Minimum Wage, Obamacare and Unintended Consequences

Posted by PITHOCRATES - February 3rd, 2014

Economics 101

The Affordable Care Act greatly increased the Cost of Unskilled and Inexperienced Workers

The Affordable Care Act has changed the employment landscape.  In particular it changed a lot of people from full-time employees to part-time employees.  Especially at entry-level jobs.  Or minimum wage jobs.  Jobs that may be physically demanding but require minimum skill or experience.  Making them ideal for unskilled and inexperienced teenagers entering the workforce.

Not everyone, though, is a teenager in these minimum wage, entry-level jobs.  Some adults find themselves in them, too.  Older adults.  Single parents.  Widows.  Widowers.  People whose circumstances have changed.  And who don’t have the skills or experience for other employment.  So they find themselves struggling to get by on their entry-level, minimum wage job.

Then the Affordable Care Act (i.e., Obamacare) made their struggle more difficult.  For it required employers to offer health insurance to anyone working 30 hours or more per week.  Greatly increasing the cost of unskilled and inexperienced teenagers.  And their other entry-level, minimum wage workers.  So they did the only logical thing.  They cut their hours below 30 hours per week.  Shrinking the paychecks of both teenager.  And those who are struggling to live on their minimum wage paychecks.

The Unintended Consequences of Obamacare changed Full-Time Workers to Part-Time

We call it unintended consequences.  When a government program to solve one problem creates another problem.  In an attempt to give people with insufficient income to buy health insurance Obamacare forced their employers to provide health insurance for them.  This caused employers to cut hours for these employees.  To keep the cost of their entry-level, minimum wage workers from rising.  Thus reducing their insufficient income even further.

The rollout of Obamacare did not go well.  In the effort to give people affordable health insurance a lot of people actually lost the health insurance they liked and wanted to keep.  Another unintended consequence.  (Unless the Democrats designed the Affordable Care Act to destroy the private health insurance industry as many believe then things are going exactly as planned as people may soon start demanding that the government step in and provide national health care).  Causing a bit of a problem for the political party that gave us Obamacare.  The Democrats.  In the upcoming midterm elections.

It’s one thing causing people with individual insurance policies to lose their health insurance that may or may not have voted for you.  But to further impoverish the impoverished working those entry-level, minimum wage jobs was another.  For thanks to endless class warfare the Democrats put the impoverished into the Democrat camp.  So they needed to do something to replace the income they lost when Obamacare changed them from full-time to part-time employees.  And chose further class warfare.  By forcing those ‘rich’ employers to pay their entry-level, minimum wage workers a ‘living wage’.  By increasing the federal minimum wage.

Obama wants to Raise the Minimum Wage to replace Earnings lost when Obamacare made Full-Time Workers Part-Time

In the State of the Union address President Obama said he wanted to raise the federal minimum wage to $10.10.  But why $10.10?  The current federal minimum wage is $7.25.  And if you earned that working 40 hours each week for 50 weeks (assuming you take 2 weeks off over the year for personal reasons, holidays and vacations) that comes to $14,500 per year.  Raising the minimum wage to $10.10 brings those annual earnings to $20,200.  Or $5,700 more at the higher wage rate.  It’s a lot of money.  But probably not enough for someone to quit a second job.  For if someone is working 20 hours a week at a second job that would come to an additional $7,250 a year.  If they work 30 hours a week in a second job that would come to an additional $10,875 a year.  And some people have to work 70 hours or more a week to approach a ‘living wage’ when they don’t have the skills or experience for a job that pays more than an entry-level, minimum wage job.  So raising the minimum wage to $10.10 an hour probably won’t solve everyone’s financial woes.  But it will do something else.

If people who were working 40 hours a week went to working only 29 hours a week after Obamacare they would lose 11 hours of pay.  At the current minimum wage that comes to $79.75 less in their paycheck each week.  A significant amount for someone struggling to make it on something less than a ‘living wage’.  But look at what happens when we raise the minimum wage to $10.10 for those 29 hours.  If we multiply the additional $2.85 per hour to those 29 hours that comes to an additional $82.65 a week.  Which is a little more than the $79.75 they lost when Obamacare cut their hours.  So it would appear that the new push to raise the minimum wage to $10.10 is to put the money the Obama administration took out of these workers’ paychecks back into their paychecks before the fall midterm elections.  So they still won’t be angry and vote Republican because of what the Democrats and their Affordable Care Act did to their paychecks.

They want to sound compassionate to those with insufficient income by wanting to raise the minimum wage to replace what they took away from them with Obamacare.  To give these people a ‘living wage’.  For the current minimum wage is actually worth about 20% less than it was during the Reagan administration.  When it was $3.35.  Wait a minute, you say.  How can $7.25 be worth less than $3.35?  Because of the Democrats’ embrace of Keynesian economics.  The government wants to print money to spend.  To provide economic activity when the private sector is not.  And when President Nixon decoupled the dollar from gold in 1971 they ramped up those printing presses.  And have been depreciating the dollar ever since.  Because they made the dollar worth less and less over the years the purchasing power of the federal minimum wage fell.  Even when people were earning more dollars.  And raising the minimum wage won’t address this problem.  Only voting the Keynesians out of office will.

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FT207: “Raising the minimum wage only discourages upward mobility.” -Old Pithy

Posted by PITHOCRATES - January 31st, 2014

Fundamental Truth

McDonald’s is one of the Few Places that will hire an Unskilled and Inexperienced Person

Teenagers want a lot of things.  A car.  A smartphone.  Nice clothes.  Popularity.  Fame.  But one thing you’ve never heard a teenager says is this.  “I love working at McDonald’s.  I wish I could work here forever.  If only they would raise the minimum wage so I could.”

A lot of teenagers work at McDonald’s.  Why?  Because it’s one of the few places that will hire an unskilled and inexperienced person.  Because a job at McDonald’s is an entry-level job for a teenager new to the workforce.  A place they can earn a paycheck without having the ability to do anything.  Where they are taught everything they need to know on the job.  While McDonald’s pays them to learn.

Some teens will work enthusiastically at McDonald’s.  Enjoying their first job.  And earning their first paycheck.  So they don’t have to depend on Mom and Dad to buy them what they want anymore.  While others hate these jobs.  And refer to them derisively as ‘hamburger flipper jobs’.  They don’t want them.  And those who do work there do so reluctantly as they are a lot like that teenager.  They are unskilled and inexperienced in doing anything else but an entry-level job.

