Assault by Government: Draining the Capital Pool

Seton Motley | Less Government |
Diamond Dave for Treasury Secretary

David Lee Roth – the original lead singer of mega-rock group Van Halen – gave us an excellent assessment of the value of coin: “Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”

What this amusingly quantifies is that money is a vital component of any and everything we do. Certainly for how we (allegedly – used to) organize our economy. “Capital” is the fundamental element of capital-ism. It is the engine that drives our yachts – right up alongside the happiness we all pursue.

Those opposed to capitalism understand this. Thus they look to drain the private capital pool – by any means necessary. They know every penny spent on government is a penny not much better used making everything better, faster and cheaper – and our lives simply better and better. And they know their prolonged, multiplicative attacks will ultimately bring down their capitalism bete noire.

Taxes are the overt way government removes capital. The more it takes – the less we all have to do all of the things that make capitalism work. The Barack Obama Administration has been repeatedly setting records for tax money taken. The federal take in 2015 is projected to be yet another record – $3.2 trillion. The entire economy – the combined productivity of every single man, woman and child – is $17.4 trillion. The Feds are taking nearly 20% of everything we make – and just about every Democrat says that isn’t nearly enough.

Regulations are the covert way for government to drain the pool. Regs are insidious – their punitive costs are indirect. Rather than taking the money, government forces the private sector to waste it in the eternal search for proper compliance. The tab is huge – $1.9 trillion in 2015. And rising dramatically – as the Administration continues its all-encompassing unilateral fiat fest. These costs – and the costs taxes impose – are built in to the prices of the goods and services we purchase. At which point government wins again – as we gripe at the private product providers for their government-inflated pricetags.

So let’s check the tote board. JUST the federal government imposition on the private sector – in taxes and regulations – is $5.1 trillion. Nearly 30% of ALL private capital – taken and/or wasted away. Add in the respective assaults of the roughly 1,000 state and local governments – and you start to see why capitalism isn’t very capitalism any more.

A third way government drives out money – is the money that never drives in because of government. When taxes and regulations make things too unattractive – the pretty coin stays away. If I invite you into my house – and then beat you about the head and shoulders with a bat – I should at least have the decency to not act surprised when you get up and leave. To wit: U.S. companies are stashing $2.1 trillion (and likely much more) overseas. Because of all of the above – including the fact that we have the world’s highest corporate tax rate (35%).

To wit: The Internet. Pre-Obama Administration, the Internet sector was a glorious outpost outlier – largely beyond the crippling bounds of government. Which is why it has become a free speech-free market Xanadu. This Administration absolutely could not allow this to stand – so it began the process of taking it down. That is in large part what February’s unilateral power grabthe full government takeover so as to then impose Network Neutrality – is all about. Getting and keeping everyone’s money out of the pool. Mission being accomplished.

AT&T’s capital expenditure (capex) was down 29 percent in the first half of 2015 compared to the first half of 2014. Charter’s capex was down by the same percentage. Cablevision’s and Verizon’s capex were down ten and four percent, respectively. CenturyLink’s capex was down nine percent.

(T)he net decrease across the six largest (Internet Service Providers) ISPs amounted to $3.3 billion in capital flight….

This capital flight is remarkable considering there have been only two occasions in the history of the broadband industry when capex declined relative to the prior year: In 2001, after the meltdown, and in 2009, after the Great Recession. In every other year save 2015, broadband capex has climbed, as ISPs—like hamsters on a wheel—were forced to upgrade their networks to prevent customers from switching to rivals offering faster connections.

What changed in early 2015 besides the FCCs Open Internet Order that can explain the ISP capex tumble? GDP grew in both the first and second quarters of 2015. Broadband capital intensity—defined as the ratio of ISP capex to revenues—decreased over the period, ruling out the possibility that falling revenues were to blame….

This is yet another regulatory assault – to effect their ultimate ideological outcome. As government continues its omni-directional draining of the private capital pool, more and more of our respective yachts become beached. Leaving us marooned – as happiness drifts further and further into the distance. Diamond Dave knows this ain’t the way to go. We should too.

This first appeared in the Daily Caller and Red State.

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