I am writing regarding Rob Olson’s column, “I love the Rich.” Robbie (Can I call you Robbie?) can only find “vague references from righteous protesters and editorial boards” in regards to the theory of trickle-down economics? Really? Being that this theory is the crux of the argument, some due diligence is in order. A simple Google search yields a wealth of information about the subject. In fact, the International Labour Organization’s World Employment Program conducted a nine-year study that “yielded over 20 books, about 40 journal articles, and over 100 working papers” which contained the collaboration of “almost 100 scholars from all over the world…” regarding information on this very topic. Granted, I’m sure that the content of these publications were inherently “vague” and these international scholars were “righteous protesters” in disguise.
For the sake of argument (and because I am a terrible fake economist) let’s say that the theory is debatable, at best. Actually, scratch that – let’s go CRAZY and say it’s impeccable. Undeniable. Immaculate. A foolproof economic manifestation handed down by the ghost of Reagan himself. Where does the money come from?
Assuming that this effect is not instant, we need to fill in the initial gaps. Enter: spending cuts. Cool beans, tax breaks and spending cuts – perfect together, like caviar and crackers.
Naturally the spending cuts will come from social welfare programs and items such as Medicare and Medicaid (you know, the programs that provide assistance to the non “rich” Americans).
On the surface it’s pretty simple math: cut revenue, decrease spending. Since there aren’t any government sponsored programs that directly benefit those in the top 1 percent you’re forced to cut from the bottom. The problem I see is that you are making a conscious decision to build your economy on the backs of the weakest and the poorest. Fairness of increasing taxes aside, it is not going to change the quality of life for the top 1 percent significantly. Cut welfare or Medicaid and tell me that it does not drastically change the quality of life for the people who rely on those services. Then, have the audacity to say that those people should be thankful to make these sacrifices so that “rich” people can buy fancier shoes that need polishing? Really? Americans do not behave like that.
– Seth Weil
Oy, there are a lot of left out words and letters and commas in here, but I hope my points are understandable still.
TJM, I appreciate your dialog and you laying out your points. You made a lot of them, and I don’t have the time or wisdom to address all of them right now. I will say something about some of the points I originally made that you addressed.
I don’t think charities take care of everyone who needs care. I don’t think charities are providing the education or health care that too many people in this country are in need of. Charities are lovely. They do a lot of good. But they do so for very specific groups and they don’t cover everyone in the groups they target.
I wasn’t actually asserting that rich people are slimeballs (though it is my personal opinion that it is a bit disgusting to accumulate exorbitant wealth–that’s my own unique opinion and I wouldn’t dream of applying that opinion to policy or arguing that point), I wasn’t trying to make that claim. I was simply saying that I don’t believe wealth to be a reliable indicator of work ethic/intelligence/perseverance. If you felt this ‘the majority of rich people are slimeballs’ was implied in me saying that I don’t trust the rich to take care of the poor, well I’m sorry if that’s what I was seemingly implying. I didn’t intend to imply that. I simply met that there is not incentive to do so. Obviously, employees of big corporations (except for people at high levels) are paid the bare minimum and given the minimum benefits because the incentive that drives people in charge of businesses is to maximize profit. That’s not cause they’re slimeballs. It’s because they are human. I’m saying we need a third party whose incentive is not to maximize its own profit to protect the needs of the poor people who work for the people who do have this incentive.
You are right about what I said about medicine. By quality, I meant availability. I don’t think I said healthcare is a right protected by the Constitution. I certainly didn’t mean to. That being said, I don’t understand why anyone would argue that it should be available for everyone. I guess the term socialized medicine is a complicated term. I guess what I’m really talking about is having more public options, providing universal health care. We’re the only industrialized nation who doesn’t do this, right? We have the worst disparity in quality of care between rich and poor, right? Germany has universal health coverage and some of the best quality of care. I think they beat us in waiting too.
