"Wealth exists, somehow ... "

"... the political left has long had a remarkable lack of interest in how wealth is created. As far as they are concerned, wealth exists somehow and the only interesting question is how to redistribute it." 

~ Thomas Sowell from his 2002 book Controversial Essays

'Eat the rich' never targets the real parasites, only producers

"The most revealing truth about modern politics: 'Eat the rich' never targets the people who actually got rich by taking your money through taxes, regulations, and crony deals. It targets the people who got rich by creating products and services you voluntarily chose to buy because they improved your life. 

"Jeff Bezos became wealthy because millions of people decided Amazon made their lives better. Meanwhile, career politicians become wealthy by redistributing other people's money while producing nothing of value. Guess which one gets labeled the villain?

"The real parasites are the ones who get rich through political power rather than voluntary exchange. They use government force to transfer wealth from productive people to themselves and their allies, then convince you that the problem is the people who actually earned their money.

"This misdirection is intentional. If people understood that politicians and bureaucrats are the real wealth extractors, they might start asking uncomfortable questions about where all those tax dollars actually go and why the government keeps growing while problems never get solved."

~ Students for Liberty/Rock Chartrand

SOWELL: 'The Fallacy of Redistribution'

“The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty.” 

~ Thomas Sowell on 'The Fallacy of Redistribution'

John Key is still a fucking moron

Cartoon by Richard McGrail from The Free Radical

I've been reminded this morning about what a clueless fucking moron we had as a Prime Minister for two-and-a-half terms. Back a few years ago when we were "rock stars." Remember that?

Anyway, here's John Fucking Key last month giving his considered analysis of what's wrong with New Zealand's economy now:

"The guts of what’s wrong is that the housing market is going down, not up,' he said.
    “When house prices go up, everybody tells the pollsters, ‘Oh that’s terrible, my son or daughter can’t buy a house. I feel really bad.’ The technical term for that is ‘bullshit’.
    “What they really do, is they say to their wife – or the wife says to her husband – ‘God, we paid $1 million for this house and it’s worth $1.7 million now.’ Quietly they go, ‘Oh, we feel rich’.
    “And then they go and borrow a bit from the ANZ and they go on holiday and they upgrade their kitchen, they feel good about life. So when you have a negative wealth effect, they feel bad.”

And I bet the roomful of home owners and property "investors" and National Party political advisors — no to mention all his former colleagues on the ANZ board —had a smug little chuckle into their at their man's shrewd witticisms. It's hard to know where to begin at his economic acumen however, 'cos apparently it's never begun.

Let's make it simple, since that's the best description of Key's grasp of things. Trump's been called a fucking moron for not understanding the economic destruction of tariffs. And rightly so. But Trump doesn't pretend to be in any way clued up about economics. Key does. And yet the fucking moron apparently knows nothing about a simple enough concept: capital consumption. It's a process of converting someone else’s wealth into your income.

And this is his one simple trick to fix the fucking economy.

You wouldn't believe it.

Here's what the fucking moron either doesn't know, or doesn't care to know.

That fucking "wealth effect" the moron talks about is paid for by one thing: it's paid for by eating the fucking seed corn. The seed corn is the part of your harvest you put aside to plant again next year. Without that seed corn, you have nothing to plant, and nothing further to harvest. What Key wants to "fix" the economy, the simple guts of it, is for is to eat the fucking seed corn. That's his recipe for success. 

Any fucking moron could get a "wealth effect" (and a poll bump) by consuming the seed corn.  But ultimately the farmer will pay a price; he'll no longer have anything to farm.

Fellow on the right enjoys Key's "wealth effect." Not so much farmers on the left.

But the difference in what Key proposes is even worse: he wants home owners to consumer other people's seed corn. Hayek used to call this "forced saving." Savers have to save more, or else, because the "seed corn" being consumed is theirs. 

Here's the thing: When mum and dad borrow a bit from the ANZ and go on holiday and upgrade their kitchen and put in another fucking ensuite, that's paid for by what was, or would have been, accumulated capital. The accumulated capital of those other savers. It's called "forced saving" because what pays for John Key's fucking borrowing is new counterfeit capital: i.e., new money that's been borrowed into existence to pay for the holiday, the new kitchen, the fucking ensuite. That counterfeit capital means savers are forced to save more just to keep up.

That's because this new borrowing is new money "injected into the economic system at a specific point" that advantages those consuming the counterfeit capital while disadvantaging those trying to save.

If the money or credit were evenly distributed among all economic agents, no “expansionary” effect would appear, except the decrease in the purchasing power of the monetary unit in proportion to the rise in the quantity of money. 

However if the new money enters the market at certain specific points, as always occurs, then in reality a relatively small number of economic agents initially receive the new loans. Thus these economic agents temporarily enjoy greater purchasing power, given that they possess a larger number of monetary units with which to buy goods and services at market prices that still have not felt the full impact of the inflation and therefore have not yet risen.

The purchasing power of these home-owners is paid for by the losses of savers. 

Hence the process gives rise to a redistribution of income in favour of those who first receive the new injections or doses of monetary units, to the detriment of the rest of society, who find that with the same monetary income, the prices of goods and services begin to go up. “Forced saving” affects this second group of economic agents (the majority), since their monetary income grows at a slower rate than prices, and they are therefore obliged to reduce their consumption, other things being equal.

In a nutshell Key's quick-fix for poll-driven success, and economic growth, is to grant home-owners purchasing power by quietly, secretly and unobserved, stealing from savers. ("By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." ~ John Maynard Keynes)

Recall that he said something similar when the problem erupted of paying to repair leaky homes. He said quite bluntly, not to worry,  inflation would fix that. Remember that when housing unaffordability was bad before he took office, and he promised to fix it. He didn't, of course. Instead, he did everything he could to put rocket fucking fuel under house prices. It would, he claimed, 'fix" the problem of paying for the problem. 

This prick has form.

He's either a calculating Machiavellian.

Or he's pig ignorant.

My money's on the latter.

RELATED:

• Key on housing affordability and elsewhere - NOT PC, 2007
• Counterfeit capital - NOT PC, 2008
• Mr Key’s dirty little secret - NOT PC, 2009
• We’re rock stars! - NOT PC, 2014
• How Do People Destroy Capital? - Keith Weiner, SNBCHF, 2015
• Housing bubble is consuming our capital - NOT PC, 2015
• The Reserve Bank’s war on capital - NOT PC, 2016
• Key admits to ‘crisis theatre’ and talks up house-price inflation - NOT PC, 2016
• John Key has had an unbelievable solution for affordable housing - NOT PC, 2017

Let’s call ‘taxing the rich’ what it really is: Theft

Picture of New Zealand's richest man. Guaranteed a reaction
 against his success by a certain sort of commentator ...

EVERY SO OFTEN A PIECE of dross comes over my monitor that just cries out to be fisked. Like this rant against the latest NBR Rich List by someone called Dr Neal Curtis. His piece argues that "as society groans under the weight of wealth inequality" (can you hear the groans, readers?) there should be a "different slogan to ‘tax the rich'." The one he favours: "reclaim the wealth'."

