Matt Fleming: The Marxist delusions of the Excessive Wealth Disorder Institute

Taxing the rich isn’t going to save American democracy.

It’s not going to “get a clear pathway to thriving communities.” Or reduce the frequency non-rich people get audited. Or “move the needle on the most pressing issues of our time.”

But apparently some people think it will.

In an interview published late last month in the business section of this paper, Gabriela Sandoval suggested as much. Sandoval runs the San Francisco-based Excessive Wealth Disorder Institute, which borrows its name from a New York Times column written by Paul Krugman.

I have no doubt that Sandoval sincerely believes redistributing wealth will solve society’s problems by raising money to lift people out of poverty and limiting the influence of ultra-rich people on our politics.

But it won’t. Excessive Wealth Disorder is not the problem — it’s not even a real disorder.

What Sandoval gets wrong

Sandoval speaks in broad terms. When asked about the existence of $20 million homes, she simply responds: “Nobody needs this.”

Well how much does someone need? This would have been a great follow-up question for the reporter conducting the interview. Sadly, it went unasked.

Of course the question is unanswerable because need is irrelevant. My neighbor’s house is bigger than mine and is approximately 20% more valuable — is his house too big or mine too small?

Sandoval argues that taxing the rich can fund programs that solve society’s problems. But in order for that to be true, the government would have to have the capacity to fix all of the problems in society, which it has proven time and again to be fantastical.

Some government intervention can be helpful on the margins, but the greater the government intervention, the worse the results.

For example, food stamps are a modest and sensible way to help low-income families keep food on the table, but efforts by the Indian and Venezuelan governments to eradicate hunger by controlling agricultural policies has led to rotting food and mass starvation.

But proving the flaw in their argument doesn’t require globe trotting. Soaking the rich won’t fix America’s problems because it hasn’t fixed California’s.

California’s experiment in redistributionism has failed

California heavily taxes the rich and fails on multiple fronts to deliver on its progressive promises.

Half the state’s budget is propped up by the top 1% of earners, which is fine when the economy is good but also causes volatile swings in funding and massive budget deficits, like the one now.

California is suffering from three straight years of declining population, which is not only caused by bad public policy but also has the side effect of eroding the tax base.

The wealthy will only tolerate so much. As The Center Square reported recently, the average annual income of Californians leaving the state is more than double that of those who are moving in.

It’s a bit of a death spiral. The more California policymakers promise, the more they tax the rich. But the more they tax the rich, the more the rich leave.

And since California Democrats don’t believe in eliminating unnecessary or wasteful government programs, they just spend on more services and keep the outdated ones on life support. Which requires more money. Which requires more taxation. And so on.

The proof is in the results though. Every budget cycle we hear about “record investments” in this or that, but what’s improved?

California has the lowest literacy rate. Its public schools are failing generations of kids. It is incapable of building houses to alleviate a housing crisis. It leads the nation in homelessness and poverty. Persistent drought. Raging wildfires. All of these problems with fixes that go unused. In fact, it is challenging to find an area of improvement over the last decade or so.

And yet California has the highest tax rates in the country.

Perhaps Sandoval would argue the problem is that California isn’t going far enough with taxation. But what’s the limiting principle?

The Excessive Wealth Disorder fallacy

Excessive Wealth Disorder is modern Marxism. Its problems are two-fold: First, that income inequality is the root of all evil, and second that there are ultra-rich puppet masters dominating society. I’ll address these in reverse order.

There’s no question the rich get perks and privileges the rest of us don’t. But there has never been a time in history when that wasn’t true.

It’s hard to take seriously the concerns that the rich are pulling society’s strings because when it’s presented it’s almost always framed in political terms, with right-leaning rich people, like the Koch brothers, and corporations, as the villains.

Spared from attack are progressive donors like George Soros or Tom Steyer or public employee unions, all of whom have unbelievable amounts of money, power and influence. It seems the problem is not rich people pulling strings, just those with whom the left disagrees.

Meanwhile, income inequality as a concept fuels envy and pits people against each other.

Instead of focusing on the real problem of too many people trapped in or around poverty because of a lack of economic opportunities, the framing is instead on the relationship between rich and poor.

Income inequality says there isn’t enough wealth to go around and only when I get what’s yours will I be satisfied.

Income inequality plays all of Marxism’s greatest hits: Class struggle, wealth redistribution and, as Karl Marx himself used to say, “From each according to his ability, to each according to his needs.”

Inequality is unavoidable. Even if the government owned everything and doled out necessities to everyone equally, there would still be inequality, because people are different.

So it really comes down to how much inequality is tolerable in society, which is something the Marxists can’t seem to define.

If Marxists are interested in lifting people out of poverty, they should ditch the class struggle nonsense and promote economic opportunities through the free market.

Follow Matt on Twitter @FlemingWords

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