Monday, September 26, 2011

The Ethics of Income Redistribution

Having run out of policies and ideas Barack Obama is getting down to the real business, the one he understands.

Not knowing how to govern, Obama is back in campaign mode, rallying his base, the people who do not pay federal taxes, and urging them to revolt against the rich.

When Obama tells his audience that Congress must pass the bill, he is really saying: make the rich pay. The unstated subtext is:  they can afford it.

He has taken as his inspiration the oracle of Omaha, one of the world’s greatest investors, a man who has recently chosen, for reasons that escape reason, to drag his reputation through the muck and mire of partisan politics by proclaiming, with all due hypocrisy, that he should be paying the same tax rate as his secretary.

When the world’s commentators rise up with one voice to explain to the great Buffett that nothing prevents him from making a generous donation to the treasure, he responds that he refuses to take the initiative until the government metes out equal punishment on all of his fellow billionaires.

You would not expect Buffett to set a good example, would you? After all, he has already chosen to set an example of tax avoidance by refusing to take a salary. Thereby, he avoids the higher tax rate on salaries and enjoys the lower rate on capital gains.

Better yet, Buffett has tried to set an example of tax avoidance by donating his fortune to charity and by leading a campaign to encourage other billionaires to do the same.

Anyway, Buffett has become the poster child for income redistribution, and also for gross hypocrisy. His reputation is falling faster than Obama’s poll numbers. It makes no sense to me that Buffett would want to besmirch his good name with such an absurd campaign, but that does not prevent him from doing so. 

Income distribution has become Obama’s favorite campaign slogan. In the last campaign Obama said that we needed to spread the wealth. The nation elected him to the presidency.

Now he is trying to tell the poor and disadvantaged that the fault for their chronic joblessness lies in the fact that Warren Buffett does not pay enough tax.

In truth, Obama is not offering more jobs; he is promising more government-subsidized joblessness.

This morning Victor Davis Hanson called income redistribution schemes a symptom of “aging societies.” I would add, of aging rich societies.

Drawing on his expertise as a classicist, Hanson points out that we’ve seen it before: “Redistribution of wealth rather than emphasis on its creation is surely a symptom of aging societies. Whether at Byzantium during the Nika Riots or in bread and circuses Rome, when the public expects government to provide security rather than the individual to become autonomous through a growing economy, then there grows a collective lethargy.”

It is not just about rich individuals. Hanson wisely extends the concept to apply to society itself.

In his words: “All affluent societies believe that they are just too rich not to be able to afford another regulation, just one more moralizing indulgence, yet again an added entitlement. But as we see now in postmodern America, idle 250,000 acres of farmland for a tiny fish, shut down an entire oilfield, put off a new natural gas find in worry over possible environmental alteration, add a cent to the sales tax, mandate yet another prescription drug entitlement not funded, or offer yet another in-state tuition discount to an illegal alien — and the costs finally equate to an implosion as we see in Greece or California. And as we know from past collapses, a new entitlement in a matter of minutes becomes an institutionalized right whose withdrawal causes far more anguish than its prior nonexistence.”

The mantra that defines the restributionalist ethos is: we are so rich that we can afford it. If you say we can’t afford it, you are saying that we are not very rich. Thereby, you are attacking national pride.

As a rich, proud nation, we can afford to shut down industries, take time off, slack off, and enjoy a life of indulgence. Heck, we are so rich that we can provide everyone a good life, even one that they have not earned.

If you disagree, you are carrying water for all the avaricious misers, the ones who want to hold on to their ill-gotten gains, gains that they cannot possibly spend, gains that they can only spend their time counting.

Why are their gains ill-gotten? Because no one is intrinsically that much better than anyone else.

Why, after all, should Warren Buffett be so much richer than his secretary? Wouldn’t fairness dictate that the government disembarrass him of a goodly portion of his wealth?

True enough, some people have earned their wealth. No one should ever begrudge them their success.

Unfortunately, more than a few of the wealthiest people in the world have not earned what they have.

Some have won the genetic lottery; they are spending the money that was earned by their ancestors.

Others have won the celebrity lottery; they are rewarded far beyond what they contribute to society.

Unearned riches often produce spoiled brats and decadent aristocrats. They also produce dimwitted celebrities.

Unearned wealth is more often spent than invested. The vision of the idle rich spending money they did not earn often provokes outrage. .

Hanson writes: “But the rub is not whether they are rich but whether they are idle, whether they send a message that affluence can make life better, rather than affluence is inevitably corrupting.”

To be fair, many of the very wealthy are anguished over the spending habits of their progeny. They often despair over the fact that their heirs might never know the joy of hard work and earned accomplishment. And many of them set strict limits on how much will be passed down to the next generations.

No discussion of unearned wealth would be complete without pointing out celebrities.

The people who are outraged at the idle rich are often happy to revel in the antics of an overpriced, untalented celebrity.

For reasons that no one seems able to explain the culture sees nothing wrong with a movie star earning tens of millions of dollars for pretending that he is someone he is not while it sees something radically wrong in a banker or an industrialist earning the same income for managing a corporation that provides employment for tens of thousands of people.  

A teenaged singing sensation has earning power that has no real relationship with the amount of work he has put into his career or to what he is contributing to society. Thus, his income will largely feel unearned and unreal.  

Often enough, a celebrity will not think about how to put his money to work but about how to spend as much of it as quickly as possible.

When you feel that your gains are ill-gotten, you are more likely to try to waste them.

The culture of celebrity is a culture of affluent leisure. It is a culture that values clubbing and vacations, not hard work and effort.

Often enough, celebrities join billionaires in pushing for income redistribution. They do not feel that they have earned what they have and prefer to give some of it away before it is all taken away. Many of the superrich are so wealthy that no tax burden would ever affect their lifestyle. Thus, lobbying for higher taxes is a cost-free way to show that they do not count among the greedy rich.

1 comment:

Dennis said...

The truly sad part is that those who covet the money earned by others eventually will create their own poverty and will be worse off than they would have been. After the rich have been relieved of their riches who then is going to support the needs of those who rather than building their own abilities and individual capabilities decided that others did not deserve the fruit of their labor? The ethics of redistribution is that it always ends up creating slavery.
Business can exist without government, but government cannot exist without businesses. Something even Lenin recognized. Neither situation where one has to choose between them is a good one. The best approach has always been to have limited government and a strong business friendly environment.
Government's job is to provide for the common defense, promote, not determine, the general welfare and insure life, liberty and the pursuit, not the attainment, of happiness. Anything past that should not be in the government's bailiwick.