You Make Too Much Money
By Steve Buckstein
In a recent speech promoting his financial industry reform bill, President Barack Obama had what may become known as another “Joe the Plumber moment” (in which he spoke off-the-cuff about “spread(ing) the wealth around.”). This time, he said:
- “We’re not trying to push financial reform because we begrudge success that’s fairly earned. I do think at a certain point you’ve made enough money.…”
Left unsaid was what the president thinks should happen to those who make “more than enough.” Should their taxes go up? Or, should everything they earn over some arbitrary level be taken from them and redistributed to others?
One prominent American who did lay out what he thought should happen to those who made “more than enough” was famed 60-Minutes TV show creator and producer Don Hewitt. In 1995 Hewitt wrote toForbes magazine:
- “If all the Forbes billionaires agreed to limit themselves to their basic billion and handed over the excess to Uncle Sam, Uncle Sam would end up with some $90 billion without one member of the club having to give up a single necessity or, for that matter, a single luxury…not a house, not a car, not a boat, not nothing.
- “The right to earn and keep a billion dollars is, as far as I’m concerned, a tenet of a capitalistic society—more than that, maybe we should rethink.”
Both President Obama and the late Mr. Hewitt were expressing a sentiment likely shared by a number of Americans. But it is not an American sentiment. America was founded as the land of the free. Here, unlike in the Europe of their time (and ours), the Founding Fathers understood that it was not government’s role to limit what individuals could earn honestly.
Would Hewitt have taken everything Bill Gates earned through Microsoft after his “basic billion?” First, put aside the likelihood that Gates wouldn’t have kept producing value for his customers if he had been forced to give every extra dollar to the government. Does anyone believe that the government could do a better job giving those billions away than Gates has done himself, fighting disease and poverty around the world through the Bill and Melinda Gates Foundation?
To understand better why some people think others make too much money, I recommend a talk given by psychiatrist Peter Breggin in 1979. Entitled “Communicating with Liberals,” it laid out lessons Breggin learned from years of having New York liberals on his office couch. Two lessons he learned related to “making too much money” were these:
- Liberals don’t understand economics and they don’t want to understand it. They’ve never taken an economics course or read an economics textbook. And,
- Liberals think that whatever income they themselves make is appropriate and justified, but anyone making more than they do somehow doesn’t deserve it or didn’t earn it honestly. And, anyone earning less than they do is somehow being exploited. They don’t understand how value is created, so they envy those who earn more, and pity those who earn less than themselves.
The politics of envy has always been with us, but lately it seems to be gaining traction. During his campaign for the presidency, Mr. Obama told us he wouldn’t raise taxes on anyone making less than $250,000. Now, with the health care reform legislation alone, most taxpayers will see our taxes rise either directly, or indirectly through higher premiums for required insurance coverage. Cap-and-trade or carbon taxes are another way the president will leave his campaign promise far behind.
In Oregon, January’s Measures 66 and 67 were just the latest manifestation of the politics of envy on a state level. For those who don’t understand economics, it was perhaps tempting to believe that raising marginal tax rates on the “wealthy” and “big business” would not affect the rest of us. But affect us it will, as jobs are lost, businesses close or move, and employees and customers alike bear the ultimate burden that taxing job creators and business imposes.
“I do think at a certain point you’ve made enough money…”will be heard in different forms and embedded in national, state and local legislation until enough of us understand that it is an un-American sentiment, and a sentiment that will harm the very people it is intended to help. Free-market transactions between willing buyers and willing sellers always create value for both sides. If a few entrepreneurs on one side get rich, that’s only because a lot of us on the other side got good value for our dollar. Using political force to stop such transactions will make all of us worse off, except perhaps those politicians who rely on our ignorance of economics to enhance their power.
Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.