Wow, someone else who's actually read Adam Smith!
Jeff M
On Feb 1, 2009, at 7:58 AM, Chris Dunford wrote:
By taking from the rich to give to the poor via the tax code. I'd
like to hear your Clintonian parsing of the difference between this
and wealth redistribution.
And I'd like to hear where this is any different from what we've been
doing since 1913, when progressive tax rates were introduced.
I should amplify on this.
You speak as if there is something new or radical about what Obama
said, but
there is not. The ideas behind what he said go back centuries--and
have been
embedded in our tax code since 1913. Ain't nothing Marxist about it.
It's
just common sense: economies don't work very well if wealth is
concentrated
in the hands of a small number of very wealthy people. It isn't good
for
anyone, including, in the long run, the wealthy ones.
Here is what Adam Smith said in 1776 in "The Wealth of
Nations" (and, d'oh,
I keep saying Keynes when I mean Smith--Keynes on the brain):
"The necessaries of life occasion the great expense of the poor....
The
luxuries and vanities of life occasion the principal expense of the
rich,
and a magnificent house embellishes and sets off to the best
advantage all
the other luxuries and vanities which they possess.... It is not very
unreasonable that the rich should contribute to the public expense,
not only
in proportion to their revenue, but something more than in that
proportion."
Warren Buffet says the same thing, only more directly:
"[The wealthy] have this idea that it's "their money" and they
deserve to
keep every penny of it. What they don't factor in is all the public
investment that lets us live the way we do. Take me as an example. I
happen
to have a talent for allocating capital. But my ability to use that
talent
is completely dependent on the society I was born into. If I'd been
born
into a tribe of hunters, this talent of mine would be pretty
worthless. I
can't run very fast. I'm not particularly strong. I'd probably end
up as
some wild animal's dinner. But I was lucky enough to be born into a
time and
place where society values my talent, and gave me a good education to
develop that talent, and set up the laws and the financial system to
let me
do what I love doing-and make a lot of money doing it. The least I
can do is
help pay for all that."
Very few economists take exception to this position, and it is the
foundation of progressive taxation, which is exactly what our
existing tax
code implements. So, in fact, what Obama was talking about is simply
what
our current income tax already does. Nothing radical or Marxist.
The conservative media fixated on the one statement that "when you
spread
the wealth around, it's good for everybody" (as if this were somehow
new, or
evil socialism, or different from what we've been doing since 1913),
but
it's just common sense and has been known for a very long time.
Was the choice of wording unfortunate? Yes. If he had instead said,
"when
the wealth is spread around, the economy works better, and it's good
for
everybody", it would have been unexceptionable. But this wasn't a
prepared
speech, it was an off-the-cuff chat with a voter.
If you really listen to the whole thing
(http://www.youtube.com/watch?v=BRPbCSSXyp0), you'll find that there
really
isn't much there that can be easily disagreed with. One can certainly
quibble about a few percentage points in the tax rates here and
there, but
the basic idea is sound, well understood, and not radical in any way.
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