Wednesday, July 18, 2012

Obama jumps the shark

Elizabeth Warren had so much success last fall with her stump speech about interdependence as an excuse for progressive taxes that this week President Barack Obama plagiarized it. He said:

There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there.
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
President Obama is attempting to use public goods to taint any hard work individuals have done that results in success. That is to say, any success the person has had that has had the slightest contact with something created by the government is now a full-fledged government creation. This misapplication of credit works the same way a virus assaults a living cell.

Mark Perry insists we also look at the way businesses have been destroyed by the government, such as the 13-year-old who went through the city to start up a hot dog stand only to be stomped by an unknown zoning issue. There's also the teen on Peaks Island, Maine who was hit with exorbitant fees to prevent him from competing with a taxi subsidized by the city.

Don Boudreaux, however, nailed this issue cold:
Government’s success at persuading taxpayers to fund the hiring of more teachers and the construction of new highways does not thereby give government (or teachers or highway workers) an open-ended claim upon the wealth of private citizens who benefit from these teachers or who use these highways.
He goes on to say that all of those government systems were built under a certain agreement, and the government has no right to come back and demand more than what was agreed upon.

Indeed, to take the president's logic seriously, we would have to see success in America as some kind of Faustian bargain, where individuals are free to sweat and toil in a wonderful market economy, but the moment anyone pulls ahead Mephistopheles draws near and takes it back.

Sometimes when I'm alone and the house is quiet I ask myself if I'd rather have president George W. Bush or Obama in office right now. While Bush has wasted oodles of taxpayer money and contributed to future deficits, I can't think of anything he ever said that was as half as outrageous as the communitarian nonsense from the O-man this week. I've never called President Obama a socialist, but I'm having a hard time interpreting what he said any other way.


  1. You've swayed me so much on economics, but I have to say that I still find this particular rationale for taxes compelling.

    At least for me, and I'm guessing Obama as well, I'm not going so far to say that all the wealth someone comes into is owed back to the government. I don't think Obama is saying success was entirely dependent on existing infrastructure and social stratum. I also don't think - nor does Obama (I can't believe I'm defending him) - that people should even give back MOST.

    I'm going to quote something I wrote in a previous comment on your blog:

    "When it comes to extreme success, or extreme wealth, Malcom Gladwell has a lot to say about outliers in his book aptly titled: Outliers. Basically, Bill Gates got to where he was partly because he is brilliant and works hard. But there are a lot of brilliant, hard-working people out there [that don't reach his status level.] It's society, through its mighty complexities that has created this randomly successful person. It's no coincidence that Bill Gates and a number of men his age who have become ultra successful in the computer industry also attended the high-schools with the first computer labs.

    ... it wasn't JK-Rowling's brilliance or hard work that earned her significantly more than Shakespeare, but rather society that made it possible for her."

    People don't get to the top solely because they're the best. Stars align. There's a lottery affect. And not all of it is due to public infrastructure either.

    No one is suggesting they should submit all their "winnings."

    Ultimately, I think it's important to separate liberal arguments for MORE taxes, and liberal arguments to retain taxation. Sometimes the liberal is up against someone (libertarian) who argues taxes should be drastically or totally cut. I find the latter is when arguments such as Obama's come out the most.

  2. The fact that the goods and services a person has produced and then exchanged with others, enriching both parties, isn't enough?

    I have to wonder where the money came from for the initial infrastructure. If I didn't know better, I would say from taxation...

    If you consider it that way, the only benefit provided by the government is that of taxation. The government isn't magic, funding always comes from somewhere.

  3. @Jeremy, it IS a lottery to a large extent, but who pays $2 for a ticket that has 1 in 300 million chance of a top payout of $50? As we tax away the "winnings" of capitalism, the incentives to play (i.e., take whatever inborn brilliance and work hard at it) diminish.

    The lottery itself is a great example of this--many more people play when the potential winnings get really large. Does it REALLY matter whether I win $50 M or $500 M? Isn't that life-changing money regardless?

    And that's just looking at motivation to plunk down $2 for a ticket. How much greater do the incentives have to be to work 80+hours a week and take risks with your life and the lives of your dependents? It's one thing to tax people who've already won that particular lottery, but don't think for a second it won't have a chilling effect on people who haven't decided to play yet.

  4. Jeremy, you and I are on the same page a lot here (and I'm a bit surprised to hear that I swayed you on economics. I hope I didn't spoil the Green Party for you) and I am accepting of both the existence of taxes and the logic of progressive taxes.

    However, the president said "If you’ve got a business -- you didn’t build that. Somebody else made that happen." His arguments are against anarchists, but his actual opponents don't support anarchism, they want a relatively flat tax.

    To make matters worse, his camp is trying to say he was taken out of context. My friend, the full context still has him saying society creates everything, not individuals, and he uses that to justify an endless right to confiscation of property.

  5. We all have access to the same roads and bridges. So whatever made Bill Gates more successful than me, it wasn't roads and bridges.

  6. You - and the sources you pointed me towards (Cowen, Yglesias, Budiansky, etc.) helped shift my position. To be fair to myself, I was investigating on my own. I wanted to either substantiate my progressive reviews or counter them.

    I thought I credited you this before.

    Either way, I'm not an orthodox or philosophical libertarian. I appreciate the pragmatism of markets, but have more ambitious ideas for government than your everyday libertarian/conservative.