Why the Really Rich Love Socialists

This article [h/t Instapundit] shows that the U.S. has a more progressive tax code than the democratic-socialist states of Europe.

Such a state of affairs should not come as a surprise. Our own history shows that the very wealthy benefit from leftist policies of high tax rates, “targeted” taxation and industrial policy.

The ugly truth is that the really wealthy can manipulate the political system to their own ends better than ordinary people. They can lobby for specific tax breaks that only they can take advantage of. They can get government trade protection for their companies. They can get bailouts. If all else fails, the truly wealthy can simply relocate their wealth into whatever area the government policies du jour make the most profitable.

In the extremes, they can simple sit on their wealth and wait for the political winds to change.

The history of Europe since WWII has shown that it really pays to be a big company in a socialist country. Socialists like stasis. Socialist politicians like to guarantee jobs. They like predictable tax revenue. To this end they select a handful of major companies and in return for heavy regulation, protect them internal and external competition. The largest companies in Europe are much larger compared to the size of their national economies than are the largest companies in America. The largest companies in Europe also keep their top positions while a great deal of turnover by comparison occurs in American companies.

America saw the same thing happen between 1945-1980. At the zenith of the Left’s influence in America the tax code grew so riddled with loopholes and shelters that the wealthiest paid little taxes. For three years in the 1970s, Malcomb Forbs, then the world’s richest man, paid zero income tax. After the Reagan tax reforms, such a thing would be unthinkable today.

The Democrats want to put us on a road back to the 1970s when the rich got off scot free, corporations grew fat and lazy behind trade barriers and high taxes, and inflation and deteriorating government services slammed the middle class. It will happen again. The perverse outcomes are guaranteed by the incentive structure built into our political system.

This entry was posted on Thursday, October 30th, 2008 at 7:38 pm and is filed under Business, Economics & Finance, History, Leftism, Political Philosophy, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

8 Responses to “Why the Really Rich Love Socialists” Lexington Green Says: October 30th, 2008 at 3:26 pm “…they select a handful of major companies and in return for heavy regulation, protect them internal and external competition… .”

This is precisely the situation Adam Smith opposed, criticizing the issuance of government monopolies.

Our “progressives” are rediscovering the joys of eighteenth century mercantilism.

Ginny Says: October 30th, 2008 at 3:36 pm We were talking last night about this: I’ve a friend who often says that those in the 1 mill to 5 mill range tend to be predominantly Republican and those in the 5+ range tend toward the Democratic. I suspect those preferences arise from Shannon’s argument - big government is more attractive to those who can manipulate the system (and too big to fail). Even in a system without graft, the time-consuming paperwork of dealing with government contracts is worth it to a larger company which will have a larger payoff.

I wonder, however, if some of it isn’t psychological. Small businessmen, even relatively successful ones, remain with their feet on the ground - challenged by events, challenging themselves. And they also realize that complete control by anything or anyone is impossible and not desirable A big businessman (like a believer in big government - indeed like the articulate intellectuals you so often criticize) believes that cutting through the red tape and letting him run things means he will get the results he wants. He is filled with a sense of his brilliance and power - justified more, perhaps, than that of the bureaucrat, but then big business in a competitive environment is not static and the profitable big business today may well fall in a couple of decades. He doesn’t “feel” that, even if he knows it, because he is at the top of a really big mound of people working toward the end he desires. Wouldn’t big government be like that? Well, no. No because government isn’t like business and isn’t held to the same constraints of profit, etc. And no, probably an authoritarian really big business is not as successful as the very powerful and wealthy businessman sitting in his tower thinks it is - or at least it won’t forever be. And government, not faced with that kind of challenging environment, will be even slower than such a business to adjust to changes.

Your great point about the desire for stasis in a socialist system - the desire for a safety net that is rigid and powerful, for instance - means that big government is not going to be flexible and adjust to changing conditions. Big business, too, becomes complacent and lazy. Why are we bailing out the big car companies? What haven’t they learned? And yet, what represented American big business when I was young? Those same companies.

David Foster Says: October 30th, 2008 at 8:09 pm A big part of it is prestige and a desire to fit in with the individual’s social environment. When a person’s assets exceed $50 million or so, he will find himself eagerly invited into the arts-and-charity circle, in which the predominant opinions are usually pretty far to the left.

Gina Says: October 30th, 2008 at 8:23 pm Soros is a predator and wants the US economy to fail so he can prey on it, as he did with the Bank of England. He’s been there and done that.

The Rockefeller trust fund generations travel to Cuba, give money to Ayers, hold parties for Obama because they’re the other side of the welfare coin.

