Nov 16, 2012
The irony is that the more progressive our taxes become the more the government is dependent on the wealthy to fund their programs, and the more sensitive our tax revenues and the economy become to anti-growth fiscal policy. If the tax base was broader the revenue stream would be more stable and less dependent on the wealthy.
When the government creates bureaucracies to solve problems, the greatest threat to the bureaucracy is to succeed. The problem will be redefined so it will never go away. After spending trillions on fighting poverty, we must redefine poverty so that more people will be deemed poor.
But discussion of how best to raise taxes obscures the harsh reality that spending must be cut, entitlements must be restrained, and that growth will generate far more tax revenue that any tax increase that can be considered. Low growth tax policies of this administration are the real problem and their proposals on the table will likely make it worse. We can not either spend or redistribute wealth that is never earned.
Fools are often very clever. Some have enormously high IQs and office walls packed with so many degrees that there is no room for a window. And they are still fools because they have no ability to draw the right conclusions. Knowledge is cheap. Your computer has access to more of it than all the wise men of history put together could ever dream of. Intelligence is a genetic gift. Wisdom is what you acquire with both or without either. It is the right conclusions that we draw about life from living it.
Wealth producers have always been a minority but as our society has become more progressive we have lost more than the understanding of the natural laws of wealth and creation, whether we are talking about farm products, search engines, or next day air delivery. We have lost a sense of accountability at a deeply personal level. We believe we can harvest crops without planting seeds and we can consume an ever increasing array of products and services, from transportation to health care, without even considering how the increase in wealth we need to pay for it will be generated.
Capitalism is the competition of ideas. Excessive regulation restricts the ideas in the market place. Excess government debt deprives the financial markets of the capital needed to pursue those ideas. And failure is just a part of the process of weeding out bad ideas, making room for the best ideas to thrive. When government prevents failure they slow down the process of improvement. When government nationalizes or controls large parts of the economy as they now do with health care, important innovation is curtailed. In a free market bad ideas are rejected, sometimes after some considerable pain. But when government institutionalizes these problems they just get more funding and remain.