I am going to attempt to explain something which is right in front of everyone’s noses, but no one sees. It is the reason that American will not and cannot recover from the current depression (yes, it is a depression).

In America, every public program that the government comes up with at any level of government is paid for solely by private workers. Don’t believe it? Lets examine taxes and do a short thought experiment.

First though, by public worker, I mean someone who is paid from some sort of tax revenue. This may be an office clerk at the township office, a school teacher, a private contractor doing work for a government agency, etc. It doesn’t matter who writes the paycheck, it only matters where the money came from. This is not the normal definition of public vs private worker, but it should be. I have at one time or another been a public worker by this definition.

If I tell a public worker that he/she actually pays no taxes, it usually unleashes a maelstrom. After all, public workers fill out tax forms and send in money do they not? However, ask yourself where that money came from.

If I took on a job for the XYZ company and they agreed to pay me $100,000 a year, but they demanded that I pay $30,000 of it back; how much did they actually pay me? I think we can agree that $70,000 is the correct answer. Now apply that reasoning to public workers, their taxes are actually a give back to their employer. So where does that $70,000 come from that the public worker did not give back. It obviously doesn’t come from other public workers paying taxes, so it must come from the private sector, IE: those who do not receive a paycheck from public funds; OR, it was borrowed money which will have to be paid back by the only other source of funds: the private worker.

If we as a society were honest about it, we would simply exempt public employees from taxes, and pay them the equivalent, but that would be very difficult to do because of all the hidden taxes each of us remit each day without even knowing about it. For example, every tax a business pays comes from the sales revenues it gets from its customers. (This is why taxing businesses is a farce, and really amounts to another tax on individuals.)

This reasoning holds true for not only income taxes, but taxes of any sort. Yes, a school teacher sends in a check for school taxes each year, but they are paying the tax with tax money. Any of the myriad taxes that a public worker pays comes from a private workers taxes, or from borrowed money.

Now here is the problem: As the size of the public sector grows, the size of the private sector shrinks. This means that there are fewer and fewer people who are the source of all public revenues, except that which is borrowed, and we all know that borrowing cannot continue forever. Sooner or later it must be paid back if we are to live in peace with our lenders.

So, I cringe every time I hear about the government creating jobs, because I know that it is on the back of the private worker. Private workers work for private companies, and the governments are working overtime to kill them with more taxes. At some point, it simply does not pay to work. At some point there are not enough workers to support the huge public welfare systems, the exorbitant school systems, and the 700 military bases we support around the world. At a time when we should be building up the private sector, we are killing it, and all hopes of a future strong America.

Welcome to the Great Depression 2.0