Harry Reid just gave a speech on the Senate floor designed to placate Democrats that were upset over the outcome of the debt ceiling debate.
In the speech, Reid stressed some words that I find interesting. One, “fairness”. He used “fair” or a derivative of the word at least ten times. He also said it was the role of government to create jobs.
What’s fair exactly? Fair is different depending on the individual. Economics professors call it “normative” economics. Normative economics places value judgements on policy. Those judgements are subject to change. In cases of income, you might call it the politics of envy.
Here is an example; How much is enough money? Depending on who you ask, and which geographical location, you will get a range of answers. Pollsters have determined $250,000 per year is a lot of money to most of the public, and this is why Obama hammers on that number.
Here is another one; What’s a correct hourly wage? That all depends on a lot of factors. It’s subjective. The bulk of government policies are all subjective. They want to pick and choose winners and losers. The power doesn’t reside in the market, but with the person in the position.
Contrast that with what’s known as “positive economics”. Positive economics are concepts that can be quantified and proven, just like a scientific method. Everyone meets the same minimum standard.
Here is an example: Raising the minimum wage increases unemployment.
It can be shown both graphically
and anecdotally that raising the minimum wage creates unemployment. It’s a simple statement of fact.
That’s why the only way to have a fair tax code is to set some standard, and have everyone regardless of income, class, gender, marital status or any other category you want to include, meet the same standard. A flat tax is ideal.
Who should pay more in taxes, Steve Jobs or a minimum wage worker? Is that fair? Even if they paid the same rate, Steve Jobs would pay far more in tax than the minimum wage worker. Jobs through all his companies creates far more jobs in an hour than one minimum wage worker will create in their lifetime.
Governments don’t create jobs. They need to facilitate the creation of jobs by the private sector. Governments do this with flat taxes, low regulation, and by simply staying out of the way. As President Reagan said, the worst words you could hear are, “I am from the government and I am here to help.”.
If Democrats and some Republicans were truly worried about creating jobs, they would strip out all the horribly toxic regulation we have today and amend the tax code like this: End all subsidies and write offs, flat tax everyone the same at 15%.
You’d see jobs created like you dreamed of. With all the economic growth, government coffers would be over flowing.
That would be fair.
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