It is no secret that Bernie Sanders isn’t too keen on people having massive amounts of wealth, and he wants to appoint himself as the one who decides how much is too much.
Democratic politicians are already well known for their love of economic redistribution, what we could call the Robin Hood approach to government. Robin was a man of the people so to speak, at a time where there was much hatred among the common people for their feudal lords, and therefore may have applauded Mr. Hood’s robberies even if he wasn’t renowned for sharing the loot with them.
There are actually two elements at work here, two issues that people want to see addressed, which is how much money people have in itself along with our desire to want to take a lot of their money from them.
These goals do work together though, because the problem is that the very wealthy have too much and we have comparatively too little. We can solve both problems at the same time by doing what Robin did, taking from them at gunpoint. Taxation doesn’t point the gun directly at people, but it does involve the threat of bodily harm should we refuse, so the end result works out the same.
Robin Hood, Jesse James, drug lord “El Chapo” Guzman, and others that have shared their loot with the common people to some degree all did their deeds outside the law, but today’s Robin Hoods are of a more advanced sort, they want to change the laws to do this work for them.
Bernie Sanders is definitely among this new breed of bandits and is hoping to use the force and power of law to commit robbery and do so to benefit the people directly. Just like the outlaws before him may not have thought through their actions properly and foreseen their pending doom if they continued to persist, Sanders obviously isn’t thinking much either, but that didn’t stop the outlaws and it won’t stop him either.
Facebook CEO Mark Zuckerberg, the fifth richest person in the world and a billionaire 73 times over, has recently weighed in on this, agreeing that it is not fair that people have this much and that no one deserves this much money. He did add that whether we like it or not, this is the reality, and although we need to go into the matter more deeply than just calling it reality, this at least serves to turn our heads in the right direction, towards reality rather than away from it.
This issue is actually a battle between reality and idealism, and while idealists such as Sanders may be happy enough to skip the reality part, it nonetheless rears its ugly head at every turn. Sanders’ proposed 77% wealth tax on estates worth over a billion dollars is a perfect example of what can happen when we allow our emotions to get the best of us, at the expense of ignoring the practical consequences of our actions, their reality in other words.
Examining the merits of such a proposal actually needs to start by more closely looking at the grievances Sanders and many others have with great wealth, which Zuckerberg also pointed us toward. There are some loaded terms that are used here such as “fair” and “deserve” that need to be fleshed out, otherwise our thinking may become seized up by such things, as they clearly have with Sanders and his kind.
We Need to be Acting Upon Principle, Not Just Emotion
This all strikes at the heart of our concept of property, and since we need to be acting in a principled manner, we cannot rightly just pick and choose who we are going to give property rights to or how much is too much. If we do act, we’re going to need to justify this at a higher level than people getting too angry or jealous at how much property certain people have managed to accumulate in a legitimate manner,
The key word here is legitimacy, and Zuckerberg serves as good of an example of this as there is, where he has made $73 billion dollars from an idea that allowed people to communicate with each other on the internet.
Literally billions of people use his service every day, and their lives have been enriched by this presumably, which becomes quite evident when they struggle so much to go without it or when it goes down for a brief period and the entire world gets very upset.
We know that the people get enough value for this, especially since this is all a free service, and the mere fact that they use it so much and so often and feel lost without it speaks loudly to this. The advertisers, the ones that actually pay Facebook, get enough value out of it as well, which is why they keep spending this money.
The company wins as well of course, as does Zuckerberg, from the profits that they receive. This really isn’t any different from any other successful business, being a win/win situation down the line, other than the fact that the scale of Facebook’s business is so enormous.
The amount of money that gets made along the way is exactly the amount that the market deemed to be fair, and in some cases, the fair amount may end up being a pretty enormous one. People who make this much money do so from some combination of skill and luck, but Facebook was a brilliant idea that ended up being an enormous success and we should seriously wonder why anyone would not think that this was all fair.
Any examination of fairness here needs to concern itself with the manner in which the money was made, not simply our pre-cognitive feelings about it. It’s not hard to see why many felt that the Rockefeller fortune wasn’t made that fairly, because their business dealings were often quite unfair, where J.D. used his clout to unduly benefit by restricting competition and gaining a bigger share than he would have been entitled to otherwise. That’s unfairness.
