Eat the Rich

As an educator, I am paid to elucidate complex concepts and explain them in a manner that is understandable to my students and I am confident in, and proud of my ability to do so.  It is frustrating therefore, when I am unable to convey basic economic truths to an acquaintance.  A gentleman and I were having a spirited but good-natured debate about tax policy, and what I believe is the fallacy of taxing the rich, but I was unable to get him to acknowledge certain economic facts (it should be noted that this individual felt justifiably proud of his vote for Jimmy Carter and every Democratic nominee since).  When he tried to justify the mandate to purchase health insurance currently pending before the Supreme Court, he couldn’t see Robert Heinlein’s logic that “there is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.”

I felt as though I had come face to face with the truism of Laurence Peters who noted that “against logic there is no armor like ignorance”  (sorry, Carlton).  This post is motivated in part to provide empirical justification for the points I attempted to make, yet he was unwilling or unable to believe or accept.

Whether we acknowledge it or not, as a nation we are in severe economic trouble.  The National Debt stands in excess of $15.3 Trillion, and increasing at an increasing rate which currently stands at about $10 Billion per day.  The national debt currently stands at 99.7% of GDP, and has increased 40% since the current administration took office.  My colleague stressed that the expenditures were necessary to “save the country,” and while I acknowledge that TARP was probably necessary, but much of the stimulus was not.  Government cannot spend money that it has not confiscated from the private sector first.  My own research showed that in Virginia at least, much of the stimulus was used to satisfy pre-existing debt, and hence did nothing to stimulate the economy.   In general, I agree with Frank Borman who noted that “capitalism without bankruptcy is like Christianity without hell.”

He refused to accept that about half of all US household paid no federal income tax.  These data are readily available from the Congressional Budget Office or in chart form (using CBO numbers) from the Heritage Foundation.  These data show that in 2008, top 10% of wage earners paid 69.94% of taxes, while bottom 50% paid 2.7% and 49% paid none.  Ezra Kline of the Washington Post (no conservative shill, to be sure) provided meaning behind the numbers.

One interesting analogy was made by Bill Whittle in a short video vignette.  He showed that there weren’t enough rich people in America to pay for our annual expenditures.  Take a few minutes and check out Eat the Rich.  Confiscating wealth is not the answer to our nation’s ills.

Perhaps Winston Churchill said it best: “for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

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About greybeardprof

Accounting Professor
This entry was posted in Economics. Bookmark the permalink.

2 Responses to Eat the Rich

  1. Anyone who quotes Robert Heinlein is okay in my book! I also like how you have taken a conversation that could have died and moved it into your blog, potentially breathing new life into it.

  2. Bernie Farkas says:

    I totally understand your frustration. I tend to avoid this kind of conersation because it is difficulat to keep it focused on fact and away from emotions. Right now, it seems that easy answers are being offered. We could take all of the money of the top 1% of earners and not put a dent on the debt. Hopefully, we will find a way to change the tone of the national dialouge and enter into serious debate and compromise to find structural changes. Yet, that is not how our media, policiticans, or other leaders maintain their relevance.

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