The economy is a vastly complex thing and anybody who claims to have athorough understanding of it is not telling the truth. However, to take a leaf out of Plato's book one must assume that just as only a trained navigator can saila ship back to shore, so too can only a trained economist have any real understanding of economics.
Simply put, there are counter-intuitive realities that do not occur to the layman and these 'instincts,' incorrect though they are, are easily exploited by professional sophists with hidden agendas.
Thus the raising of taxes does not necessarily mean that the person being taxed will have less money to spend. It all depends on how much they are raised by and what the revenue is used for.
Think about it.
Your personal income is spent on two very different things, that which you want and that which you need.
Now, there is of course, some overlap between these two concepts. For example, you need food, unless you wish to die a particular nasty death, but you still get to buy the food that you like, which of course is not always the kind of food that is best for you but hey, who wants to live forever?
Other than the kids from fame that is.
The oft praised right wing mantra of choice is however, a chimera. You have to eat. What you don't have to do is buy yourself a gold plated rubix cube, an Xbox for the 'upstairs' room, a steam shower, 12 dozen memory foam pillows in the shape of assorted Marvel super heroes or even a set of chef's knives so sharp that you could shave a fly with them. These are thing you want or if not those specific things then at least some other mostly useless crap.
Within this second group, the government has very little excuse for getting involved. Oh they might offer a grant for more eco- friendly cars or other goods that are in line with parallel policy such as reducing carbon emissions but generally speaking, government won't pay for your annual I-phone 'upgrades.'
They could of course; If the US government ordered 320,000,000 Iphones tomorrow they'd get them at a huge discount and I'm pretty sure we all understand why that would be so.
Those savings could be passed on (minus an admin fee,) to the consumer.
It would be monstrously unfair to the producers of other phones of course and that's just one reason why governments tend not to do these things.
Still the logic stands. Buy 320,000,000 of pretty much anything other than grains of sugar and you can expect to get a discount. Now hold onto that concept because we're going to try and use it in ways that make Bill O reilly go frothy at the mouth.
The first group -- the stuff we need for those of you not paying attention-- is different to the second only in so far as that when we apply the economy of scale to it, the effect on society is both positive and immediate.
And it might surprise to realize that this is the reason that we socialized certain industries in the first place. That's right I said it: the USA is in many ways as socialist as anywhere else in Europe. Pick an area where the needs of the community are put before profit, the fire department, road infrastructure, the courts, most prisons, the police. Even education. Dial 911 in the USA and you get through to socialized services that are free at the point of contact; unless of course you need medical care.
We'll get back to that.
In the good old days you paid a private company to put out fires. Rival companies would let your house burn to the ground if it wasn't covered by their companies plan. They would stand outside your house in case the fire spread to an adjacent building that was protected. Men, with hoses. Stood outside a burning building.
Think about that.
They couldn't rush in becuase of course, if they did that, then nobody would pay the insurance premiums. Indeed many who could not afford protection did not bother; they took a chance. And often, paid for it with their lives.
The property damage, the disruption, the workers too crispy to go to work, taxpayers too frazzled to pay taxes. That was the result of free market firefighting.
And so! The government realized it was messed up, stepped and socialized the whole thing. You're all covered whether you like it or not. Your premiums are about even with how much it costs to cover the area with a sufficient fire fighting force. No shareholders need to be paid. No company needs to turn a profit. It just costs what it costs.
Now,many in government would love to go back to the old system but they can't. The first time your bill went up by 4000% overnight would be followed by the first child on TV burnt to death whilst fire fighters played dice outside. Nobody would stand for that or at least no rational person would. We're just not used to the site you see. Having enjoyed the benefits of socialised fire services for many years we see that it works an we want to keep it the way it is.
We can go forward using similar logic.
You received or were at least offered a 'free' education in so far as from the age of around 5 to the age of around 18 you didn't pay for education.
At some point the government decided that the economy needed an educated population in order to compete. The need was so great that it could not be given over to private companies. There's nothing wrong with private companies of course but they have profit margins and shareholders and that makes them more expensive. OK for I-phones, not so OK for drinking water. For example...
We're Getting Fleeced: Privatized Water Is 58% More Expensive Than Tap Water, Major New Study Finds.
It all comes down to two things; how captive an audience is and some ugly truths about human nature.
By centralizing high schools and operating on a not for profit basis, costs could be kept down, which was good. A more immediate benefit was that everyone got to go, which was even better. Since the wealthy paid more in taxes they could subsidize the poor and ensure that they too got an education. The rich for the most part didn't complain about this in the days before Fox decided that news should be immediately comparable to the metaphorical opening of a sluice gate into the open mouths of those it claims to serve.
The reason they did not complain was because they too saw the wisdom of educating a population at large; rich people need educated labour to help them make money. They also needed people who knew how to build roads and bridges, who know how to write books and music for them to enjoy, how to provide medical services and so on. There was after all nothing stopping them sending their kids to a fancy private school if they so wished.
Even with universal education, some people have issues.
The point of all this is that the state pays for your schooling because it is in the state's, and pretty much everyone else's interest to do so.
As with the above fire department example, if you payed directly for your child's development, it would be hellishly expensive. Indeed, if during the 19th century the USA had decided against the idea of socialized education, an idea that all other civilized nations were embarking on at the time I when people mentioned America today we'd all immediately picture toothless simpletons wandering around a continent sized country with the GDP of Bulgaria. You do pay for high school, it's not free. You just pay a lot less.
I get so sick of Republicans and quasi Republicans like Hilary Clinton going on about 'free stuff' in condescending tones. They all know that somethings have to be socialized.
Health is an obvious example here. In the USA you pay around $10,000 dollars a year. That's three times what I pay in the UK since my health care comesdirectly out of my wages, as does everyone else's. The USA ranks 34th in the worldin terms of health care provision and yet France, which ranks first, manages to do it for only $5,000 per capita. In short, US health care is overpriced and ofpoor quality. For more on that see here. Ian Jackson's answer to What are some things that America should adopt from other countries?
Yoshi would know what to do. Yoshi always knows.
So paying $3000 to the government extra in taxes would be a very bad thing if it wasn't for the fact that at the end of the year you were $7,000 a year better off. That 7k is the stuff that the insurance companise creamed off the top. You know, theses guys.
It's not how much you pay, it's how much you have in your pocket at the end of the year that counts. Indeed, that might be as much as an extra $22,000 per household UMass economist paints a rosy picture of Sanders economics (which is a lot of money for you to spend doing what Americans have always been good at, consuming.)
Here, you really don't need a PhD in economics to inform you of what affect such shopping sprees might have on a country where consumer spending makes up 71% of its entire economy.
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For more, please see Ian Jackson's answer to Who should be the new president of the USA and why?
For a deeper understanding of politics in general, check out some of my professional work here Macat Analysis
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