Don Boudreaux On Why We All Lose If Bezos Loses
I love economist Donald Boudreaux, who's always a joy to read. Below is a letter he wrote to a college student who apparently emailed him. The student is writing a paper on what he calls "the social justice of wealth redistribution":
Mr. Eden:Thanks for your e-mail.
You ask: "Why shouldn't government tax away half of Jeff Bezos' wealth and give it to America's poor people." In your assessment, "this would be fair without hurting Bezos."
My disagreements with your assessment are many, but I have time now to list only three.
First and primarily, it's immoral to take stuff belonging to other people. Because Bezos acquired his wealth lawfully, to take it is wrong. Note also that he acquired his wealth in a manner that bestows enormous benefits on hundreds of millions of his fellow human beings, and that he has already paid billions of dollars of taxes on his earnings.
Second, Bezos's wealth is now reported at $203 billion. With 34 million Americans currently below the poverty line, confiscating half of Bezos's fortune and distributing it equally to these poor Americans would give each a one-time windfall of $2,985. A nice sum. But it's not enough to transform their lives. More fundamentally, people's lives aren't transformed for the better by being given windfalls. Transformation comes from within, personally, and from better policies that allow the creation of more and better opportunities.
Third, Bezos's net worth is what it is because the vast bulk of it is invested in Amazon and other productive enterprises. If he suddenly must turn over half of his wealth to the government, he would not draw it from his consumption (which is what you mean when you say that this policy would not hurt Bezos). He would draw it out of his investments. And resources currently used in valuable productive uses would become much less valuable when turned into goods and services for current consumption. And so to give each poor American $2,985 paid for by Jeff Bezos would require that far more than half of his fortune be seized.
You might nevertheless be good with this outcome, for it would still leave Bezos very wealthy. It would still not put a dent in his lifestyle. But the American economy would suffer greatly. Not only would the economy lose, in one fell swoop, well over a hundred billion dollars of assets - which means the loss of whatever outputs those assets produce - but lose also untold trillions of dollars of assets over time that would have been, but will not be, created. Like it or not, people do not invest heavily when government seizes large chunks of the fruits of their successes.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
Lefty economic impulses seem mostly to be wordy forms of envy.
Crid at November 26, 2020 12:38 AM
"Wordy forms of envy" wrapped in terms of righteous indignation, like "fairness" and "social justice."
Wealth Redistribution is never about "fairness." It's about envy. Is it really "fair" to take half the fruits of a specific person's labor just because that labor has been especially fruitful?
Lefties understand wealth as a pie, a pie from which they got a smaller slice than the other guy. The don't grasp that the other guy helped bake the pie and was rewarded for doing so. They don't grasp, or care, that there are more pies that can be made, with a little effort.
Boudreaux's breakdown that seizing half of Bezos' wealth will deprive the economy of investment capital is spot on. Wealthy people do not keep their money in piles, a la Scrooge McDuck, but invest it in things that they believe will increase in value - businesses, financial instruments, art, precious metals, real estate, classic cars, etc. These investments help create jobs and opportunities for the not-so-wealthy.
A massive sell-off of these things so targeted wealthy people can meet their tax burden will depress their value, losing money for the not-so-wealthy who've also invested in them.
Conan the Grammarian at November 26, 2020 8:30 AM
My friends (on Twitter) that I admire most all have side hustles going on. Meaning they do their regular jobs, but also invest time, energy and money into something that will pay off. Since I'm involved in Fitness Twitter, usually this involves selling diet books, exercise programs and the like. They did their homework and they offer valuable information, and they are paid for it.
By contrast, liberals simply have their eye on the most affluent members of society and scheme to dispossess them of their money by legal means.
Patrick at November 26, 2020 4:04 PM
A lot of the people who favor radical redistribution **are themselves** quite affluent. It shouldn't be assumed that this necessarily has anything to do with altruism...rather, in many cases they intend to become *more* affuluent through their political advocacy and roles.
Joe Biden, for example, owes every dollar he has (except for that part contributed by his wife) to his political activity, including playing the role of 'lunch bucket Joe.'
There are a very considerable number of people who profit greatly by advocating and/or administering the 'progressive' agenda.
See my post Paying Higher Taxes Can be Very Profitable:
https://chicagoboyz.net/archives/59624.html
David Foster at November 26, 2020 6:41 PM
I have no desire to take Mr Bezos's personal wealth. Or to even tax it differently than anyone else's. But at the same time I don't think Amazon should pay lower taxes than other companies. A change that would likely wipe out much of Mr Bezos's fortune.
Of course that wouldn't let people gift out his wealth like some sort of socialist Santa Claus. Oh well.
Ben at November 27, 2020 9:54 AM
What the poor need is opportunity. Many of their opportunities exist because someone was successful and got rich thereby. For example, Amazon has created a demand for delivery drivers and also sells items from thousands of small businesses on their site. Walmart promotes from within. If you want to start a small business you can get a cheap computer and software thanks to Apple and Microsoft etc. Resentment of business is high in Europe and as a consequence the laws do not favor entrepreneurs and startups and they have persistent high unemployment. These progs need to go back and read the story about the goose that laid golden eggs. Wealth is a process, not a pile of money. You can only get wealthy by creating a business that makes other people better off (excepting gov bribes and such).
cc at November 27, 2020 3:04 PM
Confiscating such assets was advocated by Hillary, too, in public speech.
You know - she was the "adult" candidate.
Radwaste at November 27, 2020 4:47 PM
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