Get a grip on true source of wealth: The Whiteboard
No doubt you noticed the denigration of business by one side of the debate over federal tax cuts.
Advocates of a business tax cut were accused of taking money from “the little guy” and turning it over, except for a few “crumbs,” to evil CEOs and business owners. Did you also notice how weak the response to those arguments was?
I don’t mean to imply business has no voice. On a national and local level chambers of commerce continue to publish information about the benefits of business tax cuts, including more business investment, higher wages and more jobs.
At a more fundamental level, the attacks on business are attacks on capitalism and creeping promotion of more socialist ideas. These attacks are having an effect. A 2016 Harvard University poll found that 51 percent of 18- to 29-year-old respondents rejected capitalism.
I believe the root cause of that is that most people don’t have a very deep understanding of capitalism or basic economics, and those of us in business are not doing a good job providing or advocating for that kind of education.
Most people – even some people in business – don’t understand that all the wealth of our nation comes from commercial activity. “The government prints the money,” some say. The money government prints is paper, it isn’t wealth. In fact, the more money the government circulates, the less it is worth. All the wealth collected in taxes originates in business. Every dollar used to ensure our national security, to educate our people and to help those who need a helping hand can be traced back to commercial activity. Every dollar that pays for government salaries, pensions and projects originates in business.
Someone will argue that government employees pay taxes, and their salaries don’t come from business. But of course they do. The salary dollars government employees pay in taxes originate in taxes paid by businesses, business investors and business employees. Government doesn’t create wealth, it consumes wealth. Good luck collecting taxes to pay government employees in a place where there is no business activity creating wealth.
What about movie stars, artists and philosophers who tell us business is evil? Don’t they create wealth? They do, because they are all in business. They sell movies, art and ideas. They sell products and services just like any other business.
Many people don’t seem to understand the risks that business owners take or understand that their risk-taking should be rewarded. Some seem to have the idea that business owners are parasites exploiting the labor of their employees. But it is the business owner who takes all the financial risk of borrowing and investing in the business. Owners earn their return on investment, while creating wealth-producing jobs for others.
Public corporations are another target. Often the people complaining about corporations don’t realize that their 401(k), IRA or pension funds own shares in some of the very corporations they are railing against. The production of wealth and shareholder value by corporations enriches people from all walks of life.
It is easy to make business and business owners a target of envy. It is easy to promise people goodies for free while criticizing capitalism and promoting socialist ideas. But as Margaret Thatcher noted, “The problem with socialism is that you eventually run out of other people’s money.”
Business operating in our capitalist society is the goose that lays the golden eggs. More people should understand that. Businesses, business leaders and business organizations must play a much larger role in educating people about our capitalist system and the financial engines that power everything.