In conversations (er, arguments) with my family and friends it's become clear to me that there's a common belief that the best way to get the economy going is to give more money to the poor. "The poor won't save it and will just spend it which will get people back to work" my dad said. Um, that's true, but it isn't the most efficient way (and, you gotta hope that employers will staff up to match the increased workload. My experience shows that won't necessarily happen.)
The best way to get this economy cranking again is to get rich people (and those VC funds) to invest in companies again. Why is that? Because if you just hand a poor person $400, they won't really change their spending all that much. Why? Because most of them are in credit card debt. Hell, most of the middle class is that way too. So, all you are gonna do is help out the banks who'll then have even more resources to keep trying to get me deeper in debt (you should see how many credit-card-junk-mail proposals I get everyday).
Compare that to what happens if we talk VC's into starting 100 new companies, each funded with $6 million. Hey, look at Woz's new company: "Wheels of Zeus." He got $6 million in funding. He's hired a dozen or so workers. They are now employed through at least next year. What do those workers do? They feel confident. They buy new houses. New cars. They go to Valley Fair and buy their girlfriends presents. They go to Los Gatos and go out to dinner. That six million is multiplied too, because of the credit card effect. A confident worker will borrow hundreds of thousands of dollars to buy a house.
This "wealth effect" trickles down to even the poorest workers. You ever been to Los Gatos? Ever seen who cleans the houses? Who cleans the buildings where people work? Who cuts the grass and does the landscaping? Who cooks the meals? Let me tell you, it ain't people who live in Los Gatos.
So, now, you've given many more people jobs and hope for tomorrow. All with a single investment.
No, the real answer on stimulating this economy isn't a tax cut for you and me and/or folks poorer than you and me. The real way to get this economy going again is to get rich folks to stop traveling the world and get them to invest in a new company.
Now, how do we do that? Well, make it cheaper to start a new company. Let's say we have a 18-month window where it's free to start a company. The government stops charging fees and taxes to new companies. They make it much easier to incorporate. They match investment in new companies. Imagine if Larry Ellison were to get $6 million to match the $6 million he invests in a new company.
The problem with this whole idea? It isn't politically feasible. It looks like we're giving money to the rich. No one likes doing that. But, it's the way to get the economy rocking and rolling again.
Look at why new companies aren't starting up in Silicon Valley right now. It's too expensive. It's too hard to do. Taxes are too high. Wages are too high. Health-care costs are too high.
Holy s%$t, there's another solution. Nationalize health-care. Instead of giving tax cuts, give Americans free health care. You know what that does? It makes it a lot easier to start a new company and hire people.
What we need are politicians who'll find ways to get us all back to work quickly. Not give us a tax cut that'll just go in the bank or to pay off some of our credit-card debt.
What do you think? [The Scobleizer Weblog]
9:43:21 AM 
|
