The Party of Crabs

When I was in college taking Economics 101, the professor, an admitted Marxist, remarked that a rich person should be heavily taxed because, he said, "society" helped him make the money and therefore, he should have to "give back' most of his earnings. I was not surprised to hear President Obama say the exact same thing. What the professor and the president don't see is that society isn't anything more than individual people. Which ones helped the rich person make his fortune? Mostly the ones who bought his product or service. In that case, it was an equal trade. Something is exchanged for its perceived value in legal tender. How about investors? Weren't they getting interest or dividends? What about the government? We all pay into that, one way or another, through taxes. And if nothing else, a rich person gets far less in return for the amount he paid than the average or especially poor person. There are, of course, speculators, who gamble that a given security, commodity or real estate will rise in value. If it does, they might take a profit. But that's only because they sell the item at a price that another person, possibly another speculator, thinks is fair and equal to that item's value.

Most of statist, authoritarian, collectivists (SAC's) also believe that if you die, most of your fortune should be confiscated by the government under the same specious reasoning, as if "society" has a greater claim on what you earned than you and those who you wish to bestow your money on, such as your family. In all of these cases, chances are, you had no part in making the rich person so wealthy. But being SAC's, it's not unusual for you to hear them, or those they brainwashed, remark that you should "give back" to the "community" if you're successful. It's just another rationale for plundering someone's wealth by those whose only claim on it is need or greed. It's the rationale of the mob or the thief.

In the case of the rich, the money they don't pay in taxes will go for investments, such as venture capital, business start-ups, hiring additional employees, and other socially beneficial uses. Some might even be donated to worthy charities. The money that goes to the government will be used and a lot will be wasted. For the SAC's, the economy is bolstered by increasing the amount and velocity of money, that is, the more you have injected into the economy and the faster it changes hands, the better off everyone is, provided a lot of it gets into the hands of those who aren't rich. So it doesn't matter if the government wastes money on a failing business venture, or lets people fraudulently claim welfare benefits, or any other waste of money. That's why Congressman Pelosi can claim that unemployment benefits create jobs. So long as the government can tax or borrow, then more money can be put in circulation to those who aren't rich. Presumably, the poor or middle class recipients of the billionaires' tax dollars would then create demand for products that the billionaires' could produce.

The trouble is, while this creates demand, it impairs the ability of producers to invest and actually create products or even jobs. The dollars that are sunk into the economy to help consumers are also taken out of the economy in the form of taxes on producers. President Reagan demonstrated that if you lower the tax rate, business takes off and the economy grows. If you increase taxes, there's less economic activity. Or, since taxes are unpopular, money is pumped in by borrowing, in which case less money is available for businesses to borrow and the inflation rate starts rising, causing interest rates to rise, making starting a business more expensive. Moreover, as inflation rises, people save less, so there's less money to lend to businesses unless the government creates more or borrows from those who do save, such as the Chinese. (The only reason we don't have hyperinflation yet is that most of the dollars the government creates wind up going overseas instead of circulating in our own economy. That's also another reason why spending doesn't equal boosting the economy. If you go to Wall-Mart and buy a widget, chances are it was made in China, which is where your money will go.)

Clearly, you can't have a healthy economy if everyone is poor. Nor can you have one if you make the producers suffer. The best economy is where businesses are free to create industries that create jobs that are so productive that wages increase, creating wealth for everyone. That's how America became so prosperous. Robbing the rich to keep more and more of the workers unemployed and living off the government dole, like parasites, will only work for so long. The parasite eventually kills the host.

But none of this matters to Obama and his ilk. They want income redistribution because they see businessmen as exploiters of workers and the environment. It's the ideological urge to level society by forcing the successful to support the unsuccessful, even though sooner or later, the wealthy will quit. That will create the space for the government to step in and create a statist, authoritarian, collectivist society. And then you have a new class of elites, the politicians, bureaucrats and their clients, who are a new feudal ruling class.

Remember when the Republicans were seen as the elites and the Democrats the party of the common man? What most Democrats don't get yet is that there's been a role reversal. The Democrats have become the party of government rulers, sycophant Wall Street investors in a command economy, businessmen beholden to government industrial policymakers, academic snobs, union leaders out for themselves, and the underclass dependent on welfare. The Republicans have become the party of middle America flyover country, the party of independent workers, small businesses, and average folks who still believe in the principles upon which this great nation was founded.

There's an old allegory about crabs in a pot. When one tries to climb out, the others pull it down. Maybe the symbol of the Democratic Party should be changed from the donkey to the crab.

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