Elizabeth Warren's Voodoo Economics

The liberal Senate candidate sets fire to a straw man

Elizabeth Warren is cheesed off.

Received wisdom says conservatives are the ones driven by anger—Republicans took the House last year because 2010 was another “year of the angry white male,” and all that. But in August remarks about class warfare that have gone viral, the Democratic candidate for a Senate seat from Massachusetts is visibly seething.

That’s okay; everyone gets worked up now and then, and most of us are lucky enough not to be caught on camera at the moment. Funny thing is, Warren’s comments—her rage and resentment and sarcasm—have made her an overnight heroine.

In the video, she addresses an imaginary captain of industry:

“There is nobody in this country who got rich on his own,” she lectures. “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 . . . .Now look, 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.”

A few points.

(1) This is a pretty powerful takedown—of a position nobody holds. Or at least nobody outside an Ayn Rand novel. If Warren can find someone who thinks he does not live in community with other people, then she might have an argument. But don’t sit on a hot stove waiting.

(2) For someone who objects to the term class warfare, she sure draws a mighty bright line between “you” and “the rest of us.”

(3) The question is not whether a captain of industry should pay taxes—but how much. Reasonable people can debate where to set marginal tax rates. But when the richest fifth of Americans pay 64 percent of federal income taxes while the bottom two-fifths pay less than 3 percent, the case for even greater progressivity is not beyond rational debate.

(4) Outside of a few anarchist collectives, there isn’t a soul around who minds paying taxes for roads, cops, firemen, or schoolteachers. It’s the jillion other things government does—from corporate welfare to the Iraq war—that people object to.

(5) Plenty of smart, well-meaning people also think even government’s core functions could be delivered better and for less—just as the Obama administration has used the Dartmouth Atlas to argue for greater efficiency in medical care. E.g., since 1970 inflation-adjusted per-pupil spending in public K-12 education has doubled. Class size has been cut in half. Neither change has produced any substantial effect on academic performance. Why don’t we have the equivalent of a Dartmouth Atlas for public education?

(6) Warren’s remarks epitomize the caricature of a progressive as someone who loves jobs but hates employers. She implies the captain of industry is simply sponging off society and hoarding the proceeds. But hiring workers is a huge social good. So is providing a funding basis for pensions, which generally rely on stock returns. So is creating products people want. Five bucks says Warren has a smartphone and a DVR and a bunch of other modern conveniences, and that she didn’t buy any of them with a gun to her head. So why is she so mad at the people who offered to sell them?

(7) Warren suggests the principle of fair play means the industrialist owes society a debt, to be repaid in steep taxes because his other contributions do not count. But this argument is one of the weakest of all the arguments for political obligation, for reasons most people can figure out after a few minutes’ thought. (E.g., Suppose I mow your lawn without asking, then demand payment because it’s “only fair.”) Why hasn’t she given them any?

(8) Perhaps, like film critic Pauline Kael, who famously didn’t know anyone who had voted for Nixon, Warren doesn't know anyone who believes government and taxes should be small. And, therefore, perhaps she does not understand their reasoning. She certainly doesn’t give any indication that she does.

So for the record, the reason is that—as Sheldon Richman wrote recently in The Freeman—“government is significantly different from anything else in society. It is the only institution that can legally threaten and initiate violence; that is, under color of law its officers may use physical force, up to and including lethal force—not in defense of innocent life but against individuals who have neither threatened nor aggressed against anyone else.” Many of those who truly love peace prefer to live in a society where the use or threat of violence is minimized. Maybe that idea simply hasn’t crossed Warren’s mind.

Maybe that’s why she looks like she’s ready to haul off and hit someone.


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