There is little more dangerous than an earnest do-gooder with brains and ability…and a head full of bad theory…
The belief in a flat earth, for example…or in a universe that revolves around that flat earth…or a belief that a flexible currency, government spending and progressive taxes all together produce prosperity…
We turn our attention now to a very successful investor–the most successful one in fact–who has a disdain for gold and a jones for aggressively progressive taxation.
Warren Buffett is calling for more progressive taxes. “Raise taxes on the ‘super rich’”, he enthusiastically tells anyone who will listen, especially if they’re in Congress.
“Stop coddling them,” says he. “Start giving it to ‘em good an’ hard” he leaves unsaid but implies it strongly.
That’s the point of mixing democracy with capitalism after all: create the most possible wealth so government has more to grab and redistribute.
In today’s NYTimes Mr Buffett offers this observation in an op-ed piece:
“And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.”
Well there you have it from the Sage of Omaha himself. A correlation that we ought to take at face value: the more money government grabs, the better of we all ultimately are. Somehow.
But correlation does not imply causation (though Mr. Buffett implies the exact opposite without backing up his claim). Here the correlation is especially casual, not causal.
Astute readers will note that we fail to be a billionaire investor like Mr. Buffet. We hope that this personal failing among our myriad others won’t diminish what we feel is a very valid point, to wit…
You simply can’t blame a movement in the direction of freer markets (lower tax rates) for the failure baked into the cake (higher unemployment) by the actions of a very un-free market monopoly on unbacked currency issue by a central bank.
Let us be more explicit. We can’t help but notice that an awful lot of “job growth” in the period Mr. Buffett mentions came from the mushrooming financial sector that benefited greatly from Federal Reserve policies that encouraged debt and speculation…
…And service sector jobs on the whole grew fueled by consumer spending which itself was largely backed by increasing levels of consumer debt.
…Then there was the growth in another industry “stimulated” by artificially low interest rates and the resulting debt: housing.
Now that employment is down after being pumped up by the unsustainable results of central bank interference, we can blame…lower tax rates…?
Mr. Buffett does admit that Congress’s first job “is to pare down some future promises that even a rich America can’t fulfill.” And here we heartily agree. And we can certainly understand the sheer math of it–spend less, rake in more from a tiny, tiny percentage of the populace whom it would hurt least–even if we can’t agree in principle.
But we can’t get comfortable with the idea of just stealing–“taxing” in the vernacular–more in order to make good on promises whose costs could never be sustained.
We would humbly suggest that Congress simply stop writing checks it can’t cash. They should also admit that they just can’t afford everything they said they could. All the promises Congress made to voters to take care of them in sickness, poverty and old age just cannot be kept. Especially when they’re also trying to fund expensive military actions in all places at all times. The problems lie not in the income but in the redistribution.
But we can’t just lay the blame at the feet of Congress, even if they do betray the public with each niggling legislation, onerous new regulation and outsized spending.
The fault lies not with Congress but with ourselves. For every American who opposes the ridiculous military spending, four more threaten revolt if their government retirement or drug checks get pinched.
“Don’t touch the military budget…we gotta fight the ‘bad guys’ (created by previous foreign meddling)…”
“Don’t touch my Social Security…or my Medicaid…or Medicare…”
And then you get deified men like Mr. Buffett assuring us that it’s okay–even morally obligatory–to take even more from some of us to keep the whole thing going a little bit longer.
We counter that that theft would be a whole heap of sin to fund a tiny drop of temporary relief. It’s all coming apart no matter what.
Gary Gibson is the managing editor for Whiskey and Gunpowder. He joins the Whiskey staff as a long-time fan and reader of both Whiskey and Gunpowder and the Daily Reckoning. A graduate of Fordham University, Gary now spends his days reading about and writing on limited government, sound money, personal responsibility and resource investing.
Warren Buffett is more than welcome to cut the US government a check for 25 Billion Dollars and he would still be a billionaire and he could have the “pride” of giving what he deserves to give…..Put your money where you mouth is Warren….of if you won’t…..Shut up.
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