Liberalism is in retreat, and nowhere is this more evident than in the contrast between the Occupiers and the Tea Party. The truth is that the 99 percenters identify themselves more with Tea Partiers than with the Occupiers. There has been a massive shift to the right, and most liberals of the 1960’s have grown up and become more conservative. Those few we find who still cling to their old and tired cliches are few and far between. Occasionally, however, we can still find good writers from the left. They somehow flourish still in outlets like Huffington Post. And then there’s Cracked.com. I haven’t heard of this outlet until now, when a friend sent me a link to Mr. David Wong’s article. The article has been viewed more than a million times, which is about a million more viewers than I can claim who will view this response. Nevertheless, for every Mr. Wong there are thousands of bloggers like me.
With regards to the last two things in his list (first two here), Mr. David Wong has simply dressed up Marx’s old ideas about which is more valuable to society: labor or capital. Marx declared that labor is more valuable, and we have seen the results of that idea. The question and our answer to it presupposes both a moral(ethical) and economic dimension. Answering it from a purely economic viewpoint misses the more important ethical point, and Marx was wrong on both counts.
Marx’s mumbo-jumbo about capital exploiting labor results from his error on how the capitalist-labor relationship creates surplus value. The fact is that ANY transaction can create surplus value. When a transaction occurs, both seller and buyer benefits, and the surplus is created by the fact that before the transaction, the seller valued less the commodity being sold than the amount of money it can exchange for (its price), while the buyer valued less the amount of money than the commodity itself. At the instant an exchange occurs (a sale), surplus value is created by as much as the sum of the differences in those valuations. The commodity is now in the hands of buyer who has real use for it and therefore values it more than its pre-exchange value, while the money is now in the hands of the seller who can now use it for other exchanges that create even more value. Likewise, in the capital-labor relationship, surplus value is created when the capitalist buys a persons time and effort to build a product.
If we can agree that the wealth of a nation does not consist of tax revenues and government buildings and parks and monuments, but rather consists of the wealth of its citizens, then capital in the aggregate means people’s capital. When I deposit money in the bank, I am contributing to the wealth of our nation. That money gets used by somebody else, in a thousand possible activities I can’t even begin to fathom, including starting a business. In this sense, capital is also people as much as labor is.
Taken in the above context, an amateur writer like me can now respond to Mr. Wong’s blog point by point.
I respond in the reverse order than that presented by Mr. Wong:
#1 – Stop Asking for Handouts! I Never Got Help from Anybody!
Liberals do not like to hear this because, by simply living in society, they argue, rich people benefit from the institutions of that society. So they should give up at least part of their wealth in return for that benefit they are getting. Give up to whom? The government, of course.
Never mind the fact that wealthy people are among the most philantrophic people around, and that therefore “Stop Asking for Handouts” is something that I don’t hear much from the wealthy. It is true that the rich do not get help from anybody in the sense that nobody helps them for free. Every help that the rich person gets is paid for. What about the police that protects his properties, or the help he gets from judges who enforces the contracts he signs? He also pays for these by way of taxes.
While it is true that a rich person’s money is worthless outside of the society he lives in, he does contribute to the overall wealth of that society much more than the average person. His businesses earn him money precisely because people like his products and buy from him, and so his wealth is a measure, however imperfect, of his value to society.
If rephrased as follows, I like hearing this from the rich: “Stop Asking for Higher Taxes! I Never Got Help from Anybody for Free!”
#2 – You Shouldn’t be Punishing the Very People Who Make This Country Work!
Liberals think that
a. We don’t owe our jobs to rich people any more than we owe it to poorer members of society; and
b. Higher taxes (pitching in) does not harm the rich as much as it harms us, so the rich should pay higher taxes.
