Who pays?

Government does not, and can not, create wealth. Wealth is only created in the private sector by leveraging capital with productivity, innovation and risk. The result in a successful enterprise is profit, and accumulated profits generate wealth. We may not all agree with this, but it is the way I learned it in school, so we will run with it. After all, it is my blog.

Our government has been in the business of redistributing wealth for years. Since the time of Johnson's "Great Society" programs of the early 60s, we have been working hard at it. President Johnson, to be fair, did not invent redistribution of wealth, but he did put it on steroids. We fund this redistribution through our "progressive tax" system. The more you make the bigger the percentage of each dollar you pay in taxes.

You with me so far? OK, so how do these 2 fit together in my mind? Well it seems to me that the government has decided open the gates of the Great Society wide open, as a matter of fact it looks like we have removed the gates entirely. Banks can't make it on their own, Uncle Sam will put you on the dole. Insurance companies, sure come on in. Car companies, steel factories, newspapers, the Stat of California - - -the list seems endless. Borrowed money you could not afford to pay back to buy that big house, doesn't seem fair to Uncle Sam. "Free" health care for everyone - -why not. Government always thinks it has the answers to our problems. That generally translates into throwing fistfuls of our earned money at any problem that arises. Maybe the government intervention can do for all these groups what it did for the Post Office! Now there is a model of success.

If Johnson's vision of the Great Society had worked, maybe I could see it working on this grand scale. The fact is it did not, and will not. The government can not make unproductive companies productive. It can not keep us as individuals from making stupid financial mistakes. It can't make us all smart or productive. It can't make us willing to take the risks required to accomplish great things. In short Uncle Sam can not deliver us from the hard cold facts of life, or the realities of free markets.

The only way that the government can level the playing field for us, be it on a corporate level or personal, is by lowering standards for everyone not raising the masses up.

For a while, the government can print money to try and cover up the problem, but it can't fix it . The government can not create wealth. So the question remains, who pays? I think in our heart of hearts, we all know the answer. One way or another we all do. It is easy to say "sock it to the rich", but the truth is more and more that "the rich" is anybody holding a job in the private sector.

Some of us will see our tax rates go up. I believe that every one's taxes will have to be raised to pay for this frenzy of spending. I don't think anyone really believes otherwise. But even if I am wrong about that, the inflation that every economist agrees is coming because of all the money that was printed out of thin air, well that will savage all of us equally.

So in the end who pays? Every single one of us! So much for "sock it to the rich."

The Villian has a face- -well sort of.

We should all be happy now that we have someone on which to focus our anger. These guys are the perfect scape goat. We don't know them, they are obviously well off, and they work for an insurance company that took government money. They are the absolute perfect patsies to take all of our wrath. Tax them at 90%, out them in public, haul them before congress and humiliate them.

Sounds like a screen play for a movie doesn't it? All we need is a hero to stand up and bring us to our senses about what is really going on. Jimmy Stewart would have been the perfect actor. Don't hold your breath. Our elected officials have appealed to our base nature calling for revenge. Never mind that these same public officials also took money from AIG at the same time. Chris Dodd and Barack Obama took over $225K for there election campaigns in 2008. The same Chris Dodd that put in the provision that let them keep those bonuses in the first place.

I don't know any of these villains, and I suspect you don't either. My guess is that they are not evil people. Overpaid, maybe, but I don't know that either. What I do know, is that most of them were losing their jobs. What I do know is that AIG needed them to work for a while longer and paid them a bonus not to leave. I also know that that is a fairly common practice. I also know that if most of us found ourselves in the same circumstance, we would take that money without a moments hesitation. With no shame or guilt attached. Indeed most everyone around us would feel sorry for us because we were loosing our jobs in a tough economy.

These folks were served up to us on a silver platter by the very folks who were their best friends a year ago, our elected officials.

There is a lot of guilt to go around in this mess. There was a lot of money sloshing around in the economy, and we all benefited at least in the short term. Our home values went up dramatically. In a sense we were all making the dreaded "windfall" profits that congress likes to tax. We had easy credit to buy anything we wanted whether we could afford it or not. We were all lined up at the same feeding trough and living high, at least for a while.

Now we face the day of reckoning, and we are angry. We need a face on which to target that anger, and now we have one. How convenient.

When I was a kid, I used to go to the movies and watch westerns. Seems that more often than not some innocent loser was always about to get lynched in those movies for some crime that he did not commit. As I recall, the real guilty party was always at the front of the mob leading the lynching. He was the guy always screaming to "hangem high". Once somebody is hung we generally quit looking for the real crook.

Kind of makes you wonder doesn't it?