Tuesday, October 5, 2010

A Libertarian-Leaning Person Shares His Doubts

I was walking my dog, Einstein, and passed a few houses that had Meg Whitman for Governor signs on their lawns. All were very fancy houses. In itself, that means nothing but it triggered these thoughts:

A core libertarian principle is that more good accrues from leaving money in rich and upper-middle-income people's pockets than the government heavily taxing them and redistributing the money to the working class and poor with massive "social programs" as well as cash "benefits." The libertarian thinking is that the rich are more capable of creating new businesses that will, in turn, create products and services that will improve all our lives as well as create jobs.

This may seem obvious but I wondered, "What percentage of those rich people's money really went to such activities and how much went to building and decorating lavish homes, buying fancy cars, clothes, and vacations, paying for elite college educations at colleges their kids mightn't have gotten into if they weren't "legacies," and least useful of all, how much do those fat cats leave to their children, which increases the chances of their being made lazy from all that wealth being handed to them--the rich person's version of the welfare mentality?

I then turned to the reality that ever more millions of Americans simply do not have the wherewithal to survive in our ever more demanding world economy. Without the government redistributing wealth from the rich and upper-middle-class to the lower middle-class, working class and poor, we'll see ever more misery, homelessness, and crime. And then there's the intrinsic injustice of anyone going without health care, shelter, and food in a country in which millions of Americans do live the aforementioned minimansion lifestyle.

So while I am most aware that government wastes an inconceivably large percentage of our tax dollars in their usually Rube-Goldberg-like, labyrinthine, incompetently administered schemes for redistributing our wealth, not to mention "regulate" the unpoliceable, and fight wars we likely shouldn't fight, my little doggie walk took a bit of the ardor from my libertarian zeal.


Laura said...

I'm very glad that you were honest about this doubt, as I do believe that rich people do become desensitized as a general rule - especially the nouveau riche - to the suffering of others and just sit on their cash and do not create jobs or opportunities that can spread the wealth. People will invest in what gives them returns, not out of altruism or national pride: http://www.ianwelsh.net/tax-cuts-for-the-rich-create-jobs-outside-the-us/

F.S. said...

Funny thing is, as a generally liberal non-Libertarian I don't have much problem with "building and decorating lavish homes, buying fancy cars, clothes, and vacations" because those activities pump money back into the economy. It's when money's not put to work -- when it's only used to buy "investments" meant to shelter the owner from taxes, etc. -- that makes me unhappy.

Jeffrie said...

I would not have as many reservations as I have about government redistribution of wealth if it wasn't for what appears to be MASSIVE corruption & waste. More and more and more is taken all the time, and sometimes, more does not equal better.

Here's a example of more probably not equaling better.

Marty Nemko said...

That's nothing. These are better examples of govt waste: http://www.garynorth.com/public/611.cfm

Anonymous said...

If we let the rich be rich, and after they or their heirs had squandered the principal, return to the level, I wouldn't have as much of a problem with what's going on.

My problem is that so many people don't understand that the current policies amplify the wealth disparity - we're not letting the rich be rich, our political decisions are making them far richer.

Because these programs impact relatively few people, they're somewhat less obvious - except when the very rich essentially threaten everyone, as they did during the collapse of the real estate bubble.

No one had gone out and forced banks to start giving out "liars loans" from the political side of the house -- the pressure came from institutions who wanted to sell more and more more mortgage backed securities.

In the period up to the collapse, the market for MBSes drove the market for mortgages. Excellent reporting has recently shown that some of the largest banks had their mortgage portfolios audited and then did not disclose the outcomes of those audits.

Federal agencies have quietly given out loans in the trillions of dollars to financial groups with huge amounts of worthless assets used as collateral, as Bloomber reported in 2007 or 2008.

These loans were so badly managed by the 'financial professionals' who created them that there are now huge numbers which can't be legally foreclosed!

There was great tape on This American Life a week and a half ago where financial professionals cried into their beer about the unfairness of having been bailed out.

It was just breathtaking.

But this is just one instance where the value we put on one kind of job - not just the fiscal value, but the moral uprightness we (wish to) see in upper middle class professions - blinds us to the political distortion a successful business creates.

One of the first gilded age capitalists, possibly Marshall Field, in response to the progressive income tax introduced by Theodore Roosevelt, said something along the lines of "the people want their money back, and it seems fair, since I took it from them."

That level of honesty is gone now from our discourse about great wealth.

Anonymous said...

The tax cuts were given to wealthy people whether they hired more workers or not. It would have made sense if the cuts were given to businesses after proof of a new hire.

Jacked Up said...

Good points!

Regarding government waste, I encourage everyone to read the sobering cover story in Newsweek about Robert Gates. The defense waste is beyond a disease.


Anonymous said...

The rich people who buy big houses, furniture etc are keeping the people employed who make and sell these items. When the rich are taxed more they will buy less or cut back on vacations, eating out, going to the nail salon and so on. This will hurt those who work in these fields. Its much better for everyone -rich or poor to have money flowing independent of government intrusion, regulation or taxation.

Marty Nemko said...

There aren't that many more people employed in building a big house or fancier furniture or fancier vacations to justify the suffering poor people must endure. And indeed, much of poor people's plight is functionally beyond their control. It matters so much to whom and where you are born.

K-Man said...

Many of you might be aware that a fire department allowed a Tennessee man's house to burn to the ground as the firefighters watched because he had failed to pay a $75 annual fee. He is in his late 60s and the average income in that part of the state is under $20,000 per year. The fee requirement borders on extortion.

Libertarians should be proud. This is an example of a libertarian policy, after all. The poor who can't pay a "user fee" for a vital service, well, do without.

Anonymous said...

Thanks, Marty, for the compassionate blog entry toward those who are struggling financially right now.

Timothy said...

You're all talking like you have some right to other people's money. Where do you get this idea? You have no right to anyone else's money. Getting the government to steal it for you doesn't make it any less stealing.

Anonymous said...

(Without having read the other comments) Mr. Nemko, I think you may be looking at this the wrong way.

Those houses, cars, vacations, etc. all keep people employed. The building, real estate, auto and travel industries AND the employees of those industries all benefit from the money being spent. It may seem like lazy opulence on the surface, but the money is providing jobs.

A. Roberts