It’s The Economy, Stupid

By J. Christoph Amberger

“Tax the rich,” a friend of mine opined yesterday. “Trickle-down economics means that we create more minimum-wage workers as clerks, landscapers and mechanics. Nobody on the bottom of the food chain gets rich off trickle-down.”

That set me thinking.

Indeed, I have never seen a store clerk, a landscaper or a mechanic who would qualify as “rich” in the Hollywood sense of the word. I know quite a few people, however, who started out as clerks, busboys or tradesmen and achieved considerable personal wealth by trading up jobs, investing their earnings, saving, recognizing and harnessing opportunity, and starting their own businesses.

(In fact, as I am writing this, I am looking at spending a substantial amount of money with a landscaper who started pushing his own wheelbarrow. It’s the equivalent of my first salary at the bottom of the publishing industry’s food chain.)

If the objective of trickle-down economics had been to make the low-wage rungs of the professional ladder rich in a static, rather than dynamic, professional environment, it sure has its flaws.

On the other hand, I know of no store clerk, landscaper or mechanic who ever got rich by receiving the redistributed wealth of the taxable “rich,” either. But I know plenty of people whose youthful energy and ambition evaporated by virtue of a seemingly unbreakable “social net” and left them discontent, ill adjusted and financially strapped as they were entering middle age.

I went to school with them in Germany.

You won’t read about it in the U.S. media, but the Bush administration’s tax breaks have resulted in quite a hiring. While young people in France face unemployment close to 30% (despite sky-high taxation of anything and anybody who remotely smells of money), U.S. employers reportedly plan to hire 17% more graduates this year than they did in 2006, topping the college-hiring record of 2000. Overall, in 2005 alone, 57 million Americans started at a new job, exceeding layoffs by an average of 364,000 per month.

“Eat your heart out, Lou Dobbs,” writes Larry Kudlow.

Real incomes, productivity and corporate profits are up, with real wages growing faster between 2001 and 2006 than during the first five years of the previous administration.

Kudlow continues: “Unemployment today is only 4.5 percent. Federal, state and local tax collections are soaring through the roof. Budget deficits are plunging. Inflation-adjusted GDP is averaging just more than 3 percent. Family wealth stands at a record of slightly more than $54 trillion. Total employment is at a record 146 million.”

For some reason, however, I can’t think of a single economy whose working population has recently profited from increased government taxation…