Yes, he's an ultra-redistributionist. Aka, a thief. Walter Williams knows the type:

Dr Curtis's piece is of course a reaction to publication of the NBR Rich List, which without fail gets a certain sort of person to hyperventilate.

Dr Curtis is that sort of person.

And this screed vomiting forth at Newsroom is the result.

Dr Curtis, by the way, is said by his bio to be "a comics scholar and critical theorist with wide-ranging interests." Lead item on his Areas of Expertise is: Comics. So let's just call him Mr Curtis.

MR CURTIS BGINS: THIS Government, he says, is "gutting government departments and cutting public services."

I wish this were true instead of comical. (Spending is now higher under Nicola Willis than under Grant Robertson. Full-time employees under the Luxon Government was 64,222 when elected, and is now 63,238. There have been cuts, it's true, but none anywhere near as big as I would hope.)

But his beginning is only a drive-by to pass off his credentials. Three paragraphs in we get to the meat. So it's here that I'll begin my fisking.

MR CURTIS: [There are] three central assumptions of current economic dogma that those who question are branded as ‘radical leftists.’ These assumptions are underpinned by the beliefs that wealth trickles down; deregulation is good for business; and the state should stay out of the market and everything should be privatised.

Should I cry "strawman" this early in the piece? Each of these pieces of alleged dogma is both fly-blown and overblown. No-one outside a piss-poor public-choice lecture would anyone say everything should be privatised. (Courts? Police? Army?) And no-one anywhere advocates so-called "trickle-down." His point here is not to make sense, however, it's simply to damn the rich so he can later advocate their being eaten.

So he ploughs on regardless, challenging each of the assertions he's just straw-manned. Like his logic, let's looks at each of them in reverse.

MR CURTIS: ...the state has always been an economic entrepreneur funding all kinds of technological innovation, such as the internet, but this often goes unreported in the dominant economic journalism.

"Always" is doing a lot of work here. There's a reason so much government entrepreneurialism goes unreported in any economic journalism: it's because it's so rare. Sure, the government defence project ARPANET linking dozens of people was transformed into something that now links five billion. But that wasn't a Ministry of Doing Shit that did that. It was private entrepreneurs who turned the great idea into a GREAT IDEA. 

MR CURTIS: ... seen from a purely corporate perspective deregulation is no doubt a path to profit. However, it is also socially disastrous as costs of deregulation are outsourced via public bailouts following financial crises, for example, that are directly caused by the rolling back of legislation designed to safeguard the wider economy.

Without going too much further than this one paragraph (though we can if you wish), let us agree that there is more than one kind of deregulation. There is the kind that mandates safety and (may) safeguard the wider economy. There is regulation that protects intellectual and real property, and that allows for the enforcement of contracts. And then there is regulation about how curved a banana should be, or how far apart hairdressing salon seats should be. You'll notice how carefully Mr Curtis conflates these. And why.

MR CURTIS: ... wealth, especially when given away in tax cuts, does not trickle down. It stays at the top. Ever-increasing wealth inequality as measured by the Gini coefficient or any study of income trends show this.

Now, it's Mr Curtis who insists this to be economic dogma, i.e., that wealth "trickles down." Yet the author of Basic Economics,  Thomas Sowell, insists that there is no-one anywhere outside a lunatic asylum or a comics convention who holds it to be true, let alone as dogma.

Years ago [writes Sowell, I] challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory. Some readers said that somebody said that somebody else had advocated a “trickle-down” policy. They could never name that somebody else and quote them, though.

[Mr Curtis] is by no means the first [person] to denounce this nonexistent theory. Back in 2008, presidential candidate Barack Obama attacked what he called “an economic philosophy” that “says we should give more and more to those with the most and hope that prosperity trickles down to everyone else.”

Let’s do something completely unexpected: Let’s stop and think. Why would anyone advocate that we “give” something to A in hopes that it would trickle down to B? Why in the world would any sane person not give it to B and cut out the middleman? All this is moot, however, because there was no trickle-down theory about giving something to anybody in the first place. 

Sowell wrote a whole book exposing the nonsense of those who believe this trickle-down fantasy. [It's free, you can DOWNLOAD IT HERE.] And as I've pointed out myself on occasion, if there is a trickle-down system in operation it's the one whereby large gobs of your own money are taken from you by government, and trickled back down to you in the form of favours, and subsidies and social welfare for working families and the like.

There is an argument however for having capitalists keep their own capital, however— an economic argument, as well as the strictly-speaking moral argument that it's their goddamn money. Mr Curtis et al would like to think that if the "one percent's" capital were not stripped from them it would perhaps be baked into pies or used to light cigars—or would be emptied into money bins so that, like Scrooge McDuck, the owner of capital can spend his time rolling around in it.

This is truly a comic-book version of reality that only one ignorant of the division of labour could hold. 

Because, as George Reisman explains,  the vast majority of the wealth owned by the so-called “one-percent” is not held in the form of chocolate bars or champagne bottles or pies, but in the form of the capital goods and equipment that produce the consumer goods on which we (and Mr Curtis) all depend—capital goods that only come to represent wealth to the extent they are used to produce the goods and services people, in their capacity as consumers, really want. Per-Olof Samuelsson observes: 

"The productive rich (think Rockefeller, Carnegie, Ford, Bill Gates, Steve Jobs, etcetera, etcetera) actually flood the rest of us with wealth (and themselves become wealthy in the process). Taxing or expropriating them simply means to dam this flood. And this may make it appear 'trickle-down'— because governments and politicians will only allow a small portion of this wealth to trickle down to us; the rest of it lands in their own pockets."

Many of the wealthiest people on earth hold their wealth in the form of a financial asset, like stock in a successful company. And the very wealthiest have no time to swim in cartoon-style money bins because they're also successfully running these companies.

[Mr Curtis and his readers] have no awareness of this, because they see the world through an intellectual lens that is inappropriate to life under capitalism and its market economy. They see a world, still present in some places, and present everywhere a few centuries ago, of self-sufficient farm families, each producing for its own consumption and having no essential connection to markets.
    In such a world, if one sees a farmer’s field, or his barn, or plough, or draft animals, and asks who do these means of production serve, the answer is the farmer and his family, and no one else. In such a world, apart from the receipt of occasional charity from the owners, those who are not owners of means of production cannot benefit from means of production unless and until they themselves somehow become owners of means of production. They cannot benefit from other people’s means of production except by inheriting them or by seizing them.

But in the modern world (at least, to the extent that the so-called “one-percent” are not simply milking government subsidies and bailouts, which is how so many seem to think business should work), all of us benefit from the private ownership of their means of production whoever owns them—just as long as the owners are left free to produce and innovate. We all get the benefit of their production, both as buyers of the products of those means of production, but also as sellers of labour employed to work with those means of production.