There is a Direct Correlation between Paycheck Size and Skills & Experience

Some teens work while in high school.  Some go on to college and work at another McDonald’s on campus.  Or at some other entry-level job that requires no skills or experience.  So they can learn workplace skills.  Gain working experience.  And learn the responsibilities that come with having a job.  Others get bored or want more money.  And use their newly acquired skills and experience to get another job.  After graduating from high school.  Perhaps entering an apprentice program in the skilled trades.  Or becoming a line-cook somewhere.  Gaining more experience.  And earning more money.  To become an electrician.  Or go to culinary school and become a chef.  Even open his or her own business.

These people are moving up.  Which is why we call this upward mobility.  They go from an entry-level job to one requiring more skills and experience that pays better.  They may go to night school or college to gain skills that will help them get a job requiring greater skill and/or experience.  Which pays even more.  Allowing them to look to and plan for their future.  Acquiring education, skills and experience along the way that opens the door to bigger paychecks.  Which you need to raise a family.  Have a nice house.  A new car.  Nice vacations.  To save for your children’s college education.  And your retirement.

You can’t have many of these things, though, if you never leave that entry-level job.  If you stay in that entry-level job you’ll never be an engineer, a doctor, a pilot, a millwright, a pipefitter, an accountant, a hotelier, an architect, etc.  And you’ll never get the larger paycheck that comes with these professions.  For there is a direct correlation between paycheck size and skills & experience.  The more you have the more you’re worth.  It’s just that simple.  Which is why it is a good thing that entry-level jobs pay the lowest wages.  For it encourages upward mobility.  Mastering the skills at one level.  And then moving on to master new skills at a higher level.  For we want people to move on so there are pharmacists to fill our prescriptions.  Dentists to fix our cavities.  Engineers to build and maintain our cellular networks.  Aircraft mechanics to keep our planes safe.  Etc.  None of which we would have if no one left their entry-level job.

Staying in an Entry-Level Job for 5 Years could put you 5 Years behind your Earning Potential

The Democrats always want to raise the minimum wage.  To get votes by giving people more stuff.  In the case of a higher minimum wage it’s a bigger paycheck.  They’ll cite the single mother of 3 struggling while working 2 jobs to support her children.  And say it’s just not teenagers working these entry-level jobs.  These are single mothers and single fathers who are barely making it.  And we need to give them a living wage.  But paying people more for these entry-level jobs is the worst thing you can do for them.  For it removes the incentive to leave these jobs.  Jobs that these employees don’t love to begin with.

President Obama wants to raise the minimum wage to $10.10 per hour.  Others want to raise it higher.  Some would even like to make it $40,000 or $50,000 a year.  But imagine the affect of that on kids graduating high school who want a lot of things that Mom and Dad won’t buy for them.  If you can have a lot of money now instead of working hard to earn that same amount of money later what do you think these kids and young adults will do?  A lot of them will take that bigger paycheck now.  And maybe work there 3-5 years enjoying life.  Flipping those burgers.  While some of their former classmates from high school will have started a career.

Raising the minimum wage only discourages upward mobility.  Life is short.  Time passes fast.  Staying in an entry-level job for 5 years could put you 5 years behind your earning potential.  It could change where you live.  And what school your kids go to. Because that smaller paycheck will limit your options in life.  A higher minimum wage may sound nice.  But it would be the death knell of any hope or aspiration you ever had.  People stay in jobs they hate because they don’t like leaving their comfort zone.  If they have decent pay and benefits they will endure some of the worst jobs ever (bad boss, office politics, a coworker they can’t stand, dealing with unruly customers, etc.) because it is easier and less scary than finding a new job.  These people are never happy.  They never truly enjoy life.  And they just dread Mondays.  Raising the minimum wage will only condemn more people to this fate.

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FT183: “Conservatives believe chivalry is not dead while liberals want to destroy the dreams of little girls.” —Old Pithy

Posted by PITHOCRATES - August 16th, 2013

Fundamental Truth

Liberals help Women delay Living Happily Ever After as Long as Possible

Conservatives believe in customs.  And traditions.  Those things that are tried and true.  Like the institution of marriage.  The foundation of the family.  Where a man and a woman pledge their love to each other.  To have and to hold.  From the day of their wedding forward.  For better.  For worse.  For richer.  For poorer.  In sickness and health.  To love and to cherish.  Till death do they part.  All the while living happily ever after.  As husband and wife.

Conservatives do not believe chivalry is dead.  Conservative men still place women on pedestals.  They stand up when a lady enters the room.  Holds her chair for her.  If it’s raining or cold outside a conservative will give his coat to her.  And open and close the door for her.  A conservative will shield her from danger.  And protect her honor.  Always treating her like a lady.

A liberal feminist woman, on the other hand, will say, “Don’t you dare open that door for me.”  For she is fiercely independent.  And wants nothing to do with chivalry.  She wants to be treated like a man.  Liberals, in fact, want women to have a career first then maybe consider getting married.  Or having children.  And not have the fairytale wedding all girls dream about.  Looking forward to the day when her Prince Charming will come along.  And sweep her off her feet.  No.  Liberals want to kill that dream.  And kill all romance.  Giving women birth control, access to abortion and the morning-after pill so she can avoid living happily ever after as long as possible.

Liberals believe being a Part-Time Mother is Good Enough

Conservatives don’t like high taxes.  Because a generation ago taxes were low enough that most everyone could raise a family on a single income.  But with the rise of the welfare state taxes have steadily risen.  Taking more and more of our paychecks.  Making it difficult for a woman to stay at home and be a full-time mother.  Which is why, today, many women are forced to be part-time mothers.  So they can earn a second income.  So they have enough left over in their paychecks after paying for the welfare state.

The family is the center of the conservative’s world.  Which is why they work hard to establish a career.  And vote to keep the tax bite as small as possible.  So they can afford to buy a house.  And begin raising their family.  With the mother staying home to be a full-time mother.  To give her children the best possible of all childhoods.  Having all of their material needs met.  A nurturing environment.  Created by a loving father and mother.  Who teach their children the customs and traditions that their parents taught them.  And help them with their school work so they get the best possible education.  So they, too, will one day be able to earn enough to raise their own family.

