As I noted in this TV interview, that last thing a parasite should want is to kill its host animal. This is why leftists are making a big mistake by over-taxing, over-spending, and over-regulating. Simply stated, if they want to live as moochers, they need to make sure someone is producing. In other words, don’t steal so much that the victims stop generating any wealth. Michael Barone, writing about the corrupt “Chicago Way” for Townhall, makes a similar point:
One prime assumption of the Chicago Way is that there will always be a bounteous private sector that politicians can plunder endlessly. …So it’s natural for a Chicago Way president to assume that higher taxes and a hugely expensive health care regime will not make a perceptible dent in the nation’s private sector economy. There will always be plenty to plunder. Crony capitalism also comes naturally to a Chicago Way president. Use some sweeteners to get the drug companies and the docs to sign onto the health care plan. If the health insurers start bellyaching, whack them a few times in public to make them go along. Design a financial reform that Goldman Sachs and JPMorgan Chase can live with even while you assail “Wall Street fat cats.” The big guys will understand that you have to provide the voters with some political theater while you give them what they want.
This is why we teach children the fable about not killing the goose that lays the golden eggs. The current crop of leftist were apparently not raised by mothers, but by nannies who failed to pass on this valuable social lesson.
Michael Barone’s and similar arguments are well taken. However, in general, such arguments, typically, grossly underestimate the pernicious issue of economic inefficiency. The maximum mooching point, i.e. where the Laffer curve starts turning downwards, is way beyond the point of maximum economic efficiency.
Conservatives often get caught up arguing with the left whether the economy has reached the top of the Laffer curve or not. As if the top of the Laffer curve, i.e. the maximum mooching point, were some implicitly desirable maximum growth point where the economy is most efficient. The maximum mooching point, represents a pathological near-stagnant and dying economy that has no potential of growing at more than 1.5% -2% yearly, on average; a sure path to decline and international economic marginalization.
This is where Europe seems to be now. They taxed their more productive citizens to the top of the Laffer curve with progressive income and luxury taxes. When the productive inevitably started seriously shrugging, they had to also turn and start milking the low and middle class with VAT, sin taxes, fuel taxes etc. Taxing in Europe seems to have come to a dead end. Even if they have not reached the top of the Laffer curve yet, more taxes are only going to reduce an already dismal growth rate even more.
But who cares about growth rates, right? When Mr. Sarkozy is taking your tax money and forcing you to fund Mr. Stieglitz to act as an economist-psychiatrist and tell you what new mandatory state programs you need to fund and participate in so as to be poor but happy (What a package! Confiscation, mandates and propaganda all funded with taxes on your own efforts!)
Already growing at 1.7%, vs. the 4% world average, by 2040 Europe will have to justify how its “lifestyle gains” compensate for the fact that the average European’s relative financial position in the world has deteriorated by 50%. Not an easy task.
I hope my adopted country, America, escapes the vicious cycle of: {[loss of prosperity] –> [voter discontent triggers anti-business sentiment and calls for redistribution] –> [further loss of prosperity]}. However, current political directions on the left, but also on the right, leave little room for optimism. I’ve seen this movie before. In Europe.
…the average European’s relative financial position in the world has deteriorated by 50%.
I meant
…the average European’s relative financial position in the world will have deteriorated by 50%. ([1.017/1.04]^30 = 0.5)
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One of best posts I have ever read, Zorba! You nailed it perfectly. I surely hope (your adopted, my natural,) America will never reach top of the Laffer curve but we are perilously close! If we reach and possibly go over the curve, will we ever be able to save ourselves from total ruin?
I have read many authors opinions on this and here I will be repeating some of their words. However, I have a very serious nerve disease and often have bouts of memory lapse with short term memory loss. I apologize to them and to you for not being able to quote them directly or not even being able to remember their names.
One said, our last and best hope has always been our liberty. Limited government, our free speech and our freedom to choose. Once those are gone, we have nowhere left to go.
One of our legislators, after ratification of our Constitution was asked by a woman what type of government do we have? The legislator replied, a Republic…. If you can keep it.
My question is… can we? Will we?
Zorba, you adopted our country, but in return we also adopted you. If the shat does hit the fan and we do have a revolution, will you stay or will you go?
Eeks! Sorry this ended up so long!