Mar 10, 2009

In Which I Struggle to Understand Why Daniel Gross Is So Stupid

I should apply for a job as the economics writer at Slate magazine, given that their two biggest contributors are Eliot Spitzer, disgraced hooker-loving former governor of New York, and Daniel Gross, Harvard history MA holder with no basis for writing on economics. Eliot Spitzer's ideas sometimes have some merit. Daniel Gross's are simply idiotic.

Today, he writes a column about how there is a 'war on the rich', but that it's actually a civil war between rich people. His logic follows thusly:

  1. Rich people are investors.
  2. Investors have taken a hammering because of this economy.
  3. Therefore, rich people are battling and destroying each other.

Certainly, a large part of this financial calamity was the fault of unscrupulous bankers packaging toxic mortgages, chopping them up, and selling them as securities (when, in fact, they weren't very secure). That would mean that some rich people are cumulatively responsible for some of the issues we face. How that can be construed to mean that all rich people are ripping each others' assets to shreds in maniacal glee makes no sense in the least. What makes even less sense is how he tries to use that 'fact' to justify Obama's desire to raise the marginal tax rates of higher-income earners, lower deductions on charitable giving, and remove the ability for American corporations to remain untaxed on overseas holdings.

Whether or not you like the fact that rich people are rich (which certainly doesn't affect you; the guy in Newport, RI owning a mansion and a yacht doesn't mean a thing to anyone else), what they do with their money can work to the benefit of society as a whole. The fact is, richer people invest more. Investing more means that companies can grow more. Growth means jobs--jobs for the not-rich. Investing also fosters innovation. When you have money, you can develop new technologies and products. When the government takes more of those dollars, due to bureaucratic costs, it automatically becomes less efficient. One dollar transferred from direct-injection in the private economy to eventual-injection by the public economy is worth less by the end because the costs of labor and time and so much more.

What I'm saying is this: the notion of class warfare is outdated and ridiculous. There is not some coherent group of 'the rich' whose purpose in life is to take, take, take from everyone else. Economies grow and expand with investment. The pie gets bigger. When it grows, it grows for everyone, even without governmentally-approved redistribution. Those with more, in the past decades, have gotten even more at a greater rate, creating a larger wage gap between 'rich' and 'middle class'. Those in the middle, however, still have more as well. Arguments against 'the rich' are fundamentally tied up in an old-fashioned, European-style, class-envy framework, based on nothing more than jealousy of those who don't have as much and presume, irresponsibly, that those with more only gained it through illicit and nefarious means. That is simply wrong. And Daniel Gross writes with the logic of a kindergartener.

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