Friday, February 3, 2012

Conservatism and the Rich

Hem and Fitzgerald

"There Rich are different from you and me."  F. Scott Fitzgerald
"Yes, they have more money."  Hemmingway

This classic exchange never really took place as above*, but it should have.

The rich are and have been the only minority that it is politically correct to malign freely.  Somewhere in the bible you can find, "Abusers of the rich are always among you."  In the old days, they were despised as the "idle rich."  They were also castigated as immoral arms merchants--the pep team for armed conflict and global Armageddon.  Today they are more likely to be pilloried as "type A workaholics" and fat cat bankers.  Mr. Burns cackles and rubs his hands in glee at the misery of the Springfield middle class.  Inherited wealth is evil because unearned while self-made men tend to worship their creator.

As the contest between fist-bumping community organiser Obama and Private equity Swiss bank account-holder Romney shapes up this year, we can expect to see lots of very predictable class envy story lines in the mainstream media.  The Occupy Wall Street crowd loves to vilify greedy bankers and suggest that income inequality will end in revolution.

Here is a recent editorial example of typical rich-bashing by Ann Werner...

"The way I see it, if Republicans were allowed to do everything they want to do, we would live in a country where the rich paid zero taxes but the poor (and that’s all that would be left because the middle class would disappear) would bear the burden of paying for everything. The burden would be lightened significantly, however, because there would be no Social Security, Medicare, Medicaid, EPA, Department of Education, Department of Consumer Affairs – well, I could go on but the only thing remaining would be the Department of Defense, which I’m certain would grow to even more megalomaniacal proportions than it already has."

Here's the whole silly article, by the way...

This critique ignores, of course, the fact that the rich pay more taxes, create more jobs and give more to charity that anyone else.  This is not an ideological statement but a mere question of mathematics.  What if we were to substitute the words "economically productive" for our usage made of the word "rich"?

Without question, conservatism, with its advocacy of free markets, promotes wealth creation.  Capital is never idle--"money never sleeps".  The savings accounts of the wealthy facilitate the loans to small businesses that are the engine of economic growth and job creation throughout the US.

Mr. Burns / Murdoch
There is, however,  a special section of media hell reserved for those who are both wealthy and conservative.  The Koch brothers and their infernal machinations are grist for their mill.  Rupert Murdoch's Fox News network is mocked as "Faux News" on countless t-shirts.  The Mr Burns character is based loosely on Murdoch who has, meanwhile, profited immensely from The Simpsons twenty year+ run.  What will those "Wascally Wepublicans" think of next...fluoridation of the water supply?  But the fact remains that the rich come in all political persuasions.

Warren Bufffet, the son of a Republican congressman, is a committed tax-me-more-please Democrat.  Bill Gates wants to save the world and raise your taxes.  Steve Jobs was a conventional Obama-supporting liberal billionaire too.  Why do these guys seem to forget that the treasury is always happy to accept an overpayment on your personal tax bill?

France's DSK of the IMF was a dyed-in-the-wool socialist who used his wife's wealth to bail himself out after being "Maid in Manhattan" recently.  The wealthy can afford better lawyers, accountants and doctors.  As JFK once observed, "life is not fair."

Our old friend, Ambrose Bierce, in The Devil's Dictionary defined "Mausoleum" as n., "the final and funniest folly of the rich."  The Keynsians would point out that Mausoleums create good paying jobs for Masons, etc.  The wealthy are a source of folly and entertainment on many levels.  Just consider the rags to riches story of J.K. Rowling who is now the wealthiest woman in Britain--yes, there is opportunity in the UK!

The conventional notion that businessmen are all right-leaning Republicans is simply malarkey.  Most business people that I know are simply too pragmatic to take sides in politics.  They are constantly being shaken down by politicos of both parties and, more often than not, contribute often to both and, especially to whomever is thought most likely to win.  Many business people in consumer-related trades are unwilling to take a firm stand either way, knowing that any partisan stand will alienate about half of their potential customers.  They either take no firm position or they spread their bets.  Today's Babbit is a moderate.

The definition of what counts for rich keeps on changing too.  A billionaire is rich, sure.  A millionaire used to be rich.  Any family making over $200,000 per year can be classified by the IRS as rich.  Perhaps $50,000 per year household income is "too much?"  But take a look at what happened to a Malaysian student in the summer of 2011 on the streets of London...

The definition of rich suddenly became anyone who is wearing shoes!  We are all Mr. Burns now!

* Scott's line is taken from the short story Rich Boy published in 1926 while Hemmingways' line was a riposte from the original magazine version of the Snows of Kilimanjaro published in 1936.


Adam said...

One of my smaller criticisms, but I just thought I'd point out that there are still several minorities that it is ok to publicly malign, chief among them being Southerners (especially "rednecks") and atheists.

While many folks criticize the rich with abandon, most folks still vote for someone that is fairly rich. As far as I know, however, there is only one member of Congress who has even hinted at being atheist or agnostic.

More on topic - our confused Keynesian economists do not realize that taxing the rich actually hurts the poor the most. I have had "rich" liberal friends tell me that the rich should pay more in taxes. They say they would not be adversely affected by paying another three or five thousand in taxes annually (and I believe them).

They say that money is just sitting "idle" in their bank accounts. This is where they are completely wrong. Frederic Bastiat pointed out that bad economists look at what is seen, good economists look at what is unseen. Keynesians look at the bank accounts of the wealthy and see idle money, gaining interest, helping no one. Austrian economists look at the same bank accounts and ask, what does the bank do with that money? The banks don't just put it in vaults and swim in it like Scrooge McDuck. They lend that money out. To whom do they lend? For the most part, to small businesses. Why is this important? Because small businesses have been the *only* source of net job growth in the USA over the past 30 years. (I have a source for this.) In other words, small businesses are directly financed by saved money in banks, and the vast majority of that saved money is from the wealthy. When you tax away that money, you directly impact small business creation. The lower the tax on the wealthy, the more small businesses we have and the more EMPLOYMENT we have. The higher the tax, the fewer small businesses and the higher the unemployment.

If government taxes that money, it is transferred to a poor person and immediately consumed. This situation is somewhat analogous to the phrase "Give a man a fish and he'll eat for a day, teach him how to fish and he'll eat forever." We obviously want the latter situation, which is what we get from lower taxes on the rich and small business creation, leading to employment for the poor. This can ultimately result in the poor becoming not-poor, as compared to the former situation where the poor stay poor and our consistently dependent on government handouts.

Blogger said...

eToro is the #1 forex trading platform for rookie and established traders.

Blogger said...

There's SHOCKING news in the sports betting industry.

It has been said that any bettor needs to see this,

Watch this now or stop placing bets on sports...

Sports Cash System - Advanced Sports Betting Software.