The wealth of the capitalists, in other words, is the source both of the supply of products that non-owners of the means of production buy and of the demand for the labour that non-owners of the means of production sell. It follows that the larger the number and greater the wealth of the capitalists, the greater is both the supply of products and the demand for labor, and thus the lower are prices and the higher are wages, i.e., the higher is the standard of living of everyone. Nothing is more to the self-interest of the average person than to live in a society that is filled with multi-billionaire capitalists and their corporations, all busy using their vast wealth to produce the products he buys and to compete for the labour he sells.
    Nevertheless, the world [Mr Curtis and his readers] yearn for is a world from which the billionaire capitalists and their corporations have been banished, replaced by small, poor producers, who would not be significantly richer than they themselves are, which is to say, impoverished. They expect that in a world of such producers, producers who lack the capital required to produce very much of anything, let alone carry on the mass production of the technologically advanced products of modern capitalism, they will somehow be economically better off than they are now. Obviously, [they] could not be more deluded.

AND IT'S NOW, WITH HIS three dogmas exposed, that we can see Mr Curtis's error more plainly. Like many who are branded as "radical leftists," not only is there an inherent wish to damn the rich, all of them, there is also a paucity of understanding of how the deserving rich got that way. 

Yes, there is more than one way to get rich. One may pull favours and subsidies from government, as cronies all try to, or one may be the government and sell Shitcoins (as one particularly egregious entity is currently doing). Or one may sit tight and rely on central banks inflating monetary assets (what is often called the Cantillon Effect, after the eighteenth-century ex-banker who called attention to this phenomenon of long-term capital consumption). But neither of those examples is any more than short-term, and no amount of short-term skimming is going to get you to the top of even a New Zealand rich list.

Even in this small pond, it does take an entrepreneur risking his or her own capital to really roll in the big returns.

Mr Curtis would like you to conflate all three, as he proceeds to draw his conclusion.

But first, his corollary: that it is government spending that makes us all rich. Mr Curtis phrases it this way.

MR CURTIS: All this [leaving capital in the hands of its owners] results in top-heavy, financially starved economies as governments continually try to make the wealth giveaways fit into a budget by stripping support for public services or selling off public assets at knockdown prices. ...
    The fact that the global economic outlook as well as specific national economies remain so fragile and unstable ... is surely enough evidence that the principle of continually moving wealth upwards doesn’t work...

He really does think that money in the hands of government grows economies, whereas money in the hands of those who made it simply squanders it. 

It's deluded.

And sure enough, having made his three points of alleged dogma, and delivered his corollary, he gets to start eating his meat. 

MR CURTIS: Just as there is no economic justification for structuring an economy in which only the very wealthy are the true beneficiaries, there is also no moral justification.... As our society is placed under increased stresses and strains beneath the extreme weight of amassed, socially useless wealth that sits with a very small class of people, there have been increased calls to tax the rich.

Mr Curtis is, of course, in favour. And now, bringing together what passes for his argument, is his payoff:

MR CURTIS: Instead of a call to ‘tax the rich’, the call should be to ‘reclaim the wealth’. I believe this phrase more adequately represents the request to return a greater share of what was commonly created. It is also a call to give back even just a small amount of what was taken through the design of an economy knowingly and carefully organised to purposefully benefit the few.

You can see his own dogma peering out from under his comical version of how an economic system works:

"Commonly created."

"Give back."

"Reclaim."

One question should be enough to puncture the deceit, and with it we return to Walter Williams at the top of this post. The question is: Who created this wealth?

Nick Mowbray is an almost perfect example here. 

The wealth represented by Mr Mowbray's Zuru Toys quite literally did not exist before Mr Mowbray created Zuru's toys. Pre-Mowbray, there was a pile of stuff. Post-Mowbray and his identification of the value to human beings to be delivered by his toys, there's enough value in them to make him this county's richest man.

I know that can be hard to get your head around, but there it is. Value, in the economic sense, is in the eye of the consumer. Consumers' "vote" every day, with their own hard-earned money on their devices, for Zuru's toys creates a socially-objective price for Mr Mowbray's offerings, and allows him to grow his capital. Which he can then use to create more toys, which creates more capital, which .....

All going well, especially if you like children's toys, that's a life-enhancing spiral that costs no-one else anything.

LET'S NOT BOTHER TOO MUCH to investigate further into the mind of someone who would despise that.

Let's ask instead only what they're trying to achieve. For. Mr Curtis, here's his payoff here, he hopes (now with an added noteto identify his errors:

MR CURTIS: As our society is placed under increased stresses and strains beneath the extreme weight of amassed, socially useless wealth [sic] that sits with a very small class of people, there have been increased calls to tax the rich.

I love the use of the passive verb: "there have been calls..." instead of "I and my colleagues have been demanding..." 

MR CURTIS: In keeping with the dogma [sic], conservative supporters have made tax a dirty word [I wish! -Ed.]. Rather than tax being an individual or corporate contribution to the maintenance of a functioning society, the corporatist right has over the past four decades tried to make it a synonym for theft [I wish - Ed.]. The idea that taxing the rich is really a form of theft also makes it easy for the dogmatists [sic] to present the call as a form of envy; a petty resentment of the successful.

And isn't it envy? Envy, for example, that one person making toys that delight people will earn more in his lifetime than someone with pretensions to intelligence making his living from analysing comic books and posting snide articles on a web page. The envy fair oozes out this piece, and other similar rants by the usual suspects.

MR CURTIS: Instead of a call to ‘tax the rich’, the call should be to ‘reclaim the wealth.

Ah. Here we go: an all-but explicit claim from the mire that "you didn't build that." Which in the next sentence is made explicit:

MR CURTIS: I believe this phrase more adequately represents the request to return a greater share of what was commonly created.

So, in what will no doubt be a surprise to Messrs Mowbray, Hart et al, everybody created the toys for which the world is clamouring, the companies made more efficient, the plastics that store food better, the films that folk queue up for ... We all did it, he claims.

In the end, after all the verbage, that's his major claim. That we made it—an absurdity—so therefore we should keep it. A nonsense.

It is also a call to give back [sic] even just a small amount of what was taken [sic] through the design of an economy knowingly and carefully organised to purposefully benefit the few.

The irony is that, if Mr Curtis lifted his head from his comic books and looked properly at the world around him and at the division-of-labour system that allows even sad sacks like himself to survive and even flourish, he'd understand that (even imperfectly) it already is benefitting all of us.

If there's one benefit of watching a US president tearing down everything that made his own country prosperous, it's that his many political enemies are slowly discovering this truth.  

Many are discovering anew that it is actually poverty that is mankind’s natural state, that it is past wealth production (not redistribution) that has been rescuing people from poverty worldwide in ever-expanding numbers—the great (but almost unheard) story of our era that allows today's worker more easily-available health, wealth, and luxuries than even a king enjoyed in all previous centuries—and that efforts to simply legislate higher wages by law amounts to little more than a “loot and plunder” approach to economics.