Liberals, though, believe in childcare.  In fact, they want state-funded childcare so women can return to work as soon as possible after having their children.  Leaving part of the raising and nurturing of their children to strangers.  As if children are a burden.  Like cutting the grass.  Something that they can farm out to other people.  As a working mother has better and more important things to do.  Like earning a paycheck.  Which is why liberals want state-funded childcare.  Because they believe being a part-time mother is good enough.  A working mother’s children may disagree with that.  But liberals are old-fashioned in this one respect.  They believe children should be seen and not heard.

Liberals encourage Women to stay Strong, Independent and Alone

Conservative policies tend to favor families.  They promote families.  While liberal policies make the family obsolete.  By trying to make husbands and fathers obsolete.  Liberal policies allow a woman to build a career instead of a family.  Birth control, access to abortion and the morning-after pill allow her to engage in consequence-free sex.  Liberal policies enable so many women to give it away for free that men see no reason to marry them.  Women earn their own money.  And with no children there’s no need for a woman to get married.  So she can stay strong and independent.  And alone.

Of course, today, there are a lot of women starting their families in their forties.  As they’ve discovered they want more than just to be strong, independent and alone.  They want a family.  They want children.  Their own children.  Before it’s too late for them to have children.  As waiting too long physically complicates things both for the mother and the child.  And there can be some emotional issues.  For a young child entering school with a 50-year old mother will be different from other children who have parents in their twenties.  And when they graduate high school their parents will be ‘grandparent’ age.  Perhaps not being there for their children when they start raising their own families.

Conservative policies foster the bonds between parents and children.   And grandchildren.  While liberal polices weaken these bonds.  By encouraging a woman to exchange a career and casual sex for marriage and a family.  Who may later in life discover that she wants to be married and raise a family.  But because she was a devoted follower of devout liberal feminist dogma those things are harder now.  And most likely she will have to do them alone.  As the men these women rejected to pursue their career likely found other women who wanted to get married and raise a family.  And even if those marriages didn’t last happily ever after they probably have grown children from it.  And may not be interested in doing it all over again.  As their children may still be consuming a large percentage of their paycheck.  Especially if they’re going to college.

And yet with every election cycle it is the conservatives that hate women and children.  Not the people that are destroying women’s lives by telling them to forget their silly childhood dreams of meeting prince charming, having the beautiful wedding and raising children.  Instead they should stay strong, independent and alone.  Forcing many women to miss or delay the greatest experience of their lives.  Raising their family.

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Social Security Taxes

Posted by PITHOCRATES - January 14th, 2013

Economics 101

The Employer has to Write the Check to pay the Full Amount of Social Security Taxes

Social Security taxes are one of the biggest expenses businesses have.  If you look at your paycheck you will see some withholding taxes.  Included in those taxes you will see Social Security.  Or FICA (which includes both Social Security and Medicare withholding taxes).  These are your contributions for your retirement.  But you don’t pay them.

The Social Security contribution is ostensibly split into two parts.  There’s the employee contribution (those taxes withheld from your paycheck).  And the employer’s matching contribution.  But the employer pays the whole thing.  Just like employers pay for unemployment taxes, workers’ compensation insurance, disability insurance, health insurance (for the most part, some employees contribute a portion these days), life insurance, paid vacation, paid holidays, paid sick days and pension contributions (for those who still pay pensions).  All of these benefit the employee, not the employer.  Yet the employer picks up the tab for these expenses.  And Social Security is no different.

Actually, there is one difference.  All of these employer-paid expenses reduce the employer’s taxable income.  Except one.  The employee’s Social Security contribution.  The employer has to write the check to pay the full amount of these taxes.  Paying the full amount (both employer’s and employee’s contribution) reduces the amount of cash they have on hand to pay their other bills.  The full amount of these Social Security taxes influence hiring decisions.  And once they pay these taxes it’s income they’ve earned they no longer have.  But they still pay income taxes on it.  Despite the employee paying income taxes on this same income.

One of the Largest Expenses a Business has is Social Security Taxes

So the employee does not pay Social Security taxes.  It’s just another on a long list of expenses an employer has to pay.  That said the employee’s contribution does reduce his or her net pay.  When President Obama cut the employee’s Social Security tax rate 2% the employee’s net pay increased.  While the employer matching portion remained at the same rate.  Yet the check the employer wrote for Social Security taxes reflected this 2% reduction.  Because the employer pays all of these payroll taxes whether it’s unemployment, workers’ compensation or Social Security.  The following chart summarizes sample labor costs.  Both at the Obama tax cut.  And after it expired.  For an employee with a gross annual pay of $66,360 (for 47.4 weeks of work plus 4.6 weeks paid time off).

Note the 2nd largest cost after health care is Social Security.  Both the employer’s and employee’s portion add up to $9,027 (both at 6.2%).  Which is a lot of money.  If an employer has 15 employees that Social Security check they have to write totals $135,408.  Half of which does NOT reduce an employer’s taxable income.  Assuming an effective tax rate of 26% (for a small business owner filing as a subchapter S or an LLC where their business earnings flow through to their personal tax returns) that’s an additional $17,603.04 ($4,514 X 15 X 26%) of taxes the employer has to pay on income that they receive no benefit from.

Under the Obama tax cut this employee had $1,456 less withheld from his or her paycheck.  Or $52 less a week.  Or $5.60 less a workday.  Almost enough to pay for lunch.  Or enough to make you stop going out to lunch.  For the 15 employees that’s $780 pulled out of the local economy each week.  For a city with 500,000 workers that’s $26,000,000 pulled out of the city economy each week.  That’s a lot of economic activity.  That can provide a lot of jobs.  So why let the Obama tax cut expire when they have such a positive effect on the economy?

Social Security is Going Bankrupt thanks to an Aging Population

Because Social Security is going bankrupt.  And the solvency of Social Security isn’t helped when you cut the only funding mechanism for it.  The Social Security tax.  That 2% reduction in the tax rate cost the retirees some $176 billion each year.  That’s why they let the Obama tax cut expire.  $176 billion is a lot of money for a program going bankrupt.  And it’s a lot of money for a government that runs a deficit.  Which is the real reason why they wanted to let the Obama tax cut expire.

When the government needs to pay for their deficit spending the Social Security Trust Fund is just too tempting to pass up.  All those payroll taxes flowing into the Social Security Trust Fund.  Just sitting there.  Not being spent.  It’s just too much for a politician to resist.  So they raid the Trust Fund. They take that cash and spend it.  Leaving behind a bunch of IOUs.  Treasury bonds.  The kind that can’t be bought or sold.  Non-negotiable.  Which means the only way to redeem these bonds (and to repay the Social Security Trust Fund) is by raising taxes, further borrowing or reducing benefits.  Such as raising the age when you can start collecting Social Security benefits.  All of which we’ve used to try to forestall the inevitably bankruptcy of Social Security.

