Letterman Questions His Betters

During a recent appearance on Letterman, Rand Paul argued that the rich — far from being undertaxed or not paying “their fair share” — already pay most income taxes. Letterman expressed reservations about the numbers, adding “You know, I think he’s wrong about some of these things. I just can’t tell you why.” The audience clapped agreement.

Naturally, this evoked squeals of outrage on the Right. Thomas Woods (“David Letterman, Economist,” Campaign for Liberty, Feb. 25)  contemptuously dismissed “Letterman and the geniuses in his audience,” saying they “made fools of themselves” by refusing to believe an “easily verified fact.” Jack Hunter, at The American Conservative (“David Letterman’s Willful Ignorance,” March 1), seconded Woods with a back slap and a hearty “Attaboy!”

So I guess Letterman and his audience would be smarter to uncritically accept any statistic that comes out of a politician’s mouth? Maybe they’d heard the old saying that “figures don’t lie, but liars figure.” Or the one about “lies, damned lies, and statistics.”

On closer examination, it’s clear that the significance Paul attached to his statistics — if not the statistics themselves — deserves a bit of critical scrutiny.

For one thing, there’s the dog that doesn’t bark: The focus on income taxes to the exclusion of other forms of taxation. A centerpiece of the neoliberal agenda in recent years has been shifting the incidence of taxation from returns on property to returns on labor. A great deal of income from property isn’t taxed, or is much easier to evade than a payroll deduction from wages  Just look at all the income that’s sheltered in tax-free munis.   When all taxes are factored in, the system is still progressive — but just barely so.

I’ll reserve my gratitude to the rich for the higher income taxes they pay until I get a closer look at where all that income comes from. How much of that top tier of income comprises rents on artificial scarcities created by the government’s enforcement of illegitimate property rights?

How much of it results, specifically, from direct government subsidies, from direct government collusion via all those “Complexes” (Military-Industrial, Prison-Industrial, Automobile-Highway-Real Estate Developer, etc.), from oligopoly and cost-plus markups in government-cartelized markets, from “intellectual property” monopolies, from tribute on land engrossed with the help of the state, and all the rest of that Baptists-n-Bootleggers stuff?

As an anarchist, I don’t advocate taxation of any kind. But I’m not exactly crying on my pillow at the thought that a feudal lord is paying a higher tax rate than his serfs. As far as I’m concerned, when one branch of the state starts beating up on another branch of the state, it’s best to make some popcorn and enjoy the show.

Unlike Letterman, I don’t see the answer as more taxes on the rich. The answer is to abolish all the state-conferred subdidies, protections and privileges that generate all that ill-gotten wealth in the first place.

Speaking of easily verified facts, Woods also ridiculed Letterman’s association of the crackdown on organized labor with the decline of the middle class, even though — wait for it! — “the growth of the middle class occurred in tandem with a decline in union membership.” In our own timeline, as opposed to the alternate history Woods inhabits, the neoliberal trend of the past thirty-odd years has been associated with both declining union membership and increasing polarization of income between rich and poor.

At one point Hunter snarks about blaming “the evil rich” for “America’s economic woes.” Hmmm … You’d think Hunter would assign government a significant share of blame for our economic ills. So who does he think controls the government? Whom does he think it serves? Last I heard, there weren’t many poor people in Congress. Former House Speaker Nancy Pelosi was married to a billionaire investment banker. And last I heard, there were plenty of people from Goldman-Sachs on the Cabinet, but not so many welfare moms.

Although (by strong implication, anyway) Paul & Co. frame the issue as the shiftless majority voting themselves loot at the expense of the hardworking rich, what’s really happening is that the rich who control the state are smart enough to understand what the system — not the free market, but the corporate economy as currently structured — needs for its survival.  The rich simply have more investment funds sitting around than there are productive outlets for, while productive capacity sits idle for want of demand. If the government didn’t bolster aggregate demand by taxing it and then spending it into circulation, we’d be in a permanent big-D Depression.

So maybe Letterman and his audience, far from “making fools of themselves,” actually showed some sense in refusing to buy a pig in a poke.

Translations for this article:

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory