Punitive liberalism never really went away, but it’s been lying fairly low for years. The Left has been trying to reinvent itself as a central-planning technocracy whose wise stewardship of the economy can guarantee prosperity for all. When they talk about tax increases, they stuff themselves into threadbare deficit hawk costumes with duct-tape patches, wilting feathers, and missing plastic eyes to shriek that all they want is a “balanced approach” to “paying all of America’s bills.” Having abandoned the minimal discipline of actual budgets, their vote-buying programs are all funded with magical imaginary money, allowing them to pay off Paul without robbing Peter, until they can present the inevitable tax increases as the patriotic duty of “the wealthiest among us.”
But now there’s renewed interest in hardcore punitive liberalism: the use of government policy, and tax increases, to deliberately destroy the wealth of people leftists don’t like. There isn’t even a pretense of redistributing the confiscated wealth. They just want to make rich people poorer. Their answer to the rising tide that lifts all boats is a team of Big Government demolition experts blowing holes below the waterline in the biggest boats.
Perhaps this is an act of intellectual desperation, as it becomes painfully obvious that left-wing nostrums for economic growth don’t work. They can’t deliver on those technocratic promises of prosperity. The example of central planning freshest in the American mind is the ObamaCare debacle. Five years of redistributionist policy have left “income inequality” worse than it was when Barack Obama took office. It grows increasingly difficult for the Left to make even vague rhetorical commitments to the kind of spending cuts that would be necessary to achieve a “balanced approach” to deficit reduction, in concert with tax increases, even if the tax hikes considerably outweighed the spending discipline. All that remains is the elementary appeal to envy that drives all socialist theory: give us power, and we’ll make those rich bastards suffer.
The new bible for punitive liberalism is a popular book by French economist Thomas Piketty, “Capital in the Twenty-First Century.” It’s been described as Marxism 2.0, but as digested by Daniel Shuchman at the Wall Street Journal, it’s actually more like a new incarnation of fascism. In accordance with fascist economic theory, Piketty wants a private sector under the strict control of an all-powerful Party apparatus that would decide how much money everyone has actually “earned,” and tax away the excess – to the tune of an 80 percent tax on incomes over half a million dollars. (Or maybe a million, if the Party is feeling generous.)
What has left-wing hearts aflutter is Piketty’s argument for the absolute supremacy of political control over private industry. The State would have the permanent, godlike power to decide what anyone who isn’t at the lowest levels of basic service or manufacturing work has truly “earned.”
Mr. Piketty believes that only the productivity of low-wage workers can be measured objectively. He posits that when a job is replicable, like an “assembly line worker or fast-food server,” it is relatively easy to measure the value contributed by each worker. These workers are therefore entitled to what they earn. He finds the productivity of high-income earners harder to measure and believes their wages are in the end “largely arbitrary.” They reflect an “ideological construct” more than merit.
Soaring pay for corporate “supermanagers” has been the largest source of increased inequality, according to Mr. Piketty, and these executives can only have attained their rewards through luck or flaws in corporate governance. It requires only an occasional glance at this newspaper to confirm that this can be the case. But the author believes that no CEO could ever justify his or her pay based on performance. He doesn’t say whether any occupation???athletes? physicians? economics professors who sell zero-marginal-cost e-books for $21.99 a copy????is entitled to higher earnings because he does not wish to “indulge in constructing a moral hierarchy of wealth.”
He does admit that entrepreneurs are “absolutely indispensable” for economic development, but their success, too, is usually tainted. While some succeed thanks to “true entrepreneurial labor,” some are simply lucky or succeed through “outright theft.” Even the fortunes made from entrepreneurial labor, moreover, quickly evolve into an “excessive and lasting concentration of capital.” This is a self-reinforcing injustice because “property sometimes begins with theft, and the arbitrary return on capital can easily perpetuate the initial crime.” Indeed laced throughout the book is an almost medieval hostility to the notion that financial capital earns a return.
Rest assured that the political aristocracy would not satisfy itself with pushing fat-cat CEOs around. Even the Left’s phony reverence for the Sainted Middle Class melts away under the stern glare of their new guru:
While America’s corporate executives are his special bête noire, Mr. Piketty is also deeply troubled by the tens of millions of working people???a group he disparagingly calls “petits rentiers”???whose income puts them nowhere near the “one percent” but who still have savings, retirement accounts and other assets. That this very large demographic group will get larger, grow wealthier and pass on assets via inheritance is “a fairly disturbing form of inequality.” He laments that it is difficult to “correct” because it involves a broad segment of the population, not a small elite that is easily demonized.
Nothing terrifies collectivists more than growth of an independent middle class filled with investors. Never believe a word of their declarations of love for the middle class – they hate and fear it above all other forces, because it combines economic independence with voting muscle. The larger the middle class grows, and the more interested it becomes in a prosperous national economy, the more left-wingers feel their power slipping away. Piketty’s book is basically an erotic fantasy about the permanent subjugation of this threat – call it “Fifty Shades of Drab” – without completely choking off the engines of private-sector innovation.
That’s where the 80 percent tax rate comes in, and it’s explicitly punitive:
Mr. Piketty urges an 80% tax rate on incomes