Elizabeth Warren is Dead Wrong

Posted: 10/12/2011 in Politics

Elizabeth Warren, a Democrat candidate for the Senate, has been wowing audiences in Massachusetts, though, to be fair, for a Harvard Law School professor and former Obama administration official, this is not exactly a miracle. A particular video of Warren addressing an audience has gone viral, with emphasis on the following lines:

“There is nobody in this country who got rich on his own—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 that 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 marauding bands would come and seize everything at your factory—and hire someone to protect against this—because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea. God bless—keep a 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.”

I intend to address this statement line by line, but first I’m going to take the liberty of a little guessing here, and suppose that many who read this or hear it experience an almost euphoric “yeah-that’s right-so there” feeling. Despite Ms. Warren’s claims to the contrary, what you are feeling is just plain and simple class envy. This is what she is peddling to get elected. The people who cheer her on are motivated by two basic strains of thought.

“Those damn, dirty rich people deserve it! Crooks, all of ‘em!”

“Somebody else will pay, not me.”

Warren’s speech is pretty rhetoric, emotional and compelling, but it’s still the same old “us versus them” drama.

Worse than that, it’s just plain wrong.

“You built a factory out there? Good for you.”

If you listen to the audio of the speech, it is especially evident that Warren is not sincerely congratulatory. She sounds snide and dismissive.

“You moved your goods to market on the roads that the rest of us paid for.”

Unless the wealthy owner of this factory is an illegal immigrant, one can only assume that he paid the same taxes the “rest of us” did. On a personal level, he probably uses the roads no more than I do, commuting to work and running errands. If we are speaking of him as a business entity, then if he hires freighters for his goods he must pay for this service (plus sales tax). The freighters pay taxes, including vehicle taxes and gasoline taxes, costs which they pass on to their customer, in this case the factory owner. If he owns his own fleet of vehicles, then these costs must be absorbed by his business directly. Indeed, even a small business owner contributes a great deal more to the maintenance of roads than I do.

Also, considering that many millionaire business owners are still just small business owners, much of the time their business is conducted locally on local roads, the maintenance of which has nothing whatever to do with the federal government Warren is trying to represent.

Another point to make here is that the factory owner has no choice in the matter. It’s not as if he chose to “take a free ride” on public roads, instead of paying to use a private highway system.

It is true that no man is an island, but if we take this argument to its logical extreme, businesses and factories cannot exist without a multitude of advancements and advantages of society, including but not limited to telephones, electricity, combustion engines, chemistry and mechanics, metal working, language and fire. Are we born beholden to our fellow man because of the wheel?

And what about the wealthy who do not depend on such infrastructure at all? What about those who inherit their wealth? What about the inventor who sells his invention for a few million and lets someone else bring it to us as a product? What about the novelist, who churns out bestsellers from her cabin in western Maine, who uses roads no more than I do?

“You hired workers the rest of us paid to educate.”

This line actually made me laugh. It is true that education is heavily subsidized in this country. However, one must assume that the primary beneficiaries are the workers themselves. After all, isn’t that what we tell young people? To get educated so that they can have a brighter future?

And how is that brighter future obtained, in practical terms? Through higher salaries. And who pays the salary? Wait for it…

The factory owner!

Again, I must assume that the factory owner in question is paying his educated workers, plus the not-insignificant payroll taxes, unless he is holding them in slavery. Also, does Warren suggest that employers should get a discount for hiring workers educated in private institutions?

“You were safe in your factory because of police-forces and fire-forces that the rest of us paid for.”

The only sort of protection provided by the federal government is from terrorism, Mexican drug cartels, and, I suppose, an invasion of aliens. None of these things are a statistically significant threat to the average factory owner. Keeping the streets safe for businesses, and for everyone else, is the job of a policeman. The policemen and firemen that Warren mentions are employees of local governments. This has nothing to do with the Feds. Putting that glaring error in logic aside, what if I feel entitled to the same protection as a factory owner? Do I have to pay as much as she does? If not, why does she have to pay more? Of course, she does pay more to support local services, in the form of property taxes, local sales taxes, state and local income taxes, permit and licensing fees, and so on. So I guess the real issue is that it is just not enough for Warren.

Also, once again, the factory owner does not have the option of rejecting government protection in favor of private services. They can add the protection of a private security agency (and most probably do), but they cannot shirk the costs imposed by the local agencies, nor by the federal government for the expensive and morally questionable actions it takes to keep us all “safe”.

