Democrats like to shout that “the Richest Americans” must share in the sacrifice. It’s recently become the principal mantra of Barack Obama: that all this is going to hurt, a lot, and “the richest Americans” can best afford it, so they must share in the suffering.
Some rich Americans, every so often, even admit that it’s true. From Rob Lowe in 1988 famously shouting back to George H.W. Bush “I don’t NEED your help!” to Warren Buffet today, rich people occasionally say that, yes, they can afford to suffer a larger tax bite more easily than can the rest of us.
This should horrify the conscious American like no tornado, earthquake or hurricane ever could. The concept is wrong on so many levels – not just misguided, but downright evil.
Why should ANYONE have to suffer?
Have you ever noticed how much the Left talks about suffering? “We have to help those who are suffering.” “We have to share the suffering.” “Let’s start with those who can best afford to suffer.”
America isn’t about suffering; never has been. This country was built by sturdy people who put up with suffering, yes, but they didn’t dwell on it. They put up with it and moved on.
Centuries ago, you suffered in the wilderness because you were clearing brush to build a farm. You suffered in a tent because you were trapping furs, to sell in the big city where you could live well. You suffered in the mountains because you were crossing them to reach California for the gold.
As the country developed, the level of “suffering” changed. You suffered long hours at the factory so you could become a supervisor, then a manager, then an owner yourself. You suffered the work of two jobs to pay for night school so you could be better paid as a college-educated professional.
You suffered cold nights in a tenement so you could save up for your own home at the edge of town or in the suburbs. You suffered the heat of a restaurant kitchen, or the danger of a mine, or the risks of a lathe, because you wanted to get out of your circumstances, and move up from poverty to lower middle class, then from lower middle class to upper middle class. You suffered the 80-hour weeks of a business startup so that you could become wealthy enough to retire comfortably, or perhaps even, to retire young.
That’s called capitalism, in a nation that believes in economic freedom. It’s good for everybody, not just the rich, but everybody who’s willing to apply themselves. It’s not easy, but it’s a proven process, a method that rewards hard work by propelling the deserving toward their desired destination.
Notice a difference today? The Left doesn’t have a destination in mind. They expect you to suffer without improvement. If anything, they want Americans to get worse. They wreck the economy so that unemployment leads to foreclosure; they wreck the market so that investments turn to bankruptcy, and savings turn to poverty. They wreck the government so that annual deficits lead to crippling, inescapable debt; they wreck the healthcare system so that sickness leads to death.
There is no good reason to focus on suffering today. Yes, we’re a nation in debt. But that doesn’t mean we need to suffer; it means we need to get to work! We have between ten and thirty percent unemployment, depending on how you count it; just put those people to work in a reinvigorated private sector, and the ensuing growth will reverse that deficit and start taking care of the debt.
But we have to make that change, and fast. From suffering and sluggishness, to hard work and growth. A growth economy reduces the burden on government, and enables the natural revenue inflow that our nation so desperately needs.
We do need the money of the rich.
Now back to the mantra. The president and his shills in his party, in the media, in the education system, all say that we need the money of the rich, and this is true, but not in the way they think.
Let’s spend a moment considering how the rich spend the money that’s on the table at present. Let’s say, it’s those several percent of their income that the Left says that the government needs… and that the rich can easily do without. Perhaps, for a few of them, that several percent is a hundred thousand dollars (this is somebody really rich, isn’t it…). Let’s explore what one of these millionaires does with this money now… so that we can envision all the things that won’t happen if it’s taken away from him:
Shopping: Maybe he shops with it. With this much money, he probably shops a lot. If he spends this money on Michigan Avenue or on a shopping trip to Rodeo Drive or Manhattan, that money goes into the cash registers at a variety of stores. It may buy domestic goods, in which case it has also enriched American manufacturers… or it may buy imported goods, in which case it has employed some Italian clothing makers or French winemakers or Chinese electronics makers or Japanese artisans. Those goods had to travel to reach these stores, so that money helped truckers and freight forwarders and distribution companies and buyers and other middlemen too, all in addition to the shopkeepers and their clerks.
Take the spending money away from the rich guy, and you’re just making him live without some fancy wine or electronics or clothing or art… He may not even notice. But you’re also robbing all these others of their livelihood when he, and thousands like him, are not there to spend that money on them.
Dining and Entertainment: Maybe he goes out with it. Maybe this is the extra money in his fun budget, so he can fly his family to New York and see five Broadway plays and stay at the Waldorf Astoria or the Conrad Hilton or the Plaza, and dine at the best restaurants for a week. This spending employs actors and playwrights and musicians and theater ushers and restauranteurs and waiters and cooks and airlines and stewardesses and airline stock owners and theatrical investors and hotel maids and hotel front desk clerks…
Take the travel money away from the rich guy, and you’re just making him skip that one cool week vacation. He’ll live. He may not even mind, if the Left has convinced him that giving it up is his patriotic duty.
