By John F. Di Leo
Warren Buffett, having already joined the billionaires’ club, enlists the president in restricting membership so it doesn’t get so crowded in there…
Sometime around the tenth century A.D., probably in the southern Tang dynasty of China, a practice grew popular that horrifies us today. They called it foot binding.
One story has it that young dancing girls were considered so lovely and talented that all women, even when full-grown, would be prettier if only they had the tiny feet of dancing children – so they arranged it. Another story has it that a popular empress had a club foot, and she was so beloved that thousands of parents wanted to improve on nature by gifting their own daughters with such a birth defect retroactively. Yet another story has it that wealthy parents wanted the world to know their own daughters were too rich to have to work, so they rendered them incapable of doing so. All on purpose.
Whatever really started the practice, it is estimated that about two billion Chinese girls had their feet bound over the centuries, by the time the practice was finally ended in the 20th century. The practice involved forcing a toddler’s feet into a “shoe” of tightly wrapped bandages too small and tight to allow growth, to effect a tiny “lotus foot” shape with a high arch and a lifetime of pain. Yes, that culture promoted this barbaric process (though its advocates would recoil at the adjective, thinking it was quite sophisticated indeed) for a millennium, until modernity finally intruded and put an end to it.
Growth is natural. We see this in science: the expanding universe. We see it in biology and botany: the development of flora and fauna alike to grow from seed to adult. And we see it in economics: the expansion of an economy as every penny is given the chance to grow into more, through investment and entrepreneurship, through labor and management.
And it can work the other way as well. As water boils into steam, it expands, unless you retard the expansion by cooling it, or even stopping it cold by freezing it. Plants grow tall, unless you prune or mow them; people grow up, unless you bind their feet or kill them in their youth.
Economies are organic. Despite all the formulas they teach in Econ class, economics is truly an organic science, a people study. Which products will appeal to buyers, which ads and packaging will motivate them… what mix of guns and butter will best satisfy one country’s public while directing other countries’ preferences in favor of trade with them rather than war… and which government and social policies will best enable the economy to grow?
Too low a tax collection, and the government cannot defend its borders, manage a stable currency, build roads for commerce, keep crime down. Too high a tax collection, and the size and cost of government will depress the economy; why work your fingers to the bone if the government won’t let you enjoy the profit of that extra work?
Contrary to the assumptions of the Keynesians, the Laffer Curve isn’t a mathematical formula; it’s an anthropological one: at what point does the government grow so burdensome that economic activity, and therefore revenues, actually decrease because people decide it’s not worth working so hard anymore?
The feudal era was based on a zero-sum game. You had a farm; every year you would produce the same crops, every year you would share the same portion with your lord or duke. Your eldest son would inherit the farm, another would join the army; another would join the church. Nothing changed, nothing grew.
But this nation is built upon a growth engine. We thrive only as long as we produce, not the same, not less, but more. We need our businesses to be more productive, our inventors to create more innovations. We must employ more people, and give them better raises, each and every year, for our economy to thrive. The goal shared by Washington D.C. and all our fifty states has to be to encourage every business, from the independent carpenter to the manufacturing conglomerate, to grow in output and profit. Only then can they spread that wealth around the economy, from purchases of raw materials and finished goods to savings and investment in every other person, product, and company from coast to coast.
So for government to do anything to stifle that growth is a crime, not just to the people or businesses directly affected, but to everyone else who depends on this interconnected economy’s continuous expansion, in this generation and all future ones as well.
Rob the carpenter of some of his profits, and he cannot take his family to dinner, so you’re really robbing the restaurant where he would have taken them, and the children of that restaurant’s employees, and their future children as well.
Rob the accountant of some of his profits, and he cannot hire PR firm to buy the radio spots and print ads that he would otherwise have purchased, so you’re really robbing the radio station, and the call screener’s children’s college fund, and the advertising agency’s copywriters and voiceover actors.
Rob the CEO of some of his profits, and he will not take his family on the extra vacation to Broadway they had planned, or buy the new car, or the kitchen renovation that would have employed hoteliers or car dealers or actors or carpenters.
Just as every expenditure mushrooms, feeding the growth of the economy, so too does every stifling measure smother the economy at large, with a great wet blanket of economic stagnation. Every activity that fails to take place ensures that a thousand other activities that had depended upon it will fail to take place as well.
Blaming it on Class Envy
Jealousy plays a major role in the psyche of the modern liberal. He cannot explain how wealth is created, or why different people have more or less of it, or why some societies foster success and others smother it, so he just lets emotion take hold, and chooses to hate rather than understand.
