Throughout our relatively short American economic history, just when we were about ready to go over the cliff, new policies promoting lower taxes, less regulation, and rugged individualism have sparked strong economic growth, and we, and the world which depends on us, have lived to see another hopeful future.
This week we must again step back to objectively review the state of our economy as compared to the previous decade. We must periodically stop, analyze, and employ rational thought to gain understanding, lest we find ourselves amongst the non-thinking masses which morph into the current rhetoric and ideology of the media and whomever is shouting the loudest.
This week our economic statistics against showed the strongest economy in half a century. We have unemployment rates which you had been told were not possible ever again, with record-low unemployment rates for African-American and Latino citizens. We have strong wage growth for middle-class workers, servers, and hotel staff. We have high labor participation rates, which means that the people who had given up looking for work, or had decided that a government check was a better alternative, have now instead decided to take one of these new jobs.
This does not happen by accident. This is not the result of "cycles." This is not lucky timing. This is clear cause and effect which us JAM VIEWS members must understand, lest we are later swayed by the economically-uneducated masses. "He who stands for nothing will fall for anything."
According to Stephen Moore, a senior fellow with the Heritage Foundation, the previous Administration's government stimulus "went for food stamps, unemployment benefits, ObamaCare subsidies, 'cash for clunkers' and failed green energy handouts (see Solyndra or EPV Solar)." This was when our then-President proclaimed that if you owned a business "you didn't build that." This focus merely re-distributed the slices of a finite and decreasing pie. This strategy always guarantees defeat for everyone.
We must be educated on abundance instead of scarcity. Growth brings abundance and an ever-increasing pie, which brings more slices for everyone. Today, with the tremendous jolt to our economy from tax cuts, reduced regulations, and other efforts to get the government out of your pocket and off your back (and some would say their heel off your throat), the Congressional Budget Office (CBO) has grudgingly determined that "higher-than-expected growth will add an extra $1.2 trillion to federal revenue in the coming decade, covering about 80% of the Treasury's original projected cost of the tax cuts. If 3% growth is sustained for another year, the growth surge will have (already) paid for the tax cuts," according to Senator Phil Gramm. And after that, all of the extra government revenue is whipped cream on top of the ice cream of an incredible boost for the nation's citizens, themselves. The current President would assert, "Get the government out of the way, so you can build that."
And, certainly more grudgingly, even the New York Times this week acknowledged that "Joe Six-Pack" received a nice tax break this year in order to better care for his middle-class family. It wasn't all to support the rich.
We have to stay diligent with our rational and mathematical logic, or we will always go with the flow of current thinking, which is almost always wrong, as JAM VIEWS continually highlights. When the heated debate of the current tax reform was in full force, Larry Summers, a top Obama advisor, wrote in the Washington Post that tax reform would make no difference unless "you believe in tooth fairies and ludicrous supply-side economics." Mr. Summers followed up about the specific cuts, "I am proudly guilty of asserting that it is some combination of dishonest, incompetent and absurd."
One of the Friends of JAM (FOJ) sent me the current Wikipedia definition for the Laffer Curve. This Curve, which illustrates the relationship between taxation and the resulting levels of government revenue, was originally sketched on a napkin in a meeting of Dick Cheney, Donald Rumsfeld, and Arthur Laffer. The economy has consistently proven that the lower the tax rate, the more wealth for the citizens and the more wealth for the government. Yet, the Wikipedia listing states, "The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%. There is a consensus among leading economists that a reduction in the US federal income tax rate would not raise annual total tax revenue." What? Consensus of whom? Ridiculous! This is what our children are being fed in college. This is why JAM VIEWS attempts to stop us from blindly following the TV show, your professor, the government, your boss, that guy on the corner. They are almost always wrong.
Don't be mentally lazy. Think. Have a great week!
"Victory smiles upon those who anticipate the changes in the character of war, not upon those who wait to adapt themselves after the changes occur." - Italian Air Marshall Giulio Douhet
Many thanks to the WSJ, Forbes, & Fortune for the above statistics and quotations.
** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.
** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com
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