Free Markets, Free People

Daily Archives: August 9, 2012


Famous dumb ideas: Let’s have a maximum wage, shall we?

Sometimes the mask slips a little on the left and you get a peek at the real collectivist agenda at work there.  Other times a leftist will just take the mask off completely and show you the collectivist behind it.

It is one of the reasons I find the left to be the most potentially totalitarian side of the spectrum … because their basic premise, the premise that spawns all others, is indeed collectivism.

For instance, this Gawker screed by some nimrod named Hamilton Nolan:

Let’s have a maximum annual income of, oh, $5 million, pegged to inflation. All income above that would be taxed at 99 percent. Our precious national sports stars, celebrities, and corporate executives could still be fabulously wealthy. The daydreaming poor could still have a nice big number about which to hopelessly dream. Five million dollars a year. Five million! Anyone with $5 million can invest it conservatively enough to earn 5 percent a year and still be making $250K per year without lifting a finger. In other words, $5 million provides you with the means to live as a member of the one percent without ever touching the principal. It’s everything that any reasonable person could ask for, financially speaking.

A million and a quarter per year? Far more than anyone should be earning, in a world with so much poverty and want, but not so much that someone could consider themselves set for life. It’s a number at which the go-getting rich person is still aspirational. They hope to double or triple that salary before their earning days are done. So a hefty 75 percent tax, though completely just, will not only spook them enough to flee, but allow them to retain a modicum of dignity while doing so, at least among the more affluent segments of their peer group.

But $5 million? I defy the slickest PR firm in America to explain to a nation of struggling, underemployed working class people with a median household income of just over $50,000 why an already-wealthy person felt the need to leave the country—taking money out of the taxpayers’ pockets in a very literal sense—rather than donate, to the common good, earnings over one hundred times the nation’s median household income. This requires an already-wealthy person who is, by definition, being paid a wage that far outstrips any measure of fairness or good sense, to stand up in front of a nation (to which he has no doubt paid ample lip service during his rise to the top) of people far, far less fortunate than he and declare: "I have far more than I need. But I would rather abandon you all than help you."

If someone is willing to do that, let them take their shame and go. Good riddance.

You have to read the whole thing to ensure its not a spoof. It’s not.  This knucklehead is serious. 

Note how blithely he decides what is proper for you to have.  “It’s everything that any reasonable person could ask for, financially speaking”.

Is it?  What if you’re trying to build a business that requires, oh, I don’t know, 10 million?

Well, you can’t have that.  Because Hamilton Nolan has arbitrarily decided that 5 mil is it.  It’s a bit like the crowd that decides that at a minimum, labor is worth, oh I don’t know, how about $7.25 an hour?

Sound good?  Let’s go with it and prosecute anyone that tries pay below that.  What do you mean that causes unemployment because wage payers aren’t willing to pay more than what the labor on a job is worth?  Why would some of them rather automate than pay that wage to a real person?   How does a minimum wage kick up the price of a product?

See it’s these little niggling questions that are never entertained by economic rubes like Nolan that blow their little collectivist theories all to blazes.

Things like “well if I can only earn 5 mil in the US but I can earn 10 mil in Russia, I’ll just move to Russia”, also known as human nature, simply don’t register. 

Dingbat’s reaction to such a move?  “Good riddance”.

Really?  Good riddance? 

Someone ought to ask this economic idiot if he got his job at Gawker from a poor person?   And when he got that job did he believe he got it because:

America has provided all of the opportunity necessary for these people to earn their fortunes. That opportunity is paid for with tax dollars.

Because that’s what he wrote.  Seriously Mr. Nolan, did “America” provide all the opportunity necessary, paid for by the taxpayers, for you to land at Gawker?  Or did your work and effort perhaps ‘earn’ you the job (although reading this hash one might be led to believe that Gawker has very low standards of employment)?

How does our collectivist plan on “rewarding” the high earners who remain and government coercively fleeces, taking most of what they’ve produced (note that the word “produced” never is used in Nolan’s rant)?

Newspaper articles.  No.  Seriously.

The wealthy could still earn as much as they want. It’s not that they don’t get anything for their earnings above $5 million; they get the distinct privilege of making a huge and helpful contribution to their fellow countrymen. Give them awards. Lavish them with praise. Publish the names of the highest taxpayers in laudatory newspaper columns. Allow them to bask in civic pride. But take their money. They have plenty.

