The following observations are generalities, possibly even stereotypical. Being aware of the probable implications of our decisions and actions, however, may help us to make better decisions and actions.
Manufacturing businesses are usually wealth builders. Most sales dollars come from customers from outside the local community. The “value-adding” process results in significant expenditures to workers who are local residents. Only 20-40% of sales dollars leave the community immediately to buy raw materials. More dollars usually come into the community than leave.
Service businesses are usually just wealth exchangers. Most sales dollars come from customers who are local residents. Most expenditures by these businesses are to workers and vendors who are members of the same community. A high frequency of transactions may give an impression of wealth building; but if activity slows or stops, the illusion disappears. National and regional government taxation reduces the wealth of such a community unless an equivalent amount is earned from outside sources.
Retail businesses are usually wealth drains. Most sales dollars come from customers who are local residents. 60-80% of sales dollars leave the community immediately to purchase merchandise for resale. More dollars usually leave the community than enter it.
Our government agencies are redistributors of wealth. A business will pay 10-30% of its gross sales in taxes. Since business expenses (including all taxes) are paid by its customers, a more meaningful measure of taxes might be that an amount equal to 30-40% of all household gross earnings will be paid to the government. In healthy, stable communities government is a wealth drain. There is less reason for the government to spend money on services because the private sector takes care of itself. Tax revenues are redirected to other communities where “need” is greater. In dynamic, growing communities government is a wealth exchanger. Tax revenues are spent on local infrastructure development. In poor, “disadvantaged” communities government might be a wealth builder if the retail business drain did not suck out resources as fast as they were poured in. Government welfare payments are wealth redistributions to the “poor.” Government purchasing and debt service payments are wealth redistributions to the rich. “Middle class” workers pay most of the bills.