Making A Mess Of ‘Fairness’
In an op-ed last week in the Wall Street Journal, Adam Lerrick, a professor of economics at Carnegie Mellon University, asks whether taxpayers can be pushed too far. He begins his piece by saying:
“What happens when the voter in the exact middle of the earnings spectrum receives more in benefits from Washington than he pays in taxes? Economists Allan Meltzer and Scott Richard posed this question 27 years ago. We may soon enough know the answer.
“Barack Obama is offering voters strong incentives to support higher taxes and bigger government. This could be the magic income-redistribution formula Democrats have long sought.
“Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.” (emphasis added)
He points out, however, the plunder from the ‘very rich’ will not be enough, and the incomes from those “who applaud the ‘fairness’ of their candidate’s tax plans” will be targeted in due course. What next? Lerrick writes:
“Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in Great Britain. In Germany a few years ago, Social Democrat Gerhard Schroeder defied his party's dogma and loosened labor's grip on the economy to end stagnation. And more recently in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.
“The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.”
In conclusion, Lerrick says:
“The economic tides will not stand still while Washington experiments with European-type social democracy . . . (and) Tomorrow’s children may come to question why their parents sold their birthright for a mess of ‘fairness’ . . . and American opportunity is no longer the envy of the world.” (emphasis added)
To repeat the Thomas Sowell quote from our October 10 growls, "One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain." And see the growls from earlier this month about Sen. Obama's so-called "tax cuts," including Otober 21, 19, and 17. Click-on "October" under "Archives" in the right-hand column.