Numbers, like words, have meaning. Since the meaning of numbers has eluded so many people surviving our educational systems, a refresher course should bring coherence to the muddle of modern-day existence. We will call it Econ-Math 101. The entire text book is available here, free, in its entirety, in this epistle.
We begin with the concept of addition and subtraction. Addition allows you to have more of something and subtraction means you have less of something. Its economic meaning is profound and can be illustrated by the story of Sam.
He figured out how to make a better giltufficator. Knowing the demand for them, he quit his job to work full-time making giltufficators. Sam (not his real name) realized that, without a job, he would need money to house and feed himself and to afford the expenses of bringing a new product to market.
The total amount was way beyond his assets and no bank would extend sufficient credit to come close to covering his financial needs. With the help of a consultant he found a source of capital necessary to lift his idea up to a viable business employing 20 people in exchange for part of the business ownership.
In time, Sam was able to accumulate enough assets to invest in other new startups. He became wealthy. This is an example of addition.
It’s called capitalism.
Enter Alexandria Ocasio-Cortez, neophyte congress-person from New York. In a television interview, she says that as a new member of the U.S. House of Representatives, her goal is to raise tax rates on the wealthy to 70 percent. With the additional income, government will be able to provide “needed” services to those in need.
Sam says “whatever,” and cuts a check to the government on Tax Day to cover the increased tax rate. He won’t do without a single summer home, yacht or airplane. He also won’t be investing in as many start-ups because the government has confiscated a chunk of his money.
One of the casualties will be the next 20 people who would have had jobs if the tax rate had been lower. No matter. The government will use the extra money they took from Sam to furnish them food stamps. This is an example of subtraction.
It’s called socialism.
It’s been tried before. It’s always failed.
There’s the Soviet Union and others, and now we are watching the disintegration of Venezuela.
What Happened to the Free Goodies?
Here’s the problem. People who can’t find jobs don’t pay taxes. As there are fewer taxes from those who do have jobs, there eventually won’t be enough money to pay for all the food stamps needed to feed the citizenry, and confiscatory tax rates only make the situation worse.
No problem. The government prints more money causing rampant inflation, and you can’t buy anything with worthless money. It’s over. Everyone starves to death except those who packed their bags and moved to another country in an effort to start over. There is not enough lipstick to make this pig look glamorous.
So why would Ms. Ocasio-Cortez make this her personal priority for the United States? There are two possible explanations. The first is that she is ignorant and/or stupid which is unlikely, given her level of accomplishment at such a young age.
The second is more insidious. She craves power. You see, the more citizens are forced to rely on government for life’s basics, the more powerful it becomes which incentivizes people like her to become part of the power structure.
Now for your aha moment. The ignorant and/or stupid is not the candidate; it’s the voters who put her there.
You have now passed Econ-Math 101 and may vote.