I think beyond that, with all respect, I believe you are too optimistic or just don’t want to believe that our system is flawed. I have to say that your suggestion that people can pull themselves up from their bootstraps ruffles my feathers because it is not true. I think people who think this maybe get this idea from pro sport players or rappers or people like Ben Carson, or Alfredo Quinones who had a lot of luck and help to come from impoverished lifestyles to glory. What opportunities are there for the average poor person? There are plenty of stories of high school valedictorians who can’t get into school or can’t keep up when they get there. Many people can’t dream of affording school. Many people are lost to the streets before they can even finish school because they realize the truth- that their inner city school is a waste of time. Do you think that rich people will come and fix these schools if they get more tax breaks? They will pour money into the prep schools that their kids go to. And then they’ll build Frank Loydd Wright style fences and install a top-notch security system so they don’t have to face the hoodlums from the public schools.
I think we have to stomp out this notion that poor people bring their misfortune on themselves. We are dehumanizing people this way, and that allows us to refuse them help guilt-free. I don’t think poor people are any different from non-poor people. This group will include the same amount of lazy and hardworking and talentless and talented and stupid and intelligent people. No more, no less. So sure, if we help them, then some help will be wasted. But, I think we can agree that the amount of lazy, untalented, stupid people in the non-rich population is small. And I think it’s certainly worth helping a few undeserving people to help millions of deserving people.
If that doesn’t evoke any empathy, why not look at it from a selfish perspective. There is no test screens out voters (except for immigrants becoming citizens). Though money accomplishes a lot more than votes, we still all have equal voting power. Do you not want these people to have an education? Does poverty and lack of opportunities not breed violence that lowers quality for the poor and the rich (we can’t all stay hiding in our gated communities forever)? Or do you really think that there is violence in Oakland because these people are inherently violent?
Do you really think that anyone in their right mind would stay on welfare *if* they had opportunities to do better? Would you? Do you think you are so different from a poor person? They want to be on welfare because they are inferior and lazy and I don’t because I’m superior and hardworking?? Really?
TJM,
You say that you are a economist. As an economist you see things as a financial scientist. How can you say the things you do, when as a scientist you know you are peddling a failed economic theory. And then you quote a CATO institute study, which is a hard right thinktank loosing all your credibility. And then you spread the myth that the rich “invest in companies”, where? The stock market? You do realize that when you buy stock in a company, unless its a IPO, none of the money goes to the company, you’re just buying stock from some other invester somewhere in the world who wanted to sell their shares.
TMJ why is it that when Republicans get into office they drive up the debt, and then tell us that “deficits don’t matter”. And then when Democrats get into office, suddenly deficits are all that matters, and then Dems become the bad guys because they have to fix problems caused by Repubs. The rich are the problem, they own the media, they set the national dialogue, they villify the poor, or the minorites as bribe politicians to pass legislation that benefits them and fleeces us.
I’m a blue collar worker, I grew up poor, “the state” fed me with the school lunch program. I work hard labor 11 hrs a day to support my family, on my lunch hour I read everything that I can get my hands on. I couldn’t afford to go to college. I follow politics, I know my enemies, and I know when a right wing shill is cruzing the blogs trying to brain wash young minds into thinking that we need to just shut up and do what the rich tell us to do.
I suggest that everyone reading this should google the “theory of the two santa clauses.” This has been the republican game plan for 30+ years.
We seem have to missed each others points. I was originally arguing that the commenter gave no points to shoot down top-to-bottom economics and merely antagonized it without proof. That being said, you bring up some interesting arguments.
