Saturday, August 13, 2011

Reality versus Ideology

Here is a bit from an article in Yahoo! Finance by David Cay Johnston that highlights fact over fiction especially the lies spread by fanatical Republicans:
In China it is among the best of times, in America it is among the worst of times, the age of wisdom in one country, the age of foolishness in the other when it comes to taxes and economic growth.

Here is some news about the idea that the path to prosperity is paved with lower taxes and reduced government spending.

In China, tax revenues since 2003 have grown a fifth faster than the booming economy.

In America, tax revenues are growing a quarter slower than the sputtering economy.

The result is that tax revenues are up 22 percent as a share of the Chinese economy, but down 7 percent as a share of the American economy.

In China, jobs are everywhere. In America, joblessness is everywhere.

There is a lesson here and it goes to the heart of why America, stuck for a decade in the economic doldrums, risks foundering on the shoals of economic ruin not because it taxes too much, but because it has adopted unsound and profoundly anti-market economic rules while Communist-led China sails into the future ever more prosperous even though its tax burdens are rising.
How do you get these truths through the thick skulls of unreasoning right wing radicals in the US? Will it require the complete destruction of America before these fanatics are forced to release their death grip on American politics?

Here is the bottom line:
What the Chinese grasp is that it matters where tax money is spent. So they spend it on education, infrastructure and pensions to get older workers out and younger ones in.

In urban China -- where half the people live -- wide, smooth roads mark the land, the stretch marks of a growing economy. Storm sewers are being built to deal with chronic flooding along the low-lying coast and electric generating plants are coming on line as fast as the now ubiquitous air conditioners that make life in this humid region pleasant.

In America, a drive is on to cut teacher pay while potholes ensure brisk business for alignment, shock absorber and tire shops and people whose guaranteed pensions were replaced with 401(k) plans learn the meaning of a 201(k).

What the Chinese know, and Americans have forgotten, is this: all private wealth is built on a foundation of commonwealth. And that commonwealth is financed with taxes.


Since 2003, China's tax revenue has grown a fifth faster than its gross domestic product. The Chinese economy grew at a 16.6 percent compound annual rate over those seven years while tax revenues grew at a hair under 20 percent.

During those same years in America the economy grew at a compound annual growth rate of just under 4 percent while taxes grew at just 2.8 percent.

How do you get the anti-tax fanatics in the US to understand how badly misdirected their ideology is? How wildly wrong they are?

Here is they key failure of empathy and economic understanding:
Unlike the Tea Partiers, the Chinese get the ancient, time-tested and therefore (in the classic meaning of the word) profoundly conservative idea that the greater your economic gain the greater your tax burden. They also grasp the teachings of Adam Smith that taxing the incomes of the poor just raises the general labor price level and of John Locke that there is no tax to be had from the poor.
Go read the whole article.

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