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Spread the Wealth?

October 21, 2008

I don’t care to give myself any labels, but I lean towards capitalism for moral reasons (good for the economy too, but there are more important things). I don’t believe it's a government’s job is to “spread the wealth around” as Obama proposes. Wealth redistribution means you have to first take the wealth from those who produce it, and that seems unfair except, perhaps, for specific purposes. So why am I not running out to vote for McCain?

I probably won’t vote for either, but let’s look at the income redistribution plans of each. My Republican friends won’t like hearing this, but along with the Democrats virtually all the Republicans believe in these socialistic ideas too. They believe in taking my money to educate other people’s children – even for college. They believe in all sorts of social programs that take money from some to give to others. They may not use the same words, and may not agree on the extent of these measures, or about who should be the recipients – but any laissez-faire capitalists left among them certainly make up less than 1% of Republican Party.

So contrary to what they may say, there is no argument on principle here, only a matter of judging who will redistribute how much and to whom, and what effects that will have. For example, John McCain criticized Obama for wanting to take “Joe The Plumber’s” money, but then he promised “”Joe… I’ll keep your taxes low and I’ll provide available and affordable health care for you and your employees.” Of course McCain isn’t going to personally fund Joe’s health care, so he obviously means to use our money for that.

That’s wealth redistribution. But wait. Joe was complaining that he wouldn’t buy the plumbing business he worked for because Obama’s tax plan would take too much from him after his first $250,000 of profit. Most of us taxpayers don’t make nearly that much, so apparently McCain’s plan is a kind of “Reverse Robin Hood Plan,” in which our “wealth” is spread around to those who make more than us.

In the second debate McCain proposed using $300 billion of our money to help buy the mortgages of people in trouble and “renegotiate” (lower) the balances for them. As I heard this, I looked out the window, up into the hills where the $300,000 homes are – those are the ones being foreclosed on – and thought, “so I get forced to help them by their homes?” We have a 65,000 home, by the way, so this is apparently another “Reverse Robin Hood” plan. (As was the bailout they both voted for.)

McCain and other Republicans (and some Democrats) seem to reflexively fight for those who have more. This is partly why our tax system has so many loopholes that can only benefit the wealthy. Wealth is good in my book, and I love the idea of everyone paying the same tax rate. But it was only a few years ago that Warren Buffet wrote his famous opinion piece in which he pointed out that he pays a lower tax rate than his secretary.

Obama’s plans are always more vague, so it’s tough to judge who will actually spend more. I suspect he won’t be able to get half of what he wants done (Clinton couldn’t), so I don’t worry as much as some about the costs. In any case, despite the promises, Republican administrations have always spent more than Democratic ones in my lifetime. So I really don’t know who will be worse.

What I can see though, is that Obama is more likely to “help” the middle class and poor, and McCain more likely to help the upper middle class and the wealthy. This would sometimes be at the expense of the working class, but I doubt that’s his intention. I think it is instinctive. For example, when we were in McCain’s very wealthy hometown of Sedona, Arizona, I noticed signs notifying us that it cost $5 to pull off the road and look at the beautiful scenery (seriously). That wasn’t meant to target those making less money, but it certainly affected them more, and they too had paid for these highways.

Consider too how wealthy communities like Sedona eventually “beautify” their towns by regulating against mobile homes – one of the few truly affordable forms of housing. It isn’t meant to hurt the poor, but that’s the effect. Most workers in Sedona live in other cities now, and have to spend a lot more money on gas. That helps the property values of the wealthy in town, and so effectively transfers money from the poor to the rich.

Some of these things are natural. Richer towns become less affordable even without laws designed to help the wealthy. And I don’t think it is a conscious thing in any case. But it does point out that those with money usually have the means and ways to protect their interests. That’s one of the reasons I’m not too worried for them under an Obama presidency.

To “spread the wealth around” is not a government’s job, but the way Obama will do it versus McCain may be the lesser of evils. Redistribution of money from rich to poorer is probably more stabilizing to a country than the opposite. I also think the rich will find ways to protect themselves. And though I think higher taxes will be bad for the economy, it is silly for “Joe the plumber” to give up his dream considering he’ll likely make a lot more than he is currently making. (Although with lower profits there will be less to reinvest and therefore fewer jobs.)

In other words, this is not as big a deal as people are making it, which is probably why even the world’s richest man, Warren Buffet, is voting for Obama. Of course there are many other issues not touched on here, and as noted I’ll probably check the box, “none of the above.” I only wish that one could win the election.

Note: This is part of a series. You can find all of the pages listed and linked to here:

The Redistribution of Wealth to the Wealthy

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Spread the Wealth