Who wouldn’t remember the disgustingly rich billionaire duck, who in the early nineties also conquered the newly capitalizing post-socialist region by his charming stories? But what did this stingy duck do to become a caricature of capitalism and greed, almost as much as the monopoly man or Jockey Ewing? What has this Scottish gold miner – in every sense of the word – done? Well, he’s pumping all the money out of the economy without reinvesting anything, to swim in and as hobby take a gold shower. The dog eats dog capitalism in Marx words absolutely works for him, while there is less and less money left in the economy because of this, so many people get fired, and the storage of duck with full of gold coins it just swells more and more over the city as a giant cancerous tumor. All this so that the selfish and greedy duck could swim in it. Here is the essence of John Maynard Keynes’ philosophy. According to this the more people save their earned money, less money will be available in the economy for consumer purposes, which creates less jobs, as result the unemployment skyrockets due to hoarders, and here is the end of the world in a nutshell.
Obviously so many people consider this as essence of capitalism, and this is why they advocate further taxes and regulations on rich ‘bastards’, without knowing the taxes and overregulation cause the unemployment in most cases (and of course the natural human jealousy plays a significant role). Here is why. It doesn’t matter how much money the government invests back in the economy, because before that they have to take that money away of there by taxes, since the government has no monely by default. They can create jobs only by eliminating jobs, so this is a zero sum game, while they’re blaming the hoarders. According to Karl Marx the reason of all human action directly or indirectly is acquiring resources, and if someone takes away more, others get less. The whole generations are brainwashed by this resources point of view for more than a century. But this is a mistake because the resource in the economy is not a static quantity. In other words people don’t expropriate value, they produce value. So it doesn’t work that way if someone has two houses, the other doesn’t have any left because of it. There could logically be a hundred golden palaces for someone so that there are no homeless people in the country. It doesn’t work to have an x-sized cake, and the more people take of it, the less is left for others. As more people get in the economy as gets the cake bigger.
Our whole society is based around consuming as much as it possible. We hear everywhere that consumption is good for economic growth, moreover essential. This is the basic principle of consumer society.
In theory the more capitalist someone is, the more they consume and invest, so they create more jobs. That is why it is very important to keep taxes as low as possible. Poor people don’t create jobs, and the jobs created by government don’t create value, only national debts and inflation.
But what about the hoarders who just sit on the pile of money, without spending it for investing or consuming? According to the Keynesian economists that behavior is detrimental to the economy. Because it don’t create jobs, but eliminates, this not only counterproductive but harmful on the society, at least according to Lord Keynes. Let’s look at the argument of Walter Block about the hoarders. Professor Block devotes a separate chapter to analyze the hoarder phenomenon in book of Defending the Undefendable. According to this, if someone withdraws money from the economy, it is not harmful but it is useful on the economy.
Why? On the one hand, because the stingy reserves money for the future, and sets an example for frivolous masses by frugality. If the crack will hit in the future the hoarders always will have previously saved value to grasp, like a squirrel with acorns and nuts stored for the winter. On the other hand with appearing more and more Uncle Scrooges there will be a less and less money available in the economy, but as a result, prices also begin to fall. Due to chronic lack of money the prices go down, until everything will be very cheap. If the amount of money in circulation decreases, prices will also decrease. The entrepreneurs and traders won’t risk losing everything with the stock remaining on them. They were interested in having everything sold. Even a bad revenue is better than the nothing with unsold stock. It is out of the question that they do not encourage buyers to buy in the face of declining demand with permanent promotions. This is an economic rule: falling demand = falling prices. As simple as that. If the traders would keep prices high with declining demand they would risk to go bankrupt. And no one is eager to go bankrupt.
And unemployment is not rising just because prices are falling, if it is due to savings. Because the population has a growing reserve of money. They become more and more prosperous. Prices are always realized for wages. If there is less money in the economy, of course, wages are lower, but so are prices. And here’s the point. The savings alone are not rising unemployment and not decreasing the purchase value of money, thus they don’t rise inflation either.
The situation is different if the state withdraws money from the economy through taxes, levies, tributes. As mentioned before it really causes unemployment, but that is not the biggest difference between the hoarders and tax authority, but the use of violence that upsets the balance. Unemployment is only a consequence of this, which can be seemingly eliminated prestige investments and jobs created by governmental support of course. But who believes that this will reduce unemployment, must also believe that by depleting water from one part of the pool and pouring back into another part, the level of water can be increased, or the the mass of water. First of all the hoarders can’t initiate violance to get money, as everyone else they must provide something useful to make another party encouraged to hand over money VOLUNTARILY. That parties are motivated in creating money as long as they can spend it whatever they want for, if they just don’t have gold mines like Uncle Scrooge. But I haven’t heard about someone makes money in order to pay more taxes. Tax deduction does not motivate anyone to create value, which is an empirically proven fact. If that were not the case, the taxes would be one hundred percent, and we would live in the real slaveholder regime. So if the hoarder has no gold mine he must provide something for money to save it for the future. And if this is the case, who can tell that the hoarder is not good for the economy? Of course they can also be enriched with scams, theft, and fraud, but then they can be caught by law enforcement. The hoarder can also make a living from interest, by lending money, and if he inherits, the inheritance is also left to him voluntarily. None of these are activities that directly contribute to economic growth seemingly, as wage workers. They rather tend to fall into the passive income category. But no one can claim, it’s not beneficial for economy, at least not harmful. It doesn’t matter where we approach the issue from, voluntary sale and purchase transaction, in addition to being the only ethical way to raise capital, can be said to cause no harm at all. This is not the case with wealth accumulated by violence, and violence can be initiated legally only in the name of the state. The state collects taxes by force, and provides nothing valuable which would make the people encouraged to hand over money voluntarily. Hence the producers are not motivated to create value if it will be taken away from them without their consent. The state collects taxes from individuals and returns them back to the collective, regardless the individual contribution or needs. This system will encourage no one to create value, only destruction. If the public servants earn more, value creation and risk-taking will be attractive to fewer and fewer. And the system will end up with the mass scale dependency ruled by an oligarchic elite, and both the stagnation and nepotism will be inevitable.
Every social-economic system requires net extractors and net contributors, the takers and makers. The system will start to collapse if being taker is more beneficial than maker, creator, and producer. In other words, the state maintains public institutions, pension system, health care, and God knows how many types of grants even for those who do not use it, and those who do not pay taxes are also eligible to use them. This is the difference between violence and volunteering.
This is why the hoarders do not create a whit of unemployment, the tax authority contributes to it brutally. The other argument in favor of the miser is that everyone does what they want with the money they earn themselves. Someone climbs a mountain, another sails, or rides a bicycle. Why saving money and accumulating capital can not bring a joy to someone? Because the money can not buy happiness according to the hypocrites. But why not? If someone is happy with cycling, or modeling, or stamp collecting, why collecting money can cause only less joy? Why do the masses make any differences between hobbies based on merely purposes? Why have I not yet heard a logical answer to this from any of hippocrates? Why does a money-saver have less right to joy than one who spends it with both hands? Why only the lowest degree of value creation, the manual work is classified only as work by Marxists? Leverage and capital accumulation, which requires more intelligence, why not? Yet this creates most jobs. And the value can be accumulated, but it needs to be capitalized and invested, because the inflation eats up the whole, since money also has a future value. If you sit on the top of it or swim in it only your savings will completely lose their value. Of course not when it comes to real money, gold, like in case of Uncle Scrooge. Either way Uncle Scrooge is a hero as every hoarder as well who preserves value for the future. The value always survives the miser who certainly does not die with an empty pocket.
This is for today. Thanks for reading me!