It is a shame that our country has gotten to the point where not everyone has the same “luck” – as you put it – to do what they wish. Here becomes the fine line between welfare states and providing freedoms to pursue dreams/goals/ambitions. Should the government be providing welfare to those who have less “luck” than others? Certainly it should try to increas the amount of opportunities for the lower classes. Should this be financed by people who are ‘rich’ and successful? Absolutely not. This mindset is hostile and blames those who are rich, whether or not they are hardworkers or ‘slimeballs’. The top 10% of the income tax payers in the US pay over 70% of the total income taxes in the country. The bottom 50%? They pay less than 3%. Let’s take your example of grades in Davis, and in general a student body at a UC. You worked hard for your grades, no doubt. You earned them. Do you think that the University should take 30+% of your GPA and redistribute it to those who had lower grades, specifically the bottom 50%? Remember, this should be done regardless of how you achieved your grades (hard work, or just by luck and are not hardworking) and how the lower 50% achieved their grades (hard work, or no work at all). It is a somewhat rhetorical question but it plays to the idea of leveling the playing field that liberal-minded thinkers propose. It is nearly identical to the situation in which you think it is OK to redistribute the wealth of those who are ‘rich’ and successful to those who haven’t had the opportunities. You hint that the private sector would never allow those less fortunate to receive the help they need if the government cut funding. Let’s look at that…
Firstly, your notion (and many other liberals) notions that the rich are a majority of ‘slimeballs’ are misconstrued. Several studies show that when taxed less, the amount that the ‘rich’ donate to private charities drastically increases. Indeed, private charities operate extraordinarily more efficient than government groups do due to lower overhead costs and administration fees (see CATO essay, http://www.downsizinggovernment.org/hhs/welfare-spending#7 , section on Replacing Welfare with Private Charity). For every government organization that helps the less fortunate, in many cases there are private ones that do the same. Rarely do the rich hoard their money when given less taxes. They invest in companies, which in turn grow business, invest in smaller businesses/companies, and in turn we get economic growth on a small scale. This works by providing jobs in a ‘ladder effect’ which economics refer to. When the top invests in the rung below it, that level in turn pulls up the one below it, and so on and so on. What do we get by providing increased welfare to citizens? Sure, there are the hardworkers that are ‘poor’, but if they are determined to succeed, improve their life, and those around them, they have plenty of opportunities to do so. But if we nurse them and provide breaks and welfare programs, who are we helping? Sure, we may be helping those who are hardworking, poor, and un-‘luck’y. But in turn we are hurting those that are poor and not hardworking. They propagate this behavior and mindset that things can be handed and given to them in this society.
I’m straying here from some main points, but I still stand behind the argument. Look at California. It has essentially become a welfare state. Immense amount of public programs and government welfare organizations to support those lower. To afford this? We have increased taxes on the upper income brackets. They in turn leave California or cease to expand business due to the incredibly high small business, capital gains, and other corporation taxes. In turn, the state is the 49th (I can’t find the citation but I know it’s between 45-50) best state for small businesses to come to. And what businesses employ the lower, ‘poor’ classes the most in the US?Small businesses, which in turn grow communities and economies to attract other retail, big box, and chain stores which also provide lower-education jobs. The system in California is broken, and it’s been allowed to be on this welfare trial period for too long. It’s shown by example (i.e. we’re bankrupt and the jobs in California, along with other economic growth factors, are stagnant) that the system of taxing the rich and giving to the poor cannot work on the grand scale that it’s at.
Don’t get me wrong, I’m not advocating for complete annihilation of social programs via the government. We do a great job with some of the programs and resources that people need, but a majority could be done without (i.e. made private) instead of under the huge federal/state umbrella.
As for my medicine/healthcare comment, it is an immense argument. Healthcare providing in the other socialist countries is one thing. The quality, however, of healthcare in the US is below no other. If you socialize healthcare, you limit the ability for doctors and practices to compete over you for your services. There are many health factors that can show that the US system is by far the best and brightest. The quality, however, has nothing to do with availability. Nowhere in the Constitution does it say that health care/medicine is a right, not a privelege or good/service. You run into SO many problems when you tell doctors they will a. be paid less for their services since it must be provided to all and there are price ceilings installed by the government, b. will be assigned patients rather than market themselves as a supplier. Part b gets into many issues with quality of care since doctors would never have to answer to the consumer directly, having their business suffer in the process.
The take home message from this is that because politicians misspend and misallocate the American tax payer dollars, the rich are forced to have their taxes increased to finance the same programs. This is a terrible time we live in when we make others pay out of their pockets for problems they never created.
TJM
*I meant to say “as much money as they can for themselves.”