So Social Security is a very complex thing.  Social Security taxes are a tremendous cost burden on businesses.  And they pull a lot of spending money out of the economy.  Reducing economic activity.  Yet as much money as they pull out of the economy it’s not enough.  Social Security is still going bankrupt.  Thanks to an aging population (the number of beneficiaries is growing at a greater rate than those entering the workforce to pay for these benefits).  And even though the rate of money flowing into the Social Security Trust Fund is falling it’s still large enough for politicians to raid to pay for other out of control spending obligations.  Ensuring that Social Security will go bankrupt no matter what tax rates are.

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FT141: “Liberals are absolutely sure they’re right and you’re wrong even though they can’t explain why.” —Old Pithy

Posted by PITHOCRATES - October 26th, 2012

Fundamental Truth

Jobs are Everything in an Economy

In the movie Apollo 13 starring Tom Hanks it was a smart electrical engineer that saved the astronauts.  Who explained that nothing they did would save the astronauts unless they figured out how to make the limited remaining power last until reentry.  He said power was everything.  And if it ran out before reentry the astronauts wouldn’t make it back alive.  So heeding the advice of the smart electrical engineer they shut off all power to save what they had for reentry.  Which meant they had no heat.  And had to do some course corrections without the computer, requiring some complicated flying skills.  Because they listened to the smart electrical engineer they had just enough power left to make it to reentry.  And the astronauts made it back home alive.

An economy is similar in a way.  For it, too, has something that is everything.  And without it nothing else matters.  Jobs.  Jobs are everything in an economy.  For they are the only way we can afford things.  A house.  A car.  Food for our families.  The heating bill.  Fuel for our vehicles.  Electronic devices.  Our wireless/cable bills.  Coffee at Starbucks.  Clothing.  Shoes.  Pet food.  Etc.  None of these would be possible without a job.  And a paycheck.  Even our government benefits.  Paid for with taxes.  Deducted from our paychecks.  Without people working none of these things would be possible.  Because jobs are everything.

Money is not everything.  We use money to make it easier to trade our skills with others to get the things we want.  The more our skills are in demand by others the more we can trade them for other things.  Which is why doctors have more things than high school kids working an entry level job.  For there are a lot high school kids with entry-level job skills.  But not so many people with doctor skills.  So we pay doctors more.  And high school kids less.  Because doctors have more valuable skills than high school kids.  And therefore can trade those skills for a lot of other things.  So it’s not the money that matters.  It’s the skills that they can trade for money that matters.  Provided there is a job for them to fill.  Once again coming back to jobs.  Which are everything.

Birth Control and Abortion are the Pressing Social Issues that keep College Students Awake at Night with Worry

If the government printed money and paid everyone in the nation the equivalent of a doctor’s earnings it would not be the same thing.  Because if everyone was paid the same no matter their skill level no one would go through the costs and hard work to become a doctor.  Because working harder to acquire those skills wouldn’t provide them anything more than they can get for doing nothing.  Giving people money for skills they don’t have diminishes the values of those skills.  So people won’t work hard to get those skills.  With less skillful people in the workplace there will be fewer people to provide the goods and services we want to buy.  Leaving a lot of empty store shelves.  And high prices because the things you want will be very hard to find.

This is why high school kids go to college.  Take on a lot of student loan debt.  To get the skills that will let them get the kind of jobs that will let them earn a lot of money.  Granted, a lot of kids go to college for the fun.  First time away from home.  Binge drinking.  Casual sex.  Drugs.  But they’re also there for the big payday a college education is supposed to give you.  However, if the jobs aren’t there neither is that big paycheck.  But that student loan debt is.  Who’s to blame for the lack of jobs?  In part these college kids.  Who typically vote Democrat.  The party that favors social justice, access to birth control and abortion, gay marriage, the decriminalization of marijuana, and other pressing social issues that apparently keep college students awake at night with worry.  So the Democrats pursue these issues to get the youth vote.  Instead of making a favorable climate for business.  So they can grow and create the jobs these college students want and are going to college for.

The problem is that these kids don’t understand the fundamentals of economics.  They don’t understand business.  Or the affect of taxes and regulatory compliance costs on a business’ bottom line.  And they don’t seem to understand that they are not the only ones who want to make money.  So do business owners.  And if the tax burden and cost of regulatory compliance reduce the bottom line it makes it more difficult to meet payroll.  And pay their other bills.  So they will not grow their business.  They will not create jobs.  They will not offer pay raises and bonuses.  And may even lay off people.  When they do these things college kids call these business owners greedy.  While their desire for a high-paying job does not make them greedy.  Funny how subjective greed can be.

Liberals are Deep Critical Thinkers though they think about few things other than a Woman’s Reproductive Parts

In the current election cycle the Democrats don’t have a good record to run on.  The current economic recovery, if we can call it a recovery, is about the worst on record.  The biggest drag on the economy?  Jobs.  There are fewer of them today than when President Obama took office.  And his policies haven’t help.  Especially Obamacare.  Which has caused business owners to slam the brakes on hiring.  As they have no idea of the final total cost impact of Obamacare.  So having destroyed job creation, the Democrats have turned to other tactics.  Fear and loathing of Republican candidates.  Such as the so-called war on women.  Where the Democrats are warning women that if the Republicans win the upcoming 2012 election women will lose their birth control, their access to abortion, their cancer screening, their freedom.  Life for women under the Republicans, the Democrats say, will be little different than living under the Taliban.

Of course, this isn’t true.  For it didn’t happen under the 20 years of Republican rule of George W. Bush, George H. W. Bush and Ronald Reagan.  But it doesn’t stop the Democrats or their celebrity endorsers from warning about the horrible things that will happen to women should the Republicans win.  And they speak with such certain authority.  For they know everything.  At least, that’s what they think.  It would be interesting, though, to ask them a few questions.  So they can demonstrate their mastery of things economic.  By explaining the stages of production.  Why stimulus spending raises prices.  To explain the business cycle.  How recessions correct prices by wringing inflation out of them.  How keeping interest rates artificially low creates asset bubbles.  Like housing bubbles.  And how bubbles create recessions when they burst.  To explain what is Say’s Law.  To name an economic school besides the Keynesian school.  To explain the Keynesian school of economics.  The number of taxes a business must calculate and pay with every payroll.  How excessive government borrowing diverts investment capital from the job-creating private sector.  Or how the growth in government spending cannot increase greater than the population growth rate.

