By Dr. Robert M. Bowman, Lt. Col., USAF, ret.
I’d like to start by sharing some excerpts from an editorial by Fred Reed.
“I understand that a farmer does something that really needs doing. People gotta eat. I understand that a truck driver does something that needs doing. People can’t eat the food unless somebody brings it to them. But I don’t see what, in an economic sense, the military does.
“Guys in Minnesota or somewhere get paid union wages to dig iron ore out of the ground. Then jillions of people in steel mills get paid to turn the iron into plate, and in Norfolk or wherever other folk get paid to weld the plate into an aircraft carrier. Then 6,000 squids get paid to drive it around the ocean until it gets old and rusty, whereupon other guys get paid to cut it into scrap.
“And everybody flourishes. The miners buy houses. The steel workers send their kids to college. The squids get drunk. Everything is roses. And yet building the carrier produces not one thing that anyone can eat, wear, or live in (except the carrier, but that’s expensive housing). The whole exercise looks like a dead economic loss.
“So, the world being now warm and fuzzy and safe, we eliminate all this wasteful military spending and save tremendous amounts of money. And what happens? Everybody is out of work. Towns fold. Hundreds of thousands of service folk get tossed into an economy that doesn’t have jobs for them. Apparently in order to save money we have to be poor and unemployed.
“What really puzzles me is that the entire military-industrial enterprise is just about as much a make-work proposition as any federal jobs program … Economically, what is the difference between paying an infantry division to go on maneuvers in Kansas for 30 years, and simply paying it? What if, instead of paying the miners to dig the ore and the steelworkers to make an aircraft carrier which the squids drive in circles fo 40 years until it gets cut up for scrap, what if we just sent all these people their paychecks and let them play golf?” [end quote]
Now this piece wasn’t in some liberal alternative press rag. It was published in “Air Force Times,” a very pro-establishment, pro-military journal. It pinpoints an essential truth that is little understood. People are always saying that defense spending is good for the economy. I have even heard people say that war is good for the economy. Nonsense! Fred Reed hits the nail right on the head. PAYCHECKS are good for the economy!
NOTE: The above was first published in “Space and Security News” in August 1993. Some things never change.
There is a popular myth that reducing taxes on businesses will create jobs. This myth is based on a more fundamental myth: “Businesses create jobs.” The truth is that in a free market system, CONSUMER DEMAND creates jobs. Government can cut taxes on businesses all they want, and banks can make loans to businesses easily available. But not a single job can be created unless there are consumers willing and able to buy the product or service offered.
I believe there should be NO payroll taxes. Indeed, there should be NO taxes on businesses until they are profitable. Tax profits, period. Reducing taxes on profits will not create jobs. It will only put more into the pockets of the stockholders and CEOs.
What creates jobs is a citizenry with sufficient money to buy products and services. Paychecks are good for employment! We are conditioned to think that paychecks only come from employment, so no job no paycheck. Not true. The government can create paychecks first. Spending and jobs and employment will follow. Not necessarily for all, but that’s OK. Productivity is so high that we can afford a significant fraction of the population living off their government check and deciding not to seek employment. Maybe they will stay home to raise their children. Maybe they will paint or write poetry or compose a symphony. Maybe they will just goof off and play video games. That’s OK too. Most people want to be productive, and since income tax rates on their earnings will start at zero and go up slowly, those who choose to work a few hours a week will keep almost everything they make (and, of course, will lose none of their basic paycheck).
If you want a vibrant economy in which every person who wants a job can get one, forget the subsidies for businesses, the corporate welfare, the tax cuts for the rich. Just send regular checks to every citizen.
Add comment