In Andrew’s Michelle Bachman post, Andre started a discussion about what rich get out of taxation versus poor people, and concludes:
I’m simply arguing that it is a difficult proposition to prove, one way or another, who the greatest beneficiary is of that system.
Here’s the thing, though: it really isn’t difficult at all.
Wealth is grown only on the back of talent. Your average rich person in the United States is rich because he or she owns a company that generates value through the effort of hundreds or thousands or hundreds of thousands of people: those people are able to generate value because they were educated by a system primarily public, kept healthy to generate that value through public expenditures on food regulation and water safety (and, anywhere but the United States, healthcare as well), kept alive through public expenditures on policing and fire safety and emergency workers and national defense, able to travel to their place of work to generate value by highways and transportation networks maintained by public funds, and able to have their value quantified by a uniform system of weights and measures and standards applied by public institutions.
The level of income inequality between the poorest and richest is the greatest it ever has been in human history. On the one hand, that kind of sucks; on the other hand, it’s amazing. There’s a reason that feudal lords in the Middle Ages weren’t as comparatively rich as modern tycoons, and it’s not because of technology: it’s because they don’t have to spend money on keeping people alive and healthy and generating value and furthermore able to generate the best possible value, because the government does that for them, and frankly does it better than individuals could anyway.
Without public investment, Bill Gates would never have been able to build Microsoft; he would have had to expend vast sums on apprenticeships, wall off his factories to stop banditry, and convince everybody else to use not only his operating code but the mathematics it was based upon. Microsoft would never have gotten beyond being a niche product in a portion of the country, one of a thousand such businesses: we know this because society already went through a period just like what this fantasy-Microsoft would have undergone.
And that’s why the rich get more out of the public system of taxation than the poor do. The rich get everything the poor do (and, as others have pointed out, depending on how funds are collected and allocated, they can often get more than the poor do), but on top of that they also get more opportunity to get richer, just by nature of the stability of public systems.
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Hang on – are the yanks still having this debate? Are there still people over there who think a public health system is a bad thing? What are they, mentally ill? I thought Stupidity got the boot last November, when a majority of Americans voted for the guy who could speak English and had a clue. Why are they still being morons? Is it something in the water?
This kind of thing needs to be said more often.
As for what’s going on in the states, basically the health insurance companies are exerting pressure through political contributions, which many politicians depend on for their campaigning (especially Senators from small states). Some very wealthy board members or owners of these companies (and other companies) also contribute money and support to right wing “think”-tanks which spew sleight-of-hand rationalizations for whatever the wealthy contributors are trying to justify and gather popular support for, like preventing Congress from regulating health insurance and forcing it to charge competitive rates (which would reduce profits). Another example is cutting taxes for the wealthy. Then a media organization like Fox starts enabling all the above as well; maybe at first through pressure from those in charge, but then the massive ratings from getting all the like-minded people to primarily watch Fox alone for their dose of a certain world view becomes its own self-perpetuating motivation.
In short: the profit motive.
See also James Murdoch, ol’ Rupert’s son, using his platform in Edinburgh last week to denounce the BBC as it is not motivated purely by profit.
That is not the sole determinant of essential services! We’re looking at insurance companies determining entry to hospital. Private mercenaries fighting wars with equipment that outstrips the regular soldiery (Xe, nee Blackwater). And commercial media that spreads lies and misinformation (Fox).
http://news.bbc.co.uk/2/hi/business/8227915.stm
It’s an American thing.
We tend to have a deeply ingrained tendency towards kneejerk reactions against any increase in perceived government authority. We’ve been honing our mistrust of the government since at least the mid sixties.
It is also an article of faith in the US that the best way to make something wasteful and inefficient is to let the government do it. Mostly unjustified, with a few notable and spectacular exceptions (see: the war in Afghanistan, the war in Iraq, FEMA in New Orleans, etc.)
Then, there is the fact that we love to argue. With anyone, and about nearly anything.
Add in the usual lobbying and partisan politics to an issue that is too complicated to be explained in a thirty second sound bite, and you get a truly epic SNAFU.
If we didn’t have all the nukes, someone would have sorted us out for our own good ages ago.
So wait, if I start an argument on the merits of Frisbee versus Frisbee golf, can we expect a post by MGK about it in a few days time?
My snark aside, that was a very good point, and I hadn’t considered it that way. I’m not entirely convinced, but you all have certainly changed my mind.
Hang on – are the yanks still having this debate? Are there still people over there who think a public health system is a bad thing?
Yes, and yes. We also suffer from a national media more interested in ratings than in presenting information. They’d rather keep a manufactured controversy going instead of resolving it.
It’s very tiresome.
I think it’s because American culture is dominated by fear. The environment, the economy, peak resources, terrorism, and on and on and on. Americans are flooded with well-grounded and realistic concerns, blow to panic level extremes, and then calmed down only through the application of incompetent impotence. And -then- you have the crazies come out (re: Glenn Beck and reparations, Obama isn’t an American but a secret muslim, Death Panels) and they really get things going.
