Bruce Thornton

Wall Street Disgruntled Utopians

The Occupy Wall Street protestors are looking more and more like the shock troops of the Democratic Party’s electoral tactic of class warfare. Responding to a question about the protestors, the President gave an oblique endorsement when he said, “The American people understand that not everybody has been following the rules; that Wall Street is an example of that.” Apparently that’s why he wants a 5.6% surtax on millionaires, which would include some small businesses on Main Street. Certainly organized labor thinks they can use the protestors, which is why some labor groups––particularly public employee unions on diminishing taxpayer-funded life support––are supporting them, in the hopes that they can exploit this movement to protect their interests.

The protestors themselves comprise the usual suspects: badly educated young people, aging hippies, leftover leftists (“Marx Was Right,” reads one sign), and the purveyors of various wacky conspiracy theories, like the guy whose sign links the Federal Reserve to the pyramid on the dollar bill. This explains the profound ignorance of economic reality that lies behind the protestors’ complaints about the “greed and corruption of the 1%.” In this melodrama, “Wall Street” and “corporations” have rigged the system so that they enrich themselves at the expense of everybody else. “Growing income inequality” is the proof of this nefarious behavior, as the left-wing magazine Mother Jones reports: “A huge share of the nation’s economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.” Q.E.D.

What Mother Jones leaves out, of course, is some facts I’ve brought up before. In roughly the same period, the top 1% paid 17.58% of all federal income taxes; in 2005, this same cohort paid 39.38%. In 1981 the top 1% paid $94.84 billion (in 2005 dollars); in 2005 they paid $368.13, an increase of 288%. In the most progressive tax system among OECD economies, today the top 10% of American taxpayers pay 70% of all revenues, while the bottom 47% pay nothing. In other words, this increasing “income inequality” has led to the rich footing most of the bill for all the goodies the federal government dispenses. Contrary to the current class-warfare rhetoric, “If you want to get more tax revenues from the rich,” economist Arthur Laffer points out, “you’ve got to make the rich richer, and to make the rich richer, you’ve got to lower tax rates.”

The Wall Street Occupiers and their sympathizers in the Democratic Party can’t seem to grasp these wealth-creating powers of a free-market economy. They’re stuck in a pre-modern notion of wealth as something limited, like land or gold, so that if someone has more, someone else must have less. But two centuries of capitalism have demonstrated that wealth can be continually created and thus distributed to more and more people, which accounts for the astonishing rise in living standards of the past two hundred years. What is historically miraculous is not the volume of wealth the top 1% possesses, but the amount enjoyed by everybody else.

A consequence of this success is that the one in seven Americans the government categorizes as poor in the United States enjoys nutrition, leisure, entertainment, and health care superior to those available to the king of Spain in the 16th century. As The Heritage Foundation’s Robert Rector and Rachel Sheffield write, “In 2005, the typical household defined as poor by the government had a car and air conditioning. For entertainment, the household had two color televisions, cable or satellite TV, a DVD player, and a VCR. If there were children, especially boys, in the home, the family had a game system, such as an Xbox or a PlayStation. In the kitchen, the household had a refrigerator, an oven and stove, and a microwave. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.” Indeed, so successful has capitalism been at raising living standards that obesity, once a sign of wealth, is now a disease of the poor.

The supposed malign effects of “income inequality” on well-being, then, aren’t really the issue for the left. The rhetoric of income inequality is the camouflage for the true goal: to redistribute wealth in order to advance ideological preferences and goals, and to achieve the radical egalitarianism that they consider to be justice––the old socialist dream that littered the 20th century with corpses, and whose milder yet still pernicious forms have brought several European countries to the brink of insolvency. In the end, what the protestors are really angry about is that the world of reality does not live up to the world of their utopian dreams.

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