Wealth which shrugged during President Obama’s first term by sitting on the sidelines and awaiting his electoral defeat is now leaving in droves as entrepreneurs hastily sell off businesses prior to the coming fiscal cliff.
The anemic growth experienced under President Obama’s first term was the direct result of a capital strike engaged in by wealthy individuals who were presented with risks to their capital which far exceeded the rewards of employing that capital. Unable to obtain rewards commensurate with the levels of risk they faced, these wealthy entrepreneurs sat on their capital and waited for better opportunities. They had plenty to sustain themselves and had no need to earn more in such a risky climate. They had the luxury of doing nothing then, and now have the luxury of relocating given the election results.
President Obama has portrayed his tax increases in the most blatant class warfare terms by asking the wealthy to pay a little more and demonizing the wealthy as some predator class which feeds off of the misery of other Americans. Never does he mention that the wealthy invest in the development and manufacture of products which make our lives easier and raises our standard of living. Entrepreneurs such as Steve Jobs, who created such popular products as iPod music players and iPad portable computing devices, are portrayed as acceptable capitalists benefitting mankind, while those who produce the energy required to power these nifty devices are portrayed as evil, greedy businessmen who only seek to despoil our environment in the pursuit of their profits. I’ve yet to see an iPad with a solar panel or windmill attachment, so I presume we will continue to have a need for batteries and the manufacturers who produce them.
When capital is punished through higher taxes, it flows much like water to friendlier climes where it is appreciated and allowed to thrive in productive uses through lower tax rates, less stifling regulation, and fewer restrictions on its travel. Even the vaunted Apple Computer, so lauded for products loved by those on the left, manufactures these products in China using factories which have been exposed as having brutal working conditions which would not be tolerated in this country. Yet, Apple continues to get a free pass from criticism by the left. The hypocrisy is overwhelming and serves to expose the left’s tolerance for industries it favors while opposing those in its crosshairs.
Make no mistake: President Obama has raised taxes dramatically on capital in the form of inflation which is lurking around the corner waiting to be unleashed as we tumble over the fiscal cliff. The Federal Reserve has pumped trillions of dollars into the economy through a succession of Quantitative Easing mechanisms designed to hide the true picture of our economic calamity. President Obama was able to hide the worst of the economic problems through this influx of cash to win reelection, but the bill is about to come due just like it did during the 1970s when Stagflation had too much money chasing too few goods resulting in a stagnant economy, stagnant wages, and increasing prices. We already have the stagnant economy and wages, and we’re about to be hit with the increasing prices.
Are we going to sail over the fiscal cliff? You betcha! Given our poor economy and the progressives’ desire to impose failed Keynesian remedies to the situation, there is no other alternative but to sail over the cliff. American government has over promised, overspent, and over borrowed and now must pay up. The capital on strike during President Obama’s first term that is now headed for the exits as fast as possible in preparation for his second term is well aware of this and is moving to more friendly climes. The wealthy see massive tax increases through the tax code, inflation, and through imposition of the Affordable Care Act.
A look at the Fraser Institute’s “Economic Freedom of The World: 2012 Annual Report” reveals that America is far from being the freest country in the world. We come in 18th behind such bastions of liberty as Bahrain, Mauritius, and Estonia. We have the highest corporate tax rates in the industrialized world and still can’t raise enough revenue to avoid deficit spending. But, we’re told that asking the wealthy to contribute just a little more is going to solve our economic crisis. Any American with a shred of common sense realizes that this will never happen until the federal government drastically reduces its out-of-control deficit spending. America is borrowing money it doesn’t have to spend on things it doesn’t need so a political party can remain in power.
France recently raised taxes on wealthy French citizens to a rate of 75% in keeping with new socialist President François Hollande’s campaign promises. London real estate agents are celebrating record sales of property to wealthy French looking to escape this onerous economic burden. Assaults on capital merely drive capital away because the wealthy can afford to leave. That displaced capital will now benefit the British at the expense of the French as it’s employed in a more favorable location. Capital punishment never works precisely because the wealthy can afford to leave. It’s time Americans fully realized this and demanded more favorable treatment of the capital which creates jobs and wealth that improve our standard of living and prevent us from becoming burdens on the taxpayer.