‎The Progressive Ponzi Scheme

Michael Smith

 ‎

8/23/2015 

Had a discussion with a ‪#‎FeelTheBern‬ supporter last night. She argued that corporations just hoarded profits. She reasoned that since the workers worked, they were the reason for those profits and because they contributed to them, the profits actually were the property of the workers and therefore should be distributed to the workers.

I asked if that meant that the company should retain no earnings at the end of any given period - she wasted no time in saying yes.

That's fine, I said, but then I asked what happens when the company doesn't make a profit due to a downturn in its market or some unforeseen circumstance causes it to have to expend more money than it planned? I explained that by her own logic, the business would have the right to cut wages and demand money back from the employees to make up the deficit until things got better.

She said that couldn't happen because it would be unfair to the workers to make them pay for the the bad decisions of the business or changes in market conditions.

I said that business isn't a constant upward curve and that retention of profits help a company bridge the downturns until things get back on track without impacting workers. Companies don't just retain cash in a mattress somewhere, excess cash over and above cash flow needs are invested, some is held in reserve for contingencies, some is distributed to shareholders and a large percentage of profitable companies retain earnings in anticipation of financing growth. To grow, companies have to expend cash in market research, property, plant and equipment, R&D, product testing, product launches and marketing...and all that comes before the first sale is made.

This ignorance of how markets and capitalism really work is the first requirement for being a progressive in America today. They can only conceive of the markets from the view of a governmental model, a model where being subject to performance, market variations and worrying about the future is unknown. They assume that all losses can just be magically washed away, payments to people will always rise regardless of performance and the creation of funding is never more distant than the next new tax.

This is why progressivism is a Ponzi scheme. The people at the top count on the ignorance of the people at the bottom to keep financing the game.