Blind, Blinder, blindest and Biden

The Wall Street Journal September 26, 2021 headline from Princeton's Alan Blinder is idiotic clickbait: House Democrats Miss Some Necessary Tax Increases. My headline is an homage to Biden's seemingly plagiarized, build back better. Like Blinder, the president has no clue. Blinder's fundamental, foolish complaint surfaces quickly. I will let his own stupidity speak for itself with the following three paragraphs.

"In June, ProPublica published leaked tax records of rich Americans that showed many of them paid little or nothing in tax. In some years,Jeff Bezos, Elon Musk, Michael Bloomberg and others paid no federal income tax at all. How is that possible?

One primary reason: The U.S. doesn’t tax capital gains until the gains are realized. Mr. Bezos’ huge holdings of Amazon stock rose from being worth close to zero in 1994 to about $200 billion today, and if he hadn’t sold any, he wouldn’t owe any tax on that gain. (He has sold some puny—for him—amounts.)

If Mr. Bezos continues to hold his stock until he dies—when it will probably be worth far more than $200 billion—the entire tax liability on the enormous capital gain will disappear. If he never sells, most of Mr. Bezos’ huge lifetime income will never be taxed."

But his lack of self awareness and emotional intelligence is apparent in this clincher: "This policy wouldn’t place a heavy burden on accumulation of wealth. I find it difficult to understand how anyone can oppose it."

As hundreds of commenters excoriate Blinder, it is pretty clear that his lack of self-awareness is akin to that of the late Pauline Kael who, while lamenting Nixon's 1968 election, opined that she could not imagine how Nixon won as she knew no one who voted for him. As we would have told Kael we can now tell Blinder, "You need to get some new friends."

As I told my students in every class I taught, a primary responsibility of a responsible person, company, government or country is to increase wealth, not to tax, consume or destroy it. Financial wealth, e.g., stocks, bonds, is not like physical, tangible wealth, e.g., land, gold, homes. Jeff Bezos has almost $200 billion in financial wealth and it is all on paper. It is basically a couple billion bits of data sitting on a server somewhere, or maybe some printed sheets of paper signifying his stock holdings.

Were professor Blinder to tax Bezos' stock, Bezos would have to sell it to generate the cash to pay the taxes. Not only would that sale destroy wealth, that sale would also probably reduce the value of his remaining stock, as the price of that stock would also decline, as would the price of the stock of the tens of thousands of other holders of Amazon stock. Blinder would be destroying wealth for every owner of the stock, generating losses that would, at some point, reduce the potential tax revenue coming from more valuable stock. It is pretty close to the concept of "killing the golden goose."

Blinder needs to take off his progressive blinders and see wealth as something to be grown and nurtured, just as the ability to create wealth needs top be nurtured in our educational system and in the public values we espouse as a country and as leaders of the phenomenal growth in global wealth over the last 200 years. With about four percent of the world's population, the United States still produces about 18 percent of global GDP, which has a direct, positive impact on the wealth of a nation. A recent proposed law by one of the progressive "squad" members of congress, wants to replace GDP with measures of happiness. As I said in class, while the love of money is the root of all evil -- and many pundits tend to omit "the love of" when making this claim -- the real root of all evil is poverty, the absence of money, the lack of opportunity, the end of something to aspire to achieve, the impossibility of happiness.