REDISTRIBUTION - BAD IDEA
DNC started and as expected was well choreographed. It was a good show and the keynote speech, as well as, Michelle Obama’s speech were both good and well delivered. But do they pass the fact test. We have already learned this morning that even some of their media allies are questioning lots of the claims made.
But beyond the sales pitch, what are more significant to me are the contradictions. Reminiscent of the Republican convention, we heard lots of personal stories of struggle and success. However, that is where the similarity ends, the government not each individual becomes the driver of success. Here we celebrate success because the community and the government provides for it.
The main theme of the DNC is that the success of the middle class is what will drive growth and prosperity. This of course is to boost the populist theme.
The truth is that they have it upside down. Growth and prosperity improves the lives of all classes rich or poor. No class in particular creates prosperity. It is the innovation and drive of entrepreneurs that improves the lot of all classes.
This idea that a government in charge of fairness and redistribution is old tried and failed. It reminds me of the story of the little girl who wants to be President and when asked why, she answers, I want to give food and homes to the poor and the homeless. That’s a noble cause and you don’t have to wait until you are President. Why don’t you come over to my house and I will give you money if you mow the lawn. You can then take that money and give it to the homeless to buy groceries. She looked perplexed and said why the homeless guy doesn’t come over to your house, does the work and buys his own groceries. The man said, welcome to the Republican Party.
The idea that you can keep taxing the rich and redistributing the income to the less fortunate, as noble as it sounds, does not and has never worked. All you have to do is look across the ocean to Greece or Spain; both Countries have stagnant growth, huge deficits and unemployment over 20%, precisely because they tried this concept. The argument that you can raise taxes and automatically increase revenues is like saying to airlines or to any business, raises your prices and your income/profit will grow indefinitely. It just does not work that way.
If Obama is reelected and this big government, attack business and success ideas continue, we will make the European crisis look like paradise.