P.T. Barnum would be so proud: One of the biggest con jobs ever successfully sold to a maddeningly enormous percentage of the masses in Western democracies, particularly in the United States, is that “tax cuts for the rich create jobs.” It is dispiriting to see this nauseating mantra repeated as fact by low-income individuals who have bought in to the false promise of a country of “haves and soon-to-haves” – that is, the outright lie that everyone can be rich if only they work hard enough (shouted loudest by those who have usually fallen into their fortunes through accidents of birth). (It was also fascinating to watch conservatives sit stone-faced on their hands as the President promoted the diametrically opposite view in last night’s State of the Union.) I’m not an economist and I don’t intend to fog up the essence of my argument here with a lot of facts and figures, because the premise gets lost among the spreadsheets and pie charts. It’s a more basic question, one that goes to the nature of human beings and their capacity for materialism. Yet it proves just as solidly that supply-side economics will never, ever work.
The presidential election in 2012 offered Americans a stark choice of an incumbent president who had come from a poor family and worked his way up to the highest office in the land – the prototypical American dream, if you will – versus a natural born plutocrat with a silver spoon wedged firmly in his nether regions who dismissed almost half of the public as irredeemable and irrelevant moochers; and, thanks to unprecedented advertising spending and voter intimidation in key states, they came very close to picking the latter. A remark from President Obama about successful businesses needing to use public infrastructure paid for by the collective taxes of the people was taken out of context and used by the GOP as their rallying cry. Mitt Romney’s entire presidential campaign, characterized best by the video in which he railed about the “forty-seven percent” to fellow travelers, was trying to assert that the wealthy and successful were singular paragons of virtue, economic growth and American spirit, forever being harassed by a tyrannical, over-reaching government determined to claw away every preciously earned penny and spend it freely on undeserving deadbeats. (Hardly a rousing “we shall overcome” or even “I like Ike.”)
Basically, Republicans tried to claim that Democrats were demonizing success, sort of a “don’t hate us because we’re beautiful” whine from the country club set. What’s ironic is that on any list of the most admired people in the world, it’s rare to find someone whose net worth is anywhere south of at least a few million. Rich and famous celebrities are worshiped. You’re hardly seeing a climate where the likes of Brad Pitt and Katy Perry are dragged from their mansions and paraded naked through the streets by the bedraggled masses.
Even in the aftermath of Romney’s humiliation at the polls and in the new congressional term, Republicans and their sympathizers insist that if we just keep giving rich people more money, well, I don’t really know what the endgame is supposed to be other than giving rich people more money for its own sake. Perhaps the thought is that if they have $400 million instead of $300 million, that extra $100 million will simply fall from overflowing wallets like proverbial pennies from heaven, as opposed to being stashed in an offshore tax haven. Even if we try to apply some logic to this argument and suggest that a more-rich person will be more inclined to use his windfall to start a new business that will hire some other folks, who’s to say that business will be successful and produce a product that will resonate and guarantee that these new jobs endure for decades? It’s lining up all one’s fiduciary chips on a single roulette number and trusting in the decency and intentions of the person you’re enriching. Communism never worked as Karl Marx intended it to because it failed to account for human nature – if you read The Communist Manifesto, Marx’s ideal state sounds utopian, but it can’t function unless everyone is really, really, REALLY nice to one another – a point lost somewhat on every oppressive Communist world leader ever, which is pretty much all of them. One might overdose on the irony of capitalism failing for the same reason.
See, here’s the thing with wealthy people. They may become wealthy because of hard work or, more cynically, because they have a famous surname, but they stay wealthy because they don’t spend their money. They hoard it with the same obsession and zeal as the sad cases you see every week on A&E who have houses overflowing with old magazines, pieces of broken furniture and used diapers. And the reason why they hoard it is because they are paranoid – scared to the depth of their bone marrow – that the unwashed barbarian hordes at the gate are coming to take it all away. Perhaps they’re mindful of the tragic tale of Jack Whittaker, the West Virginia Powerball winner whose prize of $315 million led to him being sued over 400 times by greedy opportunists, the loss of his daughter to drugs and the last of his money to her dealers. (Whittaker is apparently now broke and wishes in hindsight that he had torn up his ticket.) But it’s the quintessential human problem of attachment to material things that renders the “more tax cuts for billionaires!” argument utterly unworkable in the real world. Giving more money to a wealthy man and expecting that act to benefit the economy is like giving a crazy cat lady more cats. Is the cat lady going to take her new surplus felines and hand them out to deserving orphans who’d love a little kitty of their own? You can judge the chances of that based on the smell of her house.
We do so love our possessions, and it is against our human nature to share them. Sure, we donate to charity, we give away old clothes – but we keep the really nice stuff for ourselves. We’re programmed to. Buddhism correctly equates attachment with unhappiness – it even turned Anakin Skywalker into Darth Vader. How else can one explain the legions of sour-faced billionaires like Joe Ricketts, Sheldon Adelson and the Koch Brothers who decided to open up their overflowing coffers not to improve the lives of their fellow Americans but instead into endless ad buys for the party that was promising to make things even easier for the likes of Joe Ricketts, Sheldon Adelson and the Koch Brothers?
It’s estimated that trillions of dollars in cash are missing from the global economy because they are being hoarded by corporate entities and others who are waiting for… well, it can’t possibly be the Rapture or the Mayan apocalypse since those both happened last year and we’re all still kicking. This is the result of over thirty years of tax reductions by conservative and centrist governments clinging to the ideology of supply-side economics and still claiming despite a repeated pattern of failure that tax rates for the top should be reduced even further – since the growth they anticipate from cuts already in place isn’t happening (roughly the equivalent of saying that my house hasn’t caught fire yet so I should keep trying to light the carpet). We also see pushes for right-to-work laws in multiple states and even Canadian provinces to cripple unions, force wages lower and boost corporate take-home higher. This is not a plan for economic growth; it’s a plan to concentrate wealth into the hands of a rarefied few so they can continue their hoarding ways. They forget the lesson of Henry Ford, who knew that his employees needed to be able to afford to buy the cars they were making in order for his company and indeed America to prosper.
“I never got a job from a poor person” is one of the most common retorts – as if one expects Uncle Pennybags and Scrooge McDuck to stroll down Main Street handing out employment contracts while bellowing like Oprah, “You’re getting a job! And you’re getting a job!” Lower and middle income workers are actually the people who generate these jobs. Their spending is economic rocket fuel. They’re the ones who buy, on a consistent and ongoing basis, the products that other workers make, necessitating that those jobs endure. And when you earn less, you save less. Because a higher percentage of their income is devoted to basic necessities, they can’t afford to stash it away, to hoard it in the Caymans and consequently away from the world’s economic engine like the world’s Romneys. And they spend that money in their hometown or close to it, not on weekend jaunts to France on the private jet.
It continues to absolutely boggle my mind that any free-market conservative would be opposed to socialized medicine, given that absent the need to divert a huge chunk of their take home into monthly medical payments, people are more likely to spend that cash on clothing, furniture, new tech gadgets, you know, stuff that stimulates economic growth rather than the economic dead zone of a bloated insurance company’s bank account. The same goes, and perhaps even more dramatically, for Social Security, as seniors aren’t likely to put much of their income into savings given they are in the autumn of their life. They are more likely to spend that monthly cheque on things that require other people to work to make them. What would “stop the motor of the world,” as the misguided Ayn Rand put it, would be a massive majority of the population unable to afford anything – not a bunch of billionaires throwing hissy fits and going away somewhere to sulk.
A rich guy may have vast reserves of cash, but he still has limited individual needs. He is still only one mouth to feed and can only drive one car at a time (and can live in only one house at any given moment, even if he might decide to purchase six or seven more for kicks). Is it not better to have a nation of millions who can all afford to buy food and a car and a home, thus ensuring robust employment for those who produce food, manufacture cars and build houses? They’re the ones who need their tax burden reduced. They are the real job creators – a rich man can start as many businesses as he likes, but if lower and middle income people aren’t buying what he’s selling, the businesses will fail and the jobs will disappear. Ultimately, there will never be enough rich people to support the global economy on their own, because the one percent have no interest in doing so – they’ve proven that they want to keep the treasure for themselves, eternal Buddhist misery be damned. And that’s why giving them more and expecting them to turn into Mother Teresas, and consequently expecting the economy to become a roaring prosperity factory, is a fatally stupid idea.
One thought on “Cat lady economics”
Bang on, Graham! Hope Huffington shares this one – although that’s a little like preaching to the choir.
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