On Tuesday, March 13, 2001, The Los Angles Times published one of the most insidious, slippery and disingenuous editorials I have ever read on its pages entitled Add Economics to the Three Rs. I do not have permission to reproduce it here or I certainly would, in order to dismember it limb by limb. The editorial is available at the papers website, should the reader care to visit.
Under cover of a fairly light-toned homily, the Times let its concern for The United States economy become apparent. Principally, the worry was that with more and more people in the stock market, the uninformed were obtruding into areas only the professional ought go; those with a little knowledge were becoming a dangerous thing. The editorial then proceeded to state two gigantic mistruths about economics. This was amusing and disgusting. It ended with an opinion that the population of this nation was too ignorant to be trusted with its own money, retirement and excess wealth.
In my opinion this editorial exhibits paranoia over the problem of the new money being injected into the market causing it to not respond to old-style Keynsian controls, the prospect of a portion of citizens Social Security funds going into the market and the return of billions to Americans because of over-collection (better known as a tax cut) I think the Times was nervous over these portends of actual free-marketism, especially absent a properly Democratic President who would block them completely every one.
My response to this travesty follows:
To the Los Angeles Times
The mental picture of the Times and Alan Greenspan tisk-tisking Americans [Add Economics to the Three Rs, 3/13/01] because day traders might not be able to "name the product or service of any company whose shares they bought and sold" and because "two-thirds [of adults] did not know the meaning of inflation" is bitterly ironic. Mr. Greenspan himself assassinated the definition of inflation when he claimed fear of its eruption as the reason for his interest rate increases. He used this misinformation to deliver six sledgehammer blows to the economy in 99-00. Shame on you Mr. Greenspan. As a former Objectivist you know better: inflation is caused by government deficit spending, watering down the currency by running the printing press with unbacked script and borrowing against future taxation to cover the gap. Inflation is not the productivity surges of free enterprise that on this occasion happened to include intense demand for labor -- although absent any hint of rising wage pressure. The cost of this big lie and Greenspans actions is sickening, as witness now the daily train wrecks on the newspapers business pages.
The Times economic experts cannot be ignorant of Greenspans perfidy in the abuse of the definition of "inflation." Yet they championed his interest rate increases and did not gainsay his "inflation fighting" justification once.
The second botch in this editorial is the trite bromide that the tax cut is "essentially a huge gift to the wealthy." Once and for all: it is not a rebate; no funds will be given to the wealthy. It is not a refund, in spite of the editorials scary-quotes intimation that Bush intends to sell it as such .
The proposed new tax policy is an evenly applied reduction in the rate at which future income will be taxed.
Since a gift can only be given by the owner of the thing given, the only sense in which lowering the future rate for a taxpayer comprises "a gift" is if the government owns ALL of a companys or persons income by right and deigns to confiscated less that 100% of it out of generosity or expediency. On that view, yes, a tax rate reduction would be a gift. From the dictator.
Further, the clearly intended implication that it would be more "fair" to lower the highest brackets rate not at all or very little compared to sizable drops in other brackets rates requires the explicit premise that such ratcheting up of already lopsided "redistribution" of wealth is moral, desirable and efficacious. This is only true in the fantasies of Marx, not for the government of a Republic of free individuals endowed inalienably (or so one thought) with property rights. Progressive income taxation is an embarrassing and deadly disjoint for the United States of America.
Two glaring misstatements in one editorial (one if the Marxism was intended.) I suggest it is the Times that lacks education. Meanwhile, blue-collar workers are smart enough to grasp that lowering all rates by the same amount is actual fairness, and investors simply made the mistake of believing the market to be a square game, one in which they judged their education sufficient to face facts and risk. They are guilty of nothing worse than failing to forecast the irrationality of the unbridled dictator of the money supply, a bear who can strike at any moment, on any whim, with false claims, perhaps to prove a personal point. One wonders what sort of education the Times proposes would prepare Americans to deal with that.
Here is my homily for the Times and Mr. Greenspan: Ought we not hold a giant testimonial dinner to salute the infamous 1%? They pay 25% of the tax bill. They provide jobs for those breaking even, since they invest their capital in enterprise. Each one of them literally sustains the lives of thousands of others outright through confiscatory taxation.
Unfortunately, since you favor appropriating their income by force at an ever steeper rate, or fettering the economy they created through regulating (distorting) the cost of capital, you will never know to what enormously productive use the 1% might put their wealth were they left unchained, or whether they would make of any of it -- under the true meaning of the word -- a "gift."