You Can't Spread the Wealth Around

David Strom
|
Posted: Oct 16, 2008 1:53 PM
You Can't Spread the Wealth Around

By now everybody has heard of Joe the plumber. It was Joe that Barack Obama told that it was government’s job to “spread the wealth around”—Joe’s wealth—in order to build the economy from the bottom up.

Joe was worried because Obama’s plans to increase taxes on the “wealthy”—him—in order to give “tax breaks” (really just government checks) to people who make less than he does. Obama argues that doing this will somehow help create wealth from the “bottom up” instead of the “top down.”

The only problem is that economies don’t really work that way. Job creation and the real sources of wealth generation have never and will never come from government taking money from some people in order to give it to others.

Think about it: most people’s income in America comes from having a job. A few of us run businesses large or small and, and even fewer of us are the truly “wealthy” who don’t have to worry about money at all.

But for most of us, our daily bread comes from having a job. And Barack Obama’s tax plan is a direct assault on the job creation on which our well-being depends. Because, like it or not, no check from the government can possibly replace the paychecks on which we rely. And in general the healthier the business we work for is, the healthier our paycheck is likely to be.

Obama’s “Robin Hood Economics” is based entirely upon the idea that taking money from job creators and giving it away to preferred groups will somehow “spread the wealth around.” That’s simply bad economics. In reality, taking money away from the small- and medium-sized businesses that Obama counts among the “wealthy” will hobble the engine of job creation and ultimately hurt our own income.

It might be nice to get that government check in the mail, but the price we will pay is fewer jobs, slower economic growth, and less investment and innovation in the economy. That’s what you’ll get by raising taxes on the so-called “wealthy.”

Obama’s plan boils down to one thing: the path to a better economy is through wealth redistribution. But by focusing on propping up people’s income he is putting the cart before the horse. Before you can have income to redistribute you need to have wealth created in the first place. By attacking wealth creation Obama is just setting up the American worker for winding up worse off than before.

Obama hopes that we’ll notice the nice check we get in the mail, but fail to notice that over time job and wealth creation have slowed in our economy, making us all less well off.

Wealth redistribution schemes are a scam. By taking from the “rich” and giving to the “poor” the people in power get to appear to be the good guys, even as they hurt you. Handing out checks is a good way to get credit for making people better off. But it doesn’t take a genius to see that long-term prosperity can never be built on a foundation of wealth redistribution simply because it requires taking the money from wealth creation.

Less wealth creation means less wealth in the long run. You wind up with an economy with fewer jobs, fewer choices for workers, and even more dependence upon government for everybody.