But you’re also robbing all these others of their livelihood when he, and thousands like him, are not there to spend money on them.
Investing: Maybe he invests it. Maybe this is just more money for him to invest, so he’s a part of the day’s influx of money into the stock market and the bond market. Maybe he invests this money in blue chip companies, or in brand new start-ups, or in municipal bonds for a road project or school or bridge. So this investment money gives companies a chance to get off the ground, or to continue to grow and hire staff, or it gives a city or county or school district the ability to build the infrastructure that employs concrete mixers and engineers and construction crews and carpenters and painters.
Take this investment money away from the rich guy, and you’re just robbing him of a drop in the bucket that he might not really notice in his huge investment portfolio… that nobody might really notice.
But you’re also robbing all these startups of investors to give them a chance; you’re robbing the market of the constant inflow of cash that keeps our market stable and protects our 401Ks and pensions and other personal and government investments. We’re all in the market now, but don’t kid yourself; we depend on the rich investors to keep it growing. If we want a stable retirement fund for those of us in the working poor and middle class, we can’t rip the rich folks out of it and expect to survive by ourselves.
Savings: Maybe he just saves it. Maybe he has a limit to how much he spends and invests, and he wants to keep some cash in the bank. So he takes advantage of the FDIC’s insured coverage limits, to keep that hundred thousand dollars in a local bank account, despite the lousy interest rate. The bank then uses these dollars to invest in mortgages and business loans, and to extend home equity lines for people who are strapped at the moment, or to give credit cards to people so they can shop and dine out without the danger of carrying cash or the bother of writing checks.
Take this bank money away from the rich guy, and you’re just robbing him of a fragment of his wealth, which he truly may not really notice.
But the economy will notice it. The banks depend on their wealthy clients’ savings accounts for the cash reserves that allow them to grant business loans and home mortgages. The feds are cracking down on banks, tightening the screws on the ability of a bank to loan out money with too little in reserves. If we take this money out of the banking system, we’re ensuring that there will be more foreclosures, more bankruptcies, more bank failures, and fewer home sales, fewer investments in small business.
In fact, of course, “the rich” who are being used as the communal donor here don’t spend or invest all their money the same way. They do a mix of the above choices. They all invest, shop, dine out, buy theater tickets, buy and decorate homes, and travel. When we reduce the money that they have, we are reducing how much of all of that they will do.
Raising taxes on “the rich” may not noticeably affect their lives. When Rob Lowe or Warren Buffet or other such liberal rich folks say this, they may be telling the truth. We non-rich certainly feel a 5% tax increase a heck of a lot more than they do.
But the reason not to raise taxes on the rich isn’t just for their benefit (though it is true, for ethical reasons, we shouldn’t rob them any more than we should rob anyone). The reason is for the rest of us.
“The rich” may not feel a slight tax increase, but the rest of us will feel it when they have less money to spend and invest. The rest of us will feel it because there will be more restaurant closures, more store closures, fewer business startups and expansions… and continually higher unemployment as these waiters and shop clerks and buyers and salesmen and actors and chefs – and their supervisors and managers and accountants and landlords – find themselves unemployed.
If we take this money from “the rich”, they may not particularly notice it. But the rest of us will.
We do need the rich’s money. But we don’t need it in Washington, or Springfield or Sacramento or Lansing or Madison or Albany.
We need it where it is now: in the pockets and purses of the rich, so that they will do what they always do with their money – spread it around throughout our economy. The invisible hand of a free market will enable that money to do far more for all of us than it could ever do if it went to Washington to be poured down that endless financial drainpipe of theirs.
In the classic Broadway hit musical, “Hello, Dolly”, the title character colorfully offers the essence of economics in a single famous line: “Money, pardon the expression, is like manure. It's not worth a thing unless it's spread around, encouraging young things to grow.”
It’s true. When the government takes more money out of our economy, there will be less growth. It’s as simple as that.
And when tax revenues are down, and unemployment is up, all because of a stagnant, miserably flat economy, what we need is growth.
We need the rich to have the ability to help us all by helping themselves, to grow the economy by doing what they do anyway. As long as an avaricious government doesn’t stop them from helping, by robbing them of their ability to contribute.
Copyright 2012 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and international trade lecturer. Fortunate to have been a teenager in the days when William F. Buckley’s “Firing Line” was on television, he was able to learn his economics from the weekly appearances of economic geniuses like Milton Friedman, Arthur Laffer, and Walter Williams. It helped him resist the rampant Keynesian economics that ivy league professors shoveled at him in college!
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