5 April 2011. I am not rich – just say my earnings put in the lowest third of the upper middle class. You might think I’d jump on the democrat’s “tax the rich” solution to our country’s debt and deficit problems (Yeah get those bad rich people!). Alas, I read an array of economic texts, am a statistician by trade, and can spot specious arguments when I see them (read some of Huey Long’s speeches on taxing the rich – they are word for word paraphrases of Obama’s and other big government types rants against the rich, except that Huey wrote his speeches 70 years ago. Talk about failed policies of the past.). There are at least two flaws with this scheme.
First, consider the word “fair” in the jingle “the rich should pay their fair share”. Simply put they pay more than their fair share already. Take me for example. the federal taxes that I pay are enough to support a family of four for a year. Those who make more than me pay taxes that support many more such families. If my family of three supports a family of four then what does that family of four support? Government statistics indicate that half of income earners effectively pay no federal income taxes. What’s fair about half of potential tax payers not paying? It beats me.
Second, a lot of b…s… is being thrown around using tax takings as investments in America’s future. I have nothing against the persons who serve in government – I don’t think of them as evil. However, I do not think of them as the best people to be making investments either. If I want to invest, I want to entrust my money to people who have a track record of successful investment. We can’t afford to keep “investing” in education (double the spending in the last 30 years, no gains in student achievement), in poverty reduction (trillions spent, millions still crying for more), or alternative energies (How much farm and pasture land will it take to power America with solar panels – too much). No I don’t want these people to invest another dollar on my behalf with these types of outcomes. Economists generally agree that, performing optimally, government only mildly distorts capital investment efficiency (the cause of the growth of jobs) and, not performing optimally, markedly worsens capital investment efficiency, economic growth and job creation. Decide for yourself how our government is performing. I already have, and my conclusion is government has to be much, much, much smaller to start undoing 50 years of really bad policies.
You don’t think things are going to get worse if we don’t change course? Consider the following data point. In the 1990’s I went to Spain and had the opportunity to speak to many Spanish people. I learned most of the best and brightest university students were pursuing paths leading to government positions. Do we need most of the best and brightest to go into government? Perhaps, but look what’s happened to Spain in the past 20 years. It’s not an economically bright picture.
Bad policies sort of work until they don't. Then all the news is bad all of the time.
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