Friday, August 24, 2012

Class Warfare Harms Poor and Jobless

CNBC just had a segment with several wealth advisors discussing the results of research they had done on attitudes and spending habits of the wealthy.  They found that the wealthy, who account of a sizeable percentage of overall spending, had reduced their expenditures as the class warfare rhetoric was ratcheted up by the president and the Occupy movement.  Feeling targeted, a significant portion of the wealthy simply chose to be less conspicuous about spending.  Of course, when they don't spend  people lose jobs.

This shouldn't come as a surprise to anyone.  When Obama demonized people for going to Las Vegas, tourism and convention business to Las Vegas dropped significantly.  A lot of people who worked there lost their jobs. People whose jobs depended on those people were hurt.  Pain snowballs.

Remember the Luxury Tax of 1990:

Every now and then Washington does something so breathtakingly stupid that you can't even whistle -- you can only shake your head. The ill-fated ''luxury tax'' -- enacted as part of the 1990 deficit reduction law and largely repealed in this year's budget bill -- is such a thing. The luxury tax crept quietly into the closed-door negotiations that led up to the 1990 budget deal. Its champions were Democratic Congressmen seeking to ensure that the rich would ''pay their fair share,'' as House majority leader Richard Gephardt put it at the time.
The people who paid were the workers who lost their jobs building small planes, yachts, etc.  Half of the workers in the boat industry lost their jobs. Many of the small family-owned businesses were forced into bankruptcy. The tax was a disaster all the way around.  It raised almost no revenue, yet cost the treasury substantial sums due to lost tax revenue and money paid out for increased food stamps, welfare, and other such benefits.  It was a great example of the dead weight loss created by taxes.

But taxation isn't required for class warfare to exact a heavy toll on the economy.  Obama's stupid Vegas comment demonstrates that.  Perhaps the worst example in American history was the demonizing of business, investors and the wealthy by FDR in his re-election campaign in 1936.  Amity Shlaes documented the disastrous results FDR's rhetoric wreaked on the economy in The Forgotten Man.  Net investment actually turned negative (something that didn't even happen after the 1929 crash and the worst of the early years).  The depression worsened.

No comments:

Post a Comment