A few weeks ago, Iowahawk decided to do a little math in order to determine if, as prominent liberals like Michael Moore have claimed, there is really more than enough “wealth and cash” locked up by the evil rich, to easily pay for as many big government boondoggles as the Left can dream up. Bill Whittle turned Iowahawk’s post into an informative video that every progressive in America needs to see:
Actually I think there may be a few holes in these calculations. For example, if you confiscate all the annual salaries of professional athletes, you will have already significantly reduced the amount of money in the “all annual earnings above $250,000” category. Also, if you confiscate all the assets of the Forbes 500, who is going to buy all of those Hollywood mansions, and what will they pay for them with? And how much would the Forbes 500 finally be worth after the equities markets crashed, following the confiscation (or even threatened confiscation) of all corporate earnings? So in actuality, the situation is probably a lot more dire than Iowahawk and Bill Whittle make it out to be.
So what would happen if we actually decided to carry out such a crazy scheme? Let’s start with paying down the national debt. If we assume that the long-standing progressive axiom “the rich have stolen our wealth” is true, and we further assume that radical activist Stephen Lerner is accurate when he claims that Wall Street banks “stole $17 trillion”, we could confiscate all this money to pay off our current national debt, and have about 9 months of Federal government operating cash left over.
After that nine months was up, we could initiate the Iowahawk plan, taking all the earnings from ExxonMoble and Walmart, confiscating all of the salaries of professional athletes, seizing all the personal wealth of the Forbes 500, ending military involvement in Afghanistan and Iraq, and so forth. That would get us through 12 more months.
Then we could begin confiscating the aggregate national wealth of the United States — the total amount of wealth (cash, securities, real estate, antiques, etc.) owned by all American citizens and residents, starting with the richest first. But using President Obama’s projected spending rates, and eventually having to confiscate the total wealth owned by everyone, we would burn through our current aggregate national wealth of $54.2 trillion (minus the $3 trilion or so already taken by the Iowahawk plan) in only 11 more years.
Then what would we do?
Of course if we ever instituted such a plan, those time spans would inevitably be much shorter. Think about it: when you confiscate corporate profits you wreck the equities markets, because no one wants to be a shareholder in a company that can’t pay dividends and has a steadily declining market value. And when you destroy that much wealth, values of tangible items (and correspondingly, their market prices) significantly decline, because there are fewer dollars available to spend. That will cause the value of assets like real estate to plummet, thus lowering the aggregate wealth of the nation even further. And when the government prints more money to make up the void, the resulting inflation will render cash assets worthless.
Hyperinflation has been the result in every situation where a once-thriving economy has been pushed so deeply into debt that they have no alternative other than firing up the currency printing presses. The economy of Wiemar Germany was wrecked because the country was forced to go deeply in debt in order to meet the requirements for World War I reparations payments. In Zimbabwe the Communist government seized the land and assets of white farmers, and squandered them through mismanagement and corruption, leaving the nation broke and deeply in debt, with no means of generating wealth. And in Argentina, the government embarked on a 60 year campaign of class warfare and redistributionist economics which left the country so deeply in debt that by 1989 inflation was out of control, and a decade later the government was forced to default on its bond obligations.
History tells us that going deeper and deeper into debt and printing more money will not solve our current fiscal problems. And a few back-of-the-envelope calculations show, beyond any reasonable doubt, that there is no way for the government to tax and confiscate our nation into prosperity.
Without a healthy economy that generate an enormous amount of money each year, the kind of government that liberals dream about can never be a reality. Paradoxically though, every time progressives push the government into spending (and therefore consuming) significantly more money, or try to get the government more involved in the mechanism of the economy, the economy slows down, which leaves us with even more debt.
That’s reality. And we need to start dealing with it, because we’re not likely to alter it any time soon.
ADDED: I forgot to include a link to this post from a week ago Friday, by Megan McArdle, which runs yet another set of numbers (proposed tax rate increases on incomes over $100,000, and resulting effective tax rates after tax shelters etc. are factored in) and unsurprisingly concludes that “taxing the rich” won’t even come close to solving our current budget deficit problem.