They have no more experience with the reality of getting up in the morning with the need to go somewhere and do something to pay for housing, food, clothes, transportation etc. etc. than someone living on welfare. Which is why they don’t understand why it is so destructive to live on welfare.

They think that the government should just get rid of all of this poverty so that they don’t have to make excuses for flying their horses to the Vineyard so they can ride on the beach.

renminbi Says: October 30th, 2008 at 8:28 pm When you are really rich,you can afford the luxury of feeling good about yourself for having “progressive”opinions. I live in a building with many wealthy people, many of whom are in unproductive things like law and entertainment. I suspect that many of these chickens are going to vote for Col.Sanders. The white employees here are much more sensible.

Ginny Says: October 30th, 2008 at 10:57 pm But of course we come back to - why is it “in”, on a higher rung in the hierarchy of the social world, on a higher rung in terms of sympathy?

I don’t have an answer but suspect multiple reasons. The French disdain for the bourgeosie, the British disdain for the merchant class - both nineteenth century perhaps but prejudices whose shadows still hover in the corners.

These are the people who bought into the romanticism of Roussau (whose charming treatment of his children prepared us for the abortion obsession of the “caring left” today).

They bought into the ruthless Soviet’s argument that the “Reds” fought for the common man (when, of course, they weren’t killing him).

These are the people who think they are on the side of the underclass (Tom Joad and union stewards), but try to hire people whom they can pay under the table and therefore not pay into social security. Years later, they will weep tears that those they hired have no social security history.

These are the people who fought the ruthless fascists (except of course when they didn’t in their strange meanderings that followed the Russian’s pact with Hitler and about face when Russia was no longer aligned).

These are the people who see themselves as martyrs to McCarthyism, having practically no idea of who was guilty or who did what. But they remain for the “little people.” They’re just damn sure they are not little people. And a part of them is scared that, somehow, they will be the little people. (Though at some rarified heights, the “little people” are the entrepreneurs who make a few million a year.) And they sure as hell aren’t like that Sarah Palin - who embodies everything they are sure they’ve moved above. That this fear of seeming, well, “middle class,” would afflict the Peggy Noonans and George Wills of the world shows the power of such fear.

david foster Says: October 31st, 2008 at 6:55 am Re the Rockefellers: several of them have been beating up on Exxon-Mobil, in which they hold large positions, to do more in “alternative energy.” I wonder if they have ever considered the possibility of:

1)Selling their XOM stock 2)Raising some additional capital from friends 3)Starting their *own* energy company to do whatever they think needs doing

I doubt it. There seems to be more status attached to telling other people what to do than in doing it oneself.

Helen Says: October 31st, 2008 at 7:24 am Much as I dislike Soros, I must protest at this idea that he preyed on the Bank of England. We should not have been in the ERM and the fact that we were and stayed until we were bounced out was a decision made by politicians. On so-called Black Wednesday in 1992 (though most of us calle it White Wednesday as the economy took off after that) Soros was not the only one to benefit. A lot of pension funds did as well.

What you are describing Shannon is corporatism rather than socialism. (Though I suppose National Socialism was run roughly speaking on those lines.) Otherwise it can be called regulatory grab. We have found it over and over again that new regulations introduced either by our own government or by the EU and “improved” on by our politicians at first meets with approval from the big boys. Of course, they will benefit. They do, however, start squealing when the competition has disappeared and they are left face to face with an even bigger bully, the state.

The Middle Class Must Not Fail
by Taylor Caldwell
With the rise of the Industrial Civilization in the world,
about 200 years ago, there also arose a social body which we
know as the middle class. Before that, most of the world
suffered under a feudal system in which the people were
truly slaves of their governments in all things. There was
no strong buffer between them and their despotic rulers, no
assurance of freedom to pursue commerce and to live
decently, to keep the fruits of their labor and hold the
paying of tribute at a minimum. The middle class made the
dream of liberty a possibility, set limits on the
government, fought for its constitutions, removed much of
governmental privilege and tyranny, demanded that rulers
obey the just laws as closely as the people, and enforced a
general civic morality.

Sound readers looked to the experience of Rome, the first to
encourage a middle class, noting that Rome had been a strong
and prosperous republic, with much public virtue, a large
degree of freedom for every citizen, and a constitution (the
Twelve Tables of Law) on which our own is based. After the
fall of Rome, governments had everywhere destroyed the
middle class, returned to despotism, and entered the Dark
Ages. It had been centuries since a rising middle class
resolved to keep government at a minimum and to force
respect for the people and eschew tribute except for such
absolute necessities as armed forces, street protection, and
the guarantee of authority of contracts in commerce.

