I grew up in the great Pacific Northwest. I recently visited my family there.
I immediately noticed construction of a government-run light rail system as we left the airport. There wasn’t too much in the way of other construction I noticed. Residential construction has slowed considerably. While we pinch our pennies, the government takes money to fund something we wouldn’t contribute our own money towards. Well, it’s not my money. It’s the money of western Washingtonians. My parents were a little hazy on the specifics of the funding stream. Can’t say I blame them. Who can keep track of all the government revenue streams out there? Not me.
Roads are well kept, but traffic is terrible. Shortages abound in the road socialism found in Seattle. I don’t remember traffic ever being so bad. The market is much more averse to shortages, but free roads are considered a necessity by most. And so demand continues to increase, and taxes go up to keep the roads maintained. I admit they are looking pretty good: recently paved, green medians, flowers, etc. But it would be nice if the funding stream was more voluntary and less compulsory. Silly me.
Got into a discussion with my brother-in-law about government regulation. He’s a left liberal, basically a socialist. I admire him for his intellectual honesty. Too many are socialists and refuse to admit it. His optimism about the potential good of government solutions is roughly comparable to my pessimism about the inevitable negative consequences. There must needs be opposition in all things, right?
I tried to explain to the best of my ability why government (top-down) regulation is unnecessary, but I find I always come up short. Only in hindsight do I find a decent way to express the resolution of common problems. For instance, he mentioned that letting the wealthy keep their money (i.e. not taxing the rich so heavily) keeps the wealth concentrated in the hands of the wealthy. I did a meager, if not inept job of explaining how the wealthy among us provide for jobs.
For instance, a wealthy individual may purchase a Lexus. Who sells the Lexus? Who assembles the Lexus? Who designs and engineers the Lexus? Who drives the Lexus from the factory to the car dealer? When a rich person buys a Lexus, or any other item we may feel is excessive, unnecessary, or exclusive, (and we should be perfectly free to feel that way whether that is an accurate reflection of reality or not) we too often miss the many individuals that get a chunk of that purchase price. Same thing goes for any luxury item: who designs a private jet? Who assembles them? Who flies them? Suppose they eat at an expensive restaurant, one I would never eat at. Who works there as a waiter or a chef?
Suppose a wealthy individual wants to invest in a start-up company. There’s all sorts of individuals whose paycheck and livelihood depend upon this seed money.
Suppose a rich man put it in a bank account. It collects interest and guess who works at the bank? Guess who can get a loan as a result of the deposited money?
I think you get the point that the more money spent or invested by the wealthy, the more it gets dispersed among the rest of us. There is almost no exception to this.
On the other hand, suppose we want to tax the wealthy. Obviously, there are bureaucratic, administrative, and enforcement costs. And there’s the question of who to give to money to, and how to give them the money? There will be some things our wealthy example will be unable to invest in: a small business, some luxury consumer items, an exotic trip, etc. Less money spend there means less money going to ordinary joes like you and me.
Even if the right people get the right amount of money in the right way, a graduated income tax discourages wealth creation. There is a disincentive to be wealthy. Not only is money being taken in the form of taxation which would have constructive alternate uses, but the tax system discourages making more money. This discouragement to wealth generation leads to less spending and investing in the economy over time, even with a static tax rate: one less luxury item or fewer trips to the restaurant mean less money in the hands of ordinary joes like you and me. This is economically destructive. The constructive alternate uses of this money are destroyed.
A related myth of the well-meaning liberal is that the divide between rich and poor is a market defect and can only be bridged by government interference. This is very much tied to the Marxist idea of the proletariat. I believe the opposite. I have met several individuals who, while not elite in background, are property owners. There was a market opportunity they capitalized on. Maximizing these opportunities (i.e. making them more available) maximizes the ability for those from a disadvantaged socio-economic background to leap to middle or even upper classes.
Government barriers which make it difficult to start and maintain a business do the opposite: the Marxist model of a rigid proletariat and their greedy capitalist masters becomes ever more real as the barriers make it ever more difficult to move from lower to middle class. The divide widens as a result of government intereference, not in spite of it. The liberal understands there is a divide between the rich and the poor, but misunderstands the nature of it and the proper solution. He is too optimistic about the nature of the state and its ability to promote goodness and resolve problems.
The conversation with my brother-in-law was very civil and cordial. It was a good paradigm for me. I think we have a mutual respect for one another. His beliefs, like most others, are quite nuanced and relatively complex, according to my rudimentary understanding. Too often, small government-advocates like myself tend to dumb down these complex beliefs into one or two heated epithets, which both inaccurately characterizes their beliefs but also takes away any hope of having a civil discussion between two disparate individuals. Demonizing and contention is not the way of God. Nor should it be the way of the Latter-day Saint. Respect, understanding, and compassion, (and even empathy) coupled with gentle persuasion, can go much farther in building bridges between individuals.