One of the pseudo issues that we’re instructed to be talking about now is whether to tax capital gains – and now everyone is quoting Warren Buffet. Partly, this relies on the average person not understanding how corporate taxes work vs. personal taxes – something Buffet understands very well. But when you and I are being handed our coffee shop talking points by the media, we aren’t supposed to stop and really question those distinctions, are we? If you don’t know, you don’t know – it’s not like the method of taxation has changed in recent years or anything – there’s no need to discuss it here – it’s easily accessible for understanding in hundreds of sources on the web. But let’s just entertain the fictions at work for a moment, and say we’re actually talking about taxing the wealthy and not actually talking about taxing the engines of wealth creation – the corporations in which the wealthy are invested. This is the basic reasoning, formatted as a set of progressive syllogisms:
Major Premise: It is government’s prime responsibility to ensure basic subsistance for everyone.
- Minor Premise: And the primary way governments ensure subsistance is creating or providing a job.
- Hidden Premise: A job system (career for life, regardless of market needs) should prevail over a work system (continually adapt to market needs)
- Conclusion: Therefore, the government’s primary concern should be job creation or job protection.
Major Premise: The government’s primary concern should be job creation or job protection.
- Minor Premise: If the government had more money, it could create jobs.
- Conclusion: Therefore, the government’s primary task should be acquiring wealth.
Major Premise: The government’s primary task should be aquiring wealth.
- Minor Premise: The wealthy have created wealth/capital that is currently not engaged in job creation (sleeping capital).
- Hidden Premise: The government can more competently manage that capital than the wealthy who created it.
- Hidden Premise: Taxing the wealthy will result in the creation of jobs and a better state of affairs for the jobless.
- Conclusion: Therefore the government should take that wealth from the wealthy, so that jobs will be created.
I contend that, beyond laying out the structure of the arguments, and utilizing logic to test their validity (not whether they are true – an argument can be valid without being true), it isn’t possible to have a meaningful discussion of these issues in the US, any more than it is to have a meaningful discussion about race or homosexuality. So I’m not going to do more than present a precis of my reasons for not accepting the syllogisms above. I won’t drill down into specifics, but I feel it necessary to simply say that there’s a meaningful tradition (I think the tradition is capitalism) that has decent science and excellent reasoning behind it, as an alternative to the views expressed previously.
Giving jobs to people as charity, when we don’t need what they’re offering, rather than requiring them to continually create ways to add value to the economy, as needed, adapting to the evolving market place, dealing with obsolescence by innovating, is both subsidizing dependence and reducing incentive toward ingenuity. It disproportionately taxes success, punishing those who add the most value, and further inhibiting their ability to innovate, and it does nothing to equip others to take their place. Such solutions pretend to equitably redistribute wealth, but they harm all parties involved, including the recipients of the forcibly extorted capital, tying it up in mere expenditure, and robbing it of its potential for investment. It sabotages those who actually do create demand for work (whether employers or entrepreneurs) and reward those who refuse to act creatively or who cannot.
We hold corporations to a standard of constantly innovating to compete, and don’t heed them (generally – the recent banking fiasco sure makes it seem otherwise) when they whine that no one wants their stuff and they’re losing money. At the same time, we allow individuals to think they’re entitled to a job, and that a job is a lifelong entitlement, something someone gives or provides them if only they do the right formulaic things (get a certification or degree and don’t offend the wrong people). Unlike companies in the market, we don’t insist individuals keep innovating, keep up with the market, keep finding ways to add value. We let corporations go under every day, taking scores of investors with them, but we contemplate protectionism for individuals – they simply cannot be allowed to fail. It’s not consistent. If we give people jobs, we should also give corporations profits. If we expect corps to constantly adapt to the market and innovate in order to earn and compete, we should expect the same think of individuals whose skills have met with obsolescence. And we should stop telling the post-WWII lie that a college degree is a guarantee of a lifelong career. We not only know that it’s not true, it’s a fiction that’s doing a lot of harm by convincing people not to be prepared, not to develop adaptation as a primary skill over and above specific trade or professional skills, and to turn to government when the market changes and they are out of work as easily as a company can go out of business.
