Arnold Kling  

Scott Sumner's Parenthetical Remark

Reformers Against Democracy... Why Do Politicians Break Their...

He writes,

[BTW, Bill Gates essentially taxed middle class consumers all over the developed world, and is giving almost all of the money to the disadvantged in poor countries. That's something governments don't do, and yet for his "monopoly profits" he is despised by many on the left. Nor does this fact show up in the so-called "income distribution" data that is taken seriously even by economists who should know better.]

There is a huge contest going on between politicians and rich people over who should get to spend their money. Most of us have no direct stake in the outcome--as neither politicians nor rich people, we will not have the choice.

But I think we really ought to be rooting for the rich people. That is, we should root for lower taxes and less government spending. Government is one of the worst charities in the world. It advertises that it is going to give money to worthy causes, but very little money goes to programs that are aimed at people in need, and not many of those programs hit their targets. All of the bleeding hearts who are thrilled by the idea of government closing tax loopholes and taking more money from rich people should do an empirical analysis of who benefits from government spending and who benefits from the spending of rich people.

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CATEGORIES: Political Economy

COMMENTS (7 to date)
armchairpunter writes:

I see the partial truth in the "Bill Gates essentially taxed" line, but would point out that I am typing this comment on my Mac using the Firefox browser. I've also heard of this operating system called Linux. I have even heard of humans living without a personal computer altogether. While I suppose the disgruntled taxpayer might be able to find a new home in a jurisdiction where the government is less voracious, I can say with some certainty that it will require far more effort and sacrifice than escaping the clutches of MS, which is not necessarily easy. (In full disclosure, I do use Office for Mac and some free A/V plugins from MS. Then again, I did get some readily observable value for my expenditure.)

Floccina writes:


Periodically I remind my Democrat friends that if GM, Ford and Chrysler were run as charities for the benefit of employees (as seems to be the many Democrat's desire) they would move all its jobs to poor countries. UAW should be glad that those companies are run by people trying to make lots of money.

Scott Sumner writes:

Thanks Arnold, I should clarify that I meant "tax" loosely, as price above marginal cost. No normative judgments intended. I was skeptical about the government's antitrust case, as it depressed the stock prices of Microsoft's consumers. I know that many techies don't like Gates for various reasons, and I am not qualified to say anything on those issues.
I'm with you on the question of who can spend charitable dollars most effectively.

Dan writes:


Your argument here would be strengthened if you linked to empirical research that you referenced in your last sentence.

I agree that the overhead costs of gov't bureaucracies and the distributional distortion of lobbying makes government a poor charity. But, then again, I'm a libertarian.

Grumble writes:

Two nits:

a) Saying Gates "taxed" consumers is not fair - people are free to buy or to not buy his product at their personal discretion. If a citizen refuses to pay taxes, property can be seized or incarceration may result.

b) While I enjoy watching the "rich people vs. the politicians" battle, I am sad that there is no longer a "middle class vs. the politicians" league for me to participate in. Is the middle class just not interested in this sport? Are plasma TVs and cable too much fun?

Greg Ransom writes:

Were's the contest?

George Soros arguably has more influence in the Democrat party than anyone besides Obama.

And the rich dominate the imagination and activities of most politicians in the political lives. The politicians are dependent on the rich for their very political positions. And you see this reflected in what legislation gets attention in Congress -- and what legislation passes.

In any case, most Senators are extremely rich.

Many Governors are extremely rich.

So this is a battle between different factions of the rich.

Arnold wrote:

"There is a huge contest going on between politicians and rich people over who should get to spend their money."

Boonton writes:

George Soros arguably has more influence in the Democrat party than anyone besides Obama.

Evidence? The right brings Soros up on a regular basis for obvious reasons. He has lots of money and he is a foreigner to whom we can ascribe 'spooky' motives but is there any evidence that Soros is anything other than a guy with lots of money who likes to comment on politics and commits some of his wealth to Democratic causes (as well as other less partisan causes)?

I'm thinking of this as I recall a rant I heard a few weeks ago from radio gasbag Mike Savage who accused Soros of causing modern antisemitism to increase by shorting the British pound. (The idea being that since an antisemitic idea is that Jews cause financial problems, Jewish people shouldn't play into that by making tooooo much money in the financial markets)

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