Cabana Economics

Some of you might be asking, "Where have you been? What's taken you so long to post again?" And to you I say, "I've been busy, jerk! Find entertainment elsewhere!"

But I did want to stop in and briefly explain why the conservative ideology of tax cuts is a big crock.

I was having a drink with Jocelyn poolside at the Beverly Hills Hilton (to illustrate how long it's been since I've posted, I've seen Jocelyn twice in that time). And I was discussing with her beau Randy our different viewpoints on government. It was a good talk; both sides made valid points. Then Randy brought up the notion I'd heard before, but always felt confused over. He said that if tax rates were increased, he'd be less inclined to work as hard. As an extreme example, he stated that if taxes were so high that when someone made a million dollars, they only cleared, say, $100,000, there'd be no motivation to try to make that million.

Now, this belief is at the heart of modern conservative thought, and is at the basis for the multiple tax cuts given to the richest percent of Americans over the past five years. And at the time Randy brought it up, the only response I could think of was, "Well, that's bullshit." It wasn't until later that I realized WHY it was bullshit.

I heard Bill O'Reilly once make this statement: he has a TV show and a radio show. The TV show is more financially lucrative for him (partially because his radio show has abyssimal ratings). He said that if his income taxes were increased, he'd just give up doing the radio show. It wouldn't be worth the effort to him. Then all those people who work on the radio program for him would be out a job. The stations that carry him would lose their ad revenue. It'd be bad for the economy.

The problem is, to make that scenario work, you'd have to assume that if O'Reilly left the radio airwaves, he'd leave three hours of dead air every day in his wake. Which, of course, is wrong. If he gave up his radio show, someone else's radio show would take his spot. Now you've got one guy with a TV show, and one guy with a radio show, and isn't that better for the economy in itself?

See, the fault in the whole logic is you don't get to decide how hard you work. It's a free market. Your competitors decide how hard you work. If you think, "Oh, it's just not worth it for me to put in that extra effort," then someone else will think it is. Not to make marginally more money, but to put you out of business. Then they'll make considerably more money.

Capitalism isn't about you versus the government. It's you versus the other guy. And the genius of the system is: if you don't want to do what it takes to get ahead, there's always someone out there who will.