What if each of us was a company? Want to know what law I would support? I would support mandating that every adult in US society incorporate themselves, and have the legal protections due a corporation, the rights available to a corporation, and the responsibilities we expect of a corporation – ethically and in terms of market competition. After all, in a society that has achieved the hegemony of corporate entities over personal rights, the subordination of personal freedoms to corporate control, and the demoralization of personal initiative at the behest of dependence on corporate jobs, elevating the individual to corporate status would simply mean giving him the original rights and responsibilities talked about in the constitution and which the founders of the country had in mind. It would be an answer to both the Republicans who want to replace personal freedoms with corporate privileges, and the Democrats who say they want maximum individual liberties and opportunities. In fact, the basic concept has been envisioned in a book called The Unincorporated Man by Dani & Eytan Kollin, in which “every individual is incorporated at birth, and spends many years trying to attain control over his or her own life by getting a majority of his or her own shares”. Incidentally, there’s nothing to stop you from incorporating yourself. A good S-Corp in Nevada, Wyoming, or Utah ought to do the trick. It might be a while before you can draw capital gains, but it’s a good exercise – learn to run a company properly, and you might be able to act on an idea for value creation when it comes to mind. You could be John Fucolaki Inc.
Those in our society who create value right now are responsible for the good in the economy – they are the engines, as Ayn Rand put it, and it is partly to them that we owe the prosperity of a host of people who depended on the results of their initial idea. I wouldn’t go so far as to say they are solely responsible. In a creator society, in which we are all interacting with the ideas of each other, drawing upon them, adding our own, modifying the mix – it’s very much like a mythopoetic society, where each person is contributing part of the whole – value creation in an ideal environment is collaborative – there is always room for people who add value. So the goal shouldn’t be to get people jobs – it should be to get people into the mentality of constantly seeking ways to add value. The Republicans want to see self-reliance and individualism – put your money where your mouth is – stop playing politics by promising job creation and start demanding that people at every level of society create ways to work – stop intellectually subsidizing dependence. The Democrats want to empower people over against big corporate dominance? Sure you do – let’s see it – help them become individually motivated to generate their own industry.
Those who merely hand someone a job, whether or not it makes business or financial sense to do so, out of the kindness of their hearts, rob the economy of genuine innovation, and deprive a host of people who could be employed by even one man who is employed for a good reason. It’s not just that I don’t agree with Warren Buffet – I don’t agree with the entire attitude of the government trying to “create jobs” – which is like cosigning for a bad debt – a desire to guarantee work for people who, by themselves, can’t adapt or innovate in a changing economy and expect lifelong entitlement and have even, in general, conveyed that is their very attitude by turning to the government to make a job for them. It’s no different than bailing out banks. Don’t bail out the jobless. Instead, tell them the members of our tribe, the capitalists, must learn to swim in the market, because that’s how we as a people not only survive, it’s how our culture grows, and how we prosper.
I’ve said it many times, and I’ll keep saying it: the fundamental vocational skill in this society is the ability to adapt, to create multiple income streams, to find new ways to add value, to minimize dependence on institutions and government to provide all the work you do. In the old days, they told people who went to college to also learn a trade, because times change. Unless grandpa’s advice was utterly stupid (and I don’t think it was), the modern equivalent advice would be, everyone with any sense should have multiple irons in the fire – more than one way to add value, in other words. If you’re down to one, are you really shocked that gee, one day it becomes obsolete, and you’re completely hamstrung. Someone who gambles that way with their credit, we call foolish. But with vocational matters, we wink at it. It’s not good enough now to say “I’m going into Human Resources” or Communications or Software Development or Database Administration. The response should be “and… what else?” If there’s only one thing, you’re screwed – it’s just a matter of time. The one career for life mentality is part of a big vocational bubble that existed from 1945 to its final death rattle in 2003. Pretending we still live in that world is even more irresponsible than pretending it was a solid reality in the first place. Mom and Dad were wrong – deal with it.