The fundamental policy tools of statist politicians [explains George Reisman] are clubs, guns, and prisons... What allows statist politicians to conceal the fact that they’re thugs is the belief that they have a special account with Santa Claus. As though Santa Claus, rather than extortion, were the source of the funds extorted by the politicians.
The statist politicians and the leftist “intellectuals” dismiss the teachings of sound economics by calling it “trickle down.” They do not allow themselves to see that their theory of economics is the loot and plunder theory.

Some have realised and reconsidered. I invite Mr Curtis to consider it too.

PS: Mr and Mrs Marx were at least fully aware of how envy towards the rich is a psychological problem, not an philosophical—or economic—one. Writing to their "embittered" son after yet another tantrum at the world, Heinrich Marx said:

Frankly speaking, my dear Karl, I do not like this modern word, which all weaklings use to cloak their feelings when they quarrel with the world because they do not possess, without labour or trouble, well-furnished palaces with vast sums of money and elegant carriages. This embitterment disgusts me and you are the last person from whom I would expect it. What grounds can you have for it? Has not everything smiled on you ever since your cradle? Has not nature endowed you with magnificent talents? Have not your parents lavished affection on you? Have you ever up to now been unable to satisfy your reasonable wishes? And have you not carried away in the most incomprehensible fashion the heart of a girl whom thousands envy you? Yet the first untoward event, the first disappointed wish, evokes embitterment! Is that strength? Is that a manly character?

Is it? 

"The Greens' vision a pathway to Venezuela"

"LET'S STRIP AWAY THE political gloss and assess the Green Party’s 2025 budget for what it is: a document heavy on ideology, neo-Marxist buzzwords, and te reo, but dangerously light on pragmatism, economic credibility, and operational realism. ...

"Fundamentally, their budget is about lifting government revenue by taxing New Zealanders an extra $88billion over four years. They have no plan for growing the economy. ... for additional capital, the Greens have decided to simply borrow more. ...

"Included in the Greens tax grab are following revenue channels: Inheritance Tax [i.e., Death Tax]... Private Jet Tax ... 10-year Brightline test ... Labour’s removal of interest deductibility for residential property ... Companies/Corporate Tax [hike] ... Income Tax [threshold] change ... Mining Royalties [hike] ... Wealth Tax...

"It is worth remembering that the Green Party only claims these policies will generate nearly $90 billion in new revenue over four years. This is an implausibly optimistic figure. The reality is you can’t just plug in tax rates and expect static revenue. People adapt and restructure in reaction to law changes and shifting systems. Sometimes they just straight up leave. These are not 'guaranteed billions.' They are some pretty wild assumptions disguised as policy. ...

"CLAIMING TO HAVE FOUND $88 billion in additional revenue thanks to taxing the shizzzzz out of New Zealanders, the Greens have gone to town spending big. ... their budget is more manifesto than fiscal plan. At the heart of the document is the assumption that profit should be avoided and the state should act to hamper it as much as possible. Other assumptions of note relate to their allergic reaction to anything that remotely suggests that adults should be responsible for their own wellbeing. ...

"In classic modern Marxist fashion, they are determined to try things that have already failed multiple times over in other jurisdictions. ...The biggest problem with [their] extensive list of spending [outside the morality of altruism and theft, Ed.] ... is that there’s clearly a lack of capacity in our systems to deliver any of these services. ...

"It is also a strategy that assumes infinite government competence. The Greens are highly critical of our existing systems and yet they want to expand them, give them vastly more power, and put them under further pressure. ...

"'As Venezuelans have learned over the past 20 years of socialism, “free things” come at a high price'.' ...

"Most depressing of all, in my view is the way the Greens would set out to cause lifelong structural dependency on the state. Accusations of Marxism and socialism are often overblown, but in this case they are truly warranted. This plan contains no serious expectations of any personal responsibility nor any incentives to engage in commerce and grow the economy. Guaranteed incomes, regardless of effort, encourage longterm unemployment or permanent student life. There’s no point in saving, working hard, starting a business, or taking financial risks. In fact, those who do would be penalised severely by the Greens through taxation. This is a social model built not on empowerment, but entitlement. ...

"This budget is a blueprint for turning our country into the next Venezuela. It is easy to dismiss the insanity of the Greens as the fantasies of the irrelevant, but the assumption that will not get close to the levers of power is a naive one. ... unless MMP is overhauled ..."

~ Ani O'Brien from her posts 'The Greens' vision a pathway to Venezuela' and 'Greens' moral crusade masquerading as an economic plan

WATCH: Greens's co-leaderette Chloe Swarbrick attempts defending the impossible against Jack Tame's timid prodding:

"The Greens’ Budget is more than just a Budget. It is their utopian vision for a different country."

"[T]he Greens’ ... 'Green Budget' ... is more than just a Budget. It is their utopian vision for a different country. Unfortunately, it is also based on ludicrous assumptions and bad economics. ...

"The cornerstone of the Green revenue plan is a wealth tax raising $72.5 billion over four years. That is, well, optimistic. Just ask Germany, France and Sweden why they abandoned similar taxes. The reasons were capital flight, tax avoidance and administrative nightmares. ...

"Their plans for universal dental care ...is magical thinking, not policy. ...

"Their public housing plans ... offer no realistic plan for quadrupling construction capacity in a sector already facing severe workforce shortages and supply chain constraints.

"Their $395 weekly Income Guarantee ignores inevitable [inflationary] market responses. ... [guaranteeing] a return to similar inequality but with vastly higher government spending.

"The Greens have presented us with a textbook case of utopian thinking. And not coincidentally, 'utopia' literally means 'a place that does not exist'.”

~ Oliver Hartwich from his post ' The Green Budget fantasy'

Wealth taxes = loot + plunder

"The progressive personal income tax, the corporate income tax, and the capital gains tax all operate in essentially the same way as the inheritance tax. They are all paid with funds that otherwise would have been saved and invested. All of them reduce the demand for labor by business firms in comparison with what it would otherwise have been, and thus either the wage rates or the volume of employment that business firms can offer. For they deprive business firms of the funds with which to pay wages.
    "By the same token, they deprive business firms of the funds with which to buy capital goods. This, together with the greater spending for consumers’ goods emanating from the government, as it spends the tax proceeds, causes the production of capital goods to drop relative to the production of consumers’ goods. In addition, of course, they all operate to reduce the degree of capital intensiveness in the economic system and thus its ability to implement technological advances. […] [T]hese taxes, along with the inheritance tax, undermine capital accumulation and the rise in the productivity of labor and real wages, and thus the standard of living for everyone, not just of those on whom the taxes are levied. ...
    "Of course, many people will the line of argument I have just given as the 'trickle-down' theory. There is nothing trickle-down about it. There is only the fact that capital accumulation and economic progress depend on saving and innovation and that these in turn depend on the freedom to make high profits and accumulate great wealth. The only alternative to improvement for all, through economic progress, achieved in this way, is the futile attempt of some men to gain at the expense of others by means of looting and plundering. This, the loot-and-plunder theory, is the alternative advocated by the critics of the misnamed trickle-down theory."

