Friday, January 4, 2013

How do you keep people poor?

A wit on Twitter pondered, "Well, what do you think would be a fair tax on the rich?"

Which is a great question, as the only way to answer that truthfully would be with a percentage.  With income tax percentages ranging from negative (yes, the government gives you money, earned income credits, below a certain level) to the recently established 39.6, fairness has long since left the building.  As you earn more, they take a greater percentage.  So it's already unfair.

There is no honest (or honorable) answer to the question.  But that's not what I'm here to discuss today.

How do you keep people poor?

Well, you prevent them from becoming rich.*  While most people are happy to do this for themselves by living beyond their means, here are some wealth-prevention levers:

  • Take away more of what they earn.   It's hard to save when the money for saving is taken away.  So raise taxes.  Add taxes.  Add fees.
  • Take away what they have.  Today through increased capital gains and death taxes, tomorrow through outright property seizure and means-testing, such as social security benefits, 401k and Roth savings.
  • Social Security is itself a tool for keeping people poor.  It takes money you should save/invest on your own, and gives you back a small portion of it.  What a lousy return on that investment.
  • Devalue what they have.  Inflate the currency to the point that savings and investments, gaining or not, are devalued anyway.
  • Steal from the next generation.  Through spending beyond our means to pay back.
If you hate the rich, you will probably stay poor.  You wouldn't want to be wealthy anyway.

*For lessons on becoming rich, please see: Who wants to be a millionaire anyway?

Tuesday, January 1, 2013

Half Full or Half Empty?

An American, asked to specify his complaints about the evils of progressing bureaucratization, might say something like this:
"Our traditional American system of government was based on the separation of the legislative, the executive, and the judicial powers and on a fair division of jurisdiction between the Union and the States.  The legislators, the most important executives, and many of the judges were chosen by election.  Thus the people, the voters, were supreme.  Moreover, none of the three arms of the government had the right to interfere with the private affairs of the citizens.  The law-abiding citizen was a free man.
"But now, for many years and especially since the appearance of the New Deal, powerful forces are on the point of substituting for this old and well-tried democratic system the tyrannical rule of an irresponsible and arbitrary bureaucracy.  The bureaucrat does not come into office by election of the voters but by appointment of another bureaucrat.  He has arrogated a good deal of the legislative power.  Government commissions and bureaus issue decrees and regulations undertaking the management and direction of every aspect of the citizens' lives.  Not only do they regulate matters which hitherto have been left to the discretion of the individual; they do not shrink from decreeing what is virtually a repeal of duly enacted laws.  By means of this quasi-legislation the bureaus usurp the power to decide many important matters according to their own judgement of the merits of each case, that is, quite arbitrarily. The rulings and judgements of the bureaus are enforced by Federal officials.  The purported judicial review is in fact illusory.  Every day the bureaucrats assume more power; pretty soon they will run the whole country.
"There cannot be any doubt that this bureaucratic system is essentially anti-liberal,* undemocratic, and un-American, that it is contrary to the spirit and to the letter of the Constitution, and that it is a replica of the totalitarian methods of Stalin and Hitler.  It is imbued with a fanatical hostility to free enterprise and private property .  It paralyzes the conduct of business and lowers the productivity of labor.  By heedless spending it squanders the nation's wealth.  It is inefficient and wasteful.  Although it styles what it does planning, it has no definite plans and aims.  It lacks unity and uniformity; the various bureaus and agencies work at cross-purposes.  The outcome is a disintegration of the whole social apparatus of production and distributions.  Poverty and distress are bound to follow."

As much as this is a commentary on our present day situation; a tribute, if you will, to the Obama administration, Congress, and the Judicial branch, the fact is that Ludwig Von Mises wrote this in 1944.

So the glass may be half full: it has always been thus, this struggle of liberty against bureaucracy.  Despite more and more red tape, liberty finds new avenues of expression.

Or the glass may be half empty and draining quickly- Income Tax, the New Deal, Social Security, Welfare, Obamacare, debt, inflation of the currency.

Von Mises continues, pointing out that bureaucracy is a symptom, not the cause; the cause being policies which
...trend toward a substitution of government control for free enterprise.   Powerful political parties and pressure groups are fervently asking for public control of all economic activities, for thorough government planning, and for the nationalization of business.  They aim at full government control of education and at the socialization of the of the medical profession.  There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities.  In their eyes, state control is the panacea for all ills.

It sounds paranoid and unlikely, but what was the contemporary German experience? How was personal liberty in the Soviet Union?  And look at these events in America today: Nationalization of business**- check.  Government control of education and medical profession; check and check.  Sold to government-educated subjects with a two prong attack of subterfuge:  That free enterprise has, in its greed, failed and that the government is here to help even the score. 

What's concerning me is where this will lead and how quickly.  What will America look like in ten, twenty, forty years?  What will my town, your town, the cities look like?  What of personal property; wealth? 

As 2013 dawns, Congress has successfully kicked the can, yet again, by not addressing the core problem, spending, and it's resulting $16,000,000,000,000.00 in debt.  They did cut $106,000,000,000.00 from the military spending, but hey, we were pulling troops anyway.  That's like saying I'm going to save money by not joining the country club this year.  I wasn't going to join anyway.  They did however, fund $60,000,000,000.00 to the fine folk of Long Island who suffered a hurricane and apparently had no insurance,*** so that's pretty much a wash when you throw in some monkey-sex research grants and other wasteful funding.

The can has been kicked.  America the irresponsible.

* Anti-liberal: meaning anti-liberty, as in the definition of classical liberalism, not today's progressive-liberals (environmentalists, union workers, feminists, animal rights activists occupiers.. have I left anyone out?)

** You know, GM?  And a 2012 campaign promise (threat? desire?) from Obama that he wants to do this to more industries.  I think his word was "for."  I believe him.  He does want to.

*** Yes, please socialize the losses!  But not in a free market way- make everyone pay!  Worse than the Chicago thuggery shakedown of BP to the tune of $20,000,000,000.00