Wednesday, November 2, 2011

Redistribution of wealth

Today a friend of mine posted a link on Facebook to a newsletter entry from financial guru Dave Ramsey in which he discusses the Occupy Wall Street protests. It is an interesting piece in which he discusses one of the most common complaints about the movement, that it has no real, firm goals. Of course he then goes on to contradict himself by discussing what he sees as the faults of the movement's goals. I have issues with several of the things that he says, but one of them really stands out for me.

Mr. Ramsey delves into the concept of income inequality by saying this;

"I've heard a lot about wealth redistribution over the past few years, and I'm sure you've heard it too. Call it whatever you want, but this is how it usually sounds to most Americans: "We are the 99% of Americans who don't have as much as the 1%, so we're mad and think the government should take their wealth and property away so that we can have a piece of it. Wealth inequality is a moral breakdown! We should all spread the money around so everyone gets a fair share!"

I have my toughest critique for those who believe this: You are a thief. When someone takes my money and gives me no say in the matter, that's called theft—whether they're using a gun or the government. At the core of this demand is envy. And that's not the same as jealousy. Jealousy just says, "I want what you have." Envy is a different beast. Envy says, "I don't think I can ever have what you have, so you shouldn't have it either." Decades of horrible economic teaching and the politics of envy have kept this monster alive and growing and moving forward."

Well here is my question, if Mr. Ramsey is so upset by redistributing wealth why hasn't he railed against the redistribution of wealth from the poor and the middle class up to the wealthy that has been going on for years in this country and that many are pushing to expand?

The US economy is not driven by the wealthy, it is driven by the poor and the middle class. No one, and I mean no one, has become wealthy in this country just by being smart, or innovative, or hard working. Every single wealthy person has derived their wealth, directly or indirectly, off of the labor and consumption of the poor and middle class. If it wasn't for the hard work of the poor and the middle class nothing would be made in factories, nothing would be rung up at check out counters in stores, nothing would be displayed in an attractive and organized way on store shelves. If it wasn't for the spending of the poor and middle class there wouldn't be enough money flowing through our economy for anyone to be rich, the goods and services provided by businesses would just sit on the shelves and gather dust and our economy would grind to a halt. Sure, the top 1% control an inordinate amount of the wealth in this country but their numbers are so small they are in no way responsible for a majority of the spending in this country. I do not in any way shape or form deny that many wealthy individuals have put in a lot of hard work and have had to be very smart to get to where they are but without the poor and the middle class they would have had no chance to get to where they are.

Somehow we forgot this basic truth and decided that we should start giving tax breaks to the wealthy. We believed that it would be good for all of us if a corporation like GE pays nothing in taxes while a family of four with both the mother and father working pays a large percentage of their income in taxes. We call the wealthy job creators when in fact only demand, demand that comes primarily from the poor and middle class, can lead a business to hire new employees. We have decided that companies should be able to go anywhere in the world to find the cheapest labor possible so they can increase their profit margins to obscene levels while jobs are lost in the US every day and the only hope we have to bring them back is to turn our country into the same kind of sweat shop based economy that we find in the other countries where the jobs have flooded in. We have decided that turning our nation into an environmental wasteland makes sense because companies shouldn't have to deal with common sense regulations that protect all of us if it means their CEO can't take home 4500 times the wages his or her average employee makes. Trickle down economics is a lie that forgets that wealth only trickles up in a capitalist economy. Sure it can produce short term booms that make most people happy, but it also produces extreme busts that make it almost impossible for people to survive and that from which our economy never fully recovers.

It seems like everyday we hear of a new tax plan that will cut taxes on the wealthy and raise taxes on everyone else. I'm not just picking on republicans here, the Bush tax cuts weren't ended by the democrat we have in office currently. But tax plans that increase the burden on the poor and middle class ignore a major fact, the wealthy get the most benefit from the government spending the revenue it takes in. Lets say you start up a car company. You will immediately be benefiting from the roads that exist in our country and that were paid for by tax dollars. The roads, after all, give people a place to use the product you want to sell and allow the market for your product to be vastly larger than it would be without the roads. You also benefit by having a road system that allows the parts for your products to be moved to your factories. Then of course you benefit by being able to use the roads to transport the cars your company makes to the dealerships where they are sold. Oh yeah, roads make it much easier for your workforce to get to your car factory every day so they can build the cars you hope to sell. You are getting a huge amount of benefit from something that was built by the government and paid for with taxes, in fact I doubt your company could exist without this important government benefit. But how much benefit do your workers get from the roads? It seems the major benefit would be the roads make it easier for them to get to work, which of course is also a benefit for the car factory owner.

Of course the factory owner also benefits from the public education system by being able to hire educated workers, and he benefits from the social security and medicare systems by not having to pay out big pensions, and he benefits from the national park system by having places that people will want to drive to which makes his cars easier to market. The list goes on and on. We all benefit from the money our government takes in from taxes, but the wealthy can benefit much more than the poor and middle class and yet people like Mr. Ramsey think that the wealthy shouldn't have to pay any extra for all of these additional benefits that they receive. Mr. Ramsey thinks that asking the wealthy to pay into a system that they are more than willing to take from is theft. Well if a theft has been perpetrated it has been by the wealthy over the past few decades and we should take such an accusatory tone towards those trying to make it right.

I mean I think I understand a little. The wealthy think they are the reason they are wealthy. We have this myth of the self made man in our national psyche and we really believe that if we work hard enough that we can all be rich. Sorry, this isn't true, plain and simple. If you are wealthy in the US the greatest likelihood is that you were born into wealth. You may have not taken loans from your parents, you may not have received an inheritance from them, but you were raised in an environment that gave you a big leg up on everyone else. You didn't learn from your parents how to put off paying the light bill as long as possible. No you learned how to pick a good stock broker who could help you increase your wealth. You didn't have to go to a community college, even if you went to a public school it is very doubtful that it was a poor inner city public school. You had fewer worries so that you could focus more on what your future would be like and didn't have to concentrate on making it week to week or day to day. If you are wealthy you probably grew up with all the tools you needed to continue and grow that wealth and so you had a big advantage on everyone else. But you think you did it all yourself, and if you could do it anyone can.

Well I am sorry to say that this just isn't true and I hate to tell you this, but those people the wealthy think are trying to steal from them with redistribution of wealth aren't thieves they are just people trying to make it by and who think it is time for the wealthy to pay us back for all the support we gave them that allowed them to be wealthy. I am all for people being filthy rich, work hard, use your smarts and the advantages you are lucky enough to have. Just get to be filthy rich in a fair and truthful way, redistribution of wealth is about being fair an truthful and I can hardly see that as theft. After all, Mr. Ramsey is very open and proud of his faith, and Jesus said in Luke 12:33, "Sell your possessions and give to the poor. Provide purses for yourselves that will not wear out, a treasure in heaven that will not be exhausted, where no thief comes near and no moth destroys." If Christ says that the redistribution of wealth isn't theft I'm going to believe him over Dave Ramsey.