Thursday, September 22, 2011

Who Owes Who?

Senate candidate Elizabeth Warren gives her answer to charges of class warfare. She says that it is all part of the social contract:

You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Wow. Sounds fair. Barack Obama said something similar to Joe the Plumber. Who could argue with this?

I can. On several points.

First, where did this "you" and "we" come from? She is implying that someone who builds a factory somehow escapes the taxes that pay for roads, education, etc. That is absurd. Taxes on the trucks that carry the goods pay for their share of the highways. Property taxes on the factory pay for education (at least in Ohio). Income taxes and corporate taxes help pay to keep down the marauding hoards. We all pay for these things and we all benefit from them. That's the social contract.

Next objection, she isn't really talking about paying forward to the next kid who comes along. She really wants to take money from the rich and give it to the rest of us. Obama's jobs bill is not trying to help students. It is trying to help (unionized) teachers.

She agrees that the rich can keep a big chunk of their earnings (how generous) but she fails to say how much should be confiscated for the rest of us. Our corporations already pay the highest taxes in the world so it's not like they are getting a free ride. So what is fair? All of the income tax is paid by the top 53%. Once you get into the top 10% of taxpayers, things get interesting. This group accounts for 42% of all income earned but they pay 72.7% of all income taxes. If that's not enough then what is?

Is it fair to say to someone, "You made a lot of money. Now you can use it to pay for my retirement."

At its heart, Warren is basing her argument on the old Marxist idea that the rich acquire their wealth by taking it from the workers. She doesn't see this as mutually beneficial. She only sees people getting rich and others left out. From her viewpoint, something has to be done. By the government.

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