Martin Armstrong "It's Not the Rich – It's The Total Cost Of Government That Is Killing The Economy"

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Submitted by Martin Armstrong via Armstrong Economics,

LEVY-TX (7)

QUESTION: Do you believe in a fairer system where there is a minimum income cap and a maximum asset cap? We live in an age where productivity has risen through the roof due to technological advancement. Don’t you think humanity is at the stage where it can afford to offer basic income to people so better checks and balances can be set in place to thwart the exploitation of people (see the third world).

A maximum asset cap would also act as a  positive filter in business ownership, don’t you think? The businessmen interested mainly in greed won’t fill those positions, but those who are driven more by other means, hopefully positive ambitions, will fill those roles (CEO,COO, managers, etc.)

Can you form a good argument against an asset cap of, say, $20mm? Can you think of a situation where 1 individual NEEDS more than 20 million, aside from using it to exploit others? If a cap isn’t set, that leads to the development of a tycoon, i.e., exploiter, of an industry. Increased capital permits the further increasing of capital at the accelerated rate. When left unchecked, greed and self-serving goals create a net loss, rather than a net gain.

Remember Martin, everything is connected. You can’t think on an individual level and expect it to not hurt evolution. This is what life is about. Evolution.

We’re headed towards doom, and the enemy is not just socialism, political cronies, and economic mobsters.

ANSWER: The standard of living has collapsed and it now takes two incomes to survive not one. That isn’t because of wages are not high enough. Do not forget, if you raise the wages you raise the cost of production and the consumer will pay that higher level in the end. There is no one-sided solution – you cannot raise wages without prices also rising. People would have more disposable income and would bid up prices by demand. If there was no 30-year mortgage, the price of houses would decline sharply because if people had to PAY CASH for a house, then the price of a house would fall to the point where the average income could afford it. Roosevelt created the 30-year mortgage to try to give people LEVERAGE to buy real estate to raise the price. That LEVERAGE has now impacted prices over the course of decades.

Assbly-Line-Ford

The answer lies in the consumption of wealth not that someone has more assets than another. Eliminate taxation and you will reduce the cost of labor, bring back jobs, and you will also eliminate the lobbying to escape taxes. Henry Ford invented the assembly line and brought the cost of cars down to the middle class at $240. He made a lot of money and expanded his business with it. If there was a cap on assets, you would destroy job creation. It REQUIRED the concentration of wealth to create innovation. If wealth is evenly distributed, you will not get enough people to agree to risk it all. Most small businesses fail after start-up. Some make it while a few really strike it big. That is the risk reward.

Big corporations die because they become eventually run by lawyers not entrepreneurs. I have been called in to many board meetings and watched the process first hand. As soon as a new company becomes public, the bureaucrats enter and the creativity vanishes. This is why they pay huge money for start-ups because they create what the big companies cannot – innovation.

It is not what an individual needs that is the issue. Take all the money away from Bill Gates. How will this improve your life at all? The issue is HOW MUCH is government consuming. But as long as they point to the “rich” they get to waste your money.

Social Security has altered society in ways people do not respect. Previously, family units were stronger because the system was the young took care of the old. Introducing Social Security changed everything. What children today save to take care of their parents?  That’s the state’s job. Welfare altered the system by rewarding women not to get get married. New Zealand nearly went bust on its program that sounded nice that if a woman had no idea who the father of the child was, the state took care of everything and gave her a house. They ended up with the highest percentage of women who had NO IDEA who the father of their child was. What woman does not know that except victims of rape?

China’s one child rule has seriously altered society there as well. Couples are now offering their estate to females to come in from SE Asia if they will take care of them. You cannot create these types of changes without seriously impacting society.

IRS-REV

Pictured above at the beginning is the tax burden upon society back in 1988. Even currently, the top 1% pay about 33% of all income taxes. At the start of 2000, the total amount of revenue collected by federal and state government in the USA exceeded 40% of GDP. This is outrageous and this is why the economy is slowing declining. This has nothing to do if somebody earned $100 million or $50 million as a CEO. That has ZERO impact upon your life – but what government takes out of your pocket REDUCES your standard of living – DIRECTLY.

Taxes

The solution is NOT to raise taxes on the rich, for government will still spend more than it takes in regardless of who pays. This is like fining your wife because the guy next door did not sort his trash for recycling. This is indirect. It is taxes that we must address – not how much someone else makes.

 

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Mon, 04/14/2014 - 18:18 | 4658501 Jam Akin
Jam Akin's picture

Score one for CPT Obvious.