I also just wanted to say that understanding that we are not all born with equal opportunities to pursue happiness is not a figment of lazy people’s imagination. I hear the term lazy liberals all the time. I think I work harder than a lot of people (liberals and conservatives among them) at Davis to get to the top 10% of my grade. You didn’t go there at all, but I see this attitude a lot when people argue for unrestricted capitalism. And, I just wanted to put that out there before anyone might suggest it. I think there are myriad examples of very hard working liberals and conservatives, so let’s not make it about that.
I fail to see what this has to do with the original op/ed. I had a feeling you would strike down the weakest point in my “argument” and misinterpret it. I’m not arguing for “socialism”- whatever that really means, considering, as I mentioned, aspects of socialism have long been a part of our economic system. I’m just questioning your claim that the country’s founded on free market. My comment about equality is not so much an argument in itself. The original op/ed is about taxes. I’m saying that cutting taxes is cutting money for programs that are necessary in this country to help everyone have an equal opportunity to pursue those different goals people have. It’s absurd to propose that any kid in the ghetto, going to school in buildings that have literally gaping holes and where there is no funding, can pursue his dreams by working hard. That’s not equality. Likewise, I don’t think that being rich in this country equals being a hard worker. That is not how our country works. There are rich hard workers. There are rich slimeballs. There are poor hard workers. There are poor slimeballs. I tend to doubt that there would be a strong correlation between working hard and being rich, if we could conduct such a study.
I really didn’t mean the equality comment to be an argument for some sort of economic policy. I was merely saying that principals like those, and not economic policies, are what I believe to be the foundation of our country. I don’t think economic policy is something that has been or should be protected by the Constitution.
As far as I’ve read, you haven’t responded to the points made by the op/ed, or the point that I intended to be focused on if anything I said was to be focused on– that we have socialism for the rich already, and have for a long time.
By making this about competition, I don’t know who you are arguing against. This doesn’t change the truth that we need services provided by the government for the poor because rich people do not have incentive to do this adequately. I think we have to acknowledge in this country that the American Dream is not achieved by solely hard work and talent. It is hard work, talent, and a *lot* of luck. I consider myself to be one of those very lucky few people in America. Here I am at UC Davis, trying to get into med school. It’s a hilarious joke to think that I can point to just hard work and intelligence and perseverance for even having a shot. I needed a tremendous amount of luck to get here. My parents could afford living in neighborhoods with excellent public schools (which I think constitute a very small percentage of public schools in this country..see lack of “socialism”), my father, as a computer engineer, could afford to send me to UC, I didn’t have to deal with taking care of my family, I didn’t have to worry about crime or malnutrition, I didn’t have to worry about my parents being deported to Mexico, I didn’t have to worry about racial discrimination. These are all lucky circumstances. If you think that rich people take care of poor people better than the government can (and we are still a long way from adequacy here, too, and getting farther with lack of funding), then I dare say you may not have a very good understanding of what it’s like to be born into poverty. (You may ask how someone who has been born into such a lucky situation would know this well either– Well, I know first hand from my husband, a black man whose father has been homeless, and from a lot of friends who have been born into less fortunate situations. Growing up in Baltimore, I’ve spent a lot of times walking around the hopeless ghettos that surround Johns Hopkins Hospital (who buys up ghettos and turns them into more hospital property). Take a walk through Oakland. You can’t really think these people have the same opportunities you and I do. You can’t really think they are all lazy and stupid, and therefore have themselves to blame for their lack of accomplishments.)
I think you’re missing the point or maybe intentionally using a straw man argument by talking about competition. I don’t think that a restoration to Clinton-era taxes for the super-rich kills competition. I don’t think that you can say that capitalism was the foundation of our country. Arguing about the pros and cons of capitalism is maybe a discussion for another day, but I don’t think we can call this (or any economic system) the foundation of our country. I think to argue for flawlessness in either capitalism or socialism is silly. I think the main point of this op/ed was that Olson is insulting in asking poor folk to thank the rich for wages and benefits that make them metaphorically indentured servants. I don’t think poor people need to thank the rich. I believe rich people’s ultimate motives are to keep as much money for themselves. That is why we need government intervention (ie programs provided through taxes). If the government is so inefficient, why don’t we work on improving this? Why do we toss it out in exchange for a greater of 2 evils? The government may be flawed, but rich people will not come close in providing the same services the government does that poor people need.
