01 January 2008|
Policies to put green in the palm of your empty hand
The political interest of the average person (I'd use "voter", but that is far too small a group) could be summed up in one word: Money. It is widely known that the economic condition of the nation is one of the most reliable indicators of which party will be elected. When times are good, the incumbent party is generally reelected; and when times are bad, they're usually dumped.
But there's more to it than macroeconomic conditions. People want policies to benefit them personally. Who cares, after all, if everyone else is well off when you're not? So politicians promise all sorts of schemes and ideas to keep jobs, make jobs, and make jobs pay more, in order to get more votes. Most of these schemes and ideas, however, don't work because most politicians don't know anything about economics.
PI is keenly aware of this personal profit-seeking reality, but we actually propose policies that are directly successful at creating growth. Listed below are seven policies that you should support, if for no other reason, because they'll help make you money. After all, it 'aint no one's business if you do.
1. Earn more: Cut personal income tax rates across the board
This one is easy. Your income tax, whether withheld from each paycheck or paid in full in April, is the single largest deduction the government makes from your earned income. Tax cuts put the money you already earned directly back in your pocket. It's the same effect as a raise, except it's Uncle Sam that gives it to you.
2. Pay less: Support free trade
Free trade lowers prices for consumers. Anti-globalization activists think this is a bad thing, and so they loudly resent the fact that consumers generally want to buy things that cost less. The rest of us rational folk don't, and relish the opportunity to get more for less.
Free trade has cut the relative price of food by two-thirds since 1957. The price of clothing and raw materials has seen a similar decline, because free trade generally lowers the costs of basic, necessary goods the most. (This is because basic, necessary goods are produced by every country, thus increasing supply, and thus lowering prices more.) But nearly every product you buy is affected somehow by the global market, and thus is cheaper as the market globalizes. Free trade isn't just for your Nikes anymore.
3. Get more: Cut, and eventually scrap, the corporate income tax
Corporate taxes create two separate problems both conspiring to keep you from more money. The first is that all costs that a business incurs are eventually passed on to the consumer in the form of higher prices. The corporate income tax is no exception. So in the end, you - and every other consumer - ends up paying the corporate tax for the corporation you're buying from, on everything you buy.
Second, whether you are an entrepreneur or a corporate drone, your paycheck is paid by a business, usually a corporation. Thus business investment - namely employment and employment benefits - is reliant on profits. While there is certainly no guarantee that corporations will use their increased profits for increased pay and/or hiring, there is a guarantee that the money they pay in taxes will never go to that purpose.
4. Earn more for retirement: Social Security private accounts
6.2% of every dollar you make is taken by the government for Social Security, the national retirement payment system. (Your employer contributes another 6.2% on every dollar he pays you.) This money is placed into a Social Security Trust Fund, basically a national collection of Social Security tax payments, which ends up yielding a whopping 2% return per year.
The stock market, by contrast, has an average yearly return on investment of 8%. Invest well (diversify, do research, etc.), and your annual returns can exceed 10-20%. With private accounts for Social Security, your Golden Years can be a lot more golden.
5. Be worth more: Support education reform
Level of education is one of the most reliable indicators of future earning potential. With school vouchers, where the government pays for private school tuition, more students can receive quality K-12 education. A quality K-12 education is an important step in facilitating entrance to college and graduate school, further enhancing the earning potential of many Americans. Other pro-market policies toward facilitating competition in higher education have allowed the American university system to churn out future leaders and money makers with world-leading efficiency.
6. More to fall back on: Support Welfare reform
For those who are not as ambitious, or are prone to poverty-inducing circumstances, it's nice to know that there is a safety net to back you up. Effective welfare reform can maintain this safety net for those who need it, as well as encouraging those who don't to find gainful employment.
7. More opportunity: Open and deregulate the global market
For the entrepreneurial, the current globalized age of commerce provides unprecedented potential for future success. Globalization helps bring together billions of consumers with producers around the world. Both global consumer demand as well as global resources (material and human) are nearly limitless. Economists are already noting that successful entrepreneurs in the global market are making more than ever before, and that globalization is now the most significant factor in their success. Why not join in?
The above work is the opinion of the author, and not necessarily the opinion of The Prometheus Institute.