If one’s money came by way of free and consensual exchanges between parties in the market, then if we are going to want to claim this as being unfair, we’re going to have to do much better than just saying that we don’t like the outcome and presume that this is a sufficient or even meaningful to take some of this money away, as we will require sufficient reasons if we’re at least out to justify our actions.
This is not a matter of opposing ideals, those who are for or against a free market economy, where we can just say that we believe that this can be interfered with as we please and think that this justifies the action, where we just place ourselves at a different point on the political spectrum and agree to disagree. The legitimacy of any view is subject to both justification and challenge, and whether Bernie Sanders thinks that a billion dollars is too much for one person to have or not might be interesting but in itself adds nothing meaningful to the debate.
When he claims that having this much money isn’t fair or that these people do not deserve this, this translates into Sen. Sanders believing this to be so, with the hope that enough people will agree with him to give him the power to do this, or at least be able to pretend to have this much power, even though presidents cannot enact such laws by themselves.
Whether he truly believes that he could pull off such an outrageous wealth tax by himself without the support of both the House and Senate, or whether he is just using this issue to rile up the mob more in order to win more support in his Presidential bid, isn’t important, but the very fact that someone in his position would even think such a thing would fly is what is most disturbing about this.
Sanders’ Proposed Wealth Tax Would Simply Crush Us All
We have already spoke several times in other articles about how devastating to the economy such a massive tax would be, and all of the ideas that come out of the left-wing Democratic camp have been of this nature, whether it be taxes on wealth, huge increases in income tax on the wealthy, Medicare for All, taxing security transactions, or any of the other ill-conceived ideas that they have thrown at us lately.
It’s not that our economy is all that healthy right now, although Sanders and his band of merry men and women either do not properly consider such things or they simply do not understand them, or both. It is as if they are so blinded by their ideals of redistribution that they fail to realize that this will lead to less and not more of what they seek.
Sadly, a great number of the people that decide who gets to make our laws are similarly misinformed, people who think that the system is set up to benefit the fat cats at the expense of the masses. They protested violently when we bailed out the banks in 2008, not realizing what would have happened if we didn’t, and how not doing so would have so profoundly affected their own fortunes, which for the most part was spared.
They think that the free market economy and measures to promote prosperity is also directed at benefiting the wealthy, which includes our not taxing them to the hilt when we feel that they are making more money than we think they deserve.
Whether it is our place to decide such things is one thing, and we may even just cite the power of the people in a democracy which is believed to justify any action, just or unjust, sensible or otherwise, but we cannot just ignore the consequences of our actions, like Sanders and others are doing.
We instead need to be always aware of what effects changes in policies may have, and when the end result leads to severe economic damage, causing recessions or even depressions, we need to be very careful what we wish for.
Taxes themselves constrict the economy by their very nature by taking money out of it, and taxes aimed at those who have a lot of the money that is out there are especially damaging. There are two things that would happen with a tax like this, which are people taking their wealth to other countries and those who decide to stay losing most of it.
This wealth isn’t just laying around in bank accounts either, and such a measure would require an enormous dumping of assets at well below market value, which is another consequence of a wealth tax that Sanders does not account for. If all the very rich are dumping assets, it’s not that they can step in and pick up the slack. This in itself would cause a stock market crash of epic proportions as well as affect businesses on a fundamental level, where very large portions now need to be dumped and this may in itself be enough to cause widespread bankruptcies, apart from the ones that the economic crash would produce.
Losing 77% of your wealth if you are a billionaire will still leave you enough to live a very comfortable lifestyle if you submit to this, and although many likely would not and just flee the country, create trusts, or use any other method to sidestep this, the bigger question is whether this will allow us to remain as comfortable as we are now with ours. The answer is that, unfortunately for Sanders, this will hurt those with a far less margin of comfort much more than it will ever affect the very rich.
The chances of such an outrageous tax not shrinking the American economy massively is zero. We fight a daily battle of looking to keep up investment, which requires that we treat these investors with a suitable degree of fairness so that they continue to invest. A wealth tax like this would impact this to the extent that we can’t even be sure how bad this would be, other than knowing that it would be very ugly and painful and cause a serious degradation of the public welfare as a whole, from top to bottom, from people living in squalor to Mark Zuckerberg.
Mark surely would be able to survive such a thing even though this would cost him most of his wealth. We will not be so fortunate. Given that Sanders is supposed to be fighting on our side, he sorely needs to get a better hold of his senses and think this through more, beyond his mere disdain. Wolves that wear sheep’s clothing are perhaps the most dangerous.