"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!" ~ Ludwig von Mises
Column by Eric Field.
Exclusive to STR
Hamilton Nolan of gawker.com likes taxes. Or at least he has fantasies about forcing taxes on those he perceives as undeserving of wealth. In his August 8th column, Nolan endorses French president Francois Hollande’s proposed 75% on all incomes over $1.2 million per year. Nolan identifies one problem with Hollande’s tax proposal; that many of France’s high earners will leave their country or find some way to shield their income when confronted with such a tax burden. At this point, a reader might think that Nolan has seen the error of his ways and come to the conclusion that budgets cannot be balanced through punishingly high tax rates. No such luck. Nolan continues to advocate economic destruction by advocating a maximum $5 million per year income gap. Leaving aside the obvious flaw that one probably cannot increase tax revenues on people who have already left a jurisdiction; Nolan’s argument suffers from a number of issues.
"The problem with this otherwise fine idea is that the very rich can simply pack up and move to a more accommodating Western nation with lower taxes and less concern for income inequality, like America. There is, though, a more elegant solution to this: a maximum income.”
Nolan’s suggestion is not unprecedented. President Obama has advocated similar income caps during his presidency. So has Harvard Law School professor and congressional candidate Elizabeth Warren. Such rhetoric is prevalent throughout the Occupy movement, with allegations of class conflict between the “1%” and the “99%.”. Regardless of its source, income redistribution is merely the politics of envy based upon the fallacy that the economy is a zero sum game.
“This is not primarily about raising our total national tax revenue. That's a far broader issue. This is about inequality. It's about what type of nation we want to be—what level of inequality we are willing to tolerate in order to protect a vague and twisted notion of "freedom" that most people cannot even fully articulate, and that was created by the rich to serve themselves. This is a baby step. But it's one that would make us, fundamentally, a better and more just country.”
Nolan presents the “economy” as consisting of two homogenous, monolithic groups: 1) The wealthy, and 2) the majority. Nolan ignores the fact that no such entities exist. The two “groups” are a simply a means of aggregating millions of strangers into two arbitrary groups based upon Nolan’s assumption of an acceptable level of wealth. Contra Nolan, the economy does not consist of a rich group of “our precious national sports stars, celebrities, and corporate executives” continuously preying upon an undifferentiated working class.
Nor is the economy a single entity or process. The economy is a description of the continuous action undertaken by millions of individuals to satisfy personal wants and desires. Individuals become wealthy by offering a good or service that others are willing to pay for. The salaries of athletes, celebrities, and executives are the result of willingness of customers to pay for the goods and services offered by such people. Every voluntary economic transaction occurs because a consumer values the good that they acquire more than the money required for the purchase. The fact that athletes, celebrities, or executives become wealthy means one of two things: either that the service provider is as good as the price that they command, or that some barrier to entry prevents another provider from offering a better service. Nolan’s envy ignores the fact that some contemporary people become wealthy through state interventions such as licensure, intellectual property, or tax structures that stifle entrepreneurship. Nolan ignores the cause of current inequality while simultaneously enshrining protections for those same wealthy individuals.
Wealthy individuals do not bury their money in their backyards. Savings become the capital that powers new business ventures. A maximum income punishes those most likely to invest savings in new business ventures, limiting job creation. The process of wealth creation through savings currently operates under massive constraints by government; further punishing wealth could stall the economic engine that makes 21st Century quality of life possible and depriving billions of people the opportunity to lift them out of the poverty of the so-called “Third World.”
Nolan’s concern for symbolism over substance demonstrates that his “proposal” is a nothing more than a fantasy of fulfilling his envy. Nolan’s desire to see the force of government used to carry out economic “fairness” demonstrates a willingness to use violence in order to forcibly redistribute wealth from those possessing wealth to those perceived as more “deserving.” Nolan demonstrates a fundamental flaw of modern progressivism, the need to use coercion in order to implement ideals of fairness.