As I was getting dressed this morning, I was talking to myself, and realized that in a capitalist society we have three classes in this economy, (I use the word class here not to say rich or poor, but as a classification). The first class is the Entrepenuer, the one that comes up with the new idea or new technology that other people would be interested in buying. The second class is the investor, the one that doesn’t neccessarily have the idea, but has the money to give to the entrepenuer so that they can the entrepenuer can use that money to implement their idea, all the investor asks is for a return on investment. The third class is the worker class, this class provides the labor that makes the good that the entrepenuer came up with and designed, and all they ask for is the wage that the entrepenuer will pay for their services.
Now from what I have observed the crisis of confidence is coming from the investor class, which in turn is affecting the the access of the entrepenuer to funds, and hence not allowing the entrepenuer to hire the working class to work.
Where the Democrats get it horribly wrong is that they believe that they can stimulate the working class and regulate the the investor and entrepenuer class. This type of thing is prone to utter and abject failure. They do not seem to understand or get that without the confidence of the investor getting a good return on the risk that they are taking to invest in the entrepenuer’s idea, that the entrepenuer only has a design on a piece of paper, hence can’t hire workers. Things such as letting the cap gains taxes rise or stay high, is the exact thing, that tells the investor class to take their ball and go home.
In my mind there are two solutions to this issue. 1. Cap gains tax cuts or elimination, I don’t understand how anybody expects an economy to grow when we tax the same dollar two to three times, I mean think about it, someone makes a dollar through a job or by whatever legal means, and gets it taxed, then takes that dollar and invests it in something, and when he pulls it out, it gets taxed at a cap gains rate, if it made a return, and also gets taxed as personal income. That alone would make me think twice about the return I am getting on my investment, if most of that return is being confiscated by the government.
The second solution is for the government to get out of the business management business for which they know nothing about. They want to tell banks how to run their business, however never been bankers, and want to tell automakers how to run their business without probably knowing what end of a claw hammer is the one that pounds the nail in, instead of which end helps pull the nail out.
Unless the attitude changes, we are indeed in for a long haul, hopefully they can’t do too much more damage in a year and 8 months.