Our esteemed President, Barack Obama, often says that the goal of government is to help Americans have successful, materially comfortable jobs and careers and businesses. When he says this, I am always puzzled.
By what means does he think that government can give people middle class or better lives? We are already spending an insane amount on education in our cities. The sad truth is that the cities that spend the most per pupil, like Washington, D.C.; Chicago; New Orleans; and Oakland, generally have the worst performing students. Throwing money at education doesn’t work.
Maybe he means that Americans will be better off if government is lean and taxes are kept low. That’s possible, but that’s generally a GOP proposition. That does not work either, since no one has been able to correlate income growth with lower taxes.
Of course the most rapid income growth we ever had in this nation in the last 150 years was during World War II, when taxes were astronomically higher than they are now.
What can government do to promote higher incomes and prosperity?
For this, we turn to our genius friend, the investment manager, Philip DeMuth of Conservative Wealth Management of Los Angeles. When I posed this question to Phil, he had a simple answer: “Protect private property.” And how right that is. People will work harder, more creatively, more productively, if they know they can keep a decent amount of the product of their labor. If government safeguards property, that protects the incentive to produce and to earn.
I was stunned to read agreement on this point from none other than Abraham Lincoln. In a speech he gave some years before he became president, absolutely demolishing the evil ideas behind the greatest evil of early America, slavery, Mr. Lincoln made a surprising point. If the owners of slaves use the lash to get more work out of their bondsmen, they rarely will succeed.
But if they let slaves keep for themselves some of the cotton they pick, the slaves will pick far more than the lash would ever yield. Abraham Lincoln — capitalist! And ingeniously using the idea of capitalism to attack the most evil form of long ago capitalism — human slavery.
Now to tie this into a little bow, my Vietnamese toenail manicurist asked me recently why people in sub-Saharan Africa were so poor. I told her that there were a lot of reasons having to do with agricultural science, irrigation, fertilization, transportation, and insecticides.
She then knocked the ball out of the park. “In my country,” she said (I am paraphrasing here), “people are poor because the government takes so much of whatever people earn. The government and police just come by and take whatever they feel like, and then people argue and the police put them in jail; and then when they get out, they don’t bother to work as much.”
Yes, indeed, Maria. And it’s true all over the world. If you deprive people of the fruits of their labor, they just naturally will not work as hard. Why should they? Why should they use their backs and their minds to do the best they can when government will just steal much of it from them?
I added to Maria’s stock of wisdom (I hope) by noting that government stealing (in informal means) was virtually unknown in America. So was breaking a contract. In the vast majority of cases, was the swindling of an investor by a Wall Street firm. ( Obviously, there are exceptions.)
If I work, and pay my taxes, I get to keep what I earn. I get to invest it with my pals, Kevin Hanley and Jerry Au at Merrill Lynch and with Phil DeMuth and with people I have never met at Oppenheimer and Fidelity and Morgan Stanley.
I can be damned sure they will treat me fair and square and not run off with my money beyond a minimal fee for services. This trust makes me want to work hard (too hard) and accumulate money for my granddaughter, Coco.
I know that barring some truly rare circumstance, my private property will remain mine. I know that the few shekels I have with Warren Buffett will not be taken from me by this supergenius of money and investing, and the people all the way down the line will not be as smart as Warren, but they will be just as honest.
That’s the incentive that keeps me working and will buy Coco a pony some day. Multiplied by a hundred million, that’s what makes America rich. And when Mr. Government tries to take that incentive away, he’s not doing anyone much of a favor.
Ben Stein is a writer, actor, and lawyer, who served as a speechwriter in the Nixon administration as the Watergate scandal unfolded. He began his unlikely road to stardom when director John Hughes cast him as the numbingly dull economics teacher in the urban comedy, "Ferris Bueller's Day Off." Read more reports from Ben Stein — Click Here Now.
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