Like the idea that tax-cuts and subsidies, or "tax relief" in the land of savvy political communicators, will always increase economic growth because people will have more money to spend on things instead of paying taxes. That economic growth then increases tax-revenue, from the expanding economic climate.
That has always sounded to me like something that was too good to be true. And you know what they say about things that are too good to be true.
First of all, you have to look at America's history. If low marginal tax rates increase the economy, and high marginal tax rates destroy the economy, why did the economy collapse in 1929 when taxes were low, but expand continually in the late 1940's and 1950's when taxes were astronomical?
The answer lies in having a dynamic economy. Ford got rich making Model T's, but he wouldn't have made a dime if he couldn't have sold a lot of them. For an economy to work, you have to have markets for your goods and you have to have inexpensive ways to get your goods and customers to markets.
That's why education and infrastructure are more important to an economy than big industries. Education and infrastructure build and support a robust, dynamic middle class. The middle class buys some cheap goods and some luxury goods and opens their own businesses to increase their income. Those businesses need to purchase some cheap goods and some high-dollar goods to make it. All those purchases support the big industries and financial institutions, not the other way around.
So one has to wonder about economic and fiscal sanity if someone's plan to grow the economy is to take the knees out from under the middle class to increase the already favorable climate for big business.
For the past decade, Georgia has been losing the type of high-paying jobs attracted by good infrastructure, quality schools and an attractive quality of life, perhaps because it hasn’t been investing in good infrastructure, quality schools and an attractive quality of life.
At some point, you have to start focusing on your market, and charging businesses for access to that market. Just like the hipsters will pay to get into the club that puts the best band on the stage, businesses will pay to get into the state where they can get returns on their investment for a long time. And if they don't want to, let them go. If there is even one dollar of profit to be made in a place, a different business will show up or start up to compete for it.
And if they want to pass the costs along to the consumer? Well, we live in a free-market economy. Businesses can set their prices based on how much profit they'll make, and that number isn't guaranteed or regulated. As long as the rules are the same for every business, the consumers will regulate that for us.
Update: For another look at just how far reaching the narrative is when it comes to education, be sure to check out the new happenings in New Orleans and Wisconsin.
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