~ George Reisman from his book Capitalism: A Treatise on Economics (pp. 308-310.) Hat tip Per-Olof Samuelsson, who observes: "The productive rich (think Rockefeller, Carnegie, Ford, Bill Gates, Steve Jobs, etcetera, etcetera) actually flood the rest of us with wealth (and themselves become wealthy in the process). Taxing or expropriating them simply means to dam this flood. And this may make it appear 'trickle-down' – because governments and politicians will only allow a small portion of this wealth to trickle down to us; the rest of it lands in their own pockets."

"The argument is that 'wealth is a privilege, and with it comes the obligation of paying tax to benefit society'."

"The argument [is that] 

Wealth is a privilege, and with it comes the obligation of paying tax to benefit society.   

"This is, obviously, piffle. For what is being said there is that only by paying tax does wealth benefit society. Which is, obviously, that piffle.
    "It’s actually true that wealth is the product of having benefitted society. As in the William Nordhaus paper about who gains from entrepreneurial activity, it’s us out here, us consumers, who gain the vast, vast proportion of it. The entrepreneurs themselves gain some 3% or so of total value created. Only 3% too.
    "As an example, Jeff Bezos has some $200 billion. A lotta cash, agreed. It’s also true there’s been the 'Amazon Effect.' By making the retail system more efficient the simple existence of the company has knocked 0.1 to 0.2% off the inflation rate. Every year for two decades. No, not 2 to 4% off retail sales that is, but 2 to 4% off the whole cost of living for everyone. That’s a sum vastly larger than the Bezos pile - especially when we convert that annual benefit into a capital sum so as to be able to compare it with the Bezos capital sum.
    "It simply isn’t true, not in the slightest, that the justification for wealth is the tax paid upon it. It’s how much better off are we made by someone having made that wealth?"

~ Tim Worstall from his post 'If people don’t grasp the basics then….'

"Their wealth is not at the expense of others – it is by providing things of value"

"One-hundred years ago almost all the wealthy inherited their wealth. Today most billionaires become one through being entrepreneurs. They create something of value. ...
    "I don’t begrudge [the Mowbray family] that they are worth $20 billion. Their wealth is not at the expense of others – it is by providing things of value.
    "The left parties want to introduce an asset or wealth tax on anyone who gets too successful. Not content with taxing income, they want to redistribute assets also. But what do you think will happen if they ever succeed in NZ? I can tell you what – the Mowbrays will probably relocate somewhere and take all the income tax, company tax etc. they pay with them."

~ David Farrar, from his post 'A Kiwi success story'

UPDATE: Isn't it funny what massive success brings out of the woodwork. David Farrar's praise above for the Mowbray's non-sacrificial entrepreneurial success is in stark contrast to an envy-ridden screed about their success by failed former Labour minister Michael Wood, who skips quickly from suggesting their success shows New Zealand is "a little out of balance" [?] to calling for the government to tax the bastards.

Thomas Cranmer takes the oily former minister to task, making an excellent recommendation to remedy his thinking:

Mr Wood, of course, is a former Labour MP and Cabinet Minister who lost his seat – a relatively safe Labour one at that. Now as a union organiser – what a surprise – he carries on the collectivist messaging that characterises the Left. To understand the fundamental importance of individual effort and, as Ayn Rand put it "to show how desperately the world needs prime movers and how viciously it treats them" and "what happens to the world without them" Mr Wood might like to try reading Atlas Shrugged.
    I applaud the Mowbrays. I admire their initiative. I extol their entrepreneurship. I could not take the business risks that they obviously have to get to the position that they now are in. But that is not common for New Zealand nor is it common for the media to express unqualified praise for those who have done well. There is always a “Good on them, but….” And it is the “but” that evidences the Groupthink of the tall poppy syndrome which is an aspect of New Zealand culture that we could well do without and that Atlas Shrugged condemns.

 Damned right.

 

How often do we hear that government "austerity" is destructive —that it is the job of government, or their central bank, to "stimulate demand"? Or that growth can be gussied up by gobs of government cash? In this guest post, Frank Shostak is here to dismantle those ideas, and to explain that monetary pumping does not create new wealth, it destroys it ...

Does Government Spending and Money Expansion Create New Wealth or Destroy It?

by Frank Shostak

Many economists claim that economic growth is driven by increases in the total demand for goods and services, additionally claiming that overall output increases by some multiple of the increase in expenditures by government, consumers, and businesses. Thus, it is not surprising that most economic commentators believe that a fiscal and monetary stimulus will strengthen total demand, preventing an economy from falling into a recession. [And conversely, that a withdrawal of govt spending will send it there. - Ed.]

These economists believe that increasing government spending and central bank monetary pumping will increase production of goods and services and strengthen total demand. This means that demand creates supply. However, is this the case?

Why Supply Precedes Demand

In the market economy, producers do not produce solely for their own consumption. Some of their production is used to exchange for what others produce. Hence, in the market economy, production precedes consumption. Something is exchanged for something else. This also means that an increase in the production of goods and services leads to an increase in the demand for goods and services.

According to David Ricardo,

No man produces, but with a view to consume or sell, and he never sells, but with an intention to purchase some other commodity, which may be immediately useful to him, or which may contribute to future production. By producing, then, he necessarily becomes either the consumer of his own goods, or the purchaser and consumer of the goods of some other person.

An individual’s demand is constrained by his ability to produce goods. The more goods an individual can produce, the more goods he can demand. For example, if five people produce ten potatoes and five tomatoes, this is all that they can demand and consume. The only way to consume more is to produce more.

James Mill wrote,

When goods are carried to market what is wanted is somebody to buy. But to buy, one must have the wherewithal to pay. It is obviously therefore the collective means of payment which exist in the whole nation that constitute the entire market of the nation. But wherein consist the collective means of payment of the whole nation? Do they not consist in its annual produce, in the annual revenue of the general mass of inhabitants? But if a nation’s power of purchasing is exactly measured by its annual produce, as it undoubtedly is; the more you increase the annual produce, the more by that very act you extend the national market, the power of purchasing and the actual purchases of the nation. . . . Thus it appears that the demand of a nation is always equal to the produce of a nation. This indeed must be so; for what is the demand of a nation? The demand of a nation is exactly its power of purchasing. But what is its power of purchasing? The extent undoubtedly of its annual produce. The extent of its demand therefore and the extent of its supply are always exactly commensurate.

The Expanding Pool of Real Savings Key to Economic Growth

Without the expansion and enhancement of the structure of production, it is impossible to increase the supply of goods and services in accordance with the increase in total demand. Expanding and enhancing the infrastructure depends upon expanding the pool of real savings, which is composed of consumer goods and supports those employed producing those necessary goods and services.

Consequently, it does not follow that increasing government spending and employing loose monetary policy will increase the economy’s output. It is impossible to lift overall production without the necessary support from the real savings pool.

For example, a baker produces twelve loaves of bread and saves ten loaves. He then exchanges them for a pair of shoes with a shoemaker. In this example, the baker funds the purchase of shoes by means of the ten saved loaves of bread, which maintains the shoemaker’s life and well-being. Likewise, the shoemaker has funded the purchase of bread by means of shoes that he had produced.

