Hows That Spread The Wealth Doing - Road to the Middle Class

Back then Joe Wurzelbacher was worried that Obama’s plan to raise taxes on the wealthy, those making more than $250,000 per year, would hurt folks like him. Wurzelbacher planned to buy a plumbing business and he was afraid that he’d end up in the $250,000 bracket that Obama wanted to penalize. No, no, Candidate Obama replied, Joe would get all kinds of tax breaks and credits for his business.

It’s not that I want to punish your success... I think when you spread the wealth around, it’s good for everybody.

How’s that “spread the wealth” going, Mr. President, in this summer of recovery? Time for the Fed to print a trillion or two in new money?

Spreading the wealth seems like a good idea, rather like Mom spreading frosting on a cake: tasty and yummy. In reality, of course, governments don’t ever spread the wealth. They take money from some people and give it to others. It’s more like leaf-raking. You rake the leaves together, and then you hand them over to your political pals for disbursement among their supporters. It’s a bit like passing a $26 billion bill to save the jobs of well-paid teachers and state government workers.

The Republican retort to “share the wealth” is “grow the economy.” The trouble with that is that, nine times out of ten, it means easy money, targeted tax cuts, easy money, pet projects like green energy, easy money, and “shovel-ready” projects for politically connected government contractors.

Even the conservative favorite, across-the-board tax-rate cuts, has its problems. The Mellon tax cuts of the 1920s ignited a tremendous boom that ended in the sorrows of the Great Depression. The Kennedy tax cuts of the 1960s ignited a tremendous boom that led to the recessions and inflation of the 1970s. The Gingrich capital gains tax cut of 1997 led to the tech bubble bursting in 2000, and the Bush tax cuts of 2001-03 led to the 2008 banking panic.

The problem with each of these tax cuts is that they were combined with easy money. Only the tax-rate cut of St. Ronald in 1981-3 led to a twenty-year boom. Could that boom have been possible without the hard money of Fed Chairman Paul Volcker to stiffen the Reagan tax cut?

Don’t look for our political leaders and their bribed apologists in the academy to figure that out any time soon.

So my recommendation for economic policy is “do nothing.” You could call it Douglass-onomics, after African American Frederick Douglass and his memorable cry: “Do nothing with us!” The only thing that government has succeeded in doing with just about anything, from the Negro to the economy, is messing things up.

As I work out the argument of my American Manifesto: Life After Liberalism, I find myself comparing the liberal culture of compulsion against the conservative culture of friendship. You know what I am talking about. Liberals give us an America of a million laws, compulsion and mandates, comprehensive and mandatory programs everywhere you turn, with special exemptions only for liberals and their darlings.

Conservatism is different. Against liberal compulsion conservatives offer cooperation. Against liberal suspicion of corporations conservatives offer trust but verify. Instead of liberal rigidity conservatives offer friendly compromise. In place of liberal government programs conservatives offer mutual aid, prudence, and charity.

To build a better America upon a foundation of friendship we must relax the close-coupled economy that drives everything off the government’s central bank debt machine. Years ago, after the Three Mile Island disaster, liberal Charles Perrow in Normal Accidents showed that complex close-coupled systems like nuclear plants were accidents waiting to happen. When something went wrong at Three Mile Island the operators just couldn’t grasp what was going on inside the reactor and its coolant loops. Too many things were happening too fast. Yet liberals are quite happy to run the financial system flat out to service their clients with affordable housing. In the economy, high debt-to-equity ratios are the equivalent of close-coupled control systems in nuclear plants, and liberals swear on their Keynesian operations manuals that nothing can go wrong with borrow and spend.

In the difficult years ahead we conservatives will be called to clean up the mess and the heartbreak that a century of liberalism has created. It will be a daunting challenge, but we can do better than the dead hand of the culture of compulsion and its “spread the wealth” poison. We can replace it with a culture of friendship and a government that serves the people instead of bullying it.

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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How's That "Spread the Wealth Doing?"

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