I am told that the effect of the Bush II tax cuts was not positive. Being no economist all I can do is point to economists who differ, but that wasn’t the point to begin with. My only experience with tax cuts and revenue comes from the Reagan era, when supply side economics certainly seemed to work just fine but again that was not my point. So far as I know “supply side” is not what Bush I called voodoo economics, but I will leave the debates to others.
My point then and now is that the government is spending far too much money, and running up deficits, and this isn’t going to be fixed with tax raises; or at least there seems to be a general agreement that raising taxed in a depression is a bad idea.
But what’s being debated in Washington now has little to do with economics. What’s being debated is spreading the wealth, which is to say, who is entitled to what, and from whom? If the notion is that the rich aren’t paying enough to support the level of spending we have decided is “necessary”, and a tax raise on the rich will solve the problem, then that ought to be demonstrated, and it hasn’t been. I used to play with matrices of numbers, who made how much, and what the return on investment (economic growth) is from each bracket, and it can be fun, but it’s pretty hard to defend the numbers you get as more than speculation.
The real issue is this: without government as we know it, the result is not good for most people. Conservatives have been saying this for a long time. Government is not merely a necessary evil, but a positive good. Thomas Hobbes famously described life in a state of nature as “solitary, poor, nasty, brutish, and short.” The conditions in several Mexican areas where government no longer functions would seem to illustrate this nicely. So do conditions in some prisons. Where there is no government, the leadership principle reigns: those who can command the loyalty of others create bands, and those bands compete for supremacy, and soon there are no “innocent bystanders.” You are part of the structure, and you submit to the conditions of joining the Mafia, The Mexican Mafia, the Black Panthers, the Aryan Brotherhood, or some similar organization, or you submit to all those who have joined them. You are entitled to nothing.
The trick, then, is to create conditions to which both the poor and the rich will submit. The rich are not inclined to hire their own thugs or make common cause with the common enemy because they are safe in their property at a price they are, probably reluctantly, willing to pay; and the poor do not band together to despoil the rich. There will be criminals who do not agree and attempt to spread the wealth by simply taking it, but government tries to protect everyone from them, and even those who have little agree that criminals ought to be discouraged and prosecuted.
When those who rob the rich become sufficiently popular they either become the government or cease to be criminals and become revolutionaries, the social order collapses, and is replaced by something. The American Revolution was unique in that conditions improved greatly and there was freedom after without too long a period of disruption. It was to some extent modeled on the English Glorious Revolution of 1688, which enthroned Whiggism and old-style liberalism of the John Stuart Mill and Macaulay model.Ã‚Â Those who want to know more should study conditions after revolutions. The French Terror and the rise of Bolshevik power are not unique consequences.
Government needs to protect everyone so that, in Burke’s words, “we are all safe together.” The rich concede a part of their wealth in order to create a society in which both they and the poor are safe and not engaged in constant effort to protect or violently acquire wealth. There are always pressures to increase the list of entitlements to the poor, and protections for the rich.
It is the interplay among these factors that we call politics. Conservatives say it is best that these fundamental questions do not come to light: politics should stay a long way from the brute question of how much shall we take from whom, and to whom shall we give it; or, to how much are we entitled and who is obliged to pay it; or how much is “enough” for anyone, what is the limit of possessions we will allow?
It is much better for campaigns to be on factors of personal integrity and ability, rather than on “I will soak the rich and give this to you if you vote for me” vs. “If you elect that chap we will consider hiring mercenaries to protect us” or “Legions! Declare me Emperor and I will make your lives and those of your families better. You can trust me. Can your trust the politicians?”
These questions seldom surface in poor societies. When everyone is very poor, and yet there are those who will raid them and take what little they have, it makes sense to hire a knight: that is to pay a suitable candidate to learn the profession of arms, and protect those who are not warriors. Soon enough there arises a feudal society, because the knights are not incorruptible and can become wolves rather than sheep dogs, and who will watch those watchers? Who will protect us from the protectors? We need a strong man to protect us from our enemies, but who will protect us from the strong man? Government must be strong enough to keep order, but not so strong as to be all powerful. All power corrupts. Absolute power corrupts absolutely. There few exceptions to Acton’s maxim on power, and one of those, the Ataturk successors, seem headed to a new history even as I write this.
Who shall watch the watchers? How shall we all be safe?Ã‚Â These are age old questions which aren’t so often studied now as they once were.
Now we are rich — we live longer, we outlive our teeth, we can travel across the continent for amounts that almost anyone can raise,Ã‚Â Ã‚Â those who don’t have a living are often victims of poor management of the resources they have; since the Industrial Revolution and “Development” the middle class has enormously expanded, and the number of people who live from day to day is much smaller than it was in the days of Jane Austen. And now we are even richer, and the notion is that the distribution pyramid is all screwed up and those on top have so much more than those on the bottom that we need to spread the wealth.
Do note that those on minimum wage in today’s society work less and live better than the vast majority of people alive in England during the time of Jane Austen. In those times the disparity of resources between anyone in “Society” including those thought poor, and the average mill worker or tenant or dock worker, was so vast that it could hardly be thought part of a continuum. On the one had there was one meal a day, one suit of clothes worn every day with possibly a “Sunday” outfit although probably not, and essentially no disposable income; on the other carriages, balls, three meals a day, and concerns about making a good marriage.
I am rambling, and I have work to do: but the questions remain. To what are those fortunate enough to live in the United States entitled, and who is obligated to pay it; and is our tax policy intended to produce revenue or is the goal to “spread the wealth” and reduce the disparities between the very rich and the rest of us? And if the latter, is that best done by addingÃ‚Â to the power of the state? More another time: note I have not endorsed the confiscation and distribution of wealth, nor have I endorsed or condemned raising the taxes on “the rich.” I do believe that before we discuss these things we try being honest about what we are trying to accomplish.
If the goal is to stimulate the economy, the means are already known: Freedom and cheap energy. Low taxes, few regulations, and cheap energy (which latter will result from the lack of regulations given half a chance). We know how to do that, and all the attempts at an intellectually dominated command economy have so far pretty well come to naught.
The mix doesn’t necessarily require political freedom. That may be a goal in and of itself, but the Spanish growth in Franco’s time, and the current boom in China, show that political liberty isn’t as important as economic liberty and limited regulations. One might wish otherwise, but that seems to be the course of history. Of course without political liberty one needs some other means for restricting the size of the governing class and Iron Law parasites. But we all know that…