Mon, 04/14/2014 - 18:21 | 4658508 Pladizow
Pladizow's picture

What insightful articles will be found on your blog?

Mon, 04/14/2014 - 18:34 | 4658529 cougar_w
cougar_w's picture

I'm going to start a blog just so I can extoll the virtues of feeding atheletes, media personalities and other bloggers I don't agree with to hungry jungle animals.

Every entry will end exactly the same; "The tiger took a shit the next day, and after he'd passed through 27 feet of digestive tract that guy didn't look any different than if he had start out a goat. Which should be a lesson to all of us."

I wonder if I can get away with requiring a subscription?

Mon, 04/14/2014 - 18:42 | 4658570 Arius
Arius's picture

yes, start the blog, establish a following, then publish an ebook - thats the recipe for disaster aka "the new definition of success" ...

kidding aside you might get away with requiring a subscription, the key thing to keep in mind though as you explore these new venues in your life is how many will actually pay for the subscription ... you dig???

 

i will promise to read your blog once in awhile, however you have to keep the same views you held in gulag days here at ZH ... thats a promise :)

Mon, 04/14/2014 - 18:49 | 4658593 cougar_w
cougar_w's picture

Fuck you. When I get rich on subscriptions I am totally gonna sell out like a cheap whore. I'll come back to ZH and be all "I bought the dip and got out at the top, beotches" and be all up in your grill about that shit and everything. Troll you like a mo'fo.

So see, something to look forward to.

Mon, 04/14/2014 - 18:51 | 4658599 zaphod
zaphod's picture

Who asked/wrote that Question for the article? It was probably the scariest thing I've ever read in my life.

Mon, 04/14/2014 - 18:54 | 4658615 Cognitive Dissonance
Cognitive Dissonance's picture

Where do I send my check cougar_w?

Just promise me there will be video of the entire process and I'm in and prepaid for a decade. :)

<Mrs. Cog says your jungle animals do it with style.>

Mon, 04/14/2014 - 19:01 | 4658629 cougar_w
cougar_w's picture

Ain't she just the sweetest thang that ever wore a straight jacket?

I'm writing a story now where I have her alone in an alley splattering a couple guys all over the walls just because she can. Girl's got that much class.

Mon, 04/14/2014 - 19:19 | 4658688 Cognitive Dissonance
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Just in case anyone is wondering what the hell cougar_w is talking about, click here for his original (very original) fiction.  :)

Mon, 04/14/2014 - 19:42 | 4658777 cougar_w
cougar_w's picture

Hey you know what I'll have Diamond and Fortran make guest appearances! How hard would that rock, huh? That would rock so hard.

"Thank you Mr. Madoff for your time we really enjoyed hearing about how your Ponzi scheme made your friends and direct family members rich beyond the heights of human avarice. Oh and look the prison authorities are here to take you back. But before they do I'd like you to say hello to a really big fan of yours. Diamond sweetheart, would come here and say something to Mr Madoff? I know he's just dying to meet you."

"Oh he's a fat one! Can I eat him now?"

"That would be fine, yes. Oops there he goes! Quick little fatty, isn't he? You better run him down!"

Epic lols ensue.

Mon, 04/14/2014 - 20:54 | 4659034 American Dreams
American Dreams's picture

Unfortunately Martin would still be in solatary if he had not sold out.  He is between the rock and the MIC, he is broken like many others would be in the same position.  Godspeed Mr. Armstrong

There be no shelter here

AD

Mon, 04/14/2014 - 19:06 | 4658644 kaiserhoff
kaiserhoff's picture

Finally, a reality show I can believe in;)

Mon, 04/14/2014 - 19:25 | 4658699 cougar_w
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We be pimp'n dat shit!

http://fedtoatiger.blogspot.com/

Mon, 04/14/2014 - 20:24 | 4658942 Baldrick
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you MUST pimp your blogsite at least once a day.

Tue, 04/15/2014 - 04:55 | 4659840 ebear
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"the key thing to keep in mind though as you explore these new venues in your life is how many will actually pay for the subscription "

You'll PAY to know what you really think. -- J.R. "Bob" Dobbs

Tue, 04/15/2014 - 12:33 | 4661560 ILLILLILLI
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One up for "Bob"...

Mon, 04/14/2014 - 18:39 | 4658540 Jam Akin
Jam Akin's picture

Saying that cost of government is out of control (by comparison to anything) is hardly insightful.  It has been so for far too long.  

