A response to “Give Back? Yes, It’s Time For The 99% To Give Back To The 1%”

A recent Forbes commentary by Harry Binswanger suggests that instead of asking for more from the very wealthy, we should reward them by waiving their taxes, with a nod to Ayn Rand.

But Harry… interesting choice of Goldman Sachs, but not consistent with your example. You note that good interactions are always win/win. When Heinz sells me a bottle of ketchup, both parties benefit. I get the ketchup I wanted, and Heinz realizes profit – and creates additional value – of a few dimes. But Dear Ayn was talking about purchases. When a speculator buys insurance on a bond the speculator does not own – betting that the price of the bond will drop – there is no value created. Instead, value only changes hands, from the insurer to the speculator. This is unproductive economic behavior, and while very profitable for Goldman Sachs, it is a win lose situation, not win/win. Credit Default Swaps and many of the more abstract forms of speculative insurance are exactly this – win/lose transactions, with one side realizing profit without creating value. Again, strange that you would choose a banker as your example for Rand’s commentary on production.

You rightly point out the debt we owe to people such as Bill Gates (sorry, old school) and Henry Ford. Great examples of producers who created value. But the great majority of people that have gotten very rich in the past two decades have not been producers, they have been people involved in some kind of financial speculation, whether with credit default swaps or other forms of derivatives. By no stretch of imagination does this create value.

The strange part of your article is that somehow it suggests people such as Bill Gates aren’t able to take care of themselves, aren’t able to extract the real value from what they are doing, and hence society needs to reward them by waiving their taxes. I don’t think we need to penalize Mr. Gates, but neither do we need to pamper him – I can think of no reason he shouldn’t pay the same percentage of his income in taxes as the people using his software.

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