Taxation of the poor and cuts in public spending by cutting government expenditure causes personal suffering among those who have to live off smaller take home pay, or who lose their jobs. The unearned income from returns on stocks, profits, bonuses and commissions—the ways the rich maintain their wealth—is treated “as so sacred that we must all tighten our belts sooner than touch it” (GBS). The media pundits and tame academics employed by the wealthy class explain to us that we need the investments of these rich people to replace and accumulate capital, without which we would have no industry at all. So we have to let this narrow class of super rich have so much money that it is quite impossible to consume, leaving them with no alternative but to invest it:
After stuffing themselves with every luxury that can be imagined on the face of the earth, they still have millions which save themselves because they cannot be spent. That is the argument for having an enormously rich class amongst you. What have we to say to that?
In the first place, it is an enormous waste to overfeed a handful of idle people and their millions of hangers on before you can save money when no money need pass through their hands at all. No sane nation, which could accumulate its capital in any other way, would chose that way. Well, what on earth is to prevent us from accumulating our capital in another way? Why not take its sources out of the hands of these gentlemen and accumulate it ourselves? They would then have to work for a living, but we would all be the richer and they all the happier.G B Shaw, In Praise of Guy Fawkes, 1932
After all, they are always telling us that work is good for us, so they must be all the happier to be able to join with us in doing it, those of us, that is, who have jobs in the first place. But we will be able to sensibly organize employment by looking to rebuilding our decayed cities and providing better public amenities, thereby employing many who at present have no jobs and live in derelict inner cities despairing for the future of their kids who know nothing but the local drug baron.
Then again, what guarantee have we that these people will invest their surplus cash for the good of the nation? As a rule they send it wherever labor is cheapest, anywhere in the world except the USA.
Here we are with our cities rotted out with slums, and with the most urgent need for capital to do away with those slums and to improve the condition of our people, to give them better food, better clothing, better housing, and better education, for bringing our obsolete machinery up to date, organizing agriculture collectively, and introducing all the new scientific methods. We need capital for those things, but if there is a penny more in the way of dividend to be got by our capitalist class by sending money to the Argentine or anywhere else, they send it there.G B Shaw, In Praise of Guy Fawkes, 1932
In the present day, China has vast amounts of US dollars. By controlling the release of these dollars on to the market, the Chinese can control the US economy, making exports expensive and imports cheap, perhaps, with disastrous consequences for home industries. What do the super rich class care? They bother only about their investments which make their money abroad anyway, so the US economy scarcely matters to them.
So you see the one defense you can set up for the conspiracy of silence about unearned income is nothing but a silly excuse for shirking the great enterprise of Socialism. It is not true that wages must be cut, public enterprises much be starved and stopped in order that more hundreds of millions can be added to those that are being wasted at present on idleness, extravagance and corruption of labor which are ruining us.G B Shaw, In Praise of Guy Fawkes, 1932
As to innovation, it is true that private corporations have developed wonderful technological advances, but very much of the original scientific priming behind it is financed by the state not by the idle rich who too often consider it far too chancey to finance research, and then government contracts often under the auspices of the military are often necessary to encourage the private corporations to do anything towards technological development. In short, risk avoidance actually holds back progress when investment is in private hands. The rich look for security nowadays not enterprise. It is the small independent businessman, rising from the working and middle classes, who is often the entrepreneur, and they frequently have problems raising funds for start ups and growth.
Warren Buffet Says Squeeze the Mega Rich
We have noted elsewhere in this Blog that professor Greg Philo found some rich people—the intelligent ones—were willing, even glad, to pay additional tax if it meant greater economic and social stability in the nation and the world. Now, Warren Buffet, whose net wealth is valued at around $50 billion, in The New York Times has lashed out at Congress, saying that they were not handling tax breaks in a way that is best for the country. He called for higher taxes for the super rich of America, himself included.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we megarich continue to get our extraordinary tax breaks. These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species.
While he paid nearly $7 million in taxes last year, he should have forked over much more to the federal government but tax breaks kept him from doing so, he wrote. “It's nice to have friends in high places”, but Congress need not “coddle” the super rich any longer.