Ben Franklin on the economy
Benjamin Franklin started writing "Poor Richard's Almanac" in 1732. Franklin was only 26 years old, but yet his writings were so wildly popular that they outsold the Bible. I'm sure everyone can even quote Franklin, although you may not realize that you are--that's how prevalent his commentary is in our culture. For example, "no gains without pains."
In Franklin's day, there was no federal income tax. That came about as a result of the 16th Amendment, passed in 1913, over 100 years after he died.
Let's detour for a moment on the purpose of taxation. There are two main philosophies: one is that taxes are a source of revenue, and the other is that taxes are a means to regulate behavior. If anything is taxed beyond a certain tolerable level, which varies depending on the item taxed, people will use or do less of it, thereby generating less tax revenue. And as another consequence, selling less of whatever it is, which negatively impacts the businesses that sell it.
The problem with taxes as a source of revenue is that the only way that works is if spending does not rise. Too often, in history, as taxes are raised, spending also increases, thereby negating any benefit of raising taxes.
Franklin knew this as he wrote in 1745, "Beware of the little expenses, small leaks will sink the greatest ships." And in another quote, "The second vice is lying, the first is running in debt."
With that background, it is clear that Franklin would disapprove of our current national budget and debt. Who to blame would be less of his focus, but the solution is starkly clear: spend less, regardless of what you do with taxes.
And stop blaming George W. Bush. We can point the finger at many presidents (though I prefer to blame Congress) over the past 30 years, but the point is that we have the debt now. To go back to Franklin one more time, it's not politically popular to cut spending, but it's imperative: "To serve the public faithfully, and at the same time please it entirely, is impractical."
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