Friday, February 05, 2010

Starting the Cycle

The government is making noises that a sub $250,000 per year tax cut would lead to new jobs being created. How I see it is the cycle working like this:

Step 1: Consumers have more money to spend.
Step 2: Consumers purchase goods from corporations.
Step 3: Corporations have more money.
Step 4: Corporations hire more people.
Step 5: Return to Step 1.

Not too bad on the face of it, but there is one assumption that does not fit into the history of some of the actors involved. At the moment when Step 3 comes into effect the usual suspects will take offense and demand a remedy. In short "Tax Them!"

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