Perhaps since Stalin and Hitler, perhaps since Marx and Engels, perhaps since even earlier, the left has always given their bitter hearts full rein and left their minds to atrophy from disuse. They feed the bitterness, with speeches and articles, with tracts and books, peppering the pop culture with their warped hatred of success, as much and as often as they can get away with it.
So today their dear leader attacks the wealthy, and demands a new tax from them. The press will say that it is a populist move, that the vast majority of suffering denizens will be overjoyed that he’s “getting the fat cats” at last. “And high time, too,” they’re sure to add.
But are they? Are they really?
It may well be that the American public is smarter than Barack Obama and the Pelosireidian left give them credit for. Perhaps it’s not so hard to understand after all that if your employer is left with less money at the end of the day, that’s less with which to give you a raise. And if your prospective employer is left with less, when you’re unemployed, it’s that much less likely that he’ll be able to give you that job you so desperately need.
The voters are catching on. Many remember the successes of the 1980s, when tax rate cuts fostered economic growth, reduced unemployment, raised people out of poverty into the middle class, and raised people out of the middle class and into wealth. These voters will see the president’s “Millionaire Tax” and shake their heads in disgust. “I want these people to hire me, or to hire my spouse, or to hire my son or daughter. Bleeding our prospective employers of the resources to do so won’t help us a bit!”
Warren Buffett, one of those self-made men who made his money so long ago that he’s forgotten how he did it, has been going around making speeches, calling for the rich to pay more. Not voluntarily – he’s apparently not a fan of voluntary contributions – but involuntarily. Buffett has been encouraging the White House to call for a new minimum tax on the wealthy, just for the crime of being wealthy.
The new proposal would raise minimal revenue, and would likely do a good deal of damage. When people are faced with painful taxes, they tend to hire accountants who can find ways to reduce the tax; if they fail, they may well lose their motivation to qualify by earning so much. If it becomes more cost-effective to earn less, you do so. And that throws people out of work, either directly or indirectly.
Our charities depend on the tax-deductible contributions of upper and middle income Americans. The harder or less worthwhile the government makes such contributions, the fewer of them there may be. And the charities will suffer.
Our people depend on the desire of the wealthy to grow their businesses, their homes, their cars, their possessions. Every American at every level is in some way dependent upon others having money to spend and invest. We are all interconnected. If the Buffett Tax were to go through, we would all suffer, whether we noticed it or not.
The rest of the world, too, depends on the ability of the U.S. economy to grow. Economies all over the world count on the U.S. for raw materials and finished goods, for design innovations and manufacturing machinery, for investment dollars or places to put their own investment dollars. As we prosper, Europe and Asia can prosper on our coattails. As we fail, we are unable to save our teetering neighbors from themselves.
Will the Buffett Tax alone do enough damage to be more than a footnote in the economic texts of a generation hence? Perhaps not; it should be D.O.A. in Congress anyway.
But it does do damage of a different kind: the mere fact that a major investor would propose a tax so hostile to both our economy and our system, and the fact that a sitting president would support its implementation, do more than just waste time and political capital, distracting the public from the right approaches, even as Congress proposes the logical alternatives.
The Buffett Tax, and every other class warfare technique of this president, serve as an instruction to the onlooker, as they teach us that America can indeed be its own worst enemy on Election Day. We have put people at the top rungs of power whose economic philosophy of maximum confiscation and minimum practicality is utterly alien to the philosophy of our founders, the study of economics, and the values of our nation.
Just like the Chinese elitists of centuries past, the American elitists of today know full well the damage that their policies will do, and yet they press on, binding the body of the American economy with ever more red tape, just because they believe that the end result – a Least Common Denominator economy, in which all suffer equally for all time – is more fair, more sophisticated, more to boast about, than the sloppy, prosperous, successful growth economy we enjoyed before.
But we know what happens when you keep binding, and continue until you’ve bound the entire body: eventually slowing down the growth gives way to ending the life itself. The ultimate natural conclusion of foot binding is a mummy. And that’s exactly where President Obama and his Pelosireidian party are taking what was once the greatest economy on earth, and could be again, if only the regulation-generators, tax-hikers and over-spenders would get out of the way.
November, 2012 can’t come a second too soon.
Copyright 2011 John F. Di Leo
John F. Di Leo is a Customs broker and international trade lecturer. Permission is hereby granted to forward freely, provided it is uncut and the byline and IR URL are included. Follow me on LinkedIn and Facebook!