A time honored but mistaken economic theory


The most traditionally traveled way is not always the best way. A superhighway is a widened road which previously had been a two-lane conduit, and before that a gravel thoroughfare. Before that it was a path whose grass was tamped down perhaps by deer because they found it easier to use. Before that it was a parting of high grass through which rabbits hopped. Can we find a better way to map out routes than that?

George Washington died of blood loss. He was not injured in any way at Mount Vernon. His barber, since barbers usually took care of this procedure, “let” blood from his arm on the theory that it would drain bad blood and allow him to recover from an ailment. This medical procedure had been practiced since the time of Galen the physician in the Roman empire. No one ever questioned why tapping a vein was supposed to restore anyone to health. They just kept doing it because that was the way they always did it.

Doctors know of other practices with venerable histories. Tuberculosis patients were thought to be in need of air and sunlight. Cigarettes, cocaine and heroin were legal, medically approved calming agents. The operation known as a lobotomy is today regarded as a barbaric mangling of a person’s brain.

Cutting taxes for the rich strikes me as one such blunder handed down from antiquity with great credentials, meant to boost a sagging economy, like ours. The theory is that the wealthiest would take money normally “wasted” on taxes for the common good and invest it in new factories, making for many more jobs, which in turn would spread the wealth among the populace, so that the rising tide would lift all boats and really benefit the common good. On paper, it sounds grand. Who better than the rich have the power and the expertise to start a new factory, which of course will result in new jobs?

The only trouble is that when the rich have been exempted from their fair share of supporting the common good, time and time again they did not build new factories but bought securities like stocks and bonds, or as commonly, put it in the many world tax havens like Switzerland, Luxembourg, Isle of Man, Cayman Islands and about 20 other places known to them but not to you or me.

But the fascinating part about this is the ability of the rich to succeed in gulling many times more middle-class citizens to endorse this policy, time and time again. The latter do not benefit but instead have to pay more taxes to compensate for the tax shortfall they themselves approved. Many times more people are convinced, perhaps on the hunch that voting for the rich will make the voters rich. There is no logical reason why they would become rich. If anything, the gapping deficit only worsens when taxes for the rich are cut. Witness our current multi-trillion dollar deficit and the decade-old tax cuts helping to explain it. We the middle class are so gracious to our economic betters that we find nothing wrong with awarding their conglomerates tax freedom: between 1998 and 2005, two thirds of U.S. corporations, with sales of $2.5 trillion, paid no taxes. You, dear reader, and I paid more than did all of them combined.

At this point the beneficiaries of all this middle-class largesse will object that this is class warfare. It is trying to get the middle class to attack the rich. I oppose any attacks. But that includes the attack on the middle class by policies that hurt them on behalf of those above them. Why do the rich not indignantly object to this kind of attack?

In order to get elected, politicians must raise large amounts of campaign money. One of the traditional ways is to promise the rich tax mercy if they contribute. It only takes a relative few of them to donate compared to the millions of middle-class voters it takes to support this preference of the wealthy. So the campaign money goes into repeated TV and print ads for the candidate of the rich, gulling less fortunate voters to back a system that has yet to help them. But since all it takes is for ads to repeatedly badger voters, the party with the most money can run more ads. The Nazi Goebbels demonstrated that a lie repeated often enough becomes true.

The church magisterium has continually taught that all citizens have tax responsibilities to their governments, and according to a progressive scale whereby the wealthy pay more and the less wealthy pay less. In this there is no class warfare. There is only basic justice in community, or social justice. Those who stand to pay more when tax policy is made fairer argue that this is mixing religion and politics. They direct social prophets to butt out of secular affairs, as though the mistreatment of the rank and file of any society is not profoundly religious. They say they come to church to hear about God, not economics. But this God has told us in Christ that what we do to the least of his brothers and sisters, we do to him. This is why the 1971 Rome Synod of Bishops with Pope Paul taught that such political reformist actions actually constitute the gospel of Jesus. They are not the opinion of a social activist, to be disregarded the way we might dismiss his choice of a favorite sports team which he mentions from the pulpit.

Bunny trails, blood letting, narcotics and lobotomies are traditions as discredited as should be the excusing of the most privileged of society from their tax duties on the fatuous promise that it will redound to the good of all the economic base. All one has to do is look at the track record. When given this get-out-of-jail-free card, they have traditionally boosted their own bank accounts.

Jesus knew the human tendency to hoard when he said the then-staggering truth that it is easier for a camel to make it through the eye of a needle than for a rich man to enter the Kingdom. Was he guilty of mixing religion and economics? Should we boycott the collection basket until he backs down from his radical position? Should we disregard him because he was not an American capitalist?