And I'm not here to pimp my blog, unlike (too many) others.

Mon, 04/14/2014 - 19:08 | 4658653 Serfs Up
Serfs Up's picture

Let me re-cap here.  Armstrong serves many years in Federal prison for angering Goldman Sachs.  

He gets out and "decides" that gold is no longer useful and that the rich are not the problem.

Think of the odds!

Please, won't anybody think of the odds?!?  :)

 

Mon, 04/14/2014 - 19:52 | 4658826 Arius
Mon, 04/14/2014 - 21:46 | 4659208 Jam Akin
Jam Akin's picture

Amen.  I used to enjoy Armstrong's typewritten letters from behind prison walls.  Those were insightful.  Then came that u turn you mention...

Mon, 04/14/2014 - 22:16 | 4659286 Buckaroo Banzai
Buckaroo Banzai's picture

The rich AREN'T the problem. A healthy economy requires rich people who EARN their money in order to concentrate capital into the hands of those who can use it wisely.

Our problem is that the wrong people-- the incompetent, the psychopaths, the politically connected-- are the ones getting rich. Capital is accumulating in the hands of people who only know how to squander and misallocate precious resources.

Tue, 04/15/2014 - 05:02 | 4659845 ebear
ebear's picture

"Our problem is that the wrong people-- the incompetent, the psychopaths, the politically connected-- are the ones getting rich."

Nothing succeeds like excess.

Tue, 04/15/2014 - 08:36 | 4660123 PT
PT's picture

We'll just quietly ignore that little fact that THE RICH BOUGHT THE GOVERNMENT AND NOW THE RICH IS THE GOVERNMENT. 

Oh, did that sound a little harsh?  Let me try again:

They legally made donations to political parties, engaged ministers in important topics, and legally assembled lobby groups to influence legislation in order to better the needs of commerce.  What you saw was democracy in action!  If you had any better ideas then you should have lobbied govt, but given how poor you are, you could not have possibly had any valuable ideas.  Thank goodness you couldn't afford to lobby govt with your useless ideas which probably would have destroyed the economy even worse that what it is today.

Does that sound better?

Mon, 04/14/2014 - 22:18 | 4659295 Buckaroo Banzai
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If the idea that the cost of government is out of control is so obvious, why do a huge majority of the population think otherwise??

Mon, 04/14/2014 - 22:56 | 4659425 Jam Akin
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Blindness, apathy, convenience, confusion, pick your poison.  It is quite obvious to most folks reading along here at ZH.

Tue, 04/15/2014 - 07:21 | 4659923 TruthHunter
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Definitely don't raise taxes on the rich. When they own everything,

the poor(in the police and military) will bring Stalin back. Then

they won't own anything.

 

Roosevelt went too far. But some types of income deserve a

90% tax rater(aka a fine)

Mon, 04/14/2014 - 18:18 | 4658502 stant
stant's picture

Can't have cows or a good arrowhead collection without thier eyes on it they are so broke

Mon, 04/14/2014 - 18:22 | 4658512 Winston Churchill
Winston Churchill's picture

They want it all. everything.

Mon, 04/14/2014 - 20:21 | 4658924 Greenskeeper_Carl
Greenskeeper_Carl's picture

aside from not mentioning the fed as the mechanism of wealth transfer, and wealth inequality, I agreed with much of what he said, yet this article got a pretty low rating. Who that voted low would like to explain why?

edit:

most of the thread seems to be people blog-pimping, then geting called out for it, lets stay on subject

Mon, 04/14/2014 - 20:50 | 4659024 EvlTheCat
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http://dealbook.nytimes.com/2011/03/15/ex-adviser-out-of-jail-after-11-y...

Martin Armstrong is a FED, leg humping, cheerleader.  Read his, "The Paradox of Solutions" for more insight.

Mon, 04/14/2014 - 22:22 | 4659305 Buckaroo Banzai
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Martin Armstrong happens to think that the Federal Reserve, as originally chartered, has a useful role to play. It's not a completely unreasonable idea, even though I disagree with it. I think he would certainly agree that the Fed way overstepped its original charter many decades ago.

My point is, Martin Armstrong gets way more things right than he does wrong.

Mon, 04/14/2014 - 18:21 | 4658510 Seasmoke
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ISRAEL REVENUE SERVICE MUST BE BE ABOLISHED. (And property taxes too !!)

Mon, 04/14/2014 - 18:39 | 4658557 CrashisOptimistic
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Taxes were raised on the rich in January of 2013.

