Two views of capitalism 4

At Townhall, John C. Goodman presents and discusses two views of capitalism as expounded by Professor Johnathan Haidt.

The two views are summed up by these videos, made by Professor Haidt.

Capitalism as Exploitation

Capitalism as Liberation

John Goodman comments:

Now I would argue that one of these views of capitalism is factually incorrect. It’s not just a matter of “political and moral values” [as Haidt asserts]. In fact, in a video presentation of his theory, Haidt shows a chart mapping per capita income throughout all of human history. The chart shows (and this should be well known to all economists) that up until the last few hundred years the average human lived on about a dollar a day – in modern terms. At times and places, they might have enjoyed two dollars a day. If they were really, really lucky they might have hit three dollars a day. But that was it.

In other words, for 100,000 years our ancestors lived at the subsistence level. And then [with the advent of the Industrial Revolution – ed] we got capitalism. By that I mean not just free exchange, but also the institutions of capitalism, including enforceable property rights …

In all its guises the exploitation theory has one central message: the reason why some people are poor is because other people are rich. Here is Paul Krugman explaining why middle income families don’t have higher incomes. …

Soaring incomes at the top were achieved, in large part, by squeezing those below: by cutting wages, slashing benefits, crushing unions, and diverting a rising share of national resources to financial wheeling and dealing. Perhaps more important still, the wealthy exert a vastly disproportionate effect on policy. And elite priorities — obsessive concern with budget deficits, with the supposed need to slash social programs — have done a lot to deepen the valley of despond.

Really? J K Rowling (author of the Harry Potter series) is the richest woman in the world. Did she get rich by “cutting wages, slashing benefits, crushing unions,” etc.? I thought she got rich by writing books. How about Oprah? Has she “slashed” any benefits lately? What about Bill Gates and Warren Buffett? When is the last time they were out there encouraging scabs to cross a picket line?

Krugman’s point about political influence is almost as silly as his view of the economy. Earth to Krugman: the real base of the Democratic Party (the party of the left) has become the ultra-wealthy. And their political goals are harmful to the middle class, but not in the way that Krugman imagines. …

The problem for Democrats is that the party is increasingly ruled by the “new oligarchs”  … [who]  are basically anti-job creation and anti-economic growth – which they see … as a threat to their life style. This puts them squarely at odds with the working class voters who used to be the backbone of the Democratic Party. …

The Democratic Party is [now] the party of the poor and the rich. It’s the middle class that is bolting and voting Republican. And what do the rich want from Democrats? Contra Krugman, they’re not demanding smaller deficits or smaller social programs or even lower taxes. What they want – in addition to looney environmentalism – is for government to protect their life style.

Once the plutocrats settle in a community they become fiercely anti-development and shape their communities in ways that price the middle class out of the housing market. As a result, wherever wealthy liberals tend to congregate, housing is more expensive …

Limousine liberals are a threat to the average worker. But not because they are wage-suppressing, union-busting, exploiters. It’s because their anti-capitalist goals are at odds with the aspirations of ordinary Americans.

It seems to be the case that most – probably all – of the successful entrepreneurs who live in Silicon Valley vote Democratic. Having achieved their own riches in the freedom of opportunity for the individual that the capitalist system gave them, they vote for socialism and the removal of individual freedom that it ensures, so others cannot do what they did.

Hypocrisy 1

We delight in the fact that capitalism provides opportunity for anyone to become rich. We applaud those clever/industrious/lucky  people who have achieved great wealth in our  (comparatively) free society. We feel energized and encouraged by the happy spectacle of “conspicuous consumption” that some visible billionaires display with their mansions, their yachts, their jets, their football teams … For we see them as the living proof to us all that it is perfectly possible to become “filthy rich”. If they can do it, maybe we can to. They’re a spur to noble effort.

We are therefore bewildered by the cognitive dissonance of those self-made billionaires who vote Democratic. For instance, those who have made their fortunes in Silicon Valley by their marvelous inventions precisely because they were able to take advantage of circumstances – freedom, leisure, investment – which capitalism alone can provide. Do they not realize that to vote for Obama and the Democratic Party is to vote for socialism? Do they not know that socialism is a killer of private enterprise? That collectivism puts an end to innovation? We cannot suppose them to be so mean-spirited that, having made their own fortunes, they want to prevent others following in their footsteps. We’d rather conclude that very clever people can be very stupid about things outside their expertise.

The Democrats of course notoriously pour scorn on “the 1%” and long to make them poorer and ashamed of themselves. So a question arises: How come the extremely wealthy political elite of the Left are not ashamed of their hypocrisy?

This is from PJ Media, by Victor Davis Hanson:

I confess I never admired John Edwards …  I didn’t think much of Al Gore or John Kerry …  I was not surprised when Susan Rice just disclosed that she is worth considerably over $30 million — and has money in Keystone no less. Are they all part of the “one percent”? Did they pay “their fair share”? Do they “spread the wealth”? At what point in his life did Al Gore know that he had made enough money (before barreling ahead and making more)?

