Are there things that governments do that destroys the prosperity of the people? Once you can understand key points of prosperity then you can start to see how governments destroy prosperity in six major ways.
Key points of prosperity:
1. Prosperity is in products and services not money. Money is used only as a medium of exchange. The more products and services circulating in a country, the more prosperous the country is. However, the products and services must also be of a good quality. You would not consider a country to be prosperous if those who rule or a few in the country has tons of money and the people are without good homes, furniture, clothing, cars, and etc.
2. Prosperity is destroyed through one thing and one thing only, “a lack of profit.” Profit is made on two sources, 1.) A product or service being sold and 2.) Labor being performed.
3. Profit is made on a product or service only when the product or service cost less to produce than it is sold for, and the cost of the product or service is low enough to entice the public to purchase it.
4. Profit is made on labor when it covers more than the basic living expense of food, housing and utilities, thus extra money is available for purchasing extra products and services.
5. Profit is made when there is enough money circulating to provide capital to business owners to purchase the items needed and pay for labor to produce products and enough money for the consumer to have to buy the products.
Here are six things governments do to destroy the prosperity of the people by destroying the profits:
1. Over taxing the people. By over taxing the people, money that could go for extra products and services goes into the hands of the government which never produces anything only consumes the money.
2. Over regulating businesses. Over regulating business will cause many otherwise good businesses to give up and go out of businesses or not start in the first place. This will cause a loss of jobs, not only within the business itself, but in many other businesses they would be purchasing products from as well.
3. Creating wage and price controls. Businesses must create a profit to be successful. If government issues a law raising the minimum wages, then a business would have to increase the price of their product. This is counter-productive as the wage earner may receive a higher wage but have to pay higher prices on the products he purchases as well. Also the retail business will have to put more capital in the products they have on the shelves and when the capital is not available to do so, they suffer as well.
4. Promoting social welfare, subsidies, bail outs. When governments become involved in social welfare, subsidies or bail outs,(meaning taking from those who produce by their labor and giving to those who don’t), they create a host of problems that destroy prosperity. Here are some of the problems: 1. Those who could work stop working. 2. Those who could produce stop producing. Those who would share stop sharing. 3. The criminal element comes in and takes unfair advantage of the programs implemented. 4. More and more government workers are needed to implement the programs. 5. An overwhelming amount of tax dollars are needed. 6. More and more immigrants invade the country for the benefits given out, instead of the opportunities to earn a better living for themselves. This list of problems created could become long.
5. Allowing the circulation of money with nothing to back it. This technique of governments which causes more money to chase after the same products and services, which in turn causes inflation or higher prices. The money will become worth less and less because it takes more of it to buy less and eventually the money itself will becomes worthless.
6. Become involved in endless wars. When the government becomes involved in endless wars, good workers join the service and go off to war instead of working and making a profit. More money is required to support the war causing either higher taxes or extreme government borrowing from other countries. Whenever borrowing takes place, interest is paid, which takes money out of circulation in this country and sends it to other countries.
Another element in all of the above, is the fact that such government infringements creates more crime and the government ends up spending more and more dollars on police forces, courts and jails, which reduces productive workers and reduces money needed in circulation to create profits.
When children are without jobs because the market can’t afford to pay them such high wages as required by wage laws and are without proper supervision because both parents are working to put bread on the table or they are off to war, children get bored and they will often join gangs and get involved in criminal activities.
Summary, here are the six ways governments do to destroy prosperity:
1. Over tax
2. Over regulate
3. Create wage and price controls
4. Promote social welfare
5. Circulate money with no backing
6. Become involved in endless wars
The less the government is involvement in the above activities, the freer, more prosperous and happier the people are.
Learn more about the proper role of government in the book, The Making of America, found on our website: http://www.learntheconstitution.com
Linda N. Hackett