A friendly rebuff to Elizabeth Warren

Elizabeth Warren is a non-crazy left-of-centre US politician. Circulating on Facebook is a neat little vignette about a reasonable view of social democracy.

I actually agree with her statement (left) that wealth-creators should pay their share of taxes – but think it’s incomplete without a dig at the wealth-consumers. Plenty of US pols (like the weirdo bunch calling themselves Republican presidential contenders) are anti-tax, but most of them have always taken a public sector salary, so their views don’t exactly carry water. Here’s my quick rewrite from the right side of the fence …

There is nobody in the government who creates wealth. Nobody. You’re in the public sector out of a sense of duty to others and a desire to contribute to society? Good for you.

But I want to be clear. The services you provide are paid for by the wealth-creating part of society. Your salary is paid out of the taxes levied on the private sector. Your immense job security is made possible by the private sector’s ability to grow the economy. You’ll be safe in retirement, because your government pension is guaranteed by the taxes from people whose benefits are far, far lower. You don’t have to worry that marauding private sector workers will bring the country to a standstill by striking, because people in the private sector lose their jobs if they pull that stuff…

Now look. You joined the UK public sector, and you provide halfway decent services without wanting a kickback. That’s great! Keep on doing it. But part of the underlying social contract is that you understand you’ve got a terrific deal. You’ve got better job security, higher average salaries, and massively better retirement benefits even with the proposed reforms that ask you to pay a little bit more and retire a little bit later. So can you think again about all this strike action, guys?

4 thoughts on “A friendly rebuff to Elizabeth Warren

  1. I disagree with the entire notion that the public sector doesn’t create wealth. Don’t know the structure of public/private linkages in the UK, but in the USA, even small changes in federal policy can create entirely new markets, cause them to flourish. Research by scientists who work for the federal government is in the public domain. Such things have stimulated new industries, created technologies and markets that did not exist previously.

    Let’s not even talk about infrastructure, which is a wealth creator and enhancer all on its own….one largely funded and controlled by nation-states.

    As for private industry in an uncontrolled market economy, they seem to be interested in the engineering, not of new industries, but in the transfer of wealth from the middle classes into the hands of the rich. That and concentrating control of the world economy into fewer and fewer hands. The massive growth in the wealth of the top one percent at the expense of the middle classes of the USA is so thoroughly documented, I won’t even bother posting a link. But the second part wasn’t widely known until very recently. Just 147 companies control forty percent of the wealth of transnational companies: http://www.sciencenews.org/view/generic/id/333389/title/Financial_world_dominated_by_a_few_deep_pockets

    Food for thought.

  2. On the first point, I’d argue you’re talking about “wealth enablement” not “wealth creation”. (I agree wealth enablement is within government’s purview.) Whatever infrastructure is in place or policies adopted, it still comes down to innovation and enterprise to make it pay.

    On the second point, those 145 companies – I wonder how many jobs they’re responsible for? Wouldn’t mind betting it’s around 100m in the US… making the 40% figure more reasonable. And anyway, where the wealth is doesn’t matter so much as how it’s configured – Britain’s banks held assets around 3x its GDP, but that hasn’t prevented some pretty major retooling being imposed on them.

  3. The services they provide are not just paid for by the so-called ‘wealth-creators’. Even though a percentage in the US do not pay federal income tax, they pay other taxes, such as payroll taxes for both social security and medicare, sales tax, etc. And more to the point, it is well-documented that many of the largest corporations have paid zero taxes over the last few years, if not earlier as well. So it’s a little more grey than one might think.

    And don’t even get me started on the whole ‘job-creators’ mantra where taxation is concerned. The Republican presidential contenders continue to feed that fallacious argument to the Tea Party and Republican drones without a shred of proof of its success, and the weight of past experience against them. Truth is, there has not been one time in US history when lowering taxes has had a significant effect on lowering unemployment. Also, there has never been a time when raising taxes has had a significant effect on raising unemployment.

  4. The US Federal Aviation Administration oversees & enables probably the world’s largest & most sophisticated aviation system which has an enormous impact on local & national economies. I am not convinced about a hard line between enabling & creating. Interesting notion. http://www.gaservesamerica.com/learn/economy.html

    The FAA lately has been dogged by not having its funding renewed in past years and actually ran out — the trickle down economic consequences of a $12B agency not getting its cash has been brutal. Fortunately it’s back again and, according to this http://thehill.com/blogs/floor-action/senate/181935-senate-passes-faa-highway-bill-sends-to-white-house 80,000 jobs less at risk.

    I think the distinction between private & public sectors is likely one of those concepts that fuel arguments of division whereas in reality they’re symbiotic and unable to function without one another.

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