She puts lots of money in banks to protect her money against calamity. Jill owns a business and sends semi trucks down those roads every single day to deliver goods to market. George makes $100, and while he uses the roads when he takes the bus to and from work, he doesn't see nearly as much monetary benefit from the government's services as Jill with $1000 does. The government provides help to its citizens in a variety of ways: by providing communal infrastructure to allow for movement of goods and services, a military to protect stability, a government-guaranteed stock market, government-guaranteed banks, and other vital services. If I save a rich person $5, they might spend it, but they also might save it, which benefits them but not society as a whole. If I save a poor person $5, they're going to spend that $5 immediately, thus providing jobs and making the economy healthier. If I take 5% of his money, he will be inconvenienced, but he won't die.Īlong a similar bent, capitalism is driven by poor people spending money. The second person has $900 of disposable income. If one person earns $100 and one earns $1000, the first person has no disposable income. For our example, let's say that it costs $100 to provide bare minimum food, clothing and shelter. The end result of this practice is that there is an absolute minimum amount of money required for each person to survive. Likewise, most modern capitalist societies believe in the division of labor, allowing for goods beyond that which can be produced on a farm. It's generally acknowledged that in a capitalist society, the price of goods should not fluctuate widely, but should settle in a spot that balances supply and demand at a point that only increases prices as labor increases. However, I'll focus on five for simplicity's sake: This is an extremely naive view of the issue, however, and very few countries adopt this policy. Flat taxes are extremely popular to fiscal conservatives and libertarians for their simplicity and seeming 'fairness'.
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