The Senate just passed a 500-page tax reform bill. Assuming it lives up to its promise, it will cut taxes on corporations and individuals. Predictably, the Left hates it and the Right loves it. I am writing to argue why the Right should hate it (no, not for the reason the Left does, a desire to get the rich).
The Federal debtberg has grown beyond all measure since Nixon’s gold default. So has the money supply and the amount of private debt. No-one expects this debt to be paid back ever. The idea that it is payable (without a massive devaluation of the currency) is a kind of illusion we have collectively decided to live with. Government spending perforce leads to capital consumption – while it disturbs the production structure intra- rather than inter-temporally, it still results in an allocation of scarce resources that is not in line with actual consumer wants. Government bureaus cannot possibly ascertain the opportunity cost of their spending. They are not expected to make profits, economic calculation is not something they even care about. On the contrary, their incentives are often quite perverse: the more lavishly they spend, the better from their perspective, as that is often the best way to ensure they will receive the largest possible budget allocations every year.
The root of our problem is spending. The federal government spends much of our income, and an increasing amount of our wealth to the tune of over $4 trillion a year. That is over $11,000 for every man, woman, and child. But children don’t work and many adults don’t either (or they work for the government or a contractor).
This post was published at Acting-Man on December 5, 2017.