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Sunday, March 8, 2009

"My Success Did Not Cause Your Failure"

I was at a party last night when a total stranger struck up a conversation with me. He didn't know who I was, or that I had a blog. The crowd was mixed (by political persuasion), so there was no reason for this person to presume I would be sympathetic to conservative thoughts.

The conversation got around to the economy, and his comments went something like this: Since when have people who create wealth become the enemy? I started and grew a business, and thought this is what people were supposed to do. I thought I was one of the good guys, but this administration doesn't see it that way.

When I then told this person about my blog, well you can imagine where the conversation headed. But what is significant is that a total stranger felt comfortable expressing what a lot of people are feeling these days, that the current administration has a warped sense of cause and effect.

Economic success by one individual (provided the success is achieved lawfully) does not deprive any other individual of success. The economy is not a zero sum game. In a capitalist society, there is not a finite amount of economic activity which needs to be divided among a finite population. Growing the pie is possible with free markets and incentives for individual success. In a command economy, by contrast, the budgetary process focuses on dividing up and allocating finite resources (hence called a "five-year plan" and so on).

It is clear that Obama instinctively views the economic system in finite, command-economic terms. This attitude was most clearly revealed in Obama's unplanned question-and-answer session with Joe the Plumber:

"Your new tax plan is going to tax me more, isn't it?"...

"It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance for success too. My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody ... I think when you spread the wealth around, it's good for everybody."

Most commentators focused on the "spread the wealth" language used in Obama's response, arguing that Obama sought to use the tax code to redistribute wealth. That observation has proven to be true. Yet in my own commentary at the time, I noted that the "spread the wealth" language was the symptom, not the disease:
The key wording in Obama's response is "I just want to make sure that everybody who is behind you, that they've got a chance for success too."

The disease is that Obama sees the economy as a zero-sum game, where one person's success deprives those "behind" him of success. The only way to ensure the success of those "behind" is taxation of those "ahead."

Obama doesn't seem to understand that Joe the Plumber's success does not deprive anyone of anything. To the contrary, the success of Joe the Plumber helps the economy, helps his employees, helps his customers, and keeps all their families from seeking government handouts. Success is not a crime which needs to be punished, provided that the success is achieved lawfully.

And so it remains. Obama still doesn't understand. Business owners and those who create wealth are not the enemy. Punitive taxation of the "top 2%" for the purpose of "fairness" not only will result in less economic production, it punishes people who did nothing wrong. Just ask Joe the Business Owner.

4 comments:

  1. You're missing an ellipses.

    Right before Obama says "My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody" ... he says:

    "And I do believe that for folks like me who are, you know, have worked hard but, frankly, also been lucky, I don't mind paying just a little bit more than the waitress who I just met over there, who's … things are slow and she can barely make the rent."

    As I wrote in an earlier post - this isn't a matter of tax fairness. It's a matter of tax sustainability. We are collecting far far less in revenues than we're paying in outlays. We've been doing that for 8 years now - ever since the Bush tax cuts passed. You cannot tax the waitress more, because it will eliminate her ability to pay the rent.

    Under Bush's plan, we cut taxes in order to create the economic conditions for job expansion that would put more money in the pocket of the waitress as well. The plan failed. That is why we are where we are. Cutting taxes did not generate the economic activity needed to produce sufficient tax revenue to balance the budget.

    When the Republicans and Bush pushed through their tax cuts, they built in an expiration date. To make the budgetary projections work - so that they didn't show massively inflating deficits into the future - the expiration date was put into place. Had Bush's tax cuts succeeded ... if right now, we weren't facing a massive meltdown of the economic system ... there would be a compelling argument for extending them. Right now, it seems clear that the highest marginal rates were set too low, and that has contributed mightly to the meltdown.

    If you want to blame someone for the tax cuts expiring - don't blame the Democrats. Blame the Republicans, who built the expiration into the original bill, and who had 8 years to make the system work with the cuts in place.

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  2. Note to liberals: my success mitigates your failure.

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  3. The argument that planning an expiration date for the "Bush" tax cuts was something conjured up as a budget gimmick is an old Dem talking point, but is not accurate. Providing an expiration date was the only way to get the tax cuts throught Congress, and the tax cuts were extended to the present deadline only when making the tax cuts permanent could not pass. See this Washington Post article from 2006, http://www.washingtonpost.com/wp-dyn/content/article/2006/05/03/AR2006050302244.html.

    The post by "RonClarke" is almost identical to this post on Bloomberg two years ago, http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_berry&sid=aXYcxspDvKxM, "Republicans have only themselves to blame, because the expiration dates were set originally to mislead the public about the amount of revenue loss involved. Of course, from the beginning the plan was to argue that letting the cuts expire would impose tax increases that would harm the economy and cost jobs." This tired argument flies in the face of repeated Republican attempts to extend and make permanent the tax cuts.

    And the tax cuts did help the economy through the tech bubble burst which started in March 2000 under Clinton, the economic shock of 9/11, and two wars both of which received bipartisan support. The current credit and housing crises have nothing to do with the Bush tax cuts. That's just another attempt to make up an excuse for new higher taxes.

    And the quote on Obama referencing a "waitress" is out of context, Obama was referring to a value added tax and its impact on working people, "You know, I would be open to it except for … here's the problem with the flat tax. If you actually put a flat tax together, you'd probably … in order for it to work and replace all the revenue that we've got, you'd probably end up having to make it like about a 40 percent sales tax. I mean, the value added, making it up. Now, some people say 23 or 25, but, in truth, when you add up all the revenue that would need to be raised, you'd have to slap on a whole bunch of sales taxes on it. And I do believe that for folks like me who are, you know, have worked hard but, frankly, also been lucky, I don't mind paying just a little bit more than the waitress who I just met over there, who's … things are slow and she can barely make the rent." Here's the link to the full transcript, http://www.tampabay.com/news/perspective/article858299.ece.

    It is amazing how leftists like "RonClark" are so quick to take other people's money, make up history and regurgitate old arguments.

    Funny, whenever those who want others to pay higher taxes have the opportunity voluntarily to pay more, they never do. In Massachusetts, which provides for voluntary extra contributions on its tax forms, fewer than 2000 of over 3 million taxpayers do so.

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