Reversing the Income Flow

It wasn’t that much of a concern to ordinary people some thirty years ago when President Reagan cut taxes on the rich and made his speeches on TV about how “Supply Side Economics” would benefit everybody. After all, ordinary people have other concerns, like dealing with their own household budgets. But now the results are in. We’ve gotten to a position where ordinary people can feel the effects.

Just installing a structural bias in government policy apparently wasn’t enough, and recent greed has exposed the process of how the rich have been looting the US tax funds. Not only were billions of dollars unaccounted for in the Iraq War, but billions went to a small group of companies that caused a world-wide economic crisis and then cried to be bailed-out.

We failed to pay attention to history, or at least to insist that it not be repeated. The recent near-depression isn’t the first crash tied to “trickle-down" economics. Economist John Kenneth Galbraith attributed the Panic of 1896 to the same kind of economic policies. So we didn’t pay attention, and now there is rampant unemployment, “Occupy Wall Street” protests in the streets and a “Poverty Tour” making the rounds. These are calls to reverse the income flow which has carried all that money to the top 10%, and more specifically to the top 1% of the wealthiest in the US.

Proposals for raising taxes on the wealthy have provoked complaints about socialism and “forcibly seizing” wealth from the rich to give to the poor. The truth is that going too far in either the direction of unregulated capitalism or stagnating socialism is bad for the country—we need the middle road. However, the excesses of the last thirty years need to be undone. We need to raise taxes on the wealthy, and institute polices that use the taxpayer’s money for neglected infrastructure and research and development. We need policies that regulate companies that make sure they behave responsibly and don’t take all the profit while transferring all the costs of their business to the taxpayers.

This has all been proposed, but so far it’s been blocked. That means we need to look at breaking the hold that the rich have on our politics. Campaign reform, anyone?

Karl Marx, Barack Obama and Free Public Health Care

Here’s an interesting quote from then Texas State Representative Debbie Riddle in 2003, who was addressing the Border Affairs Committee, “Where did this idea come from that everybody deserves free education?” she said. “Free medical care? Free whatever? It comes from Moscow. From Russia. It comes straight out of the pit of hell. And it's cleverly disguised as having a tender heart, [but] it's ripping the heart out of this country.”

Ms. Riddle was talking particularly about services to illegal immigrants, but this is a widely applicable quote. The interesting point here is that she thinks socialism was born in Communist Russia. Is the U.S. already so far from the origins of socialism that we don’t remember where it comes from? Do we really not know why is it that we’re offering free public education? Social Security? A welfare safety net? It’s not because the Bolsheviks thought we should.

First, this is a moral choice--presumably where the “tender heart” part comes in--but a certain self-interest in public health and safety play a part, as well. There are services the U.S. citizens will pay for because they don’t want to see the ugly things happen in our community that happen in third world countries. U.S. citizens don’t like the vision of U.S. streets overrun with homeless, uneducated children. They want to have a workforce that can read, write and do basic arithmetic. They want the less fortunate elderly to have a reasonable pension to cover their basic needs. Finally, they want a certain level of public health to control epidemics that would threaten all of us. Think H1N1.

Besides this moral choice, there’s a less obvious cause to engage in public assistance that has somehow gotten buried under our prosperity. Karl Marx wasn’t the only socialist thinker that the terrible working conditions of the Industrial Revolution produced--he was just the scariest. Marx wasn’t Russian, by the way; he was German, and he did have some flaws in his economic theories that caused the Communists to fail in the construction of their socialist utopia. However, Marx did make some extremely acute observations about a widening gap between the rich and the poor, and about how this leads to revolution.

This means that the more fortunate are obliged to take at least basic care of the less fortunate, or else we can go back to the days of those ugly revolutions that the French and the Bolsheviks carried out so they could redistribute the wealth of the aristocrats. Just because the Communist systems of dictatorship and central planning have failed doesn’t mean that revolution can’t still happen when conditions get miserable enough for the poor. It’s just not a good idea to think “It’s not my problem,” because on a lesser scale, there’s just an increase in crime statistics.

This is not to say that the country should offer everything free. It’s already been established in years of the welfare system that too many social services are a disincentive to work. A bad entitlement policy destroys families and erodes the work ethic. Huge taxes drive the wealthy offshore to run their businesses and their investments. Ms. Riddle’s general notion that any system of national entitlements needs to be limited was right, but let’s stick to basic needs, please. Plus, it wouldn’t hurt to get some of the fraud out of Medicare before there’s any discussion of a broader free public health system.

But those are general comments. About illegal immigrants: if they’re here and we’re depending on them as part of a low wage labor force, then we need to provide minimal services for them, the same as we would for any other U.S. residents. The low wages that illegal immigrants accept allow U.S. businesses to make higher profits and private employers to save more money. Thus, it’s a cop-out to claim that illegal immigrants are not contributing anything to the U.S. economy. What’s happening is that the businesses and private employers, by paying low wages, are transferring social costs to the taxpayers. Let’s put this into perspective, please.