I watched an interesting interview today with a US libertarian who was talking about wealth inequality being a good thing for everyone in the economy. The interviewer was not remotely sympathetic to his position and tried to stick it to him (more politely than I would have) without strictly speaking calling him out on being bigoted against the poor. There is a real difference between wanting to keep a privileged position, which pretty much anyone reading this on a computer is likely guilty of, and going out of your way to punish anyone below you on the ladder as a matter of principle. The logic of the libertarian in question goes like this:
- Taxing the rich is bad because they lose incentive to innovate and work hard and since the ultrarich have obviously traded even greater benefit for the wealth they have received they are helping us all.
- The greater inequality is the more incentive there is for the poor to work hard to become rich, which increases economic performance.
- Estate taxes are wrong because the rich can invest in the human capital of their children and create highly innovative, productive people for the next generation.
None of which makes a damn bit of sense. The interviewee straight up talks about Bill Gates and his 50 billion dollar + fortune and suggests that if Gates hadn't been compensated as much he simply wouldn't have bothered. Somehow I find it a bit of a stretch to suggest that if Gates only had 40 billion dollars he would give up in disgust - why bother working for peanuts, right? (Gates of course donates truly absurd sums to charity so handing him in particular a lot of money is actually not so bad) The economic inequality that is truly staggering is not the entrepreneur who manages to put together a net worth of a few million before retirement by working really hard but rather the people with tens or hundreds of millions of dollars who cannot possibly receive any notable benefit from 90% of their income. The average person wouldn't even be able to tell you what the lifestyle difference is between someone with 5 million dollars and someone with 50 million - probably a lot of the people with fortunes of that size can hardly tell.
The hilarious thing is that the argument goes that the rich work better when the government doesn't tax them but somehow the poor are the opposite. What the rich need is boatloads of cash since that fuels their innovation and productivity but the poor need a swift kick in the ass to fuel theirs. Convenient that all the poor people produce best under the opposite set of conditions as rich folks. Should we not crush the rich with punitive taxes so that they see how much harder they must work to get above the commoners?
This attitude on estate taxes makes my head hurt. The poor need to start from nothing with no help, that makes them more productive. Rich kids on the other hand need to be handed obscene fortunes without having worked at all because that makes them work harder...? It is very well established that those people who inherit massive fortunes do not nearly so well with them as those who build the fortune themselves. Hell, punitive estate taxes don't even have any effect on the buying of education, introduction to social networks or business favours that rich kids get, it only matters when they are handed huge stacks of money in the middle years.
There are points I agree with sometimes when libertarians start pontificating whether it be north or south of the border but this stuff is ridiculous. There isn't even any attempt made to disguise this as anything but bigotry against the poor.