As they don’t teach any of this in today’s public schools and most universities they probably won’t be able to explain any of these things.  Yet liberals are absolutely sure they’re right and you’re wrong.  Even though they can’t explain why.  For they are smarter.  Brighter.  More progressive.  Enlightened.  And deep critical thinkers.  Though they think about few things other than a woman’s reproductive parts.  Even when the real unemployment rate (the U-6 number that counts everyone that can’t find a full-time job) currently stands at 14.7%.  Which is serious.  As jobs are everything.  And sometimes you can’t have everything you want.  Sometimes you must sacrifice.  And put in place policies that are business friendly.  Cutting back on the social spending.  At least until businesses start creating jobs again.  And the working tax base can once again support that social spending.

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FT123: “It takes both a tax rate and economic activity to generate tax revenue.” – Old Pithy

Posted by PITHOCRATES - June 22nd, 2012

Fundamental Truth

There is an Incredible Amount of Economic Activity behind a 20-Ounce Bottle of Soda Pop 

Have you ever considered all of the economic activity that had to happen before you could buy a cold 20-ounce bottle of soda pop from a convenience store?  First of all, building that convenience store itself required a lot of building supplies.  And construction workers to build it.  People in factories hired people and bought materials to build the food equipment, coffee equipment and coolers.  The people utilities hire make sure the store has access to electric power, gas, water, sewage, telephone and Internet access.  Transportation companies deliver food and merchandise to the store.  Who buy trucks and vans from dealerships who buy them from automotive manufacturers.  They hire drivers for their vehicles and workers for their warehouses.  They buy fuel for their vehicles.  Refineries provide the fuel and they hire people and buy petroleum oil.   Which provides more jobs in the pipeline, railroad, trucking, shipping and oil drilling industries.  Who all hire people and buy things built by other people.

The food and merchandise came from plants that hire people and buy material.  The one brand of soda pop you purchase hires many employees and operates one or more bottling plants.  They buy advertising that provides jobs for others.  They buy cans and bottles that come from suppliers who make them out of raw material that still others extract out of the ground.  These suppliers hire even more people and buy even more materials.  There is label or artwork on the cans or bottles that other people are hired somewhere to provide.  Their offices operate with computers and software built, shipped, installed and programmed by others.  They maintain a web presence which creates further jobs.  Their employees use smart phones the company purchased from others who hire people and material to build them.  And hire even more people to maintain and operate the networks.

And the list goes on.  There is an incredible amount of economic activity behind that 20-ounce bottle of soda pop.  In a vast complex of horizontal and vertical business relationships.  Each providing their little part in the big picture that lets us walk conveniently into a convenience store whenever we want and buy a cool and refreshing beverage in a 20-ounce bottle.  Now multiply this for every product in that store.  And for every store in the country.  Millions of people working in millions of jobs earning a paycheck.  And each paycheck deducts payroll taxes.  Such as Social Security, Medicare, state unemployment, federal unemployment and workers’ compensation.  Each check (in most states) deducts federal and state income withholding taxes.  Some cities even deduct a city withholding tax.  Businesses pay taxes on their earnings.  On their personal and real property.  Just as homeowners pay real property taxes on their homes.  And there’s more.

In 1992 the Middle Class paid approximately 40% of their Total Earnings in Taxes

If you look at your cellular bill there are taxes itemized on it.  When you go to the store you pay a sales tax on most purchases other than food.  Some people even pay a city sales tax.  If you buy cigarettes or drink alcoholic beverages you pay an excise tax.  Or sin tax.  They tax the gasoline you buy for your car to pay for the roads we drive on.  If you buy sugar in the store you’re paying a sugar tariff.  If you make a capital gain on your investments you pay a capital gains tax.  And on and on.  Throughout that complex of horizontal and vertical business relationships there are taxes.  Just as consumers pay taxes throughout their ordinary day.  It adds up.  According to CATO, in 1960 the middle class paid about 30% of their total earnings in taxes of every kind at every level.  In 1992 that number rose to 40%.  And is no doubt rising.

Staying with the 1992 number, this means for every dollar you earn you ultimately can only spend 60 cents of that dollar on you.  The other 40 cents goes to some governmental coffer.  Or looking at it in another way say you gross $800 a week.  Your net pay will be less for the taxes you see withheld from your paycheck.  But when you add the other taxes you don’t see you really only get to spend $480 of that $800 you earned.  Or if you gross $41,600 annually you’ll be paying approximately $16,640 in taxes of every kind at every level of government.  In a word – ouch.

Yeah, we all know that we pay a lot in taxes.  Most of us are just resigned to it.  But with all these debt crises (at the city, state, federal and international levels) it does make you think a little more about all those taxes we pay.  And the cries to get the rich to pay their ‘fair share’.  The amount of taxes the rich pay are even worse.  The percentage numbers may be lower if they pay a lower capital gains tax rate on an investment portfolio, but they are paying from hundreds of thousands to hundreds of millions in tax dollars.  Which dwarfs our $16,640.  Yes, they can afford it more than those less rich can.  But that misses an important point.  Tax rates alone do not make tax revenue.  You have to have a prosperous economy, too.

The more People that are Working the more People pay Payroll, Income, Excise and Property Taxes

You cannot tax yourself to economic prosperity.  For if the number of jobs remains the same while we increase tax rates that will only leave businesses and consumers with less money to spend to create economic activity.  And when they spend less in economic exchanges all those taxes we apply to those economic exchanges will generate less tax revenue.  This is why cities, states and national governments have deficits during poor economic times.  Because there is less economic activity to tax.  All you have to do is some simple arithmetic to see why.

Say there is a city with 250,000 working middle class people.  Each earning on average $41,600.  So each contributes $16,640 in taxes at the various levels of government.  Or $4.16 billion in total tax revenue.  Now say a recession comes along.  And the city suffers 10% unemployment.  Putting 25,000 people on the unemployment rolls.  This will reduce that tax revenue down to $3.74 billion.  Or reducing tax revenue at every level by $416 million.  Just about a half billion dollars in lost tax revenue.  All while government benefits increase at every level to cover those 25,000 unemployed.  Add a second city and that could add up to $1 billion in lost tax revenue.  Ten cities could reduce tax revenue at all levels by $5 billion.  Causing deficits at the city, state and federal levels.  It adds up.  And they cannot make up those shortfalls by increasing tax rates.  Because higher taxes reduce economic activity.  Which is what generates those tax revenues.