Because Mr. Nolan and the mob, er collective, believe they have first claim on the money anyone earns.  They just have to vote for it (“hey, that’s democracy!”).  And that my friends is the basic difference between the left and right in this country.  They believe it is“their” money or the government’s money.   They have no idea of how wealth is produced.  They have no idea of the concept of what it takes to earn something.  Instead, it’s real simple:  you get to keep what they deem appropriate, because wealth doesn’t belong to the producer, in their world it belongs to the collective.

Why?

This is not primarily about raising our total national tax revenue. That’s a far broader issue. This is about inequality. It’s about what type of nation we want to be—what level of inequality we are willing to tolerate in order to protect a vague and twisted notion of "freedom" that most people cannot even fully articulate, and that was created by the rich to serve themselves. This is a baby step. But it’s one that would make us, fundamentally, a better and more just country.

And if the rich people don’t like it, fine.

It’s not at all about “raising our total national tax revenue”.

It’s about nascent totalitarianism masquerading as “fairness”.  Fairness is one of those code words on the left that is used to rationalize removing choice, using coercion and claiming their actions are justified because otherwise the status quo is “unfair”.

There is no worse of a sin in the collective than being ‘unfair’.

And screw you if you don’t like it.

~McQ

Twitter: @McQandO


Economic Statistics for 9 Aug 12

The following statistics were released today on the state of the US economy:

The U.S. international trade gap in June narrowed to $42.9 billion from $48.7 billion, mainly from lower fuel prices and imports.

The Bloomberg Consumer Comfort Index fell to -41.9 in the latest period, the lowest reading in two months.

Wholesale sales fell -1.4% in June, while inventories declined only -0.2%, a mismatch that increases the inventory-to-sales ratio to 1.20.

Initial jobless claims fell 6,000 to 361,000 last week. The 4-week average rose 2,250 to 367,000. Continuing claims rose 53,000 to 3.32M.

~
Dale Franks
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France to impose a 75% tax on "the rich"

The “you didn’t build that” gang’s attempt to get the “rich” to pay what they characterize as their “fair share” in taxes (when in fact in almost every western country they pay more than their fair share) is about to get tested in France:

The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous.

President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil.

The question asked by the client is typical of what will happen if such a tax is imposed … anywhere.  If you believe “the rich” are going to lay back and take it, you’re crazy.  They will do what is in their best interest and paying 75% taxes on what they earn isn’t in their best interest.  We’ve often talked about the Laffer curve and how it applies to taxes.  How at some percentage of taxation, revenues will drop and in some cases drop dramatically.

That’s precisely what that client’s question indicates will happen in France with a 75% “rich” tax.

France has a history of punitive taxation which is one reason it no longer is considered much of a economic power:

[T]he proposal is the latest red flag in a country that has long labored under the image of being a difficult place to do business. France has a 33 percent corporate tax rate — the euro zone’s second-highest, after Malta’s 35 percent. That contrasts with the 12.5 percent rate in Ireland, which has deliberately kept a lid on corporate taxes as a lure to businesses.

Businesses don’t have to stay and take France’s coercive tax rates anymore.  There are countries more than happy to accept their businesses and the boost to the economy they bring. 

And, that goes for “le rich” as well.  ‘Leaving the country’, in the case of France, doesn’t necessarily mean moving too far:

“It is a ridiculous proposal, but it’s great for us,” said Jean Dekerchove, the manager of Immobilièr Le Lion, a high-end real estate agency based in Brussels. Calls to his office have picked up in recent months, he said, as wealthy French citizens look to invest or simply move across the border amid worries about the latest tax.

“It’s a huge loss for France because people and businesses come to Belgium and bring their wealth with them,” Mr. Dekerchove said. “But we’re thrilled because they create jobs, they buy houses and spend money — and it’s our economy that profits.”

You’d think, for anyone with an ounce of common sense, this outcome would be obvious.  Apparently not.  And so France will drive off its rich, see revenues in that income bracket drop even while the tax percentage is increased to 75% and attack those who’ve avoided those taxes as “greedy”.  Just watch.

Of course I agree with the words of Dr. Thomas Sowell in that regard:

“I’ve never understood why it is “greed” to keep money you’ve earned, but not greed to take somebody else’s money”.

Yeah … me neither.  Right now, the greediest entities on earth are governments.

~McQ

Twitter: @McQandO

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