Economic Multipliers (181)
Do you know what these are?
They help CREATE wealth in systems.
‘Capital’ is an economic multiplier.
I’m a bit curious as to what is going to happen in the United States in the next four years.
The United States has many unique challenges and, whether you think so or not, just like all the other countries in the rest of the world, it has a finite number of resources to deal with those challenges.
That is why economic multipliers are so important: When you ‘spend’ a ‘resource’ or ‘capital,’ the goal, if you’re really lucky (luck also takes ‘work’), is to individually and societally get more back.
When I was a kid, if you had parents or relatives who owned businesses, it’s likely that you worked. If the business was profitable enough and your parents wanted you to get a good grounding in valuing work (done for others or when hiring people), you were paid wages. And, if they couldn’t pay you due to their own economic circumstances, they explained your value as part of the family and why you couldn’t get paid and encouraged you to venture forth as a young adult into a work arena which could pay you.
When you consider all the small businesses that operated across the United States just 60 years ago (2-3 generations), it would be possible to say that a lot of the ‘old wealth’ that was created was because small business owners had kids who helped.
No one ever specifically explained to me the need for the accumulation of well spent capital for societies to function well as a whole. One business I worked for had railroad access and adjacent water driven turbines (electricity). Federal, state and private capital built those projects well before I was born.
Whether you like it or not and, appreciate – just for the United States – the individuals who put up that initial capital were most likely white men.
You’re not going to believe this: They did so not just because they saw some societal benefit. They did so because they wanted to make money (and have more money to invest).
You’ll find many people in the world who just like to make money (or gain access to it).
As builders, ‘true capitalists’ are a unique breed.
Telling them that they shouldn’t be wealthy is like telling them that you don’t want a sanitary system or schools or decent roads to drive on.
It is true that the United States probably needs less people who just want to make or access money and spend it.
We may be lacking enough ‘true capitalists’ – those individuals who come together and pool their money and underwrite large projects which have an impact on thousands and potentially millions of people.
The United States (as do all the other countries of the world) has another ‘challenge.’
When the U.S. was founded, many public projects were privately funded. Keep in the back of your head that private money did this in part because they wanted to make more money (economic multipliers). In an evolutionary process in the U.S., today most public projects are publicly funded. Private corporations vie for ‘public’ dollars.
That shift is forcing the United States to ask if sufficient wealth flows back in through government systems to adequately and appropriately support existing infrastructure and new capital projects.
The question is a worthy one for every nation in the world.
I’ve noted previously that I don’t think punitive taxation on businesses works – mainly because if businesses cannot accumulate capital, they also cannot build, acquire and/or have sufficient reserves set aside for things like property taxes for years when business conditions are more challenging.
If we could get people in all the nations across the world to focus on taxation of ‘extreme revenue’ that sometimes flows to individuals (and not in ‘punitive’ ways), a lot more would get done in the world.
The mere debate is a simple statement that a portion of the wealth that any person receives is a result of the hard work of lots of people, including past generations.
Will the U.S. Congress debate the value of this strategy?
If they don’t and you believe they should, then it’s time to run for office.
Just remember if you do (and get elected): Government money can only be spent once.
When you spend it, you have to think about all the ways you’re creating value – and also hopefully – the foundation for new economic multipliers which can generate future tax revenues for future generations.
P.S. I can find lots of amazing things in the world today. One of the most amazing to me is the low cost of tools. Of course, if you buy something like a drill and you’ll seldom use it, make sure you get a corded one or even a hand powered one.
Basic hand tools can be passed down through generations of people (imagine the economic multipliers of that).
Only 100 years ago, nails and screws were ‘coveted’ by mom and pop builders and people were willing to carve their own hammer and axe handles to keep broken tools functional.
We live in a different world.
In the United States today, I think it’s possible to say that:
a person who hunts, fishes or gardens values a freezer (unless they smoke, dry and/or can everything).
a person who farms values a tractor.
a family with kids values a wash machine.
In a ‘middle class’ world in the U.S. about a half-century ago that included a relatively ‘free’ college education, these are some of the things I (and I’m sure many, many others) had done before turning 18:
concession stand attendant
dairy farm hand
warehouse sweeper and barn sweeper
rock picker (as in clearing agricultural lands)
food processor (as in helping pick, can and freeze fruits and vegetables)
leaf raker and snow shoveler
box car unloader
apple tree pruner
garbage dump area reclaimer
brush clearer and trail builder
fish and wildlife habitat improver
When I look back through this list, there is one thing that sticks out: I was surrounded by a lot of tools. Perhaps that is why I find them so fascinating today.
Although I personally don’t always have the same definition as others as to what it means to have a good life, I’m pretty sure that everyone I’ve ever met wants to have one.