Now consider the alternative.  Say the government removed some costly regulations for businesses.  Or they repealed Obamacare.  But only removed some costly regulations while leaving tax rates as they are.  This business-friendly environment would encourage businesses to rehire people.  Let’s say they rehire all 25,000 laid-off employees.  If they did they would, of course, restore that lost $416 million in tax revenue.  Without raising tax rates on anyone.  The point being that you can’t generate tax revenue without economic activity.  So any policy that would discourage economic activity would reduce tax revenue.  For the more people that are working the more people pay payroll and income taxes.  The more people that are working the more money consumers will have to spend and pay taxes on their purchases.  And the more people that are working the more houses they will buy which would bring in more property taxes.  Higher tax rates can’t make this happen.  Only economic activity can.

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Market Economy, Command Economy and Market Failures

Posted by PITHOCRATES - April 30th, 2012

Economics 101

Money replaced the Barter System making it Easier to Trade Freely and Voluntarily

We did our first economic exchanges in a market economy.  Agricultural advances gave us our first food surpluses.  These food surpluses gave people free time.  To do other things besides growing food.  Like developing an alphabet and writing.  Mathematics.  A code of laws.  And we made material goods.  Like pottery.  Farming tools.  Processing olive oil for lamps.  People who were good at making one thing made a lot of that one thing and traded with other people.  Who were good at making one thing themselves.  These people met.  And traded.  Freely and voluntarily.

Free trade.  A key element of the market economy.  Where people freely met and traded the things they made.  With other people who are freely trading the things they made.  Free trade came before money.  We bartered our first trades.  Trading goods for goods.  We then created money to make our trades easier.  Reducing the search time to find people to trade with.

Money is something that can store value.  Which allowed people to trade their goods for money.  Then they took that money and traded it with someone else.  To get something they wanted.  Money allowed people to spend less time finding people to trade with.  Because you didn’t have to find that one person that had what you wanted AND was willing to trade it for what you made.  Money allowed us to advance beyond the barter system.  Which proved more and more inefficient as we produced more and more goods.

Because of Market Failures the Government taxes to Provide Public Goods and Eliminate the Free-Rider Problem

As we produced more and more goods our standard of living rose.  We had more things in our lives that made that life easier.  More comfortable.  And more enjoyable.  Civilizations with a bustling market economy were great places to live.  Because there were a lot of nice things to make life better.  Which other people saw.  From beyond the civilization.  And they wanted what they saw.  And they took it.  By force.  Raiding parties would enter a developed civilization and rape, murder and plunder.  So to enjoy the amenities of an advanced civilization required the ability to protect your civilization.  Which led to one of the first market failures.  The failure of the market to provide city defenses through the free and voluntary trading of people engaged in economic activity.

We call it a market failure because building city defenses and creating an army are things the market economy can’t provide.  One person can’t make a fort or an army.  And trade it with someone else.  It’s too big.  It takes a lot of people and a lot of effort to make these things.  But it doesn’t take everyone.  If everyone else is contributing one person could skip contributing.  That person would still be able to enjoy the benefits of that fort and army.  Living in safety.  And enjoy living in safety for free.  Something we call the free-rider problem.  The fort and army are examples of public goods.  Things the free market can’t provide.  Or that the free market fails to provide.  Not that the market is broken or operating poorly.  It’s because people rarely act freely and voluntarily to benefit other people.  Because any time and money spent doing this is time and money taken away from their own families.  Which would bring hardship to them.  So the government provides these things that are necessary AND cause personal hardship to individuals to provide.  The government forces everyone to contribute.  Which minimizes the hardship each individual must bear.

Some in power like to take this further.  And call things that people can provide for themselves that benefit only themselves public goods, too.  Such as health care.  Higher education.  Housing.  Food.  Everything the people can buy for themselves by working to earn the money to buy these things.  And when they do they alone enjoy the benefits of these goods.  These goods they incurred hardships to obtain.  By working to earn a paycheck.  Or sacrificing other things to have these things instead.  It’s their call.  Their choice.  A choice they enter freely and voluntarily.  Therefore these things are not public goods.  But that doesn’t stop some people from acting like they are public goods.  Usually to help them win an election to office.  Or to overthrow the government.

A Command Economy reduced Economic Activity and Introduced a Police State

Civilizations with a bustling market economy were great places to live.  If you had talent and ability.  If you did then you could work hard and trade your talent and ability for a paycheck.  That you could use to trade for other things in that bustling economy.  Those with great talent and ability would be able to trade these for great paychecks.  Those with less talent and ability would be able to trade these for lesser paychecks.  Which, of course, caused income inequality.  Which is a handy thing to exploit if you want to seize power.  So you can enjoy the best things the civilization has to offer.  When your talent and ability only can trade for one of those lesser paychecks.

History is full of people trying to seize power.  So this is nothing new.  What was new was the way these people seized power.  By using the teachings of Karl Marx and Friedrich Engels.  As they wrote in the Communist Manifesto.  Who attacked market economies.  And capitalism.  Saying that the new middle class, the bourgeois, maximized profits by exploiting the working class.  The proletariat.  Which they said was unfair.  And that the only way to make things fair was to destroy the very concept of private property.  Because only the bourgeois accumulated private property.  The proletariat had none.  And only got poorer and poorer while the bourgeois got richer and richer.  Under their system, then, nothing belonged to the person.  Everything belonged to the state.  If you created something with your talent and ability it belonged to the state.  And then the state determined how to distribute the fruit of your labors.  Basically according to the rule ‘from those according to ability to those according to need’.  Those with the greatest need got the most stuff.  And those with the most ability worked the hardest.  Well, you can just guess how that worked out.  Everyone tried to show as little ability as possible and the greatest need as possible.

Because people weren’t the masters of their talent and ability anymore they couldn’t trade freely and voluntarily.  Which meant there was no longer a market economy.  Instead there was a command economy.  Where the government made all the decisions.  What to make.  How to use resources.  Where people lived.  Where they worked.  And what prices they paid for the things in the state-run stores.  Which had shelves full of things no one wanted to buy.  And empty shelves where the staples went (soap, toilet paper, etc.).  Because the government decided what to bring to the state-run stores.  And in what quantity.  Not people trading freely and voluntarily.  Which reduced economic activity.  Reduced living standards.  And introduced a police state.  Because anyone who had a chance to escape to a market economy did.  Which is why the East Germans built a wall in Berlin.  To keep their people from escaping their command economy.  And going to the market economy across the street.

