Recently I had a conversation with a young republican at a local sushi restaurant.  The topic was capitalism and why he believed it to be better than socialism, and why tax cuts for the poor classes and tax raises for the rich were not beneficial to serving the system as a whole.  First of all, his stance was that capitalism would always be better than socialism because it creates incentive for people to work harder, because they can then do better and keep more for themselves.  Capitalism breeds competition which drives growth of economies etc.  Socialism on the other hand does not promote competition but rather halts it because everyone is equally working for everyone else.  Thus, there could be no drive to be better or compete with others because one could not keep more for themselves.

Secondly this young republican went into a mathematical example of how the “Trickle down economic effect” works.  His example included a business man who was buying a building for one million dollars and how realitors, and contractors, and inspectors, and eventually buyers all make money off of his initial decision to buy the building.  He then went into the percentages of profit that he would attain from this business deal and came to the conclusion that if tax rates were higher, his margin of profit would be considerably less.  (according to his numbers, the Obama taxes on incomes higher than $250,000 per year, would have caused him to make a profit of $90,000 versus $150,000 before the raising of tax).  Therefore he concluded that because of this new tax rate, his margin of profit would not be worth the risk because he could not invest that money in banks and make back more.  So he says he wouldn’t buy the building, the contractors then would not get the job, the realitors would get a percentage, and the people would not have a place to live.  Mean while, because all these people didn’t make money, they would not be going to Best Buy to get a new TV and Best Buy would not be selling new TV’s and then they would have to lay off their minimum wage employees. 

Advertisements