August 09, 2004
Beyond Stage One

You'd think with this kind of intro, this New York Times bit (free reg, blah blah) would've gotten more attention:

The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II.

I mean, of course that happened. Everyone knows the economy went into the tank as soon as Bush showed up. So why isn't this story getting more play? Maybe because:

new information shows that [the recession's] effect on Americans' incomes, particularly those at the upper end of the spectrum, was much more severe. (emphasis added)

Well, that's well and good, but Bush's tax cuts are really to blame, right? Wrong:

To some extent, taxes fell more than incomes because of tax cuts championed by President Bush and approved by Congress in 2001. But ... the major tax rate reductions for highly paid Americans did not take effect until 2003
At the same time many of those whose incomes fell the most - those reporting $200,000 to $10 million in income - paid at the highest rates, which meant that the drain on revenues was even greater when their incomes shrank.

This isn't Fox News people, it's the Great Gray Lady herself reporting it. Maybe now some of you will actually believe the people who own most of the wealth really are paying most of the taxes? Anyone? Anyone? Buehler?

Didn't think so.

And, really, have any of you thought about what will actually happen if all those tax cuts get rolled back? Sure, revenue will increase, substantially even, at first. But what happens after that?

Wealthy people, people who are already paying most of the tax burden, will suddenly have strong incentives to move their money elsewhere. And, unlike you and me, rich people have the knowledge and ability to do so. Over time, tax revenues will begin to drop. Fine, at least some of you will say, we'll make it illegal for them to move their money out, change the laws and get rid of all those tax loopholes and shelters.

Here we delve into the world of science fiction, because (thank God) it's not 1967 (or 1993), and the Democrats do not have control of Congress. But let's just indulge ourselves and say that, in a fit of moonbat madness, laws really are passed preventing people from moving their wealth out of the country. Tax revenues will stop falling, at least at first. But what happens after that?

Such laws simply move the problem one step back. Instead of moving their wealth out of the country, rich people will start moving themselves out of the country. Tax revenues will continue to fall, and the deficit will baloon again, and there won't be any rich people to raise taxes on this time, because they'll have all moved to Barbados. All because nobody thought past stage one of their best and brightest plan.

This is all so intensely obvious and well-attributed I am completely flummoxed when people refuse to believe it. Well educated people who I otherwise deeply respect will take a scientist at their word when they say, "evolution is fact" but will refuse to believe an economist when they say, "taking less profit on more items will always earn more money than when you take more profit on fewer items."

Far too often we focus on the desired goals and deplorable results of a program instead of the incentives they create. We celebrate the creation of a "great society", and fifteen years later deplore the welfare state. We cheer the concept of "equal opportunity", and twenty years later decry quotas. Others crow about universal health care, and then ignore the people who die of cancer because they were forced to wait fifteen months for chemotherapy.

Unlike the other side's opinion of my own beliefs, I really do think liberals and lefties have the best of intentions. Free health care, free education, free access, all and more are wonderful concepts, beautiful ideas, that speak well of their humanity.

Unfortunately we don't live in a world that allows any of those things to succeed. Your ideas may be noble, but they will fail. There's a reason the further to the political left you go, the higher the contempt for the "common man" becomes. When an idea, program, or policy requires going against human nature, failure is inevitable. When that happens it's far easier to blame the mass's intransigence instead of one's own cherished beliefs.

Markets are messy, but they work, because they compliment human nature. Democracies are messy, but they work, for the same reason. Science, the cherished last fallback of the stasist technocrat, works only because it weds the human desire to learn and explore with the equally human desire to doubt and discredit.

I don't hate the left or their beliefs, even though most of them certainly seem to hate me and mine. Instead, I feel compassion, because they're simply good people who, even with overwhelming evidence, categorically refuse to recognize simple facts. They don't believe it.

And that is why they fail.

Posted by scott at August 09, 2004 03:45 PM

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