Neal's Workshop

Ben Stein's latest editorial for the New York Times, In Class Warfare, Guess Which Class Is Winning, discusses the need to eliminate the deficit. His idea? More taxes on the wealthy. But what's particularly interesting about Stein's piece is how he so incompletely understands the cause of both the growing disparity between classes and the growing deficit - the system of uncontrolled spending founded upon the State.

Follow up:

Regarding class warfare, as Stein points out with the help of Warren Buffett, the wealthy are unmistakably "winning". Compared to the wealthy in other nations, the American super-rich are clearly an anomaly, but I don't think it's because the U.S. pretends to be a free-market friendly environment. So if it's not rampant capitalism, why the growing disparity between classes?

Sure, the taxes paid by the super-rich as a percentage of their income can be (and often are) lower than that of middle and lower class Americans, but will raising taxes on the wealthy somehow balance things out? My guess is probably not. The problem that is causing such disparity in America is systemic, and if you want to look somewhere for the source, look no farther than the U.S. government generally, and the Federal Reserve, specifically. The wealthy are better equipped to reap the benefits bestowed by government; therefore, they expend considerably more resources to secure such benefits. The coercive power of the State is merely captured by those with the most resources. Could the problem be any simpler? Regarding the Federal Reserve, one consequence of the no-reserve banking system is that money funnels directly into the financial assets the super-rich hold. Furthermore, when dollars are increasingly losing their buying power, spending becomes prudent behavior. It's not difficult to follow where the money goes.

More than class warfare, Stein's piece is on what to do about the growing monster of debt that our government has been feeding. Where Stein misses the big picture is in trying to dismiss alternatives to increased taxation:

The third argument that kind, well-meaning people made in response to the idea of rolling back the tax cuts was this: “Don’t raise taxes. Cut spending.”

The sad fact is that spending rises every year, no matter what people want or say they want. Every president and every member of Congress promises to cut “needless” spending. But spending has risen every year since 1940 except for a few years after World War II and a brief period after the Korean War.

The imperatives for spending are built into the system, and now, with entitlements expanding rapidly, increased spending is locked in. Medicare, Social Security, interest on the debt — all are growing like mad, and how they will ever be stopped or slowed is beyond imagining.

Upon making such a damning indictment of the State, Ben Stein dismisses reduced spending as an impossible solution — spending is "built into the system" and stopping it is impossible.

It is hard for me to grasp how Ben Stein can state that the system is utterly flawed only to suggest that, rather than fix the the system, we should accept it as irreparably broken and just patch over the results of such ineptitude. I'm sure Ben, as a conservative, would advocate for smaller government, but the ease with which he dismisses the most basic problem of government is a gross misstep.

Stein unwittingly confirms his inadequate understanding of our current State in his humorous imagery of a society where deficits don't matter:

Besides, if [the deficit] doesn’t matter, why bother to even discuss balancing the budget? Why have taxes at all? Why not just print money the way Weimar Germany did? Why not abolish taxes and add trillions to the deficit each year? Why don’t we all just drop acid, turn on, tune in and drop out of responsibility in the fiscal area? If deficits don’t matter, why not spend as much as we want, on anything we want?

Why bother? Who's bothering? Responsibility went out the window a long time ago. Printing money is the policy of our government — a policy already being used to subsidize the tax-deficit — a policy of taxation by inflation that the U.S. exports to the world. This is nothing new: with government, it is always this way.

Ben Stein needs to see the big picture: patching over the problem of budget deficits with higher taxes is nothing but a short-term solution. The flaws of the system cannot be ignored.