Last week, my friend Ross Kaminsky had as a guest on his radio show Larry Kudlow to talk about taxes. And economics. These topics might sound boring, but the conversation was educational, deeply thoughtful, and almost riveting at times.
I recommend that everyone bend an ear and listen—the podcast is only 20 minutes long. In the meantime, I want to expand on the discussion they started.
WE ARE THE ECONOMY
The economy is neither a narrow subject nor the reserve of economists. When understood broadly, “economics” is synonymous with “human life.”
As individual human beings, we each choose on what to focus our attention and what to ignore. We each choose whether to sit or stand or move, whether to be active or inactive, whether to produce something with our brawn or brain or to produce nothing at all.
If we choose to produce, we also choose whether our productivity will result in something others value or if we’re going to produce things no one else wants. If we produce something others value, we might also choose to trade some of what we produce with others who want what we have and have been busy producing things we want.
These are basic features of the human condition, always. They spring from a basic choice every human being makes: Live? Or die? If we choose to live, then we must work. The questions for each person then become:
- How should I work?
- What should I do?
- What should I not do?
- Are there ways to help myself by helping others?
- Is someone going to take away what I produce or will I be left alone to keep what is mine?
Add up all these human questions and all these human answers and all the human energy and thought and activity and productivity and trading and consuming and wanting and the grand sum total is: the economy.
The economy is not some object “out there,” apart from ordinary human life, apart from us, to be studied from a distance. We are the economy. The study of economics is the study of human life and human nature and human choices and human incentives, which includes the study of ourselves.
WE’RE ALL ECONOMISTS
We are all economists—in the same way that we’re all political philosophers, physicians, nutritionists, theologians, engineers, etc. We all have opinions and some knowledge about these things. The difference is that some of us are more and others less thoughtful and studied about certain topics.
Regarding economics, some pay close attention to incentives, asking why people tend to be productive in certain circumstances and unproductive or even destructive in other circumstances.
Why do some beg and others invent? Why do some steal and others innovate? Why do some take pleasure from providing entrepreneurial value for others and others demand things to which they think they’re entitled but have never earned? Why do some engage in wars of conquest and others ask to trade peacefully?
Human beings created very little wealth and lived in miserable poverty for thousands of years, from the earliest human history and even pre-history through the mid-18th century. And then BOOM!—some in the Western world began creating new wealth in magnitudes and on scales never before seen.
What happened some two millennia after Buddha, Socrates, and Jesus that some human beings in some settings, all of a sudden, refused to accept the kind of life their parents had and began solving the problems of poverty, sickness, illiteracy, and others through the productive creation of wealth and innovations of technology?
THE POLITICAL PHD IN ECONOMICS: HATING BUSINESSES
Thoughtful economists consider these questions. Unthoughtful ones don’t. But even though many don’t think deeply or well, that doesn’t stop them from spouting political opinions about economics.
Just watch the reactions of ordinary people when some progressive politician on TV utters the word “corporation” or tosses empty slogans about the “rich” not paying their “fair share.”
Voila! Instantly, ordinary people become economists. “Yeah!” they’ll shout angrily, “those greedy corporations and businesses should pay more!”
Do these armchair economists really want more money to go to those in government? Are they truly concerned that our biggest problem now is that government has too little money?
If they think government collects too little wealth right now, are Americans who work at businesses and corporations, themselves, willing to send some of their own salary to government?
Or do they simply want others to send more of their money to government? Can anyone feel proud demanding and commanding how others should spend their own money? I think that used to be called: brattiness. Or envy.
The more government taxes businesses and corporations, the more businesses and corporations raises the prices of the things we buy from them. Do we really want that? Does that help the poor? Or the non-poor? Do higher prices help anyone other than government officials who can collect more sales taxes?
THE MORALITY OF ECONOMICS
Perhaps the most important questions about taxes and economics are moral questions: What moral authority do you have to demand that more private wealth be taken away from others and given to bureaucrats in government?
You probably would not rush into a business, by yourself, and steal money. You, likely, are a morally decent person, after all.
But what makes you think that confiscation of personal property becomes morally respectable when you and millions of others vote for government to rush into a business and take money from it?
Does the morality of taking what belongs to others depend simply on the number who approve of it?
If it’s mere theft when one person steals, or a gang of a few people, at what number is theft of personal property transformed into an “investment” managed by government office-holders? A bank robber, after all, might call his thieving activity an “investment” by the bank in his personal retirement portfolio.
PAYING ONE’S FAIR SHARE
Lastly, think of the slogans that seem so effective at agitating people in the political realm: “Greedy businesses,” “profits,” and “not paying one’s fair share” have become the new terms of derision and moral scolding in American political life.
And yet—yet!—there are record numbers of Americans today who do nothing. They don’t work. They produce nothing. They don’t think about how to provide some service or product that might help their neighbors or fellow citizens.
If we are going to engage in political and economic discussions and debates about paying “fair share,” shouldn’t those conversations focus first on those who contribute nothing?
Every profitable business is producing something that others value (unless they’re crony bedmates with government!). That’s why they’re profitable: the employees and officers of a profitable business get up every morning, thinking about how to provide value for other people, and they work. Those are the last people we should try to judge about whether they’ve paid their fair share.
Let’s first discuss the millions of Americans who live off of subsidies provided by the Americans who work productively, which includes everyone at every government office, bureau, and regulatory office, at the federal, state, and local levels.
One way to define “banana republic” is a corrupt regime in which it’s nearly impossible to succeed in a private business—especially if the business is not connected to crony government regulators!—while those in government, who do not invent or innovate or produce anything that can be sold in open and free and competitive markets—become wealthy by selling crony government privileges and perks to their friends.
According to that definition, the United States isn’t becoming a banana republic. It already is one.
The only way to reverse this is to begin congratulating those who work productively, thanking them, appreciating them, while turning the questions of moral suspicion toward those who do not work productively. This includes and requires questioning the demagogues in the political arena who appeal to the non-productive by slandering the productive.
Let the most productive citizens among us be questioned no more on whether they pay their “fair share.” And let those who do little or nothing, and those who make political careers out of pandering to those who do little or nothing, prepare themselves to answer tough questions.
Let’s show the world that free people are good economists. And good people. Who expect nothing for free. Who want only the freedom to work productively and keep what they produce.