Equity in Wealth

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that maurauding bands would come and seize everything at your factory…You built a factory and it turned into something terrific or a great idea — God Bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” Elizabeth Warren

This is not a political blog; it’s a blog about reason. I am not Republican. I am not a Democrat. I have voted for both. I have an MBA and know a little about economic theory.

Captialism works. Government should indeed be very sparing in interposing itself into markets. But as the robber barons taught us, unrestrained capitalism is at least as inefficient and corrupting as unrestrained socialism. There are those who wish us to see a simple, direct, and inverse correlation between taxation and prosperity. Reality is more nuanced. A wealthy man will spend just as much, and invest almost as much, whether he is taxed at 1% or 90%. A poor man CANNOT.

Yes, all things being equal, taxation reduces the money available for spending and reduces marginal return. But all things are not equal. And anyone trying to elicit your vote on the basis of this argument without considering elasticity is a propagandist who is not after your interests, but his own.