It may disappoint progressives to learn that Christ’s words and deeds repeatedly upheld such critically-important, capitalist virtues as contract, profit and private property. For example, consider His “Parable of the Talents.” Of several men in the story, the one who takes his money and buries it is reprimanded while the one who invests and generates the largest return is applauded and rewarded.
Though not central to the story, good lessons in supply-and-demand as well as the sanctity of contract are apparent in Christ’s “Parable of the Workers in the Vineyard.” A landowner offers a wage to attract workers for a day of urgent work picking grapes. Near the end of the day, he realizes he has to quickly hire more and to get them, he offers for an hour of work what he previously had offered to pay the first workers for the whole day. When one of those who worked all day complained, the landowner answered, “I am not being unfair to you, friend. Didn’t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as I gave you. Don’t I have the right to do what I want with my own money? Or are you envious because I am generous?”
The well-known “Golden Rule” comes from the lips of Christ Himself, in Matthew 7:12. “So in everything, do unto others what you would have them do unto you, for this sums up the Law and the Prophets.” In Matthew 19:18, Christ says, “ . . . love your neighbor as yourself.” Nowhere does He even remotely suggest that we should dislike a neighbor because of his wealth or seek to take that wealth from him. If you don’t want your property confiscated (and most people don’t, and wouldn’t need a thief in order to part with it anyway), then clearly you’re not supposed to confiscate somebody else’s.
Christian doctrine cautions against greed. So does present-day economist Thomas Sowell: “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else’s money.” Using the power of government to grab another person’s property isn’t exactly altruistic. Christ never even implied that accumulating wealth through peaceful commerce was in any way wrong; He simply implored people to not allow wealth to rule them or corrupt their character. That’s why His greatest apostle, Paul, didn’t say money was evil in the famous reference in 1 Timothy 6:10. Here’s what Paul actually said: “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” Indeed, progressives themselves have not selflessly abandoned money, for its other people’s money, especially that of “the rich,” that they’re always clamoring for.
In Matthew 19:23, Christ says, “Truly I tell you, it will be hard for a rich person to get into the kingdom of heaven.” A progressive might say, “Eureka! There it is! He doesn’t like rich people” and then stretch the remark beyond recognition to justify almost any rob-Peter-to-pay-Paul scheme that comes down the pike. But this admonition is entirely consistent with everything else Christ says. It’s not a call to envy the rich, to take from the rich or to give “free” cell phones to the poor. It’s a call to character. It’s an observation that some people let their wealth rule them, rather than the other way around. It’s a warning about temptations (which come in many forms, not just material wealth). Haven’t we all noticed that among the rich, as is equally true among the poor, you have both good and bad people? Haven’t we all seen some rich celebrities corrupted by their fame and fortune, while others among the rich live perfectly upstanding lives? Haven’t we all seen some poor people who allow their poverty to demoralize and enervate them, while others among the poor view it as an incentive to improve?
In Christ’s teachings and in many other parts of the New Testament, Christians—indeed, all people—are advised to be of “generous spirit,” to care for one’s family, to help the poor, to assist widows and orphans, to exhibit kindness and to maintain the highest character. How all that gets translated into the dirty business of coercive, vote-buying, politically-driven redistribution schemes is a problem for prevaricators with agendas. It’s not a problem for scholars of what the Bible actually says and doesn’t say.
Search your conscience. Consider the evidence. Be mindful of facts. And ask yourself: “When it comes to helping the poor, would Christ prefer that you give your money freely to the Salvation Army or at gunpoint to the welfare department?
Christ was no dummy. He was not interested in the public professions of charitableness in which the legalistic and hypocritical Pharisees were fond of engaging. He dismissed their self-serving, cheap talk. He knew it was often insincere, rarely indicative of how they conducted their personal affairs, and always a dead-end with plenty of snares and delusions along the way. It would hardly make sense for him to champion the poor by supporting policies that undermine the process of wealth creation necessary to help them. In the final analysis, He would never endorse a scheme that doesn’t work and is rooted in envy or theft. In spite of the attempts of many modern-day progressives to make Him into Robin Hood, He was nothing of the sort.
(Editor’s Note: A substantially longer version of this essay is available at no charge as an e-book and in audio format under the title, Rendering Unto Caesar: Was Jesus a Socialist? at FEE.org.)
SUMMARY
•Free will, not coercion, is a central and consistent element in the teachings of Christ
•It is not recorded anywhere that Christ called for the state to use its power to redistribute wealth
•Christ endorsed things like choice, charity, generosity, kindness, personal responsibility, and voluntary association—things that are irreconcilable with coercively-financed redistribution schemes
#43
“THE FREE MARKET CANNOT PROVIDE PUBLIC EDUCATION”
BY SHELDON RICHMAN
CAN THE FREE MARKET PROVIDE PUBLIC EDUCATION? THE SHORT ANSWER, OF course, is: yes, look around. Right now, private enterprise and nonprofit organizations provide all manner of education—from comprehensive schools with classes in the traditional academic subjects, to specialized schools that teach everything from the fine arts to the martial arts, from dancing to dieting, from scuba diving to scrutinizing one’s inner self.