Assume that the baker has decided to build another oven to increase production of bread. To implement his plan, the baker hires the services of the oven maker, paying the oven maker with some of the bread he is producing. If the flow of bread production is disrupted, however, the baker cannot pay the oven maker, so the making of the oven would have to be abandoned. Therefore, what matters for economic growth is not just tools, machinery, and the pool of labour but also an adequate flow of consumer goods that meet the producer’s needs.

Government Does Not Generate Wealth

Government does not produce wealth, so how can an increase in government outlays revive the economy? People employed by the government expect compensation for their work. One way the government can pay these employees is by taxing others who are generating wealth. By doing this, the government weakens the wealth-generating process and undermines prospects for economic growth.

According to Murray Rothbard, 

Since genuine demand only comes from the supply of products, and since the government is not productive, it follows that government spending cannot truly increase demand.

If the pool of real savings is large enough to fund government spending, then a fiscal and monetary stimulus will seem to be successful. However, should the pool of real savings decline, then regardless of any increase in government outlays and monetary pumping by the central bank, overall real economic activity cannot be revived. In this case, the more government spends and the more the central bank pumps, the worse off wealth generators will be, eliminating prospects for a recovery.

When loose monetary and fiscal policies divert bread from the baker, he will have less bread at his disposal. Consequently, the baker cannot secure the services of the oven maker, making it impossible to increase the production of bread.

As the pace of loose government policies intensifies, the baker may not have enough bread left even to sustain the workability of the existing oven since he no longer can afford the services of a technician to maintain the existing oven. Consequently, the production of bread will actually decline.

Because of the increase in government outlays and monetary pumping, other wealth generators will have fewer real savings at their disposal. This in turn will hamper the production of their goods and will weaken overall real economic growth. The increase in loose fiscal and monetary policies not only fails to raise overall output, but on the contrary, it leads to a general weakening in the wealth-generation process.

According to J.B. Say, 

The only real consumers are those who produce on their part, because they alone can buy the produce of others, [while] . . . barren consumers can buy nothing except by the means of value created by producers.

Conclusion

Most economists and economic commentators claim that increases in government spending and central bank monetary pumping strengthen the economy’s overall demand. This, in turn, sets in motion increases in the production of goods and services. Thus, demand supposedly creates supply.

However, to be able to exchange something for goods and services, individuals must first have something by which to exchange. To demand goods and services individuals first must produce something useful. Hence, supply drives demand, not the other way around.

Increases in government spending divert savings from the wealth-generating private sector to the government, thereby undermining the wealth-generating process. Likewise, monetary pumping results in wealth diversion from wealth generators toward the holders of pumped money. Far from stimulating economic growth, government actions hinder it.

* * * * 

Frank Shostak has over 40 years experience as a market economist and central bank analyst. He is an adjunct scholar of the Ludwig von Mises Institute and a member of the board of editors of the Quarterly Journal of Austrian Economics. He is highly regarded for his skills to convert complex economic issues into plain English. He has written articles that have appeared in The Wall Street Journal and in academic journals in Europe and the US. A follower of common -sense economics and damage inflicted from reckless money creation, his Sydney-based consulting firm, Applied Austrian Economics, provides in-depth assessments of financial markets and global economies.

His post first appeared at the Mises blog.

It's been all too common for pro-socialist politicians here and elsewhere to talk up Sweden, to offer up it's "pro-socialist" policies and welfarate-state programmes as examples for us all to emulate. "Look," they say, "they have socialism and prosperity!" Problem is, as Swedish writer Johan Norberg explains in this guest post, that Sweden was most pro-socialist way back in the Seventies, when it was squandering the riches of a century, and it's only become prosperous as it's abandoned that notion, and embraced instead "a new period of liberalisation and of economic reform” ...

Johan Norberg: Bernie Sanders’ Vision of Sweden Is a 1970s ‘Pipedream’

When Senator Bernie Sanders and others like him talk about Sweden as a socialist paradise, they are promoting a tax‐​the‐​rich “pipedream” from the 1970s that never really existed, said Johan Norberg, a Swedish author, historian of ideas. Sweden today is a “much better and much freer place” than it was in the 1970s, says Norberg from his home in Stockholm.

“So today, if Bernie Sanders wants to imitate Sweden, he would have to reform Social Security, partially privatize it,” said Norberg in an interview with ReasonTV, a division of Rea​son​.com. “He would have to … abolish property taxes and inheritance taxes, and stuff like that, implementing national school voucher systems…. So, Sweden today is not what he remembers from the 1970s. It’s a much better and freer place than it was back then.”

Norberg, also a documentary filmmaker, earned his M.A. in the History of Ideas at Stockholm University. His latest book is The Capitalist Manifesto, which was praised by Elon Musk on X. During the ReasonTV interview above, Norberg was asked to respond to some of Sanders’ glowing comments about Sweden, which the self‐​described socialist had made during his 2015 presidential campaign.

In an inserted news clip, Sanders said, “In countries in Scandinavia, like Denmark, Norway, Sweden, they are very democratic countries obviously. Their voter turnout is a lot higher than it is in the United States. In those countries, health care is a right of all people. In those countries, college education, graduate school is free. In those countries, retirement benefits, child care are stronger than in the United States of America. And in those countries, by and large, government works for ordinary people and the middle class rather than, as is the case right now, in our country, for the billionaire class.”

Bernie Sanders: "Look, ah, Sweden!"

When news host George Stephanopoulos then said that Republicans would run an attack ad accusing Sanders of wanting to make America more like Scandinavia, the senator replied, “That’s right, that’s right.”

ReasonTV host Zach Weissmuller then asked Norberg to comment on Sanders’ remarks. Norberg replied,

"This is why Sweden is not a libertarian paradise. We might have free markets, but we do have a very generous welfare state. It’s true that many of these things are handed out by the government – it’s funded by the government at least through private providers. But the thing is we pay for these things ourselves. That’s an incredibly important point to make. Because there is this pipedream of Bernie Sanders and others that this will somehow be paid for somehow by the rich.”

Norberg continued:

“But Sweden learned in the 1970s. You can pick one: a big generous welfare state or you can make the rich pay for it all. You can’t have both. If you have a universal generous welfare state, and make the rich pay for it all, they will stop being rich. They will move. They will stop starting those businesses, the Ikeas of the future, and will move. Instead, you have to get most of the taxes from low‐ and middle‐​income households. That’s the dirty little secret of the Swedish welfare state.

“The socialists love the poor taxpayers because they are reliable, loyal taxpayers. They don’t dodge. They don’t move to Monaco. They don’t have tax attorneys. So we have the bulk of our government revenue coming from regional and local income taxes, which are flat. Income taxes are not progressive…. Also, things like a value‐​added tax at 25%, in general, on most goods. It’s obviously regressive. The poor pay as much as the rich when they buy food, in taxes.

“This means that when the OECD club of mostly rich countries look at different tax systems around the world, they say that the Swedish system is one of the least progressive tax systems of all. Much less progressive than the United States because America’s welfare state is so small, so you can rely more on the rich. Whereas here, we all have to pay for it.

