The economy works the way Adam Smith, David Ricardo, J.B. Say and Josef Schumpeter said it does. Private enterprises generate profit by allocating resources the way consumers want – the price of the resources is driven by other uses, thus if you can generate a greater profit from one use than from another, that means the consumers, in the aggregate, want them put to that use.
Profits tell producers what to produce. They tell investors where to invest capital. Reinvestment of profits is the most efficient way to fuel growth / wealth creation. The more you tax profits, the less reinvestment, the less ‘natural’ growth, the more the Fed, politically, must fuel growth artificially and temporarily via monetary means, ultimately producing inflation (1930s-1970s).
Tax cuts allow the economy to reinvest its own earnings and grow naturally, allowing the Fed to focus solely on inflation and maintain stable prices, thus creating long expansions (1980s-Today).
Gotta be the Lib quote of the week – “who the heck is Josef Schumpeter” – - – - while posting an opinion on economics…… Kind of like spouting off about baseball and then asking “who the hell is George Brett?”
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