The Rich Get Richer

The American Conservative ^ | September 25, 2006 Issue | James Kurth

[andy58-in-nh]

The combination of a solid work ethic, good common sense, and a high priority for virtuous behavior is far more important for a person's economic well-being than anything else.

Very true - and it bears repetition. People still come to America with nothing in their pockets - and succeed because of the qualities you've named.

[Alberta's Child]

A fuel tax is a good example of a regressive tax, but it's also a perfect example of a regressive tax that should be regressive.

A motorist who earns $250,000 per year, owns a vehicle with a fuel efficiency of 20 miles per gallon, and drives a total of 15,000 miles per year will pay the exact same dollar amount in fuel taxes as a motorist who earns $25,000 per year and drives the same vehicle over the same distance every year.

Yes, this is a "regressive" tax -- in that the fuel taxes paid by the second motorist comprise a much larger percentage of his income than the fuel taxes paid by the first one. But in this case, a regressive tax is the fairest means of taxation. The "rich" motorist doesn't use the road any more than the "poor" one, doesn't cause any more roadway deterioration or taffic congestion than the "poor" one, etc. So there is no sound reason why the "rich" one should pay any more in taxes than the "poor" one.

[Physicist]

Although they are the largest beneficiaries of the American way of life, including the rule of law, when it comes to the issue of illegal immigration, the rich do everything they can to undermine the American way for the vast majority of other Americans.

...

Some of these bought policies may be for the purpose of making the rich even richer, most obviously the current regressive tax policies of the Bush administration.

The wealth of the very rich is never the product of free enterprise

...

As more and more people become poor or poorer and lose any reasonable hope of improving their economic status

...

Oh, yah. Conservative.

[Alberta's Child]

So the people who experience the stratification the most are opposed to it. And those who are more in the middle they do not mind it.

That's really not the case at all. I suspect that a person's voting tendencies are largely a function of how they view work, personal finance, and the pernicious effects of taxation. Someone who can aptly be described as "idle rich" is far more likely to vote Democrat because these folks no longer see a direct correlation between work effort and personal income. The current generation of the Kennedy family is a good example of this. They -- like many other people who came into a lot of money without earning it -- espouse radical left-wing politics simply because they are bored to tears and look upon meddling in the lives of ordinary Americans as the only means of having any real purpose in life.

[Lancey Howard]

In the end he concludes that the problem will take care of itself through crime and terrorism.

Look! Both at once! Kurth is right!

(Possible Hate Crime in Wal-Mart, Washington State (Middle Eastern Men Attack White Couple)

[webheart]

I don't know who this guy is, but this reads like the product of the stoned mind, where every little crawling of an ant generates a sense of wonderment, but after the high ends, none of it can be remembered.

[Lancey Howard]

(I meant to ping you to post #65.)

Regards,
LH

[redgolum]

We must kill the greedy Kulaks ping

Great point. All the "wealth redistribution" examples in the article can be simplified to the old rich get robbed, and the robbers get to be the new rich. Most people in those examples become more equal by becoming more poor.

[redgolum]

Very true. Our poor are pretty wealthy.

[antiRepublicrat]

Yes, this is a "regressive" tax

I never said a regressive tax is unfair. Regressive gets its name as the opposite of progressive. Progressive was originally meant as an apt description of tax rates that went progressively higher with income. It has in it no hint of fairness, nor regressive a hint of unfairness.

That is until the libs hijacked the word, making it synonymous with their politically "progressive" agenda. I hate how libs get to control the terms used in political discussions, it makes good sound bad and bad sound good. They even have two conservatives here misunderstanding each other.

[xjcsa]

Ugh...the usual truckload of tripe from this Buchananite rag.

[antiRepublicrat]

(Possible Hate Crime in Wal-Mart, Washington State (Middle Eastern Men Attack White Couple)

What planet are you on? Over here there's no such thing as a race hate thought crime against a white person, or a religious thought crime against Christians.

[Extremely Extreme Extremist]

I just came back from the bread lines! Bought an apple for 5 cents too.

[1rudeboy]

"Regressive" and "Progressive" are frequently misunderstood terms around here. I once had someone try to explain to me that paying a toll to use a road is "regressive." A real head-scratcher.

[Penner]

Over one billion credit cards are in circulation in the U.S.—four for every man, woman, and child—and with 40 percent of families spending more than they earn, this keeps consumption rising, even as income may be declining.

Yep. Credit cards are the only thing keeping this economy going. The more the US moves from a producer to consumer society, the more it will resemble Mexico.

[Toddsterpatriot]

The more the US moves from a producer to consumer society, the more it will resemble Mexico.

How true. This year we'll only have $3 trillion or so in industrial production.

[Lloyd227]

"...Henry Ford paid his factory workers $5 a day, twice the going rate, with the aim of creating a broad middle class able to buy the cars they were building"

Anyone aware of DIRECT quotes from Mr. Ford regarding his reasons for paying a substantially higher rate? Because I believe this popularly accepted reason is pure spin and BS.

