Want to Help the Poor? Spend, Spend, Spend!

Published on December 28, 2005 By Gideon MacLeish In Current Events

NOTE: This is a sort of sequel to my article on Christmas materialism. I'm hoping to slowly help you, the reader, to understand the thought processes that were behind my transformation from hardcore socialist to Libertarian.

This is the time of the year when a lot of dicsussion centers on how to help the poor and needy in our community. The holiday season increases our awareness of their presence, and most of us, at the core, want to see the poor among us have a reasonable standard of living.

The best way to help the poor is to buy goods. It's as simple as that. You see, retailer X has a labor cost built into the budget. The more goods he sells, the more he has to spend on salary. He can either provide more jobs or provide better wages for the workers already in his employ. It's as simple as that.

Even big ticket items such as automobiles and SUV's help the poorest wage earners, even though the commissioned sales force that sells them could usually not be described as impoverished. You see, when Joe CEO buys a hummer, the salesman that sold it gets a commission. He takes that commission home, and spends it. The box store workers have jobs because of the money Joe CEO spends. It's the basic pronciple of trickle down economics, which DOES work, despite certain protestations to the contrary.

Consumerism is the fuel that drives the capitalist economy. It's why businesses put out bigger and better products, it's why "New! and Improved!" is a catchphrase that we hear on a seemingly basis. Although we take it for granted, consumerism has made our lives infinitely better.

Probably the best example I can give is the one you're sitting in front of at this moment. I personally have worked around computers for over 20 years now, ever since my dad got his (gack!) TRS-80...cassette loaded back in the early 80's. I have seen computers advance from the point where we were mesmerized by simple loop programs that put pixel "stars" up on the screen, all the way to what you see before you now...and more. My children have never lived in a time where there wasn't a computer in the household, albeit not always online. And those advances have been driven by the simple fact that there were people ready and willing to BUY the better product once it was released.

How you DON'T help the poor is through handouts. Trust me on this. I've had to beg exactly ONCE in my life and I hope to never, EVER do it again. I would much rather have the opportunity to work to earn a living for my family. But I can't work unless there are jobs to be had, and there aren't jobs to be had unless there's money to be made, and there isn't money to be made unless those who HAVE the money, SPEND that money. That's the life cycle of a dollar in a rather small nutshell.

So, the next time someone argues that we can only help the poor through welfare programs, don't buy it. Trust someone who's been there that a FAR better way to help the poor is to help provide jobs through your spending. And enjoy that big screen TV knowing that in watching it, you are creating jobs.

Comments (Page 1)

Gideon MacLeish

on Dec 28, 2005

LW,

I think you know MY answer to this, but I'll clarify for those just coming to this page. If they won't work, the government has no obligation to them whatsoever. If private charities want to help, that's their choice. If individuals want to help, likewise, that is their choice. But it's not the government's duty to enable those individuals entrapped in the cult of victimhood.

While that may sound harsh, I believe that forcing people to learn to rely on themselves rather than enabling them over a lifetime is the ultimate act of compassion.

COL Gene

on Dec 28, 2005

Increased spending is good so long as it is not charged. Personal debt is too high and will come back to haunt the economy.

Dr Guy

on Dec 28, 2005

Very simplistic model, but accurate. You see, Joe Salesman does not always spend his whole commission. Part of it he saves. Now that sounds EVIL, but in actual fact it is not. for when big Box store wants to build a new store, they have to get the money from somewhere (contrary to popular belief, Big Box is not sitting on a ton of cash). So they go to the bank. And where does the bank get the money from? Joe Salesman's savings! (or CDs)

So Big Box builds another store, and hires more people to staff it. And thus the savings have now been converted into jobs as well!

Gideon MacLeish

on Dec 28, 2005

Now that sounds EVIL, but in actual fact it is not. for when big Box store wants to build a new store, they have to get the money from somewhere (contrary to popular belief, Big Box is not sitting on a ton of cash). So they go to the bank. And where does the bank get the money from? Joe Salesman's savings! (or CDs)

And, in the case of a rather prominent big box, they also acquire money from the assets they hold from stockholders such as Joe Salesman, who bought his stock at a DEEP discount from the company.

Nice addition, Dr.

Dr Guy

on Dec 28, 2005

And, in the case of a rather prominent big box, they also acquire money from the assets they hold from stockholders such as Joe Salesman, who bought his stock at a DEEP discount from the company.
Nice addition, Dr.

I got a degree in this stuff. I am very impressed with your grasp of it just from intuitive reasoning and deduction! Kudos to you for a great article!

Gideon MacLeish

on Dec 28, 2005

I got a degree in this stuff. I am very impressed with your grasp of it just from intuitive reasoning and deduction! Kudos to you for a great article!

Thanks, Dr.

Ya know, I was thinking...LW bills herself as the "poor woman's Ann Coulter". Perhaps I should start billing myself as "the poor man's Walter E. Williams...lol!

