A French economist, Thomas Picketty, has written a book on economic inequality that has liberals raving as it climbs the best seller list. The leftists are calling Capital in the Twenty-First Century “extraordinarily important,” and “one of the watershed books in economic thinking.” The resident radical at the New York Times, Paul Krugman, calls it “truly superb” and “awesome.”
Mr. Picketty is death on high incomes, wealth and what he calls family dynasties. His solution which I believe will be our inevitable future is to raise taxes. He argues for an 80% tax rate on incomes over $500,000 and 60% on incomes of $200,000. He advocates an annual wealth tax of 10% on the assets of the rich and a one time 20% tax on everybody’s money. It’s not so much that he wants to give it to the poor but to take it away from the affluent. To think that such a horrid prescription could resonate with liberals and cause them such joy tells you what we’re up against in America.
In due time the left will have the votes to pull it off. The incredible numbers of people getting subsidies are a powerful voting bloc for the liberals. The poisoning of the minds of minorities and immigrants against what they believe to be social injustice adds more voters to the leftist cause. The Republicans don’t help by voting against a minimum wage increase. I understand all the arguments against raising this wage. In normal times I believe that labor should be governed by market pricing but everything gets warped by our insidious, hidden inflation. Imagine trying to get by on $6.50 an hour. That would make anybody become a Socialist.
Government sponsored inflation is the primary cause of income inequality. It makes the wealthy people who own assets that much richer. The new money pours into stocks, farmland, art and antiques. At the same time, inflation shrinks the buying power of wages. The middle class can’t keep up because their wage increases are less than the inflation rate. That’s the consequence of misleading government statistics and lies about the extent of inflation. If you want to know the real rate of inflation, look backward to prices 10, 20 and 30 years ago. It’s much worse than they tell us.
Make no mistake about it; they are coming for your money. They are more aggressive than ever in going after tax shelters, foreign bank accounts and any kind of underreporting. They employ painstaking audits. They are eliminating deductions and jacking up tax rates on everything. Then they get even more through the hidden tax of inflation.
Mr. Picketty says he believes in free markets and entrepreneurship. However, his formula for eliminating income disparity would lead to poverty for all. Entrepreneurs would flee the country. Business would wither away and the economy crumble. The lights would go out in America. The current 50% tax rate already has the economy on the ropes. Sad to say as long as the left retains its influential positions in the media, the educational system and the government its 50-50 whether we’ll survive in any semblance of a free and prosperous nation.
The economist Murray Rothbard eloquently summed up the argument against socialists like Pickety. “The modern welfare state, highly touted as soaking the rich to subsidize the poor, does no such thing. In fact, soaking the rich would have disastrous effects, not just for the rich but for the poor and middle classes themselves. For it is the rich who provide a proportionately greater amount of saving, investment capital, entrepreneurial foresight, and financing of technological innovation that has brought the United States to by far the highest standard of living – for the mass of the people – of any country in history.”