“Now look, you built a factory and it turned into something terrific, or a great idea. God bless—keep a hunk of it.”

Aside from noting again the snide and dismissive air, I’d like to ask Ms. Warren: what exactly is a “hunk”? I’ve noticed for all the leftists’ claims that the wealthy do not pay their fair share, virtually none are willing to give a cold, hard number of what that fair share is. Perhaps this is because, deep down, you squirm from outright declaring how much of someone else’s money you wish to steal? Or perhaps you know, deep down, that it will never be enough.

“But part of the underlying social contract is: you take a hunk of that and pay forward for the next kid who comes along.”

Again with the “hunk” business.

What is this social contract? Who wrote it? Who, besides Ms. Warren, is able to interpret it? Is it voluntary?

Or is it true, as “progressives” seem to insist, that the social contract is rigid and binding, to be interpreted by them, and imposed on all? Simply by virtue of being born human, we are born into bondage.

Here and now, let me be clear: I reject this claim utterly. Owing nothing to anyone, and claiming no debt for myself, I wish only to be free, and for all others everywhere to be free, so long as I violate the rights of no one, and no one does such to me.

Morally speaking, I believe that generosity and charity are virtues. They are morally obligatory. But that has nothing to do with government. What people should do, is not the same as what they must do under threat of force. And let no one have any illusions; government is the threat of physical force, something which is only morally permissible in defense of natural rights (which do not include other people’s money, by the way). If you’re wondering how this principle is at all compatible with our current government…it isn’t.

Something else needs to be said here, concerning Warren’s statements earlier in the video positing what caused the current debt crisis. Among other things, she places blame on Bush tax cuts for the wealthy. Let’s first look at the numbers.

The last law to change rates was the Jobs and Growth Tax Relief Reconciliation Act of 2003, which, among other things, continued or accelerated tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001. In 2002, the highest income bracket for married-filing-jointly began at $307,050. That meant that a couple earning 308K would pay 38.6% just in federal taxes. In 2003, the highest income bracket rose to $311,950, with its new rate lowered to 35%. The same couple, still making 308K, now pays a federal income tax rate of 33%, so a reduction of 5.6%.

Anyone who believes that reducing someone’s taxes by 5.6% led to our current crisis is fooling themselves. I hate to break it to you, but there just aren’t that many wealthy people in this country. A whooping 49% of the population pay no federal income taxes at all (I wonder if they should be allowed to use Warren’s roads). In 2008, the top 5% of earners were people who made more than $159,619. 1040s with AGI of more than $380,354, were in the top ONE percent. That’s 1% of all taxpayers, and .45% of the entire population. Despite being such a tiny group, these taxpayers are responsible for something around 40% of ALL income tax taken by the federal government. The top 10% (earners reporting more than $113,799) are carrying 71% of the federal income tax burden.

And yet it’s not enough, because it will never be enough. Even if this small group of people forked over everything they earned and went to live in shelters, it would not save us.

The real truth about it is, with few exceptions, government spending has outpaced revenue since 1960.

A drop in revenue, even if it occurs, is not the cause of debt. Spending is the cause of debt. If I go out and buy a luxury car I cannot afford, it is not the fault of my employer for not paying me enough, it is my fault for spending what I did not have.

I take issue with referring to tax-cuts as a “cost” to government, because I take issue with the assumption or implication that the government owns everything, and they generously allow us to keep some of it, at a “cost” to them.

Let’s put all that aside while I make one final point. Even if you believed that the government has the right to confiscate a significantly higher portion of the income of a tiny percentage of the population, what good would it do? Do you believe that the government would suddenly become solvent, efficient, and effective? Federal revenues have tripled since 1965. Do you believe that the federal government has gotten three times better?

Or…just three times bigger?

Will higher federal revenue bring an end to military adventures abroad? Will it stop them from debasing the currency by printing and borrowing even more money? Will they cease pursuing policies that create artificial market bubbles that derail economic stability and sabotage savings? Will they cut back on the executive privileges that hush civil liberties to a whisper? Will they no longer foster corporatism and cronyism?

Maybe, just maybe, the answer is not putting more money in the hands of government, even if it is conveniently taken from a very small minority.

“Democracy leads to anarchy, which is mob rule.” – Plato


End transmission.


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