Is labor really more valuable to society than capital? Or are these two really one and the same thing? If labor is more valuable to progress and to society, then we must find ways to redistribute capital. We must tax the rich to give to the less fortunate among us. The fact is that a number of countries have done this to varying degrees, and the verdict is in: it does not work. The more you redistribute, the poorer everybody becomes. The word “punish” is apt in this sense. If you set a level by which people can be rich, beyond which taxes can be very high, it simply means you are discouraging (“punishing”) those who get to that level. The result is, naturally, you get less people striving to reach that level. That’s my response to point 2b. My response to point 2a follows from that for 2b as follows: if you discourage people from getting richer beyond a certain level, people who are already near that level, will tend to not invest their wealth to gain more wealth. Less investments from the rich means less capital for business. Less business means less people employed. Ergo, we do owe our jobs to rich people. If you force the issue and demand that wealthy people invest anyway, unless you really want to become a dictator the wealthy people will oblige, but only sparingly (because of the tax disincentive). If you really insist and turn yourself into a dictator, the wealthy will just move to another country, and your country will be much poorer, plus your sweet pretensions to “freedom” and “social justice” will sound hollow.
No problem here. I say the rich should keep saying this.
#3 – You’re Just Jealous Because I Made It and You Didn’t!
Yes it’s all about envy. All that the liberals can say about this is that it’s not true. Is it envy that drives the Occupiers? I would say that, based on their pronouncements and their placards most Occupiers do have this feeling of envy in them.
Mr. Wong then talks about how the 99 percenters feel: they only feel adoration for the rich, so therefore it is not envy that drives the 99 percenters either. Yes, I agree. The 99% of us have more common sense than the Occupiers.
In fact Mr. Wong’s tone himself reveals seething envy and hatred dressed as antagonism against those who “refuse to acknowledge that their power brings with it any responsibility” and against “bullies and dictators and supervillains”. This is crazy because a majority of the 1% probably agree with him. In fact, not just Warren Buffet, but also a large number of millionaires have come up to U.S. Congress asking to be taxed more. America is a free country: they don’t have to ask Congress to enact another law, they can simply give up their wealth and hand those to the government!
The defenders of the rich are ordinary people like me, and we do so only because it is, in fact, good for any country to welcome the rich and not punish them.
If you are rich, please keep saying this, specially to liberals. It hurts because it’s true.
#4 – If I Can Do It, So Can You!
This one I agree that rich people should do away with. Of course, it is NOT true that whatever rich people do we can all do. It’s obvious: people have different skills, personal qualities, habits, and virtues. Even looks can be different :-). This is just a form of encouragement, usually given by successful sales people to fellow sales people. It doesn’t really mean much as written, and people who say this usually qualify the words of encouragement. So yes, Mr. Wong, I agree with you that rich people should stop saying this.
#5 – Hey I Worked Hard to Get What I Have!
We understand what this means: you’ll never get to where you want to be unless you work hard. However, although working hard is a requirement, it is not sufficient to be successful. In other words, you can work really hard, even harder than Manny Pacquiao himself, to be a champion boxer; but if you are missing an arm, chances are you’ll never be one. However, you can work hard to excel in something else, say a symphony conductor.
I therefore urge the wealthy to keep saying this because it’s true.
#6 – Well, $500,000 a Year Might Sound Like a Lot, but I’m Hardly Rich
Another way of saying this: no matter how high you’ve climbed the wealth ladder there’s always somebody wealthier than you are. Unless you are at the very top, which only very very people aspire for anyway.
If there is such a thing as a theory of relativity of wealth, even that person at the top will only feel the richest if those right below him are too far below to reach him. So he struggles to get higher still. The only way he can do this in a free market system is to invest and take risks, activities that only makes life easier for everybody else.
At what level does it make sense for society to impose a limit? A trillion? A billion maybe? How about a million? Well, we know what happens when we impose a limit: the market gets distorted like a car race that imposes a speed limit, and capital becomes poorly allocated. Everybody is worse off.
In America, the Alternative Minimum Tax law was enacted in the early 1970’s that originally targeted the very rich. It has since evolved and now affects practically all the middle class. When liberals cry “Tax the Rich!” they actually mean you and I, in more senses than one.