If we define “public education” as “what the government does now,” then it’s a trick question. Every school serves members of the public. For the sake of this discussion, we can ignore that the word “public” has been corrupted to mean “coercively financed through the tax system.”
The free market—and I include here both for-profit and nonprofit organizations—would provide even more education than it does now but for the “unfair competition” from government. Since government has a resource that private organizations lack—the taxpayers—it’s able to offer its services for “free.” They’re not really free, of course; in the government context, “free” means that everyone pays whether he wants the service or not. Clearly, as long as government can tax its citizens and then provide educational services to them at a marginal price of zero, much private education will never come into being. How ironic that government vigilantly looks for predatory pricing in the private sector when it is the major offender.
There is certainly nothing about education that should lead anyone to doubt that the market could provide it. Like any other product or service, education is a combination of land, labor, and capital goods directed at a particular objective—instruction in academic subjects and related matters demanded by a class of consumers, primarily parents.
Here’s where things may get contentious. Critics of market-provided education are uncomfortable with education’s being treated like a commodity, subject to supply and demand. In the marketplace, consumers ultimately determine what is produced. Entrepreneurs take risks to serve them. And fickle consumers show no mercy when something new and attractive comes along. Ask the shareholders of Boston Chicken or Kodak, among others.
Why should parents alone determine what is and what is not acceptable education? But why not parents? To whose hearts are the interests of childr
en closer? Besides, most parents would no more make educational decisions without consulting knowledgeable authorities than they would make medical decisions without consulting doctors. The uninformed-consumer argument against free-market education is a red herring.
Parents, and the private sector, should be free to determine what is and what is not acceptable academic education for the same reasons they are free to determine what is proper religious education. We don’t use the small number of neglectful parents as a pretext for government control or finance of religion. Nor should we use it as a pretext for government control or finance of schooling.
Defenders of government schooling have enlisted various economic arguments related to “market failure” to dispute the idea that parents in a free market should ultimately determine what educational services are offered. These arguments fail. Education does not have the characteristics of a “public good.” One person’s consumption of a given service can detract from another person’s consumption, and nonpayers can be excluded.
Nor does the positive-externality case succeed. Education obviously does have spillover benefits, but that is not enough in economic theory to justify government action. You would have to believe that the external benefits would cause education to be under-consumed unless the government subsidized it. No one has ever shown that. Nor could anyone. To believe that, you’d have to believe that parents engage in the following reasoning: I’d like to buy X amount of education for my child, but since society will benefit by my child’s erudition without paying anything for it, I’ll buy less than X amount of education. Ridiculous, isn’t it?
The argument that high-quality education is intrinsically too expensive for a significant portion of the population to afford also fails. A free market that can saturate society with refrigerators, microwave ovens, washing machines, and telephones—cellular and otherwise—can surely produce good education for a mass society. The key is entrepreneurship.
We think we know what education is and what methods work. And we do know some things. This sense of certainty might encourage us to think that education is best left to government. But we shouldn’t be so presumptuous, or we could wind up like the nineteenth-century Patent Office official who said the office should be closed because everything useful had been invented.
The world is open-ended. We don’t know exactly what we will learn tomorrow. As fallible beings, we can be sure that at any time, valuable information and opportunities are being overlooked. Scarce resources are being misdirected because our knowledge is incomplete. This is as true for education as for anything else.
What can we do to hasten the discovery and correction of error? We already have a method: entrepreneurship. What entrepreneurs do is search the landscape for instances where resources are being under-used, that is, devoted to the production of goods and services that consumers value less highly than other things those resources might be devoted to. What lures entrepreneurs to discover those instances is profit. Nothing approaches its power to stimulate discovery. Profit accrues when an alert entrepreneur, noticing what others have overlooked, switches resources from producing things consumers value less highly to producing things consumers value more highly.
The application of this principle to education should be obvious. Since we don’t know today all that we may learn about educational methods and objectives tomorrow, we need entrepreneurship in education. Government isn’t up to the task. Bureaucracy is the opposite of enterprise. It stifles enterprise. Government domination of education assures that the entrepreneurial innovation and creativity we are accustomed to in, say, the computer industry will be missing from education.
There is no good substitute for the decentralized, spontaneous entrepreneurial process that full privatization of education would stimulate.
Thus it is not only the case that the free market can provide education. We may conclude further that only the free market should provide education.
(Editor’s Note: A version of this essay was originally published in The Freeman magazine in June 2000.)