Why do a Timmy Geithner and John Kerry preach about raising taxes while trying their best … to avoid them? I remember the Clintons seeking write-offs for the donation of their underwear, Tom Daschle not counting limo service as income, and Hilda Solis with a lien on her husband’s property. Why wouldn’t the above pay too much rather than too little? If Barack Obama did not get free government everything … would he still preach that guys like him need their taxes raised?

Of course, I accept without much worry that government service can lead to the contacts that lead to big money. Dick Cheney and Don Rumsfeld made millions in the private sector in between D.C. jobs. I grant too that old-boy networking is lucrative. George W. Bush’s Texas Rangers small fortune came from having powerful friends in the right places. No doubt Colin Powell and Bill Clinton are multimillionaires. Bravo to them both.

And Cheney, Rumsfeld and Bush are not of the Party that pretends to despise the rich. Democrats who are keen on redistributing wealth should start by redistributing their own.

What we cannot stomach is all the sermonizing about “fair share” and “play by the rules” and “the one percent” from those who seek to be exempt from their own rhetoric. Can’t Warren Buffett keep quiet and just leave his $50 billion to his heirs — and let the wonderful federal government do what it must with a $30 billion estate tax on his earnings? … His estate will dodge more tax liabilities than what millions of his proverbial overtaxed secretaries pay. Why isn’t George Soros one of the despised money speculators of the sort that Occupy Wall Street was enraged about? … So weird what constitutes good and bad riches!

I guess the rub is not big or small money, or what you must do to get it and keep it. No, the lesson instead is what you say when you get it. If I were to advise a young rich man, I would promote entering politics or the media and talking up the liberal redistributionist state, the model being a sort of Chris Matthews, Katie Couric, Nancy Pelosi, Jon Corzine, or Jay Rockefeller.

If you know what to say against the rich –

You may meet and marry a rich person …  all sorts of doors will open that allow you to keep and compound what you garner — and you will feel wonderful in the bargain.

And Larry Elder writes at Townhall:

Ah, the hypocrisy of tax-hikers who do everything they can to avoid the taxes they wish to impose on others.

Sen. John Kerry  tried to avoid $500K in his home state’s sales and excise taxes by docking his newly purchased $7 million 76-foot yacht in Rhode Island.

Massachusetts lowered its state income tax in 2001. Given the presumably large number of rich people who pine to pay more taxes, the state allowed tax filers to check a box and voluntarily pay the old, higher rate. In a liberal state of over 3 million tax filers, how many volunteered to pay the higher rate in 2004? A tiny fraction of 1 percent — 930 taxpayers.

We’re astounded that there were any. To the well-known statement, “tax payers are entitled to arrange their affairs to attract the least taxation”, the retort must be, “what sort of fool would  arrange his affairs to attract the most taxation?”

Among those who refused to pay the higher rate? Sen. Kerry and Rep. Barney Frank. …

John Edwards, former senator and Democratic presidential candidate: His wife, Elizabeth, once called him a person of “character” because Edwards voted against his own economic “interests” by voting for higher taxes. Well, OK, but like billionaire investor Warren Buffett, who urges higher taxes, Edwards is less than keen on paying them. As a lawyer winning major jury awards, John set up a subchapter S corporation to pay himself through dividends — and thus avoid $600K in Medicare payroll taxes.

Well, the guy may be nasty – is infamously so! – but he’s not an idiot.

Ted Kennedy and his family shield[ed] their money through a series of complicated family trusts first begun by father Joe Kennedy. The trusts transfer wealth from generation to generation while avoiding estate taxes.

The late Ohio Democratic Sen. Howard Metzenbaum … enjoyed a lifetime rating from Americans for Democratic Action of 95 (100 being perfect) and a zero from the American Conservative Union. He never met a tax hike he did not like. [But] he moved to Florida when he retired from the Senate. Why Florida? No state estate or personal income taxes.

“Civil rights” leader and MSNB-Hee Haw host Al Sharpton: Though he supports increasing taxes on the rich, Sharpton, it seems, fails to do his part as a member of the 1 percent. As of last year, according to the New York Post, Sharpton owed $3.5 million in state and federal income taxes. His nonprofit, the National Action Network, as of 2011 owes nearly $900K in unpaid federal payroll taxes.

What do these individual instances of hypocrisy say about whether taxes should be increased on the so-called rich? …

The Congressional Budget Office just issued a report on what would happen to the economy if Congress fails to retain the Bush-era tax rates. Keeping the Bush-era rates for all but the rich, the CBO says, adds 1.25 percentage points to GDP. Retaining tax rates for all, including the rich, however, adds 1.5 percent to the economy. In other words, raising taxes on the rich lowers economic output.

Obama cannot really believe that making the rich pay more will help the economy out of recession. Even he knows it won’t. His reason is ideological. He is a communist by breeding and instinct, which is to say an egalitarian, a leveler. He must inform his voting fans, both rich and poor, that he is against the rich in principle. He knows that just so long as he talks that way, it’s okay for him to be rich himself. Okay to be a hypocrite.