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Oct 21 2008

Spreading the wealth-2: Why this benefits all

What is interesting about the flap over Obama telling Joe the plumber about the benefits of spreading the wealth around, is that if you listen to the exchange between Joe and Obama, what Obama is saying not only makes absolute sense, its truth should be blindingly obvious to anyone.

What Obama said was that while he was happy for Joe’s success, he also cared about the waitress and the teacher and the store clerk and the policeman and all the others in that community who do not earn anything close to $250,000 per year and were currently struggling and who needed a break. He pointed out that if they were able to do better in life, then they were more likely to be able to afford the services of a plumber like Joe and he would do better too.

That is exactly right. I myself hate plumbing chores. Even though I do not earn anywhere near the $250,000 that Joe is hoping to earn, fortunately I still can afford it so that when something goes wrong in our home I call Nate the handyman and he comes along and promptly takes care of it, while shooting the breeze with me, exchanging information about our families. It is all very pleasant.

As a result, my plumbing problems get solved by an expert professional, Nate gets my business and some income, and this frees up my time and energy to do the things that I enjoy, such as reading and writing. We are both better off.

If I could not afford Nate’s services, I would have to learn to do the plumbing work myself and spend a lot of my spare time on it and would probably end up doing a lousy job if not actually flooding the house. And if that fails, I would have to ask friends who know more about plumbing to help me out. A lot of poor people do exactly that. They sacrifice their own time and energy to do such things, bartering their own skills and services for those of others. That is perfectly fine, but it does not help the neighborhood plumber’s business.

This example can be multiplied over and over. I pay people to work on my car, to repair the roof, to trim the tress in my yard, to plow my driveway in winter, and so on, because I can afford to. And we all benefit from that in different ways.

But if most people are impoverished and barely making ends meet, and the more concentrated wealth becomes, the less likely it is that small businesses will succeed since fewer people will be able to afford their services. It is far better for a plumber to have a hundred middle class people in his neighborhood than one multimillionaire and a hundred poor people, since a single rich person will not have a hundred times the plumbing needs of a hundred homeowners.

Henry Ford discovered this many years ago when he realized that if he and other employers like him did not pay their employees good wages, there would not be a large enough market of consumers who would be able to afford to buy the cars he made. So while higher wages reduced his profits in the short run, it increased the viability of his business in the long run.

But this basic truth has to be obscured in order that the rich can benefit by impoverishing others, The rich have always depended upon duping the poor to support their lifestyles. As Voltaire said, “The comfort of the rich depends upon the abundance of the poor.” But they also have to persuade the less well-off that that this exploitation is good for them. They do this by using their wealth and power to make the political structure serve their needs, then suggest that the resulting structure that redistributes wealth to benefit the rich is ‘natural’ and that reversing that change to benefit the majority is somehow unfair. What is amazing is that so many poor and middle class people actually believe that argument.

This English nursery rhyme (c. 1764) captures the idea of how the laws have always favored the wealthy. (Thanks to blog reader RCarla.)

They hang the man and flog the woman
That steal the goose from off the common.
But let the greater villain loose
That steals the common from the goose.
The law demands that we atone
When we take things we do not own.
But leaves the lords and ladies fine
Who take things that are yours and mine.

‘Spreading the wealth’ means taking the commons back from those who have taken it for their private benefit. It has so many benefits for so many people that one has to wonder why there is so much fierce opposition to the idea from the very people who would benefit.

In the next post, this question will be explored further.

POST SCRIPT: The other Palin for president

15 comments

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  1. 1
    bob

    You and Nate engaged in a private transaction. Where does the commons come in?

    What right does the government have to intercept the consideration that you and Nate agreed upon in order to channel some percentage to other people?

    The thing is, out of all job classes in the U.S., waitresses are the most notorious (along with bartenders) for understating their income so they dont’ have to pay their fair share of taxes. Sen. Obama wants to tax someone who reports income in order to subsidize a job class that doesn’t. Talk about irony.

    Aside from that, who decides how to spread the wealth that has been stolen? What criteria is used to decide? Annual income? That’s no good. We already known that many jobs get paid in cash and they fail to report that income. Race? That excludes poor whites.

    So you have a private transaction between two people. The government intercepts a portion of those funds to spread it to those less fortunate. We don’t know who those people are so we establish a huge gov’t bureaucracy that needs even more money to run. After years of wasting the very money they are supposed to give to the poor waitresses who didn’t report their income they decide to establish a social welfare program.

    Of course, this only motivates those who are ‘poor’ to never work so they can pay for their cable and cell phones thanks to Nate and Joe’s hard work.

    And this makes sense to you?

  2. 2
    Mano

    Bob,

    I am sorry but I cannot get worked up about the petty frauds perpetrated by minimum and sub-minimum wage workers who are barely able to meet even the most basic needs of existence.

    I reserve my outrage for the wealthy individuals and corporations who can afford to use tax accountants and lawyers to find ways to avoid paying taxes even though they can well afford them. People like the late billionaire Leona Hemlsley who boasted that “We don’t pay taxes. Only the little people pay taxes.”

    I also reserve my outrage for the wealthy and powerful elite that has set up a system that siphons the wealth generated by the labor of poor workers and transfers it to themselves.

