We obsess over the rich way too much. America’s millionaires and billionaires, from the ones who became successful by satisfying consumer demand to those who inherited their fortunes, have targets on their backs, especially in a society where envy is considered a virtue. Politicians of the leftist persuasion tap into this emotion and use it as fuel to advance their paths to higher office, convincing the public that they’re entitled to someone else’s money because of equality, justice … yada yada yada.
Senator Elizabeth Warren (D-MA) kicked off her presidential bid by coming up with an unsurprising soak-the-rich policy. Under Sen. Warren’s plan, households with more than $50 million in assets would be taxed 2% annually on their net worth. This levy rises to 3% on assets topping $1 billion. The proposal is estimated to generate $2.75 trillion over ten years to cover her ambitious big government programs. But it’s okay because it only affects 0.6% of the population! …there is no other loathsome group of people that busybodies fixate over more than the wealthy.
…there is no other loathsome group of people that busybodies fixate over more than the wealthy.
This wealth tax came just in time for leftists to pontificate on the immorality of being well-off. As Liberty Nation’s Jeff Charles writes, citing a column that equated death to fortune, “According to the left, anyone who buys a yacht is guilty of murder.” It is this belief that allows politicians to continue endorsing tired tropes of taxing the rich, even though the top 10% pay nearly all the nation’s bills. And the rest of us just eat it up.
In addition to weighing the scales of right and wrong to justify their theft and greed, the left attempts to use economics to support their progressive cause. In this case, they cite hoarding as a transgression. Like everything else the left is incorrect about, this is not detrimental to the economy, to the marketplace, or to the consumer. Besides, do the rich even hoard? Let’s dive deeper to debunk this Keynesian doctrine.
Money Under the Mattress
It is argued that hoarding hurts the economy; the wealthy are not putting billions of dollars to work, instead choosing to stuff cash under their mattresses. Is this even remotely true? Hardly.
First, the “tippy tops” are not hoarding anything. Even if men like Jeff Bezos and Bill Gates did not reinvest their wealth into their companies, they are still contributing to the global economy. How? Savings and investments, the real drivers of prosperity. Through savings accounts, mutual funds, stock accounts, and every other financial instrument available at your local bank, your capital is used to erect towers, start businesses, purchase homes, and ensure your granny has enough wool to knit you another scarf.
Savings and investments enable capital accumulation, while a paucity of consumption amplifies the abundance of capital goods (those utilized to produce other goods). A barrage of consumerism will not make an economy thrive because buying is only an outcome of accrued wealth.
Economics author Henry Hazlitt used the example of two brothers, Alvin and Benjamin, in the influential Economics in One Lesson. The former wastes his $50,000 inheritance and the latter is a saver who preserves his own share. Years later, Alvin is broke and Benjamin lives a modest life of maintaining his spending-to-saving ratio. Is the economy better off with someone like Alvin or worse off with Benjamin’s disposition?
By holding more dough, the national system enhances its degree of financial liquidity, preventing bankruptcies and insolvencies that increase insecurities. In uncertain times, this is a prudent decision, no matter how much central bankers, progressive academics, and politicians want the public to consume. But, let’s concede for argument’s sake that the rich did hoard their millions. Would that be bad? Nope.
Their tepid demand for money boosts your hard-earned income’s purchasing power. If banknotes aren’t entering the market, then this supply is not raising prices. This results in two benefits for the 99% that the left claims to honor and defend: lower prices and higher real incomes. As economist Walter Block writes in the seminal Defending the Undefendable, this is “heroic.”
Moreover, this hypothetical behavior further considers that cash’s value may be determined by the prospect of future exchanges, in addition to current-day transactions. Simply put: The money is useful even when it is sitting idly by waiting to be used. Legendary libertarian commentator Tom Woods also hilariously pointed out the irony in the left’s thinking:
“Funny that the left can’t get its story straight about the rich: on the one hand, the rich are out for the highest profits they can get. On the other, they’re supposedly hoarding their cash, which means they’re foregoing whatever they might have earned by investing in stocks, bonds, etc.”
One more thing: Let’s again concede that hoarding is taking place and it is a vile act. But who are we to penalize this heinous decision to bury treasure troves of Benjamin Franklins in the backyard? It is their money, and thus, it is their private property. You never have a right to someone else’s property.
Bitter Old Misers
Aside from straight white men, there is no other loathsome group of people that busybodies fixate over more than the wealthy. Pop culture has typically depicted affluent hoarders as reclusive miserly old men who take great pleasure in counting their briefcases of Federal Reserve Notes and swimming in their pools of gold coins. But the gatekeepers of allowable opinion have never been particularly concerned with facts, hence the political left’s newfound 21st century wisdom of moral correctness dwarfing factual accuracy.