Please don’t turn my argument into one that is all-or-nothing. If you talk to me about competition, we’re not arguing, because I’m not arguing to eliminate competition.
And since you brought up healthcare though, the data is readily available that many socialized healthcare systems are superior to ours. You only talk about the pros of capitalism. But you fail to mention its proven susceptibility to corruption. How’s privatized insurance working out for us?
Very well then katielicious, we shall have at it.
You say that you “don’t think America[n] was founded on the free market” and that America was founded on equality. True, we were founded on equality of man. He shall not be judged by the color of his skin, his private enterprises, nor his beliefs or sexual orientations. I won’t get into an argument on whether or not that is truly the case, but theoretically it is. This has nothing to do with socioeconomic class, income, and the quality of life. Being an American does not give you a divine right to have a wealthy income, successful job, modest living arrangments, or the like. It only gives you the freedom to pursue such goals.
Therefore, if everyone is free to pursue these goals and lifestyles, we cannot (and should not) dictate persons behaviors or lifestyles once they achieve said goals. Some of us in this country wish to be multi-millionaires and extremely financially wealthy. Others wish to be modeslty wealthy. Others even wish to live directly off the land and have little to no material property, and there are plenty more types of citizens in between what I mentioned. Each of us has the right to pursue these dreams and goals to their fullest extent. What right do you have to say that John Smith cannot wish to become a millionaire and benefit from his own hardwork, commitment, and perserverance to his own personal causes? Just as much right as you have to tell Jane Doe that she cannot live off the land without any material property and she must consume like others; which is no right at all. As much as it may seem unfair to many folks that rich prosper, they have (mostly) all put in hard work, sacrifice and had a determined work ethic in order to get where they are. The government has no right to take from them what is already there’s just because they are more successfull financially than others.
This brings me to a final point for this comment. Socialism may seem like an excellent idea to many, whereas capitalism also seems like a great idea to many. When it comes to socialism there is an innate problem that may never (and most likely will never) be overcome. In order to operate a socialistic (or communistic) society, everyone must be on board and agree to the principles. Everyone must sacrifice their own personal goals for the goals of another or the state. This may seem possible theoretically but it is never possible realistically. Without competition, markets like medicine (i.e. healthcare), technology, and others grow stagnant. The only motivation in a socialistic society to improve and outperform others is based on a need to give back to the state without seeing any personal return. This type of motivation vastly underperforms that of a society or industry which is driven by competition due to a free market. America was founded on being the best it could be, and always getting better, stronger, and wiser. In a socialistic society this growth would be severly hampered compared to one of a capitalistic society.
TJ Maxx
I don’t think American was founded on a free market. It was founded on democracy. The rich have long been making their livings off of socialism. Sure, they make a big deal over their faith in the free market. Then when the free market fails them, as in the recent case we all bemoaned, the government bails them out. So yeah, socialism for the rich. Free market for the poor. That’s what America’s founded on? I feel like there was something about equality in there..
Well, that’s convenient, TJM. If the ideas are not sound and are in fact refutable, than refute them. Otherwise, what’s the point in saying anything at all. “Look at where we are today”…Were we not better off economically when we had higher taxes in the Clinton era?
What a horribly unfounded argument. As an economist I won’t even begin to refute your points because, well, you didn’t even make that many other than poking fun at trickle-down economics and capitalism as a whole.
Your letter drips with socialistic tendencies. Although this isn’t a horrible idea, it isn’t what America was founded on; competition, a free market, and a small but secure governmental structure. Look where we are today. Sadly, I nor Mr. Olson will be able to convince people like you, Mr. Weil, that our ideas are sound, and vice versa.
TJM