Opinion Supply side works

According to William H. Boyer in his guest editorial in The Nugget February 17, Henry Ford knew more about economics than George Bush.

He reasoned that to help sell more Model T Fords to employees, Ford raised all his workers wages to $5 a day.

Well, if raising wages to $5 a day would sell more Model T's, why didn't he raise them to $10 and sell even more cars? Of course, the price of the cars would have had to be increased so much that few consumers would have been able to buy them.

I think old Henry was pretty smart to give his workers more money, but don't forget they gave it back when they bought his cars!

The real accomplishment of Henry Ford, as every business student is taught, is that he invented the assembly line which reduced the labor cost of building cars to the point that he could efficiently pay his workers more per day.

Many other producers of goods followed his lead and this helped give America a big push during the Industrial Revolution.

According to the U.S. Department of Commerce, personal consumption increased in 2002 by more than $300 billion over the previous year and this is what has kept the economy going.

Wages also increased in 2002, even with higher unemployment, and this further supports that it is a lack of spending by business that is keeping us in rather flat economic times.

Using "supply side" economics, the federal government collected just over $1 trillion in taxes in 1992, and about $2 trillion in 2002, or over 100 percent increase in just 10 years!

This flood of taxes did not result from higher tax rates which Clinton and the Democrats imposed in 1993, which simply slowed the expansion a little.

So what happened during this time? Revenues poured in, just as the supply-side economists predicted during the Reagan presidency.

The expansion started in 1990, two years before Clinton took office, and ended two years prior to the end of his administration.

In effect, Clinton was lucky.

No government policy makes things or sells them. People and companies do. Through hard work, good management and risk taking, the economy expanded. In other words, the economic pie got bigger, making it easier for everyone to get a larger share of the pie.

And this is what happens when supply side economic policies are followed.

As for the implication that the country is ripe for some sort of collapse of the social structure which can produce revolutionary politics, those below the federal government's poverty line are not so bad off as many believe.

Data show that 40 percent own their own homes, 70 percent of poor households own cars (25 percent own two cars), 97 percent have a color television, nearly 75 percent have VCR's, two thirds have air conditioning, and 85 percent say their families have enough to eat.

Certainly there are real Americans having a rough time of it, especially here in Central Oregon.

We all know of need and want right here around us.

But unlike any other society, America has created a level of prosperity unmatched in the history of the world that benefits most of the members.

Robert Reich, Secretary of Labor under President Clinton, complains that the proposed tax cuts will only make the rich richer.

When a corporation earns a profit, it pays a tax as high as 35 percent on those earnings. Many corporations then pay dividends to their stockholders.

It is an important principle that Americans shouldn't be taxed twice on the same income.

Tax rates as high as 75 percent on the income from equity investments is bordering on confiscation, and it discourages savings and investment in our economy.

Further, almost half of the benefits of repealing the dividend tax will go to senior citizens, so this isn't just "tax cuts for the wealthy."

Eliminating the tax on dividends will also draw people back into the stock market and as it begins to recover, help middle class families with their retirement accounts invested in the market.