SUMMARY
•As long as government can tax its citizens and then provide educational services to them at a marginal price of zero, much private education will never come into being
•Most parents would no more make educational decisions without consulting knowledgeable authorities than they would make medical decisions without consulting doctors
•We don’t use the small number of neglectful parents as a pretext for government control or finance of religion. Nor should we use it as a pretext for government control or finance of schooling
•Government domination of education assures that the entrepreneurial innovation and creativity we are accustomed to in, say, the computer industry will be missing from education
#44
“WARREN BUFFETT’S FEDERAL TAX RATE IS LESS THAN HIS SECRETARY’S”
BY GEORGE HARBISON
IN AUGUST 2011, WARREN BUFFETT WROTE AN OPINION PIECE IN THE NEW YORK Times in which he made the assertion that his 2010 “federal tax rate” of 17.4 percent was 18.6 percentage points less than the 36.0 percent average rate paid by the twenty other workers in his office.
Buffett’s piece garnered substantial media attention and, in the months since its publication, his “federal tax rate” assertion has been woven into the fabric of American politics. His analysis was the basis for the “Buffett Rule,” a tax plan proposed by President Obama that would implement measures under which everyone making more than $1 million in income per year would pay a minimum effective tax rate of 30 percent.
Clearly, given Buffett’s status as a legendary businessman and investor (the “Oracle of Omaha”), his tax analysis carried a great deal of credibility and, as such, it was never challenged. Adding to the unchallenged acceptance of Buffett’s assertion was the fact that Buffett never released (a) his 2010 federal tax return, (b) the federal tax returns of his office workers, and (c), the analysis underlying has “federal tax rate” assertion.
In truth, Buffett’s assertion is completely inaccurate and is based on a fundamentally flawed analysis of basic federal taxation principles. In reality, he pays a much higher relevant “federal tax rate” than any of his office workers.
First of all, payroll taxes (Social Security and Medicare) are totally irrelevant for this type of analysis. Because these taxes were not assessed on non-wage income (prior to 2013), and because Social Security taxes were only assessed on the first $106,800 of wage income in 2010, the amount Buffett paid into these programs was very close, in dollar terms, to the amounts paid into them by each of his office workers. But because Buffett had total taxable income of almost $40 million, the amount of Social Security and Medicare taxes paid by him in 2010 represented only a tiny fraction of his total taxable income. For most of his office workers, these taxes represented 7.65 percent of their taxable income (even though they paid roughly the same amount as Buffett did in dollar terms). This 7.65 percent payroll tax differential is part of the 18.6 percent differential cited by Buffett in his op-ed.
But what Buffett failed to mention is the fact that Social Security and Medicare benefits are capped as well. Upon retirement, Buffett will receive almost exactly the same Social Security and Medicare benefits (in dollar terms) that his office workers will receive. There is very little differential between Buffett and his office workers in terms of what they pay into the Social Security and Medicare programs, and what they will receive in benefits. As such, the 7.65 percentage point “federal tax rate” differential between Buffett and his co-workers arising from the existing Social Security and Medicare taxing mechanism is simply not relevant, and is a mirage.
A second flaw in Buffett’s analysis has to do with the fact that he included employer-paid payroll taxes in coming up with his and his office workers’ “federal tax rates.” The obvious problem here is that Buffett’s co-workers do not pay these taxes. Rather, as a partial owner of Berkshire Hathaway, Buffett himself pays them. Buffett’s incl
usion of these taxes, paid by Berkshire Hathaway, into his analysis was clearly incorrect and it distorts the rates he cited. Of course, he included employer-paid payroll taxes to double the 7.65 percent “federal tax rate” differential mirage identified in the previous paragraph.
Buffett himself owns 33.9 percent of Berkshire Hathaway, a publicly traded corporation with taxable income of $19.1 billion in 2010. Assuming a very conservative corporate federal tax rate of 25 percent, Berkshire will ultimately pay $4.76 billion in federal corporate income taxes on this taxable income. Corporate taxes are borne by shareholders of the corporation, in that these taxes reduce the amount of cash available for (a) dividend payments (Berkshire has not historically paid dividends to its shareholders), or (b) reinvestment into the corporation in order to increase shareholder value.
Given his ownership stake in Berkshire, 33.9 percent of the $4.77 billion in federal corporate taxes, or $1.61 billion, were borne by Buffett. Buffett ignored this tax amount in compiling his “federal tax rate” analysis. If Buffett’s share of corporate taxable income and corporate taxes paid are factored into his analysis, his overall 2010 “federal tax rate” increases by 7.56 percentage points, from 17.4 percent to 24.96 percent.
As an employer, Berkshire matches the Social Security and Medicare taxes paid by its employees. These taxes are borne by the shareholders of Berkshire for the same reasons corporate income taxes are. Using reasonable assumptions and data gleaned from the company’s 2010 SEC filings, Buffett’s share of these taxes was approximately $400 million in 2010. If these taxes are included (and they certainly should be), his 2010 “federal tax rate” increases by 6.16 percentage points to 31.12 percent.
Excuse Me, Professor: Challenging the Myths of Progressivism Page 19