AN INTERNATIONAL ELITE

Those who for centuries had ruled their nations, from father
to son, in total despotism, realized that they were
threatened. Were they not the elite, by divine right? Were
they not by birth and money entitled to rule a nation of
docile slaves? Did the people not understand that they were
truly inferior dogs who needed a strong hand to rule them,
and should they not be meek before their government?

Little wonder that the elite hated the middle class which
challenged them in the name of God-given liberty. And
little wonder that this hatred grew deeper as the middle
class became stronger and imposed restrictions through which
all the people, including the most humble, had the right to
rule their own lives and keep the greater part of what they
earned for themselves.

Clearly, if the elite were to rule again, the middle class
had to be destroyed. It had to be destroyed so despotism
and the system of tribute could be returned, and grandeur
and honor and immense riches for the elite — assuring their
monopoly rule of all the world. For you see, the elite of
all nations, then as now, were not divided. They were one
international class, and worked together and protected each
other. But the middle class laughed and said “we will bind
you with the chains of our Constitution, which you must obey
also, lest we depose you, for we are now powerful and we are
human beings and we wish to be free from your old
despotism.”

The elite did not give up. While it profited from the
Industrial Revolution which under liberty of enterprise
freed the people from the feudal and despotic systems, and
which gave a new birth to the middle class, it also hated
the threat to its own authority. It did not wish to destroy
the Industrial Revolution; it wished to use it for its
exclusive purposes. In the early 19th century this elite
looked for a way, once and for all, to regain its power and
extort tribute from the people and so destroy the burgeoning
middle class which stood in its way, and to subdue the
populaces again to their proper role as slaves of government
by the elite.

CONSPIRATORIAL ADVANCE

Through the “League of Just Men”, elitist conspirators
sought a fanatic to cloak the point of their purposes in
slogans and cant. The man they hired was Karl Marx.
Certainly Marx was no worker; he had never soiled his hands
with labor. He hated the middle class, which he
contemptuously called the bourgeoisie, for he considered
himself superior in mentality and breeding to what he called
“the gross merchants of commerce and exploitation.” He did
not attack the waiting despots, no indeed. They were of one
mind with him. Rather he proposed in his books and
pamphlets the return to government of the total power to
exact tribute from the people in order that government might
better direct every phase of the peoples’ lives, as he
asserted, “for their own welfare.” The elite, in turn,
would control the governments.

Marx began to accuse the middle class of heinous crimes and
aroused the workers against their benefactors. He labored
to create envy and malice among the workers — all aimed at
the entrepreneurial middle class which had raised them from
serfdom, restored their human dignity, and given them
liberty for the first time in nearly 2,000 years.

Karl Marx was made to order by the self-styled elite. They
financed the propagation of his sedition all over Europe and
in America. They bled France and Germany with it. They
financed sedition in Russia. And the plan began to succeed.
By 1910, the Scandinavian countries had already fallen to
the socialism of Karl Marx. Only three nations stood
between the elite and their ambitions — the British Empire,
Czarist Russia and the United States of America.

Much is now made of supposed Czarist tyranny. But the fact
is that the Czar of Russia had already granted his people a
greater measure of freedom. A constitution had been
established, and a parliamentary system. Russia, too, was
well on her way to nourishing and encouraging a middle
class.

HATE AND ENVY

The elitists were anxious to promote the Marxist notion of
demanding tribute from the people, for only through forced
tribute could freedom be destroyed and the people reduced
again to forced labor for the benefit of the elite. Only
thus could the middle class be eliminated. So, we have Karl
Marx’s infamous notion: “To each according to his needs,
from each according to his ability.” That is a foundation
for slavery and tribute. Marx and the elite had a juicy
bait for the workers, who were deluded to envy and hate the
middle class which had freed them. If the riches were taken
away from the middle class, then the workers would become
their equals. Marx called this redistribution of wealth.
Not wealth from the elite, with their vast fortunes in every
country of the world — inherited fortunes which would not
be taxed as income — but wealth from the strong middle
class, which would be robbed in the name of the people.
Only “earned” income would be vulnerable to seizure.

But in the way of all this happiness for the conspiring
international elite, and the slavery of the people, stood
the United States, the British Empire and Czarist Russia.
They would have to be destroyed. Britain had only a small
income tax, used for the armed forces, for roads, for the
maintenance of law and order, and for the payment of a tiny
body of bureaucrats.

