth. It is the cause of rising standards of living. The other sector is the parasitic sector. It reduces standards of living.

Suppose everyone in the private sector was free to keep everything he earned. 100 percent. Assume no federal taxes. The result would be an enormous rise in prosperity and standard of living. That’s because a key to rising standards of living is savings and capital accumulation.

If people were free to keep everything they earned, they would inevitably save some of their money, which they would deposit into banks. Employers would borrow that money to buy tools and equipment that would make their workers more productive. Higher productivity means higher revenues and higher wage rates — i.e., a higher standard of living.

Suppose the government starts taxing people at a rate of 3 percent of their incomes. Now people are worse off because inevitably they are going to save less than they were before. The tax reduces people’s economic well-being.

Now, people might think that the 3 percent tax is worth it because it helps to keep the federal courts working, which enables people to peacefully resolve their disputes. They would say that that’s an important and legitimate function of government.

Let’s say though that the federal government suddenly starts taxing people 33 percent of their incomes and uses the extra money to hire 10,000 people from the private sector, fund forever foreign wars, and provide a welfare dole to some people. In that case, people are now retaining only 67 percent of their income, making them significantly worse off than before. Many of them are now unable to save any money, which reduces the overall level of capital in society, thereby inhibiting the ability of businesses to become more productive.

It’s even worse than that. Think about those 10,000 people. They are now no longer in the private sector producing wealth. They have become dead weight as federal bureaucrats in that they are now dependent on the money extracted from the private sector. The same with the military-industrial complex, whose members are fighting those forever wars. The same with the people on the dole.
This is an excerpt from a larger article. You can read the entire piece here: https://www.fff.org/2019/01/23/a-rea...p-the-economy/
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