Big Government

“Tax Cuts for the Rich”

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That’s the term the Left and the media use. Even conservative media people and some Republicans use it. It’s wrong.

It’s not the rich. It’s people who want to be rich. It’s people with high incomes. It’s people running small businesses as LLCs and Sub-S corps that get funneled into the same tax category with people making high salaries. These people are working like hell to use their limited capital as efficiently as possible, to get the highest possible return. The successful high-earners among them are some of the most creative and productive people in our society. They create the jobs. The best of their small companies eventually become large companies and create tremendous wealth for their founders, shareholders, employees, contractors, suppliers and customers — all of us.

The higher we set the rates at which we tax these highly productive people on their incomes and capital gains, the lower will be the returns they earn on their capital and therefore the less they will invest. The less they invest, the less they will create. The less they create, the less wealth there will be for all of us. Scrooge McDuck, sitting on piles of idle money, isn’t affected by high income- or cap-gains tax rates. Nor is he creating much by keeping his money idle. But a guy who has most of his net worth tied up in a successful business has a lot to lose and will be trying to earn the highest possible return on his capital and effort. Make him a target, reduce his returns by singling out high earners for tax-rate increases, and he will invest less and work less, and therefore will create less and hire less.

We should be encouraging such people, not looting their capital to buy votes.

UPDATE: Robert Schwartz adds many good points in the comments.

NPR: “Who Is The Tea Party? There’s No Short Answer”

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Mr. RAUCH: Yes, that was what turned out to me to be most interesting and to be hardest to get my mind around. The most important thing that they will tell you they’re trying to do is a cultural movement, not a political movement. They’re tiring to reeducate the whole country, change the way Americans think about their relationship to government. Move us back to a more self-reliant, independent sort of watch dog against government mentality.

They will tell you if you just try to change an election result, you have to come back every two years and do it again. If you can change the hearts and minds of the people, make them more skeptical of big government, then you do that forever.

I enjoyed listening to this NPR interview with Jonathan Rauch of the National Journal.

The interviewer seemed to have a hard time understanding the Tea Party as a largely leaderless movement which is sort of amusing. Jonathan Rauch says it is like a “hive or a network.” Bzzz, bzzz, bzzz….buzz away, friendly libertarian-ish hive. People are intrigued.

Update: Reihan Salam at NRO’s The Agenda blog:

Rather surprisingly, Jonathan Rauch, one of my favorite writers, has emerged as the most keenly observant chronicler of the Tea Party movement. I say surprisingly because I’ve never thought of Rauch as a political reporter per se, yet it’s clear that he has a knack for it. As much as I admire National Journal, I think his essay on “The Tea Party Paradox” deserved a much wider audience.

John Robb of Global Guerillas is mentioned too. Paging zenpundit….

Update II: Thanks for the link Instapundit! An Army of Davids is a perfect description of the phenomenon, isn’t it?

Ignore The Canary

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I was talking to someone who grew up around Appalachian coal mines a few days ago.

“My daddy would always make sure he was the guy who carried the cage with the little bird in it when he went down into the mines. That way he would always be the first to know if there was a problem. He would watch the bird, and would run for the top when it would drop. Everyone else would just watch him, and start running when he would pass them by.”

It isn’t news that the Obama administration has increased employment in the public sector by an amazing degree, even when individual governments in Europe, and the European Union itself, have slashed budgets.

When even the cultures which most enthusiastically embraced government intrusion in their economies start to admit that it was a bad idea, it is pretty much the point when the bird stops chirping and keels over. The Democrats in charge of our country should have paid attention some time ago.

The latest news is that Cuba has announced plans to lay off one million government workers.

“Those laid off will be encouraged to become self-employed or join new private enterprises, on which some of the current restrictions will be eased.”

So the Communists are making noises that they are going to give up on a centrally controlled economy? They are gingerly adopting American business practices because it is the only way to survive? And, even though they are discarding the old ways as being self-destructive, the Liberals are enthusiastically embracing those same policies?

For goodness’ sake, when Cuba passes you in the mine, it is past time to turn around and make a run for the fresh air!

Quote of the Day

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Any system susceptible to a Black Swan will eventually blow up.

–Nassim Taleb [Link is a pdf.]

Sounding The Depths

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Cheryl Rofer was kind enough to post an essay where she discusses her attempts to understand the mindset behind the supporters of Glenn Beck, Sarah Palin, and the Tea Party movement.

That essay has invited a fair number of comments, some of them less than kind. When I noted that Ms. Rofer was trying to reach Tea Party satori by mulling over the life of Tchaikovsky, and the writings of authors who hail from Spain and Great Britain, I am afraid that I became guilty of writing something negative myself….

“You conflate a Russian composer and a British novelist with an American grass roots movement that is devoted to shrinking the size of government? I think it is pretty obvious why you are confused!”

That was both unkind and uncalled for, and I apologize to Ms. Rofer unreservedly.

As a gesture to show that I take her seriously, I would like to try and smooth the way for her a little bit. But to do that, I will have to bore you all to tears by explaining my own background. My only defense for this terrible waste of your time is that I believe it will lead to a better meeting of minds.

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