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FT112: “You can have liberty or equality but you can’t have both.” -Old Pithy

Posted by PITHOCRATES - April 6th, 2012

Fundamental Truth

Higher Taxes were Okay when it was Someone Else’s Money but they’re Just Plain Unfair when it’s your Money

People throw around the word ‘equality’ a lot.  Especially politicians.  To make life fair.  More egalitarian.  Where they make the rich pay their fair share.  For they won’t just voluntarily pay their fair share, will they?  Sounds fair, yes?  And just.  For no one should be ‘too rich’ when others have ‘so little’.  Of course the only people who agree with this are the ones who have ‘so little’.  Those who are ‘too rich’ are not all that supportive of using their wealth to help others be more equal.  Especially when the scale that measures what is ‘too rich’ is a sliding scale.  For someone believes a person is ‘too rich’ when they have more than he or she does.  And that holds true even if they win the lotto.

It’s open season on rich people.  Everyone attacks them.  For they are easy prey.  There are few of them.  So angering them won’t have a huge impact at the polls.  Which is why politicians whip up a fury of hate against them.  Which the people who have ‘so little’ are eager to join them in that hate.  Because they hate rich people.  They hate them a lot.  And there just isn’t anything good they can say about them.  They hate them so much that they buy lotto tickets in hopes of becoming rich people themselves.  Because that’s the only thing that can assuage their hate of rich people.  Becoming rich people.

People who have ‘so little’ will define anyone as having ‘too much’ if they have more than they do.  But if they win the lotto it’s a different story.  For rich people like them don’t have ‘too much’ then.  In fact they become downright greedy.  And become everything they once hated.  They don’t want to share their winnings.  (Even some in lotto groups who bought a winning ticket will try to keep that ticket for themselves, saying they bought THAT ticket with his or her own money and not the group’s money and therefore they don’t have to share THOSE winnings.)  And they sure don’t want to pay half of their winnings in taxes.  Higher taxes were okay when it was someone else’s money.  But they’re just plain unfair when it’s your money.  It’s just a fact of life.  People are greedy.  Even those with ‘so little’.

If there is No Incentive to Choose the Hard Jobs then Someone will have to Coerce People to ‘Choose’ Them

Consider this.  How hard would you work if you had to deposit your entire paycheck into a general fund?  Let’s call the fund the Equality Fund.  All workers everywhere on payday take their checks to the bank and deposit them into the Equality Fund.  And then they get their ‘equal share’ from that fund to live on.  So doctors and janitors earn different incomes.  But their distributions from the Equality Fund are the same.  NFL franchise players and workers in fast food earn different incomes.  But their distributions from the Equality Fund are the same.  Ditto for movie stars, rock stars, pop stars and lotto winners.  They all deposit their income into the General Fund.  And live on the same money as do hair stylists, Wal-Mart greeters, busboys and gardeners.  Even the people who don’t work.  Who love the Equality Fund.  Because with equality they don’t have to work.  Pretty sweet.  Don’t work.  And get paid the same as those who do work.  So they have no incentive ever to go to work.  And some of those who do work start asking themselves, “Why am I still working?” 

If there was an Equality Fund how hard would you work at your job?  Would you even work?  Would you choose a difficult career field that took a lot of costly education?  Would you work that hard to earn more money only to deposit those high earnings into the Equality Fund?  Instead of using those high earnings to buy a nice house?  In a nice neighborhood?  With nice schools for your kids?  Probably not.  Let’s say everyone is paid $50,000 from the Equality Fund.  Regardless of what you paid into it.  Either nothing.  Or millions of dollars.  Everyone lives on $50,000 per year.  Not too shabby.  Especially for low-income people or the unemployed.  They’re going to love the Equality Fund.  But those paying in millions will not be living in million dollar mansions.  Buying expensive cars.  Big boats.  Fly in their private jets.  Or even fly first-class.  No one will wear a Rolex watch.  Or other expensive jewelry.  Or high fashion.  No one will have these things.  Not when you’re raising a family on $50,000 per year.  Even if your work skills bring in the kind of high earnings that could afford them.  Because all of your pay will go into the Equality Fund.  Is that fair?  It’s equality.  But is it fair?

Let’s take this a little further.  Say everyone wises up and quits working.  Because they get the same amount to live on whether they work or not.  So why work?  Those who would like to tell the boss off and quit working are no doubt saying, “Sounds good to me.”  But this would cause a problem.  For what would you buy with your $50,000 annual allotment if no one worked?  For you need people to work if you want to buy a house.  A car.  A boat.  Fly.  Wear a watch.  Jewelry.  Clothing.  Sure, some will say we can just buy old homes.  And buy imported cars, boats, planes, watches, jewelry and clothing.   Sure, you could.  But you can’t import everything.  You can’t import road maintenance.  You can’t import port facilities and railroad infrastructure.  Or the people to operate them.  You can’t import restaurants complete with chefs, servers and busboys.  You can’t import emergency trauma care.  Maternity care.  Cardiac care.  A college education.  You just can’t import everything.  Someone has to work these jobs.  Even though they won’t get paid any more for working than they would for sitting at home collecting their allotment from the Equality Fund.  And when no one chooses to work at the jobs we can’t replace with imports someone will have to ‘help’ them change their mind.  To make them choose to work.  Even if it’s against their will. 

This is the problem with equality.  If we pay everyone equally no one will choose the hard jobs.  They’ll choose the easy jobs.  Worse, if we pay them equally whether they work or not they’ll simply choose not to work.  And if there is no incentive to choose the hard jobs then someone will have to coerce people to ‘choose’ them.

You can have Liberty or Equality but You can’t have Both

To choose your career you need liberty.  To choose to go to school to learn a high-paying skill you need liberty.  To work in a high-paying job you need liberty.  To keep your high-pay earnings you need liberty.  To work hard and to advance yourself to reach your personal goals you need liberty.  To play in the NFL you need liberty.  To be a movie star or rock star or pop star you need liberty.  To play the lotto and keep your winnings you need liberty.  To do all of these things you need liberty.  And one other thing that makes all of these things possible.  Inequality.

