PrintFebruary 13, 2011
The Right Way to 'Spread the Wealth Around'
When he was still just a candidate for the Presidency, Barack Obama was confronted by Samuel Joseph Wurzelbacher during a campaign stop in a residential area of Ohio. Mr. Wurzelbacher (who was almost instantly renamed "Joe the Plumber") asked Mr. Obama about his plans to increase taxes on small business owners. The future President of the United States responded:
"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... My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. If you've got a plumbing business, you're gonna be better off [...] if you've got a whole bunch of customers who can afford to hire you, and right now everybody's so pinched that business is bad for everybody and I think when you spread the wealth around, it's good for everybody."
The phrase "spread the wealth around" simultaneously reveals Obama's command and control view of the role of government and his startling naïveté regarding how basic economics actually works.
To borrow one of his own favorite phrases, let me make one thing perfectly clear, Mr. President: We already spread the wealth around, and have been spreading it around for over 200 years. We, as a nation, have done so without your help or any guidance from the government.
Wealth is redistributed every time a business makes a payroll, or pays an invoice for its inventory.
Every charitable donation spreads wealth from one person to another who is in need.
When a family goes out to dinner, wealth flows out of their pocket and ends up in the pockets of the restaurant owner, who then pays his waiters and waitresses, cooks, dishwashers and of course his landlord gets a share. The guys who print his menus or plow the snow from his parking lot, or the utilities that provides power for his heating, cooling, lighting and for the ovens that cooked the food benefit from his redistribution of the wealth that the family that chose his restaurant paid for their meals.
In each illustration, the wealth being redistributed is being offset by the receipt of a benefit. Labor is exchanged for a share of those monetary resources in the case of the employees. In the case of his distributors, the owner receives fresh food. In exchange for his utility payments, the restauranteur has light to see his customers, and insure that the food they have ordered is cooked properly.
Only charity offers no compensating benefit to the giver, other than a feeling of having done something good, moral and principled.
Now would be a good time to ask a question: When you pay your taxes, do you feel good, moral or principled? Or do you feel something more akin to having been mugged?
Are you following these concepts, Mr. President? There will be a test, so perhaps you should take notes. The test is scheduled for November 2012.
On the other hand, perhaps the President should make his concept of "spreading the wealth" a bit clearer. Does "spreading the wealth" only occur if the government is spreading it around? Does the concept only work if the government decides who will be the recipients of our coerced largesse? Or does he mentally lump governmental outlays into the "charity" category, never expecting any value in exchange for his redistribution of someone else's wealth? Other than votes in the next election, of course.
The best approach to "spreading the wealth" is by removing government from the process, since the government itself is the largest single impediment to efficient and effective allocation of private resources.
The phrase "private resources" is not a typo. Every single dollar that circulates is someone's private property. It is not something that the government generously allows us to keep. It is ours and it is we who allow the government to use some of it to do the business of government as efficiently and economically as possible. At least that's the theory.
Before anyone's head explodes from seeing the words "government", "efficiently" and "economically" in a single sentence, please remember we are discussing a theory.
The reality was summed up rather nicely by Mr. Jeff Daiell (the Libertarian Party candidate for Governor of Texas), who said:
"When the Barbary Pirates demanded a fee for allowing you to do business, it was called 'tribute money.' When the Mafia demands a fee for allowing you to do business, it's called 'the protection racket.' When the state demands a fee for allowing you to earn a living, it's called "taxes."
Jim Yardley is a retired financial controller, Vietnam veteran and libertarian (small "l"). Jim blogs at jimyardley.wordpress.com, or he can be contacted directly at james.v.yardley@gmail.com
