The last presidential debate touched on the idea of “wealth,” and how it is, in our society, that it is distributed. John McCain derided comments reported in the news by his opponent, Barack Obama. McCain said, “You know, when Sen. Obama ended up his conversation with Joe the plumber, he said, ‘we need to spread the wealth around.’ In other words, we’re going to take Joe’s money, give it to Sen. Obama, and let him spread the wealth around….I want Joe, himself,to spread that wealth around (not the government).”
In a country whose motto is “freedom and justice for all,” a big issue to figure out is what the role of government should play in making this motto a reality. It seems a happy refrain that we want government off our backs, that government is the problem, that the way to greater freedom and greater justice is through lesser government. But, history shows that freedom and justice doesn’t happen by accident, that given the chance, the powerful subject the weak, greed triumphs over justice.
There is a progression in history toward greater justice. Over time, the “divine right” of kings to be lords and masters was subjected to the prerogatives of princes, and the prerogatives of prices, over time, subjected to the monied classes, and the monied classes, over time, subjected to a wider democracy. We are, even now, trying to advance our democracy to make it more effectively work
McCain showed disdain to the principle of government helping to “spread wealth around,” but it is a principle firmly established as part of American history, and is firmly established as part of our progressive tax structure. It’s a great question to consider: What is fair? What is just? We have one notion, that in order to be fair, everyone must be treated equally. In America, for example, all citizens have an equal right to hop on an airplane and enjoy an expensive vacation in Hawaii, but having that right means little — unless one also has the money to buy the ticket. Similarly, every citizen has a right to good health care — if he or she can find a way to pay for it. Freedom and justice has a lot to do with economics. A democracy must find a way to organize itself, economically, so that its motto about “freedom and justice for all” has a chance to be realized.
Left to itself, the market demands cheap, disrespected labor — including child labor; it demands unsafe working conditions; it demands the right to disregard environmental degradation. Left to itself, a purely capitalist system makes a few obscenely wealthy and the vast majority abjectly poor.
The idea that in a democracy, government should help regulate the economy, should help bring about greater economic justice, is a well established idea. When McCain shows disdain for the fact that government should help spread the wealth, he is appealing to simple mindedness, he is appealing to advocates of a pure doctrine that is not reality based.
The prevailing tax doctrine, progressive taxation, established in our democracy, by great effort and struggle, is the idea that fairness means that incomes and, therefore, tax payers with different incomes, must not be treated the same, but must be treated differently. At one time, when John Kennedy came to power, the highest brackets of income was 90%. In Obama’s plan the highest tax bracket on personal income will be 39%.
Is the amount Obama wants to tax the wealthy fair? That is the question. The answer to that question depends a lot on an appreciation for why, in the United States, any of us are rich. If Joe the Plumber had a plumbing business in Nigeria or Egypt, for example, he would be working just as hard or harder and not making much money at all. The same is true of the money made by teachers, or doctors, or lawyers. And, of course, factory workers. What is the “fair” amount Joe should pay for the privilege to plumb here in United States, the privilege to get rich? The point is, we are all rich because we live in America, and particularly, the wealthy are rich because of the unique opportunities America has given to them. I write about this here: Why Are We Rich?
I wrote in Shouldn’t How To Increase Wealth, How To Fairly Distribute Wealth, Be At The Center Of Our Political Debate? “I’ve not been paying enough attention to the details of Obama’s plan to distribute money to low wage earners. Getting more money into the hands of ordinary people sounds great to me. And if the tax system can help us accomplish such a goal, then why would we not do so? I didn’t, until now, realize that Obama’s plan involves sending checks to qualifying citizens who pay no income tax. I like the idea. The important consideration is not whether by some definition this is ‘socialism,’ the question is: Will this action impact our economy to add to the general increase of wealth? The question is: Will this action result in a more fair distribution of wealth?”
This is what Obama said to Joe the Plumber: “I’m gonna cut taxes a little bit more for the folks who are most in need and for the 5% of the folks who are doing very well … I just want to make sure they’re paying a little bit more in order to pay for those other tax cuts. … I just want you to be clear – it’s not that I want to punish your success – I just want to make sure that everybody who is behind you – that they’ve got a chance at success too.”
It makes sense to me.
sick
Just out of curiosity I tried to find out if any countries still have a one size fits all tax rate. As I expected almost every country has a progressive tax system. Now my research was far from complete but interestingly the ones that I found that have a single rate for all are all former soviet bloc countries.
Ted I don’t know where to start. Your talking points sound too familiar but lack substance.
The housing crisis was a combination of many elements. The biggest reason for the housing failure was the over valuation of properties by the banks attracting investors (people who have (had) money to buy and hold residential property that caused tremendous oversupply until it burst the bubble.
Yes I would love for you to show us how to lower taxes, cut spending, and balance the budget. Everyone that has tried has failed (except Clinton did balance it and build a surplus). If you can show us how it is done then maybe you should run for president.
Capitalism works better with reasonable government oversight. Sometimes that means that some of us have to pay a little more to support the roads we all drive on.
The work ethic stuff does not really describe how the world works. Work is one factor but so are luck (often what race and class you are born into) natural ability and corruption (gaming the system, using the laws against your competitors, favoritism, bribery).
One major cause of the mortgage mess is that loan originators were paid thousands of dollars in commissions for every loan they sold, whether the loan was good or bad. They didn’t work to earn that money. There is not that much work involved. Mid level office managers could make a million dollars in a year in the mortgage business, mostly because they all did it and could get away with it. Even more money was made on Wall Street packaging and bundling the loans into the trust investment that turned out to be worth a lot less than people were sold. Mostly they abused peoples’ faith and trust. How much do you reward that kind of work?
If you read “Nickled and Dimed” you’d see that the people who work at WalMart are actually skilled workers and are worked hard. They just don’t get paid much because of the way Walmart has things set up. And few have health insurance. And the owners of Walmart are something like half of the richest rich people in America. How bad is spreading the wealth around so you have a more just distribution of wealth? Bush concentrated wealth in the hands of the wealthiest by the way he redid the taxes. If you undid Bush’s tax cuts for the wealthy and went back to the way taxes were under Reagan, would that be unfair to the wealthy?
By the way since I am a “scumbag lawyer”, I suggest that everyone who trashes the legal system or the idea of other people have rights is going to expect justice from the legal system if something bad happens to them. They aren’t going to want to hear that the company got to a Congressman first and bought some immunity against injuring you, or that some sort of legal reform came at your expense. You aren’t going to want to be told to suck it up, be a man and stop whining. You aaren’t want to hear how compensating your injury is bad for their bottom line. And if some lawyer helps you get the justice you deserve, is that lawyer a scumbag? Or just the lawyer on the other side? The legal system has lots of flaws to be improved, but the idea that lawsuits are responsible for the country’s problems in health care, consumer product quality or any other area is garbage. Mostly businesses and government officials are trying to be able to do what they want with impunity, no matter how much harm they do.