Over and over, in America, the elite tried to establish
their federal income tax, but they did not succeed. The
people were too vigilant, too jealous of their freedom, too
proud, too respectful of themselves. They embraced the
ancient proverb, “To work is to pray,” and they guarded the
fruits of their labors. No, America had no graduated income
tax to drain the capital of the hard-working middle class,
and so she became strong and rich and powerful, the envy of
nations which exacted tribute and forced labor from their
people. Attempts were made to exact such tribute from
Americans during the Civil War and the war with Spain, but
each time the Supreme Court declared that our Constitution
prohibited it. As late as 1902, the graduated income tax
was again declared unconstitutional, and the Chief Justice
observed: “It is a method to enslave our people, and deprive
them of their liberty and right to the fruit of their
labors.”

The conspiratorial elite fumed. How best, now, to institute
their system of tribute and slavery? The solution was WAR.
During wartime, governments were better able to tax the
people, harnessing their patriotism to maintain enlarged
armed services.

And so the elite began to prepare America for war, and
conspirators of the French and German and Russian and
English elite worked with them — for the destruction of
their own nationals and the elimination, once and for all,
of the defiant middle class. The American elite, under
advice of their brother conspirators in other nations,
proposed an amendment to the American Constitution — a
graduated income tax, just as Karl Marx had proposed. To
support this elite were very busy, through their henchmen,
the socialists and the populists, and through their secret
communists, in arousing the envy of the workers against the
middle class. They told the workers that they would never
be taxed, “only the rich,” and even then the highest rate
would be only two to three percent. And the taxes would go
to “our exploited workers,” through all sorts of government
benefits. The unthinking, the envious, the stupid, and the
malicious thought this was wonderful. They supported the
16th Amendment — the federal income tax — and it was
passed into law in 1913.

Now the stage was set for war, the attack on the British
Empire, Czarist Russia and the German Empire. The major thrust
of the effort to destroy the freedom of the whole world, and
reduce it to total control by the elite, had begun.

The rest is sad contemporary history. Few in America heeded what
Thomas Jefferson had said long ago, that when we are taxed on our
earned incomes, in our food and drink, in our coming and going,
in our property, we would face the return of slavery and the
reestablishment of an all-powerful and despotic elite. So it is
that we of the middle class are being destroyed through the
exaction of tribute, resulting in an ever-increasing power and
despotism of a central government controlled by a conspiratorial
elite, and everlasting wars to subdue us and drive us to our
knees.

NEVER AGAIN?

Do not believe for an instant that the world’s conspiring elite
in every nation have so much as a serious quarrel among them.
They have just one object: control through tribute. Your
slavery, through tribute, and mine. And they use wars for their
purposes just as they use inequities, harassment, bullying,
capriciousness, and extortion of their graduated income tax. The
system of taxation with which they have yoked us is really forced
tribute from the hard-working, and especially from the middle
class, who are slowly being eliminated.

Behind this attack are the self-styled elite, secure in their own
power and riches. Most of them have huge fortunes which are tax-
exempt. But every man and woman of us — we of the middle class
— are taxed in our food and drink, in our comings and goings.
The harder we work, the more tribute we have to pay for the elite
are determined that never again will the middle class challenge
them, and never again will we be able to save money and so rise
to power, and never again will we protest the slavery they have
planned for us.

But many of us still dare to protest, and will continue to do so
while God gives us breath. To be effective, we know we must
direct our attacks on the real criminals, the wealthy and
powerful secret elite of all the world — the conspirators
laboring night and day to enslave us. Even our own government is
now their victim, for it is the conspiratorial elite who choose
our rulers, nominate them, and remove them by assassination or
smear.

I have fought these enemies of liberty in every book I have
written. But too few have listened to me, as too few have
listened to others who have warned of these conspirators. The
hour is late. Americans must soon listen and act — or endure
the black night of slavery that is worse than death.

* * * *
(From Grolier’s Academic American encyclopedia)
Caldwell, Taylor

Janet Miriam Taylor Holland Caldwell, b. Sept. 7, 1900, d. Aug.
30, 1985, was a popular American novelist who began her prolific
career with Dynasty of Death (1938), a fictional biography about
the fortunes of two powerful families of armament manufacturers
over the course of 60 years. Many of her other novels followed
this generational pattern, including The Captain and the Kings
(1972; film, 1976) and Glory and the Lightning (1974). Caldwell,
who also wrote under the pseudonym Max Reiner, also wrote The
Devil’s Advocate (1952), Dear and Glorious Physician (1959), and
Answer as a Man (1981).
Bibliography: Stearn, Jess, The Search for the Soul:
TaylorCaldwell’s Psychic Lives (1973).

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