True to form, Krugman makes no mention of the fact that in each case the money paid as estate taxes was rightfully the property of the bequestor, who earned it and who had a right to determine to whom his property would go: namely, to his chosen heirs and not to anyone selected by Krugman or government officials, in defiance of his wishes. With Krugman and his ilk, the rights of bequestors and of taxpayers in general count for nothing. They are overridden by the needs of others.
His message is the endlessly repeated one of “stop, don’t use your wealth for your own enjoyment (present or future), because others are suffering and need it more than you do.” His message is that everyone’s life is mortgaged to the needs of others and that no one can breathe free and live for his own happiness and pleasure so long as anyone else, anywhere on earth is suffering and in misery.
Here is a news flash for Mr. Krugman and all others who share his beliefs: The individual owns his life free and clear. His own happiness is full and sufficient justification for his actions, irrespective of the needs, misery, and suffering of others. He did not cause their suffering and his self-sacrifice would not cure it.
An individual may be a multimillionaire (nowadays, he probably needs to be a billionaire) and desire a yacht or personal jet. He values his yacht and/or jet more than feeding the possibly thousands or tens of thousands of starving people around the world for whom the price of his luxuries might buy food. His valuation is not arbitrary or capricious. It is based on the fact that his yacht or plane will make a greater actual contribution to his life and the lives of his loved ones than will the feeding of a mass of people with whom he has no personal connection and who make no actual contribution to his life or well being.
Ironically, Krugman and virtually all the other bleeding heart “liberals” behave in essentially the same way in their own lives as does the billionaire. They too value their luxuries above the necessities of strangers. If they did not, they would live as monks under vows of poverty, in small cells, sleeping on a straw mat, and subsisting on bread and water, so that they could provide for those needier than themselves to the greatest possible extent.
Krugman closes his column with the remark, “Congress has already declared that the budget deficit is serious enough to warrant depriving children of health care; how can it now say that it's worth enlarging the deficit to give Paris Hilton a tax break?” The answer is that while Paris Hilton may not be one of the most inspiring representatives of humankind, the fact remains that like everyone else she too has the right to the pursuit of her own happiness. And neither Krugman nor anyone else is entitled to deprive her of anything that is rightfully hers because they believe that her wealth should be used differently than she would wish to use it. Paris Hilton deserves the tax break because the money is hers in the first place. Krugman’s Medicaid children do not deserve that money because it is not theirs and has been given them only by means of stealing it—i.e., taking it against the will of its owners at the point of a gun wielded by tax collectors.
Cutting Medicaid and all other government programs while reducing and eliminating taxes is precisely the policy that is needed to restore the founding principle of the United States, which is the individual’s right to the pursuit of his own happiness. This principle, not cutting the government’s budget deficit, is the primary. Implementing it means cutting government spending precisely for the purpose of cutting taxes. If there is a deficit, it means cutting government spending still more. It means cutting government spending for the very neediest to make possible the pursuit of happiness by the very wealthiest. If the pursuit of happiness is the principle, it means this above all, because only this will secure the principle.
The philosophy I have expressed above is most closely identified with Ayn Rand and her philosophy of Objectivism. And in truth, she is its most consistent advocate. Nevertheless, I would like to quote a passage from another advocate of the same philosophy, namely, Ludwig von Mises, which has the special virtue of pointing out the close connection between the ethics of egoism and the teachings of economics on the subject of the harmony of self-interests. It is the single passage in all of Mises’s writings that I value most highly and which served to make me a “Misesian” for life, when I first read it over fifty years ago. It summarizes the essence of Mises’s economic theories.
Nothing is gained when the teacher of morals constructs an absolute ethic without reference to the nature of man and his life. The declamations of philosophers cannot alter the fact that life strives to live itself out, that the living being seeks pleasure and avoids pain. All one’s scruples against acknowledging this as the basic law of human actions fall away as soon as the fundamental principle of social co-operation is recognized. That everyone lives and wishes to live primarily for himself does not disturb social life but promotes it, for the higher fulfillment of the individual’s life is possible only in and through society. This is the true meaning of the doctrine that egoism is the basic law of society.—Ludwig von Mises, Socialism An Economic and
Sociological Analysis. New Haven: Yale University Press, 1951, p. 402.
Among the most important things that Mises showed is that the pursuit of self-interest is the foundation of the saving and investment and continuous innovation and improvement of products and methods of production that serves to raise the standard of living of all. In a country governed by the principle of the individual’s pursuit of his own happiness, the standard of living of the very poorest comes to surpass the standard of living of the very richest of a few generations back.
In such a country, great business fortunes are accumulated on the basis of the earning of a high rate of profit over a long period of time and the continuous saving and reinvestment of most of that profit. To earn the high rate of profit, repeated innovations are required, as competition serves to eliminate the premium profits on earlier innovations. In their origin and disposition, the great fortunes serve to increase the supply of products and reduce their prices, while raising the demand for labor and its wages, this last being one of the effects of the greater accumulation of capital.
In his ignorance, it is precisely such fortunes that Krugman is out to undermine through his advocacy of the continuation of the estate tax. He thinks the estate tax has no negative consequences for the average person because it “is overwhelmingly a tax on the very, very wealthy; only about one estate in 200,” he says, “pays any tax at all.”
If the estates consisted of mere heaps of personal consumers’ goods, in the manner, say, of the jewels of an Indian maharajah, Krugman might have a point. He has no point when the estates consist of the means of production that serve the general buying public in providing it with goods and services and that underlie most of the demand for labor in the economic system. Estate taxes are at the expense of the supply of consumers’ goods for all and at the expense of the demand for the labor of all. They are urged in opposition to the general standard of living and the well being of all.
Krugman and the other advocates of looting and plundering the wealth of the rich for the alleged sake of the poor contemptuously dismiss these absolutely correct economic doctrines pertaining to the role of innovation and saving as “the trickle-down theory.” In doing so, they serve only to perpetuate the poverty of which they pretend to complain.
Krugman and his ilk actually care nothing whatever for the welfare of the poor. For them the suffering of the poor is merely a weapon with which to beat down the aspirations and success of the rich, which alone can elevate the poor.
This article is copyright © 2006, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site http://www.capitalism.net/ is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.