People working in fast food can’t earn the same as neurosurgeons.  Because if they paid their workers that much the cost of fast food would be prohibitive.  And no one would be neurosurgeons because it’s a lot less stressful working in fast food.  It doesn’t take years of training.  Or expensive malpractice insurance.  You don’t have to live with accidents that permanently disable or kill people.  Or deal with their aggrieved family members.  So that’s why we pay neurosurgeons so much.  It’s a very difficult profession that few choose.  Because so few choose this profession those that do are very valuable resources.  Demanding high pay.  And because they demand such high salaries it attracts the few who are willing to deal with all the things that come with being a neurosurgeon.  The high pay helps people choose this valued career despite the high personal costs.  So inequality is a good thing.  It provides incentive to choose the hard jobs.  Which is a good thing.  For who wants a low-paid person forced to be a neurosurgeon operating on his or her brain?

Everyone who has ever bought a lotto ticket agrees that inequality is a good thing.  They wouldn’t buy a ticket otherwise.  Because they buy those tickets to become rich.  To have more than other people.  That is, to be unequal.  Because everyone is greedy.  Just like football players, movie stars, rock stars, pop stars and, of course, lotto winners.  And not a one of them is going to work hard to develop their unique earning potential just to put the fruits of their labor into the Equality Fund.  They may talk the talk.  Support Democrats.  But they do that just so the people who have ‘so little’ leave them alone.  For they all still live in their million dollar mansions.  Because they like being unequal.  The more unequal the better.  They adore their pampered lives.  And when it comes to choosing liberty or equality they choose liberty.  As their comfortable lives clearly show.  For you can have liberty.  Or you can have equality.  But you can’t have both.  And that’s okay with them.

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FUNDAMENTAL TRUTH #81: “Gross pay is a myth.” – Old Pithy

Posted by PITHOCRATES - August 30th, 2011

The sooner Kids don’t Believe in Santa Clause the sooner they get Clothes as Gifts

When we were young the world had unicorns.  A jolly fat man in a red suit gave out toys once a year.  The Tooth Fairy paid us for our baby teeth.  Thankfully after they had fallen out.  And an Easter Bunny left hardboiled eggs for children on Easter morning.  Because kids love hardboiled eggs.  As well as the occasional piece of chocolate.

But that was once upon a time.  In a far distant land.  Our childhood.  And as we left our childhood we learned some hard truths.  They weren’t real.  Except unicorns, of course.  But Santa Clause?  The Tooth Fairy?  And the Easter Bunny?  Just childhood myths.  Existing only in our childhood.  Until the day our parents killed them.  Just to save a buck. 

Raising kids is expensive.  And these things just added to the cost.  Especially in large families.  The sooner your kids didn’t believe in Santa Clause the sooner you could wrap their clothes as gifts.  And skip the expensive toys.  Because Daddy worked hard enough.  And the money from that second job could buy Mommy some nice things for the house.  Or a new car.  Besides, there are only so many hardboiled eggs Daddy can eat.

Progressivism replaced Rugged Individualism with the Feminization of Men

Speaking of myths, there is another one many of us remember from our childhood.  Daddy’s paycheck.  He may not have earned a lot.  But he kept almost everything he earned.  And he could raise a large family.  Kids grew up with lots of brothers and sisters.  But then something happened.  And Daddy couldn’t do that anymore.

Government began to grow.  You can probably blame this on a war.  But probably not the one you’re thinking about.  Unless you’re thinking about the American Civil War.  For that war killed a generation of fathers.  Leaving a lot of children fatherless.  To be raised by widows.  During the 1870s and 1880s.  Some who would go on to enter politics.  And served in the federal government.  Joining the Progressive Party.  Which began the ending of rugged individualism.  And the feminization of men.

This was the founding of the nanny state in America.  Boys who lost their fathers in the Civil War had no male role models in their lives.  They were surrounded by women.  And went from rugged individuals to refined dandies.  In the Northeast, at least.  Overly sensitive to other people’s feelings.  Overflowing with empathy.  And filled with a mothering instinct.  Learned from their own doting mothers. 

(These Civil War widows went through unspeakable hardships.  Losing husbands, fathers, brothers and sons.  The Civil War killed approximately 2% of the population.  Some 620,000 people.  That same percentage of today’s population would equal some 6,000,000 people.  They lost so much that they doted on their remaining children.  As any parent would.  This is not a condemnation of their parenting.  These widows should be held up in the highest regard.  It’s just a story of numbers.  Such a large generation of fatherless children was destined to change the body politic.)

The Term ‘Gross Pay’ has gone the way of the Unicorn

The fatherless children of the Civil War began the growth of the federal government.  Where the best and brightest would make everything fair.  And better.  Woodward Wilson greatly expanded the federal government.  Then it was FDR‘s turn.  And then LBJ.  Every time government grew so did the cost of government. 

Wilson gave us the first income tax since the Civil War.  And gave us the Federal Reserve System.  FDR gave us the New Deal (including Social Security).  LBJ gave us the Great Society (including Medicare and Medicaid).  All expensive programs.  All requiring heavy taxation.  And where did those taxes come from?  Daddy’s paycheck.

During this period of expanding government a new term entered the American lexicon.  ‘Net’.  As in ‘net pay’.  If you got a pay raise or a bonus, your wife didn’t ask how much your raise or bonus was.  She asked how much will you ‘net’.  After taxes.  That part of the check you actually got.  Because by this time the term ‘gross pay’ went the way of the unicorn.  (Yes, I know unicorns don’t exist.)  Gross pay is a myth.  It may have existed at one time.  But now the term is meaningless.  Because of all the taxes taken out of your paycheck.

High Taxation and Inflation make it difficult for Daddy to Raise a Large Family Today

The gap between ‘gross pay’ and ‘net pay’ is now very large.  It is a very big part of the reason that Daddy can’t raise a large family anymore.  Even with working nights for a little extra money.  Now it takes two full time wage earners to raise a large family.  And a booming child care industry.

But this growth of government took spending to such heights that taxing alone could not pay for it.  So they borrowed a lot of money.  And printed a lot.  In fact, they were printing so much that President Nixon took us off the ‘gold standard’.  Which was the only real restraint on printing money.  And once he did, they printed away.  Giving us permanent inflation.  And a faster growing CPI.  Which shrank our shrinking paychecks even further.

It’s the one-two punch of high taxation and inflation that makes it difficult for Daddy to raise a large family today.  On a single paycheck.  Thanks to an ever rising CPI.  And an ever shrinking net pay.  It’s gotten so bad that kids often get socks and underwear for Christmas.  From Santa Clause.  Even when kids still very much believe in him.

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