We’ve been building up to it since the days of hidden Commies and WW3, and it doesn’t look to be going anywhere anytime soon.
This. Yes. Thank You.
And that’s why no one takes Libertarians seriously
People almost never properly balance ‘the value of social welfare programs for the poor and disenfranchised’ against ‘the protections of well-guarded infrastructure for the well-to-do’. Usually because the loudmouths missing the duality are the ones fortunate enough to be in the second category (or at least to not be in the first), so they just accept it as a RIGHT, not a socially-achieved privilege. It’s nice to see a non-specialist hit it dead on, MGK 😉 .
Beacon: Well, to be fair, there are LOTS of reasons to not take libertarians seriously. This concept, as so ably described by MGK, is just one of the best ones.
Libertarian IDEAS can provide valuable perspective, occasionally, but full-contact ‘Libertarianism’ just seems like someone dressed Anarchism up in its “But no one’s gonna steal your stuff and/or kill you because we’re all friends here, right? Riiiiight? *congenial elbow*” Sunday best.
So, well, you’re saying taxes are better for the rich than for the poor because in earlier times the rich had had to keep their workers alive to actually earn money/get richer?
As far as my knowledge of history goes, and I think it’s not actually bad, in the feudal times that you quote a lot of people were starving, child mortality was near 1/3rd, if not even higher, and the poor had average life-spans of 25-35yrs, depending on the job and area of life.
So, you’re saying that at that point, where the rich had the duty to pay their workers in order to keep them “functional”, compared to now, the rich were less well-off and the poor somehow better?
Hell yeah, the rich have more opportunities today to get richer, but at least what we call “poor” nowadays in western countries is a level of being poor that still allows you to live! And those opportunities do not arise from the taxes and although they are related to general public health and education, the richness-opportunities in general arise from the liberal monetary system we are using.
The US system, obviously, is favouring the rich, compared to other systems, but nonetheless it’s more beneficial for the poor than a feudal dependency – the rich pay for the politician’s campaigns and thus have the power. But nonetheless if a rich person pays 100$ taxes and a poor person 10$ and they still get the same street and police, then, who gained – relatively – more through the taxes?
The rich would have been able to afford it anyway, but the poor would not have.
So, as we know that the US is a system favouring the rich, look at countries that have higher taxes – european, especially scandinavian countries. There taxes are far higher than in the US and include everything from unemployment safety to education to health care. The taxes are higher, which means everybody there pays a higher percentage of tax relative to their income. A fixed tax would be negative as the poor would relatively pay more than the rich, but a relative tax (e.g. “50%”) somewhat enables the poor to get services they would not be able to afford themselves.
So, overall, the result I would arrive at is the complete opposite of yours: Relative taxes (and as far as I know no western country uses fixed tax rates) are beneficial for the poor, not the rich, and as many countries actually have higher tax rates for high-income earners than for “poorer” people the benefit is even greater.
I think our different viewpoints arise from a different focus: You look at “what the rich have to do in order to earn money” while I look at “what all people experience regarding life quality”. I don’t doubt your result that it is easier to get rich(er) today than it was in feudal times, but that the reason is because of taxes seems to me somewhat contradictory.
Thanks for the post though 😉
k
I hate when people make this argument because it’s just wrong. Yes, child mortality was at about thirty percent; yes, the poor had shorter average lifespans. The fact that people can cite both of these points together without noticing that the first element defines the second is nuts: average lifespan was overall lower almost entirely because of child mortality rate. When one out of three people dies before the age of four, shockingly that leads to a collapse in average lifespan.
Once you remove child mortality from the equation, the average lifespan for someone in pre-industrial times was about sixty years. Now, obviously modern medicine has improved on that, and that’s great. (Of course, you need access to said modern medicine to get that benefit, but that’s neither here nor there.)
but nonetheless it’s more beneficial for the poor than a feudal dependency
Which is irrelevant in terms of hard monetary value gained. Rich people get more for their tax dollars than poor people do; they get every last intangible benefit of health and wellness and security that the poor do (since they too can benefit from those public systems), plus they get all the hard-costed monetary benefits of the stability of the system which they can exploit. Every worker the rich do not have to pay to educate is a benefit that the system provides them.
We don’t have to compare modern-day to pre-industrial times either; we can just compare our modern countries to a lot of West African nations. Nations like Mali or Burkina Faso don’t have modern public systems, and guess what – they barely have rich people either. The “rich” of those nations are comparable to the middle-class here, not just in terms of comfort but in terms of influence and power.
[…] Chris Bird points out how the rich benefit disproportionately from taxation. […]
So what I’m hearing is that MGK’s saying that wealth is not static, but is a self-sustaining system with health dependent upon its environment. The greater wealth of others, then ones own potential wealth is greater.
The hypothesis is that the wealth of the rich is greatly increased when the wealth of the poor is slightly increased. The assumptions are that the government is the best and perhaps most efficient force for increasing the wealth of the poor. The presumable supporting argument is the short-sightedness of the individual vs the view of the government having greater breadth and distance(time)
* Man, “breadth” just doesn’t look right. I mean, it’s got “bread” right up in there!