Is it truly a case of the “lesser of two evils?”
The Unites States has two main political parties – the main difference supposedly being how each would stimulate the economy.
Democrats
A Democrat generally believes that to stimulate the economy more capital must be put in the hands of the consumer. This is based on the assertion that the consumer will go out and spend more, which would increase retail sales. Increased retail sales, in turn, increases orders going to factories. The factories would then hire more people, and so forth. If extrapolated, Democrats further assert any program that puts money in the hands of the lowest income citizens and even those unemployed would always become a motivator for the economy to grow.
Republicans
A Republican generally believes that to stimulate the economy, businesses should be allowed to retain more of their profits. This is based on the assertion that were it not for businesses – there would be no money to make the economy work at all. If the business is allowed to be taxed less (therefore keeping more profit) it will take that capital and invest more into itself in an attempt to become more successful. This in turn would create more employees with expendable cash to spend in the economy; accomplishing the same result as the Democrats with more retail sales, more factory orders, more hiring of workers and so forth.
Unlike Democrats, this is almost always accomplished by making tax cuts. Republicans put their faith in businesses knowing best what to do with their money rather than the government. The thinking goes that the more money businesses can keep from their profits instead of paying taxes, the more they will build (which creates jobs for construction people) and the more they will hire (which makes for more jobs). All of this activity inherently stimulates the economy – allowing more people to earn acceptable wages and pay their own fair share of the tax burden. If more people are employed, then less people are receiving unemployment checks. This causes less of a drain on tax dollars and the need for growing social programs. It is interesting to note that by reducing taxes on those who pay them – the more dollars are spent to purchase goods and services – which results in more taxes paid. Human nature being what it is – people feel more inclined to spend their money when they know it is not going to be taken through confiscatory taxes. Conversely, businesses are less inclined to spend when their taxes are raised and hold their money for future tax burdens.
But what about Democrat Intentions to help the lower class and unemployed?
Putting money into the hands of the unemployed can be good if the purpose is to sustain that person between jobs. However, what if the unemployed do not mind being unemployed? What if an unemployed person views an unemployment check as a convenient, paid vacation? The money may not be enough to change their financial position, but it may be enough to threaten any motivation to find a job and work to better themselves financially. If that occurs – then you have created another form of welfare (a topic for another study). Many taxpayers believe the Democrats good intentions are building an unsustainable welfare state through unemployment programs. And once started… how do you stop it without imposing true financial pain on recipients, and avoid exacerbating an already vexing problem?
This becomes more problematic when the unemployed are not motivated to seek work or to better their skill offerings. For employers, whenever an employee is let go and they file for unemployment, it is the employer who must, by law, pay the premiums.
Unemployment is an insurance program. The employer pays a premium based upon payroll and past utilization of the program. This utilization is referred to as an experience rating. The experience rating is a percentage calculation. However if the employer has only five employee and loses one employee then the payroll percentage is significantly effected by the change, as will the employers future unemployment insurance premiums. This percentage does have a cap . What aggravates this situation even more that is that because this is an insurance ,the people who oversee this program believe the cost is not born by the employer and will award benefit almost on every occasion.
Cost wise, it is like your auto policy. If have an accident and your rates go up for the next three years.
For many businesses, there is no shortage of jobs to be filled. Instead, they cannot find highly skilled people, trainable people, who must have the ability to read, write, and possess some degree of self-discipline” (i.e. to get to work on time, dress properly for their job, and practice common courtesies). Consequently, the unemployment lines grow, businesses pay out more in unemployment insurance premiums, and the number of jobs that cannot be filled multiplies. Without taking into account human nature, good intentions lead to more problems.
But what about Republican Intentions to protect businesses from Federal Regulations and overreach into owners practices and profits?
Who distinguishes between small and large corporations?
Business Owners do not appreciate being dictated to how to handle their money and/or people by the Federal or State Government any more than you would appreciate having the same government intrusion into your personal finances and family decisions. In fact, one could say that the entire history of America’s political life has been one long experiment in finding just how much government is too much. For that, the Republicans can be given the benefit of the doubt as always “attempting” to limit government reach. However, when it comes to businesses, Republicans do not distinguish between small business (any company with less than 500 employees) and large corporations, (those with over 500 employees).
So who really understands small business?
In America, there are approximately six million small businesses and only about forty-thousand large corporations. That is a ratio of 150 to 1. And even though those corporations are much larger individually, their employment roles do not compare to the number of workers small business hires.
Small Business is largely responsible for providing jobs to those who consider themselves to be “The Average American”. It could even be said that small businesses make the American Middle Class. Yet – it is small business that is carrying the load of regulations and taxes with detrimental effect.
Granted, Republicans often cry that certain businesses are “too big to fail” and must be rescued by the taxpayer.
But Democrats would have you believe that all Republicans (i.e. – business owners) are simply greedy and made their money off the backs of the poorest among us
The truth is that small business owners are made up of all political stripes, as are their employees.
What are the answers?
We at The Encumbered seek to find solutions to this and a variety of other issues that starve our economy and bring strife to our common struggle for life, liberty and the pursuit of happiness.
- If only politicians didn’t need special interest money to fund re-election campaigns…
- If only government regulation didn’t strangle small businesses and their razor-thin profit margins…
- If only the unemployed were self-motivated to find better jobs and better their skills…
- If only health insurance weren’t so cumbersome and expensive…
- If only everyone in politics always did the right thing…
- If only everyone in business always did the right thing…
Neither political party is “evil” … but their solutions are not working.
For now, consider small businesses. They are the ones putting their own dollars at risk – not the investment of stock holders. They are the ones creating the most jobs, training most of the unskilled. They are the ones giving our children more opportunities for advancement and growth. And yet their numbers are dwindling every year. And when their jobs go away, our unemployment roles will swell, and our economy will falter.
Whatever the solutions are, they must equally involve small businesses.
Join us as we look for the answers.
Dear Reader,
Solutions are ideas that evolve. We are not an expert in any facet of government. Your ideas, comments, questions and experiences us develop these solutions. Please continue to submit your insights.