  3. 3
    Alyx

    Bob- My mother waitressed through most of my childhood, and while she probably didn’t report all of her tips, I promise we were not using that money to live the high life at the expense of the government. Nor was my mother (or any of the other people we knew in similar income brackets) ever tempted to stop working for the buckets of money provided by welfare. Poor people take just as much pride in their ability to support their families as wealthier people do, which makes it all the more frustrating for someone to work 40 hours a week and still not be able to make ends meet.

  4. 4
    Anonymous

    Bob

    Lets just say that waiters and waitresses were tax dodges, that is just one profession amongst hundreds and does not change the validity of Obama’s statement.

    The $250 margin will still be beneficial as Mano stated.

  5. 5
    Jay the Indianapolis Handyman

    I think the key here is to keep the opportunity for people to make $250K per year, while at the same time providing better opportunities for those who want to move up the pay scale to be able to do so. The problem with most thinking is that it punishes either one or the other. As a handyman myself, I want to opportunity to bust my butt and make six figures a year and not be taxed to death. I’m not there yet, but I certainly don’t begrudge anyone who is.

  6. 6
    Al the Handyman

    It’s just sad that so many things are taboo in our society. “Spreading the wealth” is something that is forbidden for our media or politicians to say. As is, any mention at all of helping the poor.

  7. 7
    Sharky

    Time has gone by and still the ideas from Obama are valid. We have not been able to entitle everybody to follow those concepts. Working on it.

  8. 8
    Alan

    I enjoyed reading your article. The only thing I would warn against is not using a licensed professional plumber you can trust.
    All the best, Alan

  9. 9
    desklancer

    It’s just sad that so many things are taboo in our society. “Spreading the wealth” is something that is forbidden for our media or politicians

  10. 10
    Fast Fix the Manchester Plumbers

    You make some valid points in this article and you put them across very well.

    What people have to consider though is that a trusted expert plumber or electrician is invaluable. In respect of undertaking jobs themselves, people have to consider the cost, both in terms of financial and in terms of time lost for them to do this. They would have to learn the theory, learn the practical skills and you would certainly not see the end results that you would with an engineer.

  11. 11
    Gene Erwin

    I believe everyone in this country, truly reaps what they sow and can achieve any success level they are willing to work hard for.

  12. 12
    Michael

    I am a plumber in the UK and am pleased there are wealthy customers who want spread a little of their wealth my way! I try to choose the right locations for work as some customers expect to pay much more than others for the same repair or installation.

  13. 13
    ken mills

    The problem with your theory is that the majority of wealthy people see non wealthy people as lazy,ignorant shirkers.
    It always has,and always will be, the case that the majority of wealthy people are parasitic.You would have on hell of a job to”take back the common” as you suggest.

  14. 14
    Trade Services Sydney

    Mano,

    It was eye opening post, loved the way you shared your thoughts on spreading the wealth around. Imbalance of wealth among different communities is worldwide problem and the gap is increasing day by day between Rich people and poor people. I am completely amazed seeing Mr Henry Ford’s long term realization for paying good wages too their employee and now I know, what was the reason behind that realization by Mr. Ford. Your example of plumber is again very effective. Keep sharing your thoughts with us.

  15. 15
    Chach The Plumber In Honolulu

    I think we all want to help the poorer people make a better life for themselves, agree? And, that everyone should have the OPPORTUNITY to do so. You succeed on your own PERSISTENT efforts, and fail only if you give up.

    Both the socialist system and the capitalist system have evils. So, the question is which system is the lesser of two evils?

    If you want to bring out the best in individuals and a country, there’s no better stimuli than competition. But, you will have a “loser.” That is in quotes only because as long as you can produce something of value to a market, you will not lose. This would leave only a small percentage that truly cannot stand on his own two feet. And the winners like Bill Gate, Steve Jobs, and Michael Moore would gladly spread their wealth to support the truely impaired.

    If you want everyone to be equal, then there is no better action than to distribute the wealth. But, this will lead to citizens and a country to being subpar. And, who are we going to trust to distribute the wealth honestly so that he himself is equal? No politician (even communist politicians) will do this.

    If the greedy business man knows that paying his workers higher wages will benefit his bottom line, then he will do it, and we all benefit (as your argument states). But, let the private individual and the free market decide that, not some government official.

    When governmnet officials have the power to distribute the wealth and manipulate the free market, there will be corruption.

    Question: who can afford to pay big money to lobbiest to influence favorable legislation? Only the wealthy businessman! Irony: The government that supposed to benefit the masses only benefit the few!

    We must limit governments power so big business cannot buy politicians!

    The same goes with finding loopholes. Only wealthy companies can afford these specialized lawyers and accountants to find these loopholes so only THEY can benefit.

    Why don’t we make it EASIER for the small businessman to come in and take away market share from these big businesses? I guarantee you they will change their ways. But, if we have so much regulations that having an expensive legal department is a “prerequisite” to juming in the game, then the little business man cannot compete against big business.

    More competition means lower prices, which will make it more affordable for the individual just beginning his wealth building career.

    Author: I would love your feedback if you have the time. Thanks for opeining this post to comments.

    -C

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