“The Swedish welfare state mostly just redistributes over an individual’s life cycle. We get lots of stuff when we’re young, in preschool and school, and then we work hard and pay for it all, and then we get much of it back in health care and retirement benefits. Which mostly means, yes, we get lots of stuff but we pay for it all….

“It’s so interesting that socialists keep coming back to Sweden and I think that’s because all their favorite countries constantly fail. Every Cuba and Venezuela ends up with bread lines, millions trying to escape from that horror show. But they always have Sweden. It seems so friendly and successful and yet socialist.

“We have been socialist in Sweden and we have been successful but never at the same time. That’s what Sanders and the others fail to realize. We had that period in the 1970s and 1980s when Sweden was doubling the size of public consumption, raising taxes, regulating everything – price controls, what have you. This is the moment when Bernie Sanders and all those who are sort of stuck in the 1970s, this is what they still remember: ‘Look at Sweden! They’re socialist! But they’re also one of the richest countries on the planet! It seems to be working in Sweden.’

“The problem, of course, is that it’s like that old joke, how do you end up with a small fortune? Well, you start with a large fortune and then you waste most of it. That’s what Sweden did in the 70s and 80s. We were one of the richest countries on the planet before this experiment. And this was based on a 100‐​year period of limited government, free markets, free trade, as late as 1960. We had lower taxes than the United States and most European countries. This brought us all the wealth and all those successful international companies, the Ikeas and stuff, that brought us so much wealth that politicians thought they could just redistribute everything and begin to just jack up spending and taxes.

“Well, they couldn’t. Because the 70s and 80s, that’s the one period in modern Swedish economic history when we lagged behind other countries. This is the moment when we didn’t create a single net job in the private sector, and when entrepreneurs and businesses left Sweden. Ikea left Sweden. Tetra Pak left Sweden. Most successful entrepreneurs left because it was impossible to do business in Sweden. This all ended in a terrible financial crash in the early 1990s.

“So that was a brief period of time and it’s one that we don’t want to go back to in Sweden. Not even Swedish socialists – even they say, okay, we went too far. The Social Democrat finance minister at the time said it was actually absurd and perverse in many ways, what we were trying to do. Since then, Sweden has again become successful. But that’s based on a new period of liberalization and of economic reform.”

Perhaps that is the Swedish model policymakers should try to emulate.

* * * * * 

This post first appeared at the Cato Institute blog.

Regulation raises elites

"One often overlooked consequence of regulation is that it adds to the complexity of decision-making. Thus government regulation tends to favour the better informed members of the community, over those who are less well informed. Although I have a PhD in economics, I don’t believe that I am anywhere near well informed enough to deal with government regulation. [Even t]he tax code is too complex for me....
    "There are many other areas of life where being well informed [or well connected] helps one to deal with the complexity of regulation. Big companies have an easier time complying with complex regulations than small companies. Occupational licensing laws favour those with more formal education. Our welfare state favours those who understand the complexities involved in applying for benefits. Expertise in taxes favours those who wish to avoid estate taxes, or those who wish to avoid losing wealth to the government after signing up for [a state pension]. Our immigration system is highly complex and difficult to navigate....
    "When the government designs its tax laws and regulations, it seems as though almost no weight is put on the way in which the rules favour those who are better informed. I have two problems with complex regulations:

1. They favour the cognitive elite (as well as big businesses that can hire people to navigate the regulations.)
2. They incentivise people to become well informed about facts with no social utility.

"The first problem relates to equity, the second to efficiency. ...
    "Regulation creates a shortage of painkillers. Who gets painkillers in that environment? Those who are smarter and more well connected. Regulation creates a shortage of kidneys for transplant. Who gets kidneys in that environment? Those who are smarter and more well connected. The safety net doesn’t have enough money for everyone who is needy. Who benefits from government programmes? People smart and well connected enough to navigate through all of the paperwork. (i.e., not the homeless.) Who has an easier time navigating the regulatory gauntlet to build new houses? The big builders. There are many more such examples.
    "Progressives tend to favour big government, thinking it will help those on the bottom of society. Sometimes it does. But big government also creates a system that favours those who are skilled at navigating its complexity—the economic and cognitive elite."

~ Scott Sumner, from his post 'Regulation favours the elites'

"...every election is a sort of advanced auction of stolen goods.”

“The state — or, to make matters more concrete, the government — consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting ‘A’ to satisfy ‘B’. In other words, government is a broker in pillage, and every election is a sort of advanced auction of stolen goods.”

~ H.L. Mencken, from his 1936 essay 'Sham Battle,' collected in his 1956 Carnival of Buncombe

The dystopian truth about the Greens's so-called "poverty plan"

The Greens's so-called "poverty plan" has two legs: 1) the government stealing capital from rich investors; 2) so they can hand it out to middle-class "poor" voters as an "Income Guarantee" aka a Universal Basic Income (UBI).

Here's a data point from Norway on that first leg:

With a higher wealth tax hitting, Norway’s rich are abandoning the Land of the Midnight Sun for countries that allow them to keep more of what they earn, a warning to the Democratic senator from Massachusetts, Elizabeth Warren, as she drums up support for her Ultra-Millionaire’s Tax....[H]uman beings are dynamic and react to factors such as a higher cost of living.
    Norway is learning this lesson the hard way. It is one of the few nations in the Organization for Economic Co-operation and Development that taxes not just income but net wealth. Its Labor Party increased the bite that the government takes out of nest eggs. Now the golden geese are roosting elsewhere.

And here's the dystopian truth about that second leg, 

The basic idea of a UBI is that the state would make a regular guaranteed payment to every citizen, regardless of their means and employment status....
   It tells us a lot about how these [politicians and their cheerleaders] view work, individual autonomy and the potential of automation.
    UBI supporters’ ambivalence over whether people choose to work or not is especially telling.... they don’t call for improved working conditions, or for better jobs, but for people to be able to take or leave work.... It shows how work has lost its social significance....
    The calls for a UBI also reflect the paternalistic outlook of its supporters. They assume that people need to be looked after by the state. That rather than relying on our own individual and collective resourcefulness, we need a permanent handout instead. Far from freeing us, a UBI would shackle us permanently to the state....
    The postwar welfare state was originally intended to provide a valuable safety net for people unable to perform or find work. Today, it has become a web that entraps people. ... A guaranteed basic income for all would not eliminate dependence. It would extend it into a permanent way of living....
    A UBI ... is not a progressive or emancipatory proposal. It is the product of a deep cultural and political pessimism. It rests on the devaluation of work, the diminution of individual autonomy and an anxiety towards automation. The answer to our economic malaise lies not in universal state dependency. It lies in regaining a belief in progress and in the value and importance of work.

The Greens's so-called "poverty plan" would see many would-be investors depart, will steadily strip  remaining investors and wage earners of their capital, and will ensnare in dependency (and permanently impoverish) everyone else.

What's not to like?

"The effects of redistribution are completely dwarfed by the effects of technological progress on long run economic growth."

