In the President’s latest weekly address to the nation he said that the “wealthiest Americans must pay their fair share.” In Washington State, Bill Gate’s Senior recently tried to make the wealthiest Washingtonians pick up their “fair share” too. But the voters turned it down. Some said it was because there are big differences in opinion on what constitutes wealthy. An income over $200,000 didn’t cut it. Others said, the wealthy are already paying their fair share, so let’s look at some other ideas – like increasing productivity and reducing wasteful government spending which seems to be evident everywhere.
Most people know that the wealthiest 10% of American are picking up the tab for about 70% of income taxes, and nearly half of Americans pay no income tax at all. So how much more should the wealthy pay to pick up a fair share? How come the President isn’t talking about a fair share for everyone?
Or is he? Presently the lowest 60% of American earners are net receivers. This means that they get more from the government than they pay. Is that their fair share? Maybe not. That was the statistic in 2010. It is expected to trend higher to 70% of Americans as net receivers.
President Obama seems to be studying the practices of Latin American politicians. Populism runs rampant south of our border. Populists appeal to the low income, non-tax payers, by promising them that the government will take more money from the wealthy taxpayers so that it can be redistributed. It’s like politicians playing Robin Hood. But, isn’t this really vote buying? Doesn’t it seem like government officials that use their power to buy the votes that could secure re-election should be illegal because this is a corrupt act?
Maybe it should be illegal, because sometimes people need protection from themselves. Look at the situation in populism prone Latin American. Venezuela’s president, Hugo Chavez, has been voted into office more than once on a populist platform. In Venezuela per capita income has been on the decline, even with sky high oil prices fueling the government coffers. That’s only part of the woes. Venezuela is now talked about as a totalitarian state, but the net receivers did elect him. Evo Morales, the president of Bolivia and Raffael Correa, the president of Ecuador claimed victory at the polls on populist platforms too.
These three leaders can take pride in presiding over countries with anemic growth rates, even when others in their vicinity are experiencing healthy growth. They can also boast average per capita incomes that are 10-25% of America’s. In the US, on average the people in these three nations would be living below the poverty level. Another thing they can take credit for is being in the top 8% of countries with the worst government institutions on the planet. This includes law enforcement and justice systems that are plagued with corruption and abusive actors. Oh well, it’s hard to have effective institutions when politicians are focusing so hard on getting elected, by appealing to people that don’t pay taxes, that they forget that their job is to provide a secure environment and opportunities for everyone to contribute to increasing a nation’s standard of living.
But a secure environment and an increasing standard of living cannot exist in a government where politicians practice populism. When government leaders, like President Obama, make references to the rich people who are largely funding our government in a condescending manner, it has to make you wonder if they know what has made America tick. Really what makes anyone tick.
The average American that dreams of being rich, is dreaming of being successful. They are dreaming of attending college and becoming a successful engineer or scientist who advances innovation, or an entrepreneurial business person creating jobs, maybe a doctor, or a financier who makes it possible for others to create wealth. In that dream they don’t see themselves as someone whose results are spoken of derisively by the President. In the dream they also don’t see the fruits of their labors being shared with people who have taken a less productive path. That’s a vision in the fallacious communist dream that has never worked. In America we praise individual success and we reward individual success. This has always been highly motivating.
When the government makes decisions to take away those rewards they are fooling around with what has motivated American’s to create the most productive nation on earth. They are fooling around with what has made America the largest economy on the planet, even though we have just 25% of the people of China or India. Who, by the way, have been trying to make a share-the-wealth formula work for decades. You may hear about the recent tremendous growth rates in these countries but when you have average per capita incomes of $4382 in China and $1265 in India versus $47,284 in the US, big percentage gains are easier to come by. And, by the way, do you know what their recent growth formula has been — it’s not sharing the wealth.
Populism by destroying the motivations of the most ambitious Americans will do the country a big disservice. It also does a disservice by destroying the motivations of those net-receiving Americans who are rewarded by working less.
The only way America will get back on its feet is if people are motivated to get good educations, to work hard, to innovate, and to engage in the entrepreneurial spirit. A president appealing to a populist prescription will kill that. It would be better if the President were to study what has made America great rather than the practices of politicians who have kept their people poor.