The GOP voted for it.

Mon, 04/14/2014 - 21:16 | 4659103 Stuck on Zero
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Rich meaning anyone earning minimum wage and up.  The very rich had their taxes lowered.

 

Tue, 04/15/2014 - 09:36 | 4660408 TruthHunter
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"Rich meaning anyone earning minimum wage and up." 

Exactly, by global standards, there are virtually no poor in the US.

Mon, 04/14/2014 - 18:24 | 4658516 buzzsaw99
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bollocks

Mon, 04/14/2014 - 22:37 | 4659361 Poor Grogman
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Words of wisdom as always my fair faced chap

Mon, 04/14/2014 - 18:24 | 4658517 cougar_w
cougar_w's picture

But take the converse argument -- cut government by 90%, leave the wealthy intact -- and you are left with weak government and powerful rich fuckers all wanting to be King George the Next.

On the plus side, guillotines are cheap.

Mon, 04/14/2014 - 18:35 | 4658546 Poor Grogman
Poor Grogman's picture

So anyone who is much more innovative and successful than "normal", must be evil and therefore should be taxed more than everyone else, or alternatively be subject to mob rule capital punishment.

After all "it's only fair".

What a crock of shit!

Mon, 04/14/2014 - 18:36 | 4658551 Superdude
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So if someone is innovative enough to pimp put your daughter or wife that's cool? It matters how one comes up on their wealth and how they maintain it. 

Mon, 04/14/2014 - 18:44 | 4658578 Poor Grogman
Poor Grogman's picture

Of course that's correct, it certainly does matter how one comes up with their wealth, natural law must prevail in all cases.

I'm sick of hearing that just because you worked had and are successful you must be some kind of a ( insert snark here) person.

There ARE clever hard working honest people out there, just like there are lazy, envious, stupid people out there as well.

Deal with it.

Mon, 04/14/2014 - 19:24 | 4658693 Raging Debate
Raging Debate's picture

Zero Hedge - I gave Poor Grogman a downvote and what appeared was two upvotes and three downvotes. Stop the algorythm shit, how can this site have users that promote liberty but allow vote rigging?

Poor Grogman - You are right buddy. Some are so smart they learned how to bribe corrupt officials. Yeah that is really innovative man... You seem new here. You know what that means... Actually, your retarded comment does not even deserve an argument.

Mon, 04/14/2014 - 19:25 | 4658702 Poor Grogman
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New tip for free

Shhhh don't tell anyone, (Read the comment).

Now there's a thought...

Mon, 04/14/2014 - 21:09 | 4659073 Day_Of_The_Tentacle
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With a sub par comment like that, you are just "all raging and no debating", my friend. Too simplistic and too piss-antsy. 

Tue, 04/15/2014 - 11:57 | 4661365 fedupwhiteguy
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hey, rd, try refreshing your page before voting!

Mon, 04/14/2014 - 19:22 | 4658695 Superdude
Superdude's picture

Of course there are smart people working, some of whom find value in things other than money. I'm a doctor, I could exploit others because I have knowledge and abilities others do not have. Just because one can do something doesn't mean they should. The more I look at the situation the less clear and more complex it all becomes. 

Mon, 04/14/2014 - 18:40 | 4658559 cougar_w
cougar_w's picture

No I'm just summarizing the lessons of 12,000 years of human history. You know, that same history Jefferson and Washington (who could read) where grappling with when they thought to start a new nation. Oh BTW, the French came along 20 years after them and did things a little differently, if you want another reference point.

Read a book then come back here and let us know how many real options we have here, cuz I'm all outta ideas.

Mon, 04/14/2014 - 18:50 | 4658595 Arius
Arius's picture

i gave you an idea in my reply to your first post ... JUST DO IT!

simple very simple ... i only wish i could be as good at doing things as i am at advising others how to do it ...

Mon, 04/14/2014 - 19:03 | 4658633 cougar_w
cougar_w's picture

You maybe should not have lit that fuse though. I have a really bad habit of following through on really bad ideas ...

 

Mon, 04/14/2014 - 19:18 | 4658671 Arius
Arius's picture

got nothing to lose ... might turn around to be good ... the key thing is to keep your values and conscience.

it seems you are highjacking Martin's entry, this was supposed to be about his blog not yours :)

 

btw, i was joking above, sorry if it was not that clear ... i thought as a longtimer you should be able to read between the lines  ... too much to ask?  joking ... :)

 

 

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