Wealth redistribution is necessary for economic stability

Wealth redistribution is necessary for economic stability

Reading last week’s edition of the Old Gold and Black, I came across a piece summarizing a lecture by John Tamny, political economy editor for Forbes, called “The Wonders of Inequality.”

The lecture was sponsored by the BB&T Center for the Study of Capitalism, which co-sponsors the Eudaimonia Institute — more than likely a front group for the Koch Brothers. The only “studying” of capitalism being done is the unabashed defense of laissez-faire capitalism, hardly a recipe for eudaimonia — what Aristotle defined as human flourishing.

Tamny’s treatment of income and wealth inequality is a smoke-and-mirrors tactic. His celebration of the pursuit of inequality —straight-up greed — was packaged as school spirit. He implored our Demon Deacons to consider whether “anyone at Wake Forest” was “weakened because Arnold Palmer became the worldwide face of golf” or because Chris Paul earns millions of dollars with the Clippers. The irony of this question is that our student body is generally affluent. Of course the average Wake Forest student will not find themselves on the losing end of income inequality.

More importantly, this analogy is misleading. Tamny calls these Wake Forest legends “unequal” alumni, yet he conflates two types of inequality. No one who believes in progressive taxation is opposed to inequalities in talent. I, like many students, admire Palmer and Paul for their athletic prowess. But that is a different matter from the subject at hand, whether these two ought to have made incomes exorbitantly greater than our hard-working doctors, professors and small business owners. The point of progressive taxation is not to penalize talent or hard work. It’s to ensure that the top one percent of Americans pay their fair share.

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No person is an island. The richest Americans could not have succeeded without the support networks of society, particularly the support of government. Federal and state governments set the rules of the market under which businesses compete. Rich business owners benefit generously from tax breaks and subsidies, making them hardly the “rugged individualists” envisioned by the BB&T Center for the Propaganda of Capital.

Our economy could not function properly without strong public education and properly enforced standards for public health, safety and the environment. All of these public goods depend on public revenue, so it only makes sense that the rich should contribute a larger proportion of their income on tax day. They ought to give back to the community, owing to it the very possibility of their success. 

Tamny argued in his lecture that the rich share their wealth throughout the entire economy. This logic of “trickle-down economics” has been discredited by numerous economists, owing to its failure in the 1920s, 1980s and early 2000s. Extreme income inequality is a recipe for recession. According to Paul Gambles, managing partner at MBMG Group, “Ultimately, the narrower the wealth and income bases are, the less efficient an economy is. If a single individual owns the entire productive asset base, then the only employment is indentured slavery.”

When a small group of wealthy families, the top one-percent, own as much wealth as the bottom ninety percent, economic power is denied to the poor and working class. As the rich get richer, while incomes stagnate for the lower and middle classes, the economic mobility of the many is sacrificed for the largess of the few.

I read in the piece that one student attempted to refute John Tamny’s arguments in a Q&A period. I hope that this student knows they are not alone in the fight for economic justice.

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  • C

    Caleb RashApr 11, 2017 at 12:41 am

    Capitalism functions on inequality, as you rightfully acknowledge. However, you referenced the “pay your fair share” talking point that seems to comprise the entirety of the left’s lexicon on this subject. Who has the omniscience to determine what “fair share” means? Since the correct answer to that question is “no one,” all individuals must be taxed at the same rate in order to avoid infringing upon their personal economic liberty. Any other scheme constitutes redistribution of wealth, a euphemism for theft.

    And only on the left has trickle-down economics been “discredited.” 1980s was a highly successful conservative experiment; 1920s hardly qualify as trickle-down considering some of Hoover’s invasive policies into the market; and the 2000s crisis stemmed from the government’s agenda to increase home ownership, a program that required the erosion of safe lending standards.

    • T

      tdalyApr 25, 2017 at 1:40 pm

      Who determine what is a fair share, “We the people”, and thus we are interested in a progressive tax system, not one in which Apple and Warren Buffet pay taxes a a lower rate than median income Americans.

      As far as the 1980s are concerned, Reagan and Papa Bush pushed large tax cuts primarily for the wealthy, and managed to triple the debt. That is hardly a successful experiment. Clinton raised taxes and had better economic growth than Reagan and ended up with a balance budget. “W” cut taxes for the wealthy again and handed Obama a trillion dollar deficit.