The Government Doesn’t Make Money—You Do | 5-Minute Videos | PragerU

The Government Doesn’t Make Money—You Do | 5-Minute Videos | PragerU

Summary

How the Government Makes Money

The government does not make money by producing goods and services, unlike individuals who work in exchange for a paycheck. Instead, the government takes money from its citizens through taxes, which account for around 95% of its revenue.

Government Revenue Sources

  • Individual income taxes
  • Social security taxes
  • Medicare taxes
  • Corporate taxes
  • Other taxes

Consequences of Government Spending

The government’s spending does not lead to economic growth, as it simply redistributes money from one person to another. For example, if the government takes $10,000 in taxes from one person and gives it to another, there is no net gain in economic activity.

Taxation and Its Impact

The government charges taxes on various transactions, including income, property, and sales. This can lead to a significant burden on individuals and businesses, reducing their ability to spend and invest. The government’s constant demand for more taxes can also lead to a decrease in purchasing power, as the money supply increases and inflation rises.

The Need for Limited Government Spending

While some government services, such as the military and court system, are necessary, there should be a limit to government spending. The current level of spending, around $5 trillion per year, is excessive and can lead to a decrease in prosperity and freedom for citizens.

Conclusion

A government that takes less from its citizens and allows them to keep more of their hard-earned money is more likely to lead to prosperity and freedom. It is essential to recognize the importance of limited government spending and the need for individuals to retain control over their own finances.


Key Vocabulary

Term Definition Example Usage
Taxes Compulsory payments made by individuals and businesses to the government for public goods and services. The government collects taxes on income, property, and sales to fund its activities.
Government Revenue The income received by the government from various sources, including taxes, fees, and other payments. The government’s revenue is primarily composed of taxes, which account for around 95% of its income.
Individual Income Taxes Taxes levied on an individual’s earnings from employment, investments, and other sources. Individuals are required to file tax returns and pay income taxes on their earnings.
Corporate Taxes Taxes imposed on the profits of businesses and corporations. Companies are required to pay corporate taxes on their net profits.
Inflation A sustained increase in the general price level of goods and services in an economy over time. Excessive government spending and money supply can lead to inflation, reducing the purchasing power of citizens.
Government Spending The amount of money spent by the government on various activities, including public goods and services. The government’s spending can have significant consequences for the economy and citizens’ prosperity.
Redistribution of Wealth The transfer of wealth or income from one group of people to another, often through government policies and programs. Government spending can involve the redistribution of wealth, as taxes are collected from some individuals and given to others in the form of benefits or services.
Purchasing Power The ability of individuals or businesses to purchase goods and services with their income or wealth. Inflation can reduce the purchasing power of citizens, as the same amount of money can buy fewer goods and services.
Prosperity A state of being successful and thriving, often characterized by economic growth, stability, and high standards of living. Limited government spending and lower taxes can contribute to a more prosperous economy and society.
Freedom The state of being able to act and make decisions without undue restriction or constraint. Excessive government spending and taxation can erode individual freedom, as citizens have less control over their finances and lives.

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The Government Doesn’t Make Money—You Do | 5-Minute Videos | PragerU

Vocabulary Quiz

1. Which word means ‘the act of giving money to the government for public use’?

A) Revenue
B) Prosperity
C) Taxes
D) Inflation

2. What is the result of the government taking money from one person and giving it to another?

A) Economic growth
B) Increased purchasing power
C) No net gain in economic activity
D) Reduced government spending

3. What happens when the government’s demand for taxes increases and the money supply rises?

A) Deflation occurs
B) Purchasing power increases
C) Inflation rises
D) Economic growth accelerates

4. Why is it essential to have limited government spending?

A) To increase the national debt
B) To reduce individual freedom
C) To lead to prosperity and freedom for citizens
D) To decrease the military budget

5. What is the likely outcome of a government that allows its citizens to keep more of their hard-earned money?

A) Reduced prosperity and freedom
B) Increased government spending
C) Economic decline
D) Prosperity and freedom

Answer Key:

1. C
2. C
3. C
4. C
5. D


Grammar Focus

Grammar Focus: The Use of Subjunctive Mood in Formal Discussions

The subjunctive mood is used to express doubt, uncertainty, or possibility about a situation. It is often employed in formal discussions, such as those related to government policies and economic issues. For instance, in the text, it can be implied that “it is essential that the government recognize the importance of limited spending,” where “recognize” is in the subjunctive mood. The subjunctive mood is typically used in clauses beginning with “it is necessary that,” “it is desirable that,” or “it is essential that.” The verb in the subjunctive mood is often in its base form, which means it follows the pattern of the bare infinitive without “to.” Examples include “be” for the verb “to be,” “take” for the verb “to take,” and “keep” for the verb “to keep.”

Grammar Quiz:

Choose the correct answer for each question:

  1. It is necessary that the government _______ its spending to avoid economic downturn.
    1. reduces
    2. reduce
    3. to reduce
    4. reducing
  2. The proposal suggests that it is essential that citizens _______ more control over their finances.
    1. have
    2. has
    3. to have
    4. having
  3. It is desirable that the new policy _______ economic growth without increasing taxes.
    1. promotes
    2. promote
    3. to promote
    4. promoting
  4. The economist argued that it is necessary that the government _______ its budget deficit to maintain economic stability.
    1. reduces
    2. reduce
    3. to reduce
    4. reducing
  5. The report recommends that it is essential that companies _______ their prices to stay competitive in the market.
    1. keeps
    2. keep
    3. to keep
    4. keeping

Answer Key:

  1. li>b
  2. li>a
  3. li>b
  4. li>b
  5. li>b