"During the late 1920s, the living standard of American blue collar workers was far higher than 100 years earlier. And yet almost none of the 'progressive' ideas advocated by leftists had been put in place. There was no minimum wage, no federal unemployment compensation, no [Health & Safety Act], [no 'wealth taxes']and labour unions were fairly weak. In 1929, the federal government spent only a bit over 3% of GDP.
    "When trying to understand living standards, it is more helpful to focus on output, not money... As American industry began churning out vast quantities of consumer goods, it was almost inevitable that the living standard of the average American would rise sharply. If Apple and Samsung produce a billion phones, then lots of people will end up owning smartphones.
    "That’s not to say that income distribution plays no role in living standards... But the effects of [re]distribution are completely dwarfed by the effects of technological progress on long run economic growth."

~ Scott Sumner, from his post 'A Rising Tide Lifts Yachts and Rowboats'

"The pronouncements of progressive politicians, woke academics, and senior bureaucrats increasingly sound like characters out of 'Atlas Shrugged'."

"A friend who shall remain nameless suggested something last week that I can't shake: The pronouncements of progressive politicians, woke academics, and senior bureaucrats increasingly sound like characters out of [Ayn Rand's 1953 novel] 'Atlas Shrugged.'
    "I liked Atlas Shrugged--still do--but also shared the common view that the villains were overdrawn. And as of the 1950s, when Rand was writing it, they were. As of the 2020s, not so much. Merit is racist. Individualism is evil. Objective truth is an illusion.
    "There's an op-ed to be written, with direct quotes from leading contemporary progressives and direct quotes from Wesley Mouch, Robert Stadler, and Floyd Ferris. The parallels are amazing."

~ Charles Murray

"It’s not just high taxes that are driving people out of cities.
    "There are other costs—moral, social, and cultural—when you create communities that spurn property rights and celebrate looting.
    "IRS data only tell us so much. If you want to better understand those costs, pick up 'Atlas Shrugged.'"

~ Jon Miltimore, from his post 'America’s ‘Atlas Shrugged’ Moment Has Already Arrived, New IRS Data Show'

"In a successful economy one might have hoped that there would be many more really wealthy families, at least if that wealth had arisen from the creation and development of new businesses/products..."

"[T]he New Zealand economy has not exactly been a staggering success in recent decades. Setting the tax debate to one side for the moment, in a successful economy one might have hoped that there would be many more really wealthy families, at least if that wealth had arisen from the creation and development of new businesses/products....
    "[I]n the minister’s framing [of taxes levied on high-wealth individuals] there was no mention of the fact that New Zealand over the decades has had relatively low rates of investment (relative to OECD averages for countries with our sort of population growth) in land development, in building new houses, and in business investment more generally. What one aspires to have more of one generally should not seek to tax more heavily....
    "I have no problem with the notion that unrealised real capital gains add to the economic resources and future purchasing power of the owner ... But increases in asset values that simply keep pace with general inflation do not add to future real purchasing power and are in no meaningful economic sense ... economic income....
    "And in all this in a country where we systematically over-tax capital income already."

~ Michael Riddell, from his post 'Parker, taxation, and that IRD report'

Middle-class welfare at its finest

"Contrary to the claim that taxpayer subsidies for higher education provide great social benefits, these subsidies actually are a wealth transfer from the less-well-off to wealthy people."

~ Gary Galles, from his article 'Subsidising Higher Education Is Not Creating Widespread External Benefits'

“Giving back” really is a terrible phrase

The phrase “give back” is as common as it wrong. It implies that something was taken in the first place. It paints the successful entrepreneur as a taker who through their success has deprived us of something that must be returned. Even worse, as philosopher Stephen Hicks explains, "the phrase also denies the benevolence of the giver. If you are only giving back what is rightfully someone else’s, then you do not deserve any special praise for your action. Your benevolence need not be acknowledged or honoured."

Jacob Hibbard picks apart the nonsense in this guest post.

Why People Should Stop Saying CEOs Have a Duty to 'Give Back' to Society

by Jacob Hibberd

It is not uncommon for successful businessmen, entrepreneurs, and celebrities to talk about what they are doing to “give back” to society or how they feel a need to “give back.”

Kelli Richards for example, CEO of The All-Access Group, maintained in a 2017 Inc. article  that “companies and individuals who [have] done well financially [are] honour-bound to look around and philanthropically offer a helping hand to those who weren't as fortunate—to honour the greater good.”

While it is can sometimes be praiseworthy for entrepreneurs and successful individuals to engage in non-sacrificial philanthropy, the idea that successful innovators need to “give back” in order to honour the "greater good" is faulty and ultimately immoral.

First, the phrase “give back” implies that something was taken in the first place. It paints the successful entrepreneur as a taker who, through their success, has deprived the rest of us of something that must be returned. This could not be further from the truth.

Jeff Bezos isn’t roaming the country with his brute squad demanding your business or your life. No taking has occurred that would require “giving back” as compensation. Instead, innovators and entrepreneurs— including the derided billionaire class—are creating immense value for us, not only by providing goods and services, but also by creating jobs that allow us to earn a living. 

In a capitalist society with the rule of law where individual rights are secured, wealth or success is not taken, it is produced, earned, and voluntarily given through mutually beneficial trade. Innovators create products and provide services that we, the consumers, value more than the dollars in our pockets and enter into voluntary transactions to acquire. The idea that the resulting wealth, peacefully acquired, comes with it a demand to "give back" is as wrong as it is insulting to producers.

The concepts of the duty to “give back” and serving the “greater good” also lead to greater resentment in society and ultimately lead to immoral policies. When we embrace the idea that the successful have a duty to “give back” to us and serve an amorphous “greater good,” we begin to resent the innovators when they do not “give back” in the ways that we want them to. It’s too little, people say; or, it’s to the wrong people; or, it’s serving the wrong sort of greater good -- and of course the complaint that it’s not being given to me.

This resentment festers until we turn to our common agent, the government, and demand that it uses force to take the wealth of the successful and “give it back” in the way that "we" judge best, serving our vision of the “greater good,” violating the rights of the successful and perverting the government from its proper role.

Societies built on resentment and the plundering of the successful in the name of the “greater good” implode. If you want to see it in real time, look at what’s happening to California now. Innovators are fleeing due to burdensome regulations and taxes.

So instead of demanding that entrepreneurs and innovators “give back,” and resenting them when they don’t use their wealth the way we like, let’s strive to have some gratitude.

Let’s recognise the immense value that Jeff Bezos, Steve Jobs, and Elon Musk (in his non-grifting mode) have created for us and society. They give us a greater quality of life when they create the next Amazon, the next smartphone, or open the next factory that creates thousands of jobs. They don’t need to be forced to help society. They are already helping.

* * * * 

Jacob Hibbard is the Grassroots Director for Americans for Prosperity Utah and a first year law student at Brigham Young University. His op-ed first appeared at the Foundation for Economic Education. It has been lightly edited.

[Hat tip to Stephen Hicks for the link and post title.]