Home > Federal, National > The Moral Case Against Spreading the Wealth

The Moral Case Against Spreading the Wealth

December 9, 2010
by Leslie Carbone

Leslie CarboneIn the fall of 2008, a plumber named Joe Wurzelbacher challenged Democratic presidential nominee Barack Obama’s plan to raise his taxes.  Senator Obama’s famously dismissive reply was:  “I think when you spread the wealth around it’s good for everybody.”

After two years, the results of President Obama’s wealth-spreading policies have confirmed centuries of economics, political philosophy, and common sense:  Forced wealth redistribution doesn’t make things good for everybody; it makes things worse, both fiscally and morally.

There are two principle reasons why the federal government should not be in the business of wealth redistribution.

“Governments are not instituted to spread the wealth around, to make life “fair” or easy or comfortable, to synthesize equality of opportunity, or even to create jobs or growth or prosperity.”

First, government imposed wealth redistribution doesn’t work:  It doesn’t create, or even spread prosperity, it dampens it.  Second, redistribution is not the legitimate purpose of government. Governments are not instituted to spread the wealth around, to make life “fair” or easy or comfortable, to synthesize equality of opportunity, or even to create jobs or growth or prosperity.

As the Declaration of Independence famously declares, governments are instituted among men to insure the preservation of the inalienable rights given to men by their creator. Those rights are life, liberty, and the pursuit of happiness. Once these rights are secure, American history demonstrates that the free market does a magnificent job of providing jobs, economic growth and prosperity.

The American Government exists to protect free people from theft, harm or another violation of their rights. We have given our government the power of the sword to exercise this important function and the power of the purse to pay for it.

But progressive taxation, and redistributionary spending, actually violate our rights.  When government engages in wealth redistribution–when it seizes from some citizens, simply because they have acquired more than others–it becomes a thing quite monstrous, perverting its own function and abusing the power that it has been granted to maintain.  It also ends up suppressing prosperity, diverting resources from where they do the most good, adding unnecessary transaction costs, and diminishing capital, business, job, and wage growth.

Government imposed redistribution does moral harm as well.  First, wealth redistribution discourages the virtuous behavior that creates wealth:  hard work, saving, investment, personal responsibility.  In the natural order, virtue and vice carry their own consequences. Virtue yields largely positive results. Hard work, patience, and orderliness, for example, tend to generate prosperity. Vice, on the other hand, brings negative consequences. Sloth, impatience, and recklessness lead to suffering.  By taxing the fruits of the virtuous behavior that creates wealth, government redistribution discourages that behavior.

“When government seizes from a family or individual more than is necessary to protect their rights, it diminishes their economic freedom, their capacity to act as responsible moral agents, and to do what they believe is right, including giving to those in need.”

Our progressive tax system also takes too much money—not just from the so-called rich but also from the middle class—diminishing their economic, and thus their moral, freedom.  When government seizes from a family or individual more than is necessary to protect their rights, it diminishes their economic freedom, their capacity to act as responsible moral agents, and to do what they believe is right, including giving to those in need.

Our tax system also steers behavior away from virtue. For example, by providing greater deductions to people who are not married, the “marriage penalty” encourages both cohabitation and divorce, with all their attendant social pathologies.  And many so-called tax breaks that have been added into the code intentionally steer behavior in ways the founders never intended.  The mortgage deduction, for example, seeks to encourage something—home ownership—that we consider to be a mark of a healthy society. But that incentive comes at the cost of encouraging debt. And we’ve certainly seen over the last two years how dangerous that can be.  The point is, with these kinds of incentives, the federal government is actually inserting itself into the family’s or the individual’s decision-making process, usurping the moral authority to decide what’s best for their own situation, seizing a moral power it shouldn’t have.

“George Bernard Shaw famously said that those who rob Peter to pay Paul can always count on the support of Paul. And that’s correct—if Paul is a man of low character and little virtue. It’s correct if Paul fails to grasp the moral dangers of the forcible redistribution of wealth. It’s correct if Paul isn’t man enough to be offended by the insult of Big Brother’s paternalism.”

These affronts to wisdom, justice, and virtue stem from an incorrect and even foolhardy view of what government can and should do.  Government doesn’t create prosperity. And when it tries to spread prosperity, it ends up diminishing it.  The best it can do is to enforce justice by protecting the rights of the people who create prosperity through work and trade.  And although this correct role for government doesn’t create prosperity directly, it maintains the order that allows virtuous people to create it.  This is a proper and noble role for government.

Government becomes ignoble when it abuses its power, when it seizes wealth from the people who are creating it and gives it away to others.  It also becomes ignoble when it meddles in the trading relationships that people undertake by dictating wages, prices, or other terms.

George Bernard Shaw famously said that those who rob Peter to pay Paul can always count on the support of Paul.  And that’s correct—if Paul is a man of low character and little virtue.  It’s correct if Paul fails to grasp the moral dangers of the forcible redistribution of wealth.  It’s correct if Paul isn’t man enough to be offended by the insult of Big Brother’s paternalism.

And Big Brother is more likely to get away with such benighted beneficence at Peter’s expense if Peter too fails to grasp the moral hazard of wealth redistribution, if his understanding of his own rights is mushy, or if he is simply pessimistic about his ability, and that of producers like him, to counter government plunder with either persuasive reason or the power of the ballot.

Fortunately, there is great cause for optimism.  Through Tea Parties and popular protests, millions of Peters and Pauls, and Joe the Plumbers are rejecting what F.A. Hayek so aptly called the fatal conceit of paternalistic government.  Decades of federal expansion have demonstrated what history, economics, philosophy, and common sense have told us all along:  People, working through the market, are the engines of prosperity, both moral and financial—but only if we get government out of their way.

Leslie Carbone is the author of Slaying Leviathan:  The Moral Case for Tax Reform (Potomac, 2009). 

Posted on: http://www.torenewamerica.com/

Advertisements
%d bloggers like this: