Business and Economic Burdens

Growing up I used to hear people make fun of the "laugher curve".  I thought everyone was laughing at President Reagan and his economic policies.  Going through business school I learned that the "Laffer Curve" was some real economic theory by a real professor.

Here is a copy of the basic laffer-curve:

The big problems with the interpretation are pretty easy to spot.  Given this image it would appear that 50% tax is the ideal percentage for the Government.  That is no where near the case, The Horowitz freedom center noted that many thought the tax cuts President Reagan asked for were incorrectly thought of as only for the rich.  They were tax cuts for everyone, the popular media slanted the view.


In todays business climate, business of all sizes have stopped investing, simply because of uncertainty.  As a business owner, property owner, taxpayer and hopefully voter you should at least understand and be aware of what the government is trying to do to your wallet.

Since nearly 50% of all the voters in the US are working for a public agency, government contractor or subcontractor or are directly related to someone that is, we have a problem.

Ben Franklin warned us that "When people can vote themselves money, that will herald the end of the republic."

Today nearly 33% of all of the welfare recipients in the US are in California.  The budgetary problems of the state clearly show what happens when people vote themselves money.  Add to that group all of the public sector employees who will vote for anyone against cutting public sector jobs.

Here is the reality.  When the economy grows, so do tax revenues.  Sales tax are a percentage of sales, sell more, get more tax money.  The private sector is what funds the public sector and the public sector should never forget it.  One of the greatest errors in the public sector is creating a "career path".

The US military and reserves have an "up or out" policy as do a couple of major airlines.  No one is allowed to "camp out" in a job until they retire.  The costs of keeping a person in a job beyond a period of time grows astronomically, it allows people to build a career and a retirement from a job that doesn't provide the benefits to the public to deserve those gains.

When someone is first hired, they require training, sometime later they will peek and slow down the system.  Could you imagine if the public sector instilled six sigma review practices and terminated the bottom 5-10% every year?  You could be in and out of the tax office in 15 minutes.

In an ideal world every graduate of a public university should have to work entry level jobs in the public sector like like the DMW or Franchise tax offices for two years.  They would learn more about our government and how it works.  The military has a program like this for doctors, but the military isn't for everyone, and not everyone can be a doctor.

Since the burden of public finance falls squarely on the private sector it is the obligation of the private sector to help find solutions to the public problems.  Increasing taxes now will not be good for any business, big or small, and in any financial condition.

A professor from a university in Paris France told me "The challenge of government is to keep the people busy, so they don't become a larger problem." There in lies the other edge of the public sector sword.  Reducing more jobs in the public sector means more people out of work.   You can see why politicians do what they do when you look at the big picture in this way.  The easy way for a politician to keep his job is to let people vote themselves a job or money. The easy way out for the politician is to vote to keep the jobs and freebies, then place more of the burden on the private sector.

What we need today in both the public and private sector is leadership that is willing to take the tough stand and build our economy rather than give away money we don't have.  Only when the private sector takes a public interest and educates it's employees will the economy stand a chance.  Remember, 50% of the people are connected to the public sector, and that means 50% are also connected to the private sector.

My challenge for you today, educate just two other people on how the private sector helps.