(actually, I owe a LOT of credit to Williams for my understanding of economics...credit I am NOT loathe to give him).

Dr Guy

on Dec 28, 2005

Ya know, I was thinking...LW bills herself as the "poor woman's Ann Coulter". Perhaps I should start billing myself as "the poor man's Walter E. Williams...lol!
(actually, I owe a LOT of credit to Williams for my understanding of economics...credit I am NOT loathe to give him).

Since Walter E. Williams is my mentor (since my senior year in college), I would say you are a testament to his economic teachings! (If not his tongue in cheek soliloquy's about how he treats his wife! )

Gideon MacLeish

on Dec 28, 2005

Hmm, while I still bow to Ms Ann's greatness, I do need to change that because I've pretty much abandoned the political forums, waiting for fresh blood to make it all new and exciting again.

It's a shame, LW...you have a very useful and unique perspective. But, you know the life cycle of JU, and we'll get some good newbies in and see some more of your stuff before too long.

Texas Wahine

on Dec 28, 2005

I've actually re-thought this in the past few months, and realized that the very best way we can help our economy and the poor in our nation is to take care of our own family well. With some exceptions, if we all did this...properly providing for our own...there would be far less need for government assistance.

If my husband and I give our children the best life we can...providing for their needs...then no one else has to, and further, we've taught them to care for their own family as well so that no one else will have to support them, either.

So the idea is to put my own family first, even if that means that my children have things while other children go without. I am responsible for my own family, and at this point we don't have the ability to give much to charity without shortchanging our own children.

I don't see it as selfish so much as it is responsible.

Gideon MacLeish

on Dec 29, 2005

I don't see it as selfish so much as it is responsible.

Exactly, Tex.

Part of my personal philsophy came about after reading the biography of Rich Mullins, a Christian music singer who passed away some years back and a huge inspiration for my life (his biography is titled "An Arrow Pointing to Heaven"--a recommended read if you get around to it). When he spoke about the sympathy he had for the poor, a friend told him that the WORST thing you can do if you want to help the poor is to remain poor...all you are doing then is easing your own conscience. The best thing you can do is to earn as much money as you can and use that money to help the poor.

Furry Canary

on Dec 30, 2005

'You see, retailer X has a labor cost built into the budget. The more goods he sells, the more he has to spend on salary. He can either provide more jobs or provide better wages for the workers already in his employ. It's as simple as that.'
Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.

Dr Guy

on Dec 30, 2005

Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.

And who builds those pools, cars or mans the cruises? Other people not as rich as himself, so the money is not hoarded, it is going back into the pockets of the working class. While socialist tend to decry conspicious consumption, the actual fact is that money makes its way into the pockets of the working class, and yes sometimes the poor. As a demonstration of the stupidity of trying to penalize a rich guy for his spending, look what happened when congress slapped a luxury tax on yachts in this country.

The rich quit buying them. Good right? Not if you were one of the poor schmucks building them! They lost their job! Did it hurt the rich? NO, they spent their money on something else or invested it. And investing it accomplishes the same thing (see previous explanation).

But you fail to understand a fundamental of capitalism. If you do not grow your business (in the stated case, hire more people), you will fall by the wayside and wither and die. So mr. Rich Guy will pocket some of the money (it is called ROI), but invest most of it back into the business, and that investment is in people.

So it IS THAT simple.

Gideon MacLeish

on Dec 30, 2005

Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.

Yeah, he can. But it IS as simple as that. He buys a bigger car, carmakers benefit. He builds a pool, the pool companies benefit, as do pool maintenance companies in perpetuity. A vacation? Travel agents, the airline industry, the hotel industry.

In short, we don't spend money in a vaccuum. Every dollar we spend helps someone else somewhere down the line. That's the essence of capitalism.

Thanks for proving my point better than I could, furry.

Furry Canary

on Dec 30, 2005

'Thanks for proving my point better than I could, furry.'

But it DOESN’T prove your point. All I've done is point out that a culture of runaway expenditure begets even more expenditure. There's a huge leap between that and the poor being any better off as a result.

The vast majority of the research I'm aware of suggests that, in the West (the undisputed bastion of rampant consumerism), the gap between rich and poor continues to widen. If your argument held any water, then surely the ranks of the poor would be diminishing before our eyes. I see precious little evidence of that; indeed, most of the the data suggests quite the opposite.

'Every dollar we spend helps someone else somewhere down the line. That's the essence of capitalism.'

It’s the way you tell ‘em, Gideon! The essence of capitalism is self-interest, not benevolence. Any suggestion to the contrary is merely a device to enable those who subscribe to and benefit from its creed to sleep a little easier at night.

Dr Guy

on Dec 31, 2005

The essence of capitalism is self-interest

It is self-interest that benefits all! It is using the inherant nature of man for the benefit of mankind! No one is denying that, nor can you prove otherwise.

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