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From Here To Economy Essay

1122 words - 4 pages

From Here to Economy accomplishes what it sets out to do, explain economics in a clear easy to read manner. The author, Todd Buchholz develops the readers interest and understanding that there are many factors that drive the economy, as well as showing the reader that their lives affect the economy affects and vice versa.Economies run in cycles from good to bad. Business drives the economy, and profit drives business. When profits are up, business's hire employees, increase capital spending, and provide pay increases, and benefits packages. However with disappearing profits, businesses have to cut wages, health-care benefits, and are not in a position to hire more employees which effects workers, as they are afraid of losing their jobs, and don't spend their money. When consumer confidence is down, suppliers, their payrolls are effected as people are not purchasing items. This drags the economy down further as people are not buying the products business produce. The result is a roller-coaster ride for the economy as a whole.Unemployed workers that are actively seeking jobs but aren't finding them are a concern to an economy. Labor is a commodity, and because it can be bought and sold, if there is no demand for it, unemployment can occur. When this happens, not only are citizens not adding to the productivity of the economy, but they are taking away from it, as they are now government expenditure. The author offers an interesting idea, give unemployment benefits upfront, and provide an incentive to use it as "seed capital" to start up a business. It would also free up some red tape.Buchholz is a firm believer supply-side economics, which emphasizes individual economic decision-making, and how government policies impact those decisions. Free, unfettered markets provide incentives - through price and profit - to allow resources to find their most efficient and beneficial use. The market allows people to make decisions as to what type of behavior they will choose. Will they consume, invest, save, or produce? The market will determine the answer. The incentive for a profit is what drives people to produce products for sale. Thus it is the individual, not the government that drives the economy, although the government does try to affect consumer decisions through policies.The government's primary need is to raise money in order to sustain itself, but it needs to do so in a manner that increases production, makes work attractive, and spends it's tax revenues efficiently. However, often governments spend more than they take in, and issue bonds to make up for this deficit. These bonds have a down side, they "crowd out" available funds that makes business projects less attractive. Over time, deficits lead to debt which if not used on properly, will become a drag on the economy.The key to Supply-side economics is the fiscal policy is a low marginal tax rate. A high marginal tax rate is a driving force of individual decision-making, as it erodes the...

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