My understanding of why wages were dooubled was because Mr. Ford expected things done a certain way, he wanted to the ability to command that type of following and the ability to fire a man on the spot with ten good relacements standing in line.

This liberal "building the middle class" stuff is pure liberal delusion.

[Toddsterpatriot]

This liberal "building the middle class" stuff is pure liberal delusion.

Exactly! How many Ford employees were there?

[Myrddin]

An anticapitalist rant if ever I saw one. Class envy through and through. Bitching about dropping estate taxes and capital gains taxes. The author has no concept of how capitalism works. The author does understand how socialist/communist politicians punish success using exorbitant tax schemes to steal the private property of the successful and purchase the allegiance of the "have nots" using wealth redistribution schemes.

[GeorgefromGeorgia]

Joe,
I think that a key Marxist theory is called the labor theory of value. Marx added the feature of "exploitation" that the rich exploited the poor, driving down real prices.

Further, Marx believed that the more advanced the capitalist economy becomes, the greater these contradictions and conflicts. The more capitalism creates wealth, the more it sows the seeds of its own destruction.
Marxism
by David L. Prychitko

More than a century after his death, Karl Marx remains one of the most controversial figures in the Western world. His relentless criticism of capitalism, and his corresponding promise of an inevitable, harmonious socialist future, inspired a revolution of global proportions. It seemed that—with the Bolshevik revolution in Russia and the spread of communism throughout Eastern Europe—the Marxist dream had firmly taken root during the first half of the twentieth century.

Now we witness the utter collapse of that dream in Poland, Hungary, Czechoslovakia, East Germany, Romania, Yugoslavia, Bulgaria, Albania, and the USSR itself. What was it about Marxism that created such a powerful revolutionary force? And what explains its eventual demise? The answers lie in some general characteristics of Marxism—its economics, social theory, and overall vision.

Labor Theory of Value

The labor theory of value is a major pillar of traditional Marxian economics, which is evident in Marx's masterpiece, Capital (1867). Its basic claim is simple: the value of a commodity can be objectively measured by the average amount of labor hours that are required to produce that commodity.

If a pair of shoes usually takes twice as long to produce as a pair of pants, for example, then shoes are twice as valuable as pants. In the long run the competitive price of shoes will be twice the price of pants, regardless of the value of the physical inputs.

The labor theory of value is demonstrably false. But it did prevail among classical economists through the midnineteenth century. Adam Smith, for instance, flirted with a labor theory of value in his classic defense of capitalism, The Wealth of Nations (1776), while David Ricardo later systematized it in his Principles of Political Economy (1817), a text studied by generations of free-market economists.

So the labor theory of value was not unique to Marxism. Marx did attempt, however, to turn the theory against the champions of capitalism. He pushed the theory in a direction that most classical economists hesitated to follow. Marx argued that the theory is supposed to explain the value of all commodities, including the commodity that workers sell to capitalists for a wage. Marx called this commodity "labor power."

Labor power is the worker's capacity to produce goods and services. Marx, using principles of classical economics, explained that the value of labor power must depend upon the number of labor hours it takes society, on average, to feed, clothe, and shelter a worker so that he or she has the capacity to work. In other words, the long-run wage that workers receive will depend upon the number of labor hours it takes to produce a person who is fit for work. Suppose that five hours of labor are needed to feed, clothe, and protect a worker each day so that the worker is fit for work the following morning. If one labor hour equaled one dollar, the correct wage would be five dollars per day.

Marx then asked an apparently devastating question: if all goods and services in a capitalist society tend to be sold at prices (and wages) that reflect their true value (measured by labor hours), how can it be that capitalists enjoy profits? How do capitalists manage to squeeze out a residual between total revenue and total costs?

Capitalists, Marx answered, must enjoy a privileged and powerful position as owners of the means of production and are, therefore, able to ruthlessly exploit workers. Although the capitalist pays workers the correct wage, somehow—Marx was terribly vague here—the capitalist makes workers work more hours than are needed to create the worker's labor power. If the capitalist pays each worker five dollars per day, he can require workers to work, say, twelve hours per day—not uncommon during Marx's time. Hence, if one labor hour equals one dollar, workers produce twelve dollars' worth of products for the capitalist but are paid only five. The bottom line: capitalists extract "surplus value" from the workers and enjoy monetary profits.

Although Marx tried to use the labor theory of value against capitalism by stretching it to its limits, he unintentionally demonstrated the weakness of the theory's logic and underlying assumptions. Marx was correct when he claimed that classical economists failed to adequately explain capitalist profits. But Marx failed as well. Therefore, the economics profession rejected the labor theory of value by the late nineteenth century. Mainstream economists now believe that capitalists do not earn profits by exploiting workers (see Profits). Instead, they believe, capitalists earn profits by forgoing current consumption, by taking risks, and by organizing production.