Every so often, I try to appeal to statists by explaining to them that it’s not in their self interest to steal too much.
Why? Because if you kill off the geese that lay the golden eggs, what will you do tomorrow when nobody is left to produce?
Heck, even the former leftist President of Brazil understood that there can’t be any redistribution if there’s no production.
I’ve made this point by sharing a very clever cartoon. I’ve made this point on television. And I’ve tried to explain it using simple analysis.
I’m not sure I’ve been overly successful, but perhaps this Chuck Asay cartoon will help get the point across.
The cartoon is akin to the fable of the ant and the grasshopper. But the “modern” version of the story, featuring coerced redistribution that causes the ant to no longer be productive.
Heck, it’s also what we see in the PC version of The Little Red Hen. And the same theme can be found in the amusing anecdote that uses beer to explain the corrosive impact of a “progressive” tax system.
The moral of the story – in every case – is that you shouldn’t be too greedy if you’re living off others.
In my speeches, I often joke that a tick or a flea is in trouble if it’s feasting on a dog that dies. Well, on a more serious note, this can happen to countries. Greece is in deep trouble because there are too many people riding in the wagon and not enough people pulling the wagon.
We’re not there yet, but I don’t like the trend.
[…] don’t suppose Mr. Bruenig has thought through what happens if too many people decide to stop working so they can live off the “universal basic […]
[…] don’t suppose Mr. Bruenig has thought through what happens if too many people decide to stop working so they can live off the “universal basic […]
The argument is difficult to make because there are varying degrees of hysterisis, ie. delays between cause and effect. It takes years for all the disincentives to production to cause systemic changes in population behavior, and indeed culture, and drive a country into decline. But once the process starts, it becomes self perpetuating, irreversible, unstoppable. That is where the US is now. The beginning of HopNChange. Greece is in the middle, and still has long way to go.
This cause-effect delay is what the Laffer Curve, as typically presented and debated, largely ignores. On the other hand, the Rahn Curve more aptly captures this effect of delay and the catastrophic compounding effect of slower growth. And this is why, as the Laffer Curve is interpreted within a longer and longer term horizon, it assumes more and more the shape of Rahn Curve (Zorba’s Lemma). The long term interpretation captures the sub-par growth in government revenue attributable to compounding effects of slower economic growth. And because of compounding, slower growth becomes the overwhelmingly dominant portion of any economic trajectory.
So, in slightly more pedestrian terms, when voter-lemmings start mooching, politicians can initially gratify by borrowing. Soon though, enough creditors start putting two and two together, see where things are headed, and so taxes have to be raised (or else credit caput and crisis). But when the taxes of redistribution and mandatory collectivism are raised, very-very few people drop out of work the next day, or even the next year, though a more systemic lower enthusiasm starts settling in. Some producers even remain largely unaffected, perhaps hoping for a return to better, lower tax, days sometime in the future (…and yes Mother Theresa—sha always works regardless of taxes — and leftists too, they always work to the top of their ambition and abilities regardless of taxes). But more normal people, people who care about themselves and their families, and especially many people at the margin, start making changes in their life choices and life plans. Some, seeing higher taxes ahead and a wealthy but confined life in the four walls in an office away from family vs. an average life of less or no work surrounded by family and supplemented by ObamaCare, will start choosing the latter (Hmmm…I wonder who these people are going to be…). The aggregate effect is a lowering of competitiveness, which causes marginal products to start falling to foreign competition. Less able to sell into the economic supply chain, the population becomes more stressed…. It now does need more and more help. So voter-lemmings take their myopic anger to the polls and vote for more redistribution. The vicious cycle of decline deepens.
By why be gloomy? Let’s make a small parenthesis in fantasy land…
Perhaps leftists and government are right. Perhaps higher taxes have no effect on productive behavior. Wouldn’t that be wonderful? Just imagine the possibilities! In the next election, I can go and vote for whatever I want. Taxes can always be raised so that I can keep living my developed western world lifestyle. I mean, I can stay in the American 99% which is the worldwide top 8%, through domestic redistribution. Actually, I just want three or four things. So I will start voting with healthcare paid by others, education paid by others, some significant housing help and a few food subsidies. Then, with the basics covered, I can just retire to a modest suburban apartment and a small bungalow by the beach and all the family time I want. Ok maybe I can teach some yoga and play a few gigs with my band for small pay. But remember, this is fantasy land, so I will be the only one that does so, therefore no effect on the economy, others will keep working competing with the three billion emerging world people (and with enough aggregate enthusiasm to win!). This I’m told by leftists, voter-lemmings and, of course, government economists. Who would have thought…
In reality, the effects will be felt, and even leftists know it. But perhaps they hope that they can get by under the wire in their lifetimes and leave the problems of decline to the next generation. But here is where things have changed in this early twenty first century. The pace of all human activity has accelerated. Rises and declines that once used to take centuries will increasingly conclude in a few decades. Today’s voter lemmings will no longer be able to pass the consequences of their redistribution free lunches to future generations. Voter lemmings will get to experience the decline they chose, within their own lifetimes, especially the younger HopNChange voters. Hopefully they are making plans to make their labor mobile.
The bar of economic salvation for the United States and any other country is set at 5% annual growth folks. That is the average worldwide growth, the new worldwide norm – though if you are a delusional western voter lemming you are largely oblivious. One would have to be utterly delusional to hope that policies that result in 5% growth rate will get past voter-lemmings. 2008 was the last exit to prosperity and freedom. Now it’s the ever steeper highway to decline. Bush, freedom in words, statist in action failed? We elect Obama! Statist in both belief and action. The vicious cycle of the voter-lemmings is well underway.
[…] There can’t be redistribution if there is no productionDaniel J. Mitchell […]
[…] If You’re a Moocher, Common Sense Should Tell You Not to Kill all the Producers « International L…. […]
Great analogies.
When Altlas Shrugs…were gonna see a whole bunch of welfare zombies trying to eat us alive!