Saturday, 6 August 2011

The Transfer of Wealth

"The Democrats want to transfer wealth from the rich to the poor, the Republicans want to transfer wealth from the unborn to the rich. They are the same disgusting species." - Anonymous friend of mine

This quote jumped out at me the moment I saw it in a Facebook update regarding the recent credit rating downgrade that S&P dumped on the United States recently. My friend's initial comment on the downgrade was that the stock slide and credit downgrade are a response by "the Market" (his capitalization) to the US' deficit reduction plan, which he dismisses as "smoke and mirrors."

The credit downgrade and stock mini-crash are worthy of their own posts - my interest was piqued by my friends statement at the top of this one, which was made in response to some statement about the free market, which this friend does not believe is being treated in a properly laissez-faire manner.

I'm of the opinion that the Democrats do not, in fact, want to transfer wealth from the rich to the poor. If they did, I doubt that deep entitlement cuts would have been as central to the budget deal as they were, and the bill might even have included revenue reform that would focus more of the burden on the richest Americans. Instead, Congress is considering what Matt Taibbi has succinctly labeled an "evil corporate tax holiday," which will "repatriate" corporate profits by dropping the tax rate for corporate earnings from 35% to 5% (I'm not making that up).

For my purposes, let's pretend that these characterizations are accurate, however. Let's pretend that the Democrats are scarred and seasoned class warriors instead of horrible, tepid sellouts. Are they the "same species" as a party that seeks to transfer wealth from the unborn to the wealthy? To believe this, you have to believe that all transfers of wealth are created equal, which is to say that all transfers of wealth are in and of themselves immoral.



I can dig this logic, having read my Nozick and Rothbard et. al. and having done my ideological time as a libertarian. The so-called 'non-coercion principle' that is central to libertarian theory holds that as long as nobody holds anybody else at gunpoint, metaphorically or otherwise, human interactions (especially market interactions) should essentially be left alone. Monkeying with the market by essentially robbing the wealthy at gunpoint to distribute their property to the poor constitutes coercion, which is morally wrong.

Boil this down far enough and you get the slogan "taxes are theft," which is really catchy from a marketing perspective, especially since those who tend to benefit the most from conservative and libertarian tax reforms constitute the owner class and the wealthiest (and smallest) segment of the American electorate. Convince enough people that all taxes are created equally (equally abhorrently) and you get the spectacle of the lower-to-lower-middle-class agitating ferociously on behalf of their bosses' and masters' fortunes (see this old chestnut for more on that).

So group (R) believes that we should basically do the opposite of paying it forward, essentially "robbing the unborn to pay the rich" by refusing to raise revenues, and group (D) believes that we should rob the rich to pay the poor. These are the "same species?"

To make this argument, you either have to believe that A.) there are no classes and/or there is no class conflict; people are equal no matter what their income is, or B.) it is as immoral to help the poor, who need help, as to help the rich, who do not need help, as long as said 'help' does not involve consent. I think that the silliness of A is self-evident, but the entire narrative of the American dream and the great ladder of success has been constructed to further this ridiculous fantasy. In reality, greater and greater power and wealth have been concentrated in fewer and fewer hands for the last several decades, while both real income and opportunity for the middle and lower classes have rapidly stagnated or evaporated.

Argument B requires a little more finesse. It is difficult to take a person whose economic well-being you are largely responsible for ruining and convince them that the real problem is people like them. The solution is ancient - think of it as either "divide and conquer" or "let's you and him fight."

It's no coincidence that the Tea Party's outrage at entitlements as a general principle have in practicality been confined to griping about benefits for "urban" (read: poor black) recipients from the comfort of a Rascal scooter paid for by Medicare. Andrew Breitbart protege James O'Keefe's misadventures with ACORN came dangerously close to acknowledging the racial aspect of the Tea Party right's anger at the organization (a recent demographic breakdown of the TP provides further circumstantial evidence regarding the 'race factor'). The end result is that people wind up divided and quarreling along racial lines within the same class or classes, making it more difficult for the poor, working poor and vanishing middle classes to unite against the political juggernaut of money and influence that the ruling class now represents.

I'm not arguing that anybody advocating argument B is doing so dishonestly out of racial motivations. I am, however, suggesting that the widespread support that argument B currently enjoys in the middle and lower classes is only possible because of racial distractions, beginning with the so-called "Southern Strategy," through Reagan's "welfare queens in Cadillacs" up to the current Tea Party/Glenn Beck rhetoric about Obama's supposed black extremism and/or connection to racially demonized organizations like ACORN.



So: are all transfers of wealth the same? That depends.

I think that both group (D) and group (R) would agree that equality of opportunity is an important American ideal. The trick is defining that equality of opportunity. Wealth is power; a transfer of wealth from 'the unborn' (essentially already powerless) to the powerful would seem to me to be an immoral transfer, while a transfer from the wealthy (and powerful) to the less wealthy (and less powerful) is a worthy and essentially Democratic act.

In that mysterious and Utopian "free market" always promised and promoted by neoclassical economists and right-wing politicians alike, however, I suppose that the wealthy and the destitute are equally free to voluntarily starve to death. Whether that's a type of equality that's worth pursuing is another question.

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