Tuesday, April 26, 2011

The, "don't tax the wealthy, they're more productive" fallacy

If I hear this one more time I'm going to throw up, seriously. It's a big, fat, lie and it's coming from the most unlikely places.

Why is it that Tea Partiers and others, who reside nowhere near the ranks of the wealthiest in this country, are suddenly so adamant about protecting the earnings of the rich? Have they been brainwashed that effectively? They seem oblivious to the fact that they are speaking against their own interests and more importantly, that what they are saying about the rich being more productive is just a total fallacy.

Now, to be square with MMT, I'll say that I am not arguing for higher taxes on the wealthy. Any MMTer worth his salt would tell you that; a) taxes do not fund governmment, they serve to regulate demand and; b) the problem we are having has nothing to do with excessive demand coming from rich folks.

Furthermore, as much as I am in favor of greater income equality I am not in favor of doing it by some "Robinhood" scheme of rasing taxes on the rich and giving it to the poor (or the non-rich).

On the contrary...what I am attacking here is this ridiculous statement that somehow the rich are more productive than everyone else and therefore, we should safeguard their earnings over everyone else's.

That's a bunch of crap.

Just take a look at the Forbes 400 list of richest Americans. The vast majority of the people on that list owe their fortunes to inheritance, real estate ownership and/or stock investment and speculation. They "produce" nothing. They basically collect rents off assets. They haven't added one iota of real capital to the economy. Why, then, do we prioritize their incomes over everyone else's?

Do you mean to tell me that some landlord collecting rents off a portfolio of buildings in Manhattan, LA or Chicago is more important or productive than the sanitation worker collecting his garbage? Is some hedge fund manager more productive than the teacher who teaches your kids or the cops and firemen that keep our streets safe and our property protected? Are they more important than a nurse in an Intensive Care unit or the construction worker that's fixing a highway or repairing a bridge?

I mean, come on...really!!!

Yet this is the dialogue we are having in our country today. There are people of limited means, working class people, saying that we shouldn't be taking money from productive people and giving it to unproductive people. They've got it backwards. We ARE taking money from productive folks, just not the folks they think are the productive ones.

Budget cuts, spending cuts, cuts in services, education, Medicaire, and all the rest are the fiscal equivalent of taking money from the most productive. This equates to taking money from the people that keep our streets safe and clean, protect our property, teach our kids, care for our sick and infirm, put things together on production lines, operate our trains, boats and planes and everything else that goes into making a modern society modern.

Now don't get me wrong, I'm not knocking the rich and I'm certainly not knocking those who made their fortune creating and adding to the overall supply of real assets (good and services). Those are the things that define our very standard of living. They deserve every penny as do the rich folks who got their money from inheritance or real estate and stock speculation.

But it's time to drop this BS that people who have lots of money are more productive or important than those who have less. It's just not true.


Tom Hickey said...

This is why economic rent (gains from non-productive sources) need to be taxed as a disincentive while incentivizing productive investment, i.e., primary investment. Instead, the current plan is to tax workers incomes and exempt economic rent in the name of incentivizing the producers. It's just BS.

It's a bastardization of capitalism that has given control of the political process to a plutocratic oligarchy. The masses go along with it because they don't want to be taxed if they win the lottery. Crazy.

Michael Hudson has written and spoken extensively on this.

Matt Franko said...


"people who have lots of money are more productive or important than those who have less."

I hate to say it but that seems to be a main theme of many of the anchors on Fox.... Casone, Asman, Gasparino, many of the guests. They could care less about the true small business persons out here trying to "git 'er done".

You are quite alone over there.... but we appreciate it man please keep up the fight!


mike norman said...

Thanks, Matt. I know, it's their dogma at Fox.

Chewitup said...

I think because the popular definition of "wealthy" is those with incomes of $200,000 or more. Many small business people then qualify. They (me included) will be greatly affected by a tax increase. We all know high income people who in no way qualify as wealthy. If their incomes stopped tomorrow, so would their life style and consumption.
These tend to be the productive people of whom the Tea Party speaks.
Otherwise, I am in total agreement.

Mike, I think you're gaining respect on Fox. I sense progress.

Anonymous said...

It's also the dogma of the Neo-liberal-Conservative-Libertarian-Austrian-Objectivist cabal.

A meritocracy it is not.

mike norman said...

:) Laura!

mike norman said...


Thanks for the encouragement!