Most common question: What about the people who can’t adapt or innovate or change or add value? Why? Are they mentally ill? Do they have low IQs? Why do you believe they are incapable of doing what people all over the world are having to do when their industries are phased out? Is the average guy a lout who can only learn one repetitive task – to sit but not to roll over? And why do we have to solve the problem of the chronically dull, senseless, stupid, and uncreative anyway? If we acknowledge that the proposed solution will not improve their situation, on what basis do you insist that a solution actually exists? Stupid people get run over in the road every day, along with some pretty smart ones. We can’t save everyone. And it’s not the job of government to save everyone. Not in our legal tradition. It never has been. It is our job to remove as many barriers as we can to people innovating and creating value. We should minimize license restrictions for small business, simplify regulations, stop subsidizing and protecting industries and corporations that keep them from competing effectively, and work to streamline the ability of individuals to go from idea to industry without making it a system of welfare. In short, the job of government is to make sure that government doesn’t interfere, and that no one uses the power of the gun in all its forms to interfere. Other than that, it should keep its hands out – of my job life, work life, entrepreneur life, company life, etc. Safety and health things I have some tolerance for, but unnecessary control or contribution by any arm of government is poison. And that goes for the average guy clamouring for going after the rich. Instead of taxing the corporations of the wealthy more, try subsidizing and protecting them less. Are you brave enough to argue that one at the Starbucks and to your congressman? That will do more than most things to give Joe the out of work airlines employee a chance to start his accounting practice or his travel concierge service, or whatever he’s planning in the wake of his industry’s downfall. But handing the airlines money to hire him back, paying him to sit at home or sweep streets, is just prolonging the problem.
Next time you hear a politician claim he’s going to do anything to create jobs, ask him not to. It’s not the job of government to create jobs. Next time he says we need to subsidize an industry, and that will create jobs, tell him he’s just recreating the problem, stifling innovation – not adding to it, and protecting the corporation over against the entrepreneur – even if he’s a Democrat. Stop listening to the gospel of dependency, and do something for yourself, and do it now if you’re employed, before you’re next. Don’t listen to those people growing up who told you that the goal is to acquire a career and protect it at all costs – you can’t. Get a second line of work and moonlight on the side to keep it fresh and active, for the same reason you have an emergency fund, or savings, or health insurance, or insurance on your roof. And when you find yourself saying let’s tax the rich more, because it’s not fair that they get more, look in the mirror, because you’re jealous, you’re spiteful, and you don’t know what fairness is at all. It’s never depriving the other guy, it’s merely not stopping you from adding value and profiting by it. Didn’t you learn anything in kindergarten, or were you the kid who believed it when the teacher said if one person has gum, they have to bring it for everyone? Good thing we don’t have that rule for your girlfriend at parties, or your billfold the next time you whip out a twenty. Focusing on who you can get money from for the government just gives the government more things to spend it on, and doesn’t do anything for you but make you stupid and distracted. Stay focused, because no matter who you are, or where you’re at, you’re vulnerable, and the government isn’t actually here to help you, and never will be.
So, the socialism of jobs as an entitlement, as welfare, as something owed not something competed for and won, and the focus on jobs instead of work, is going to be the operative premise of political life for a while. I encourage you to join the rest of us. We’re not waiting for a handout – and yes, you are, if you’re asking government to create a job for you – we’re off thinking about how we can make new things – how we can do it without permission, entitlement, sanction, or as part of a plan to ‘restore America’, whatever the hell that means. There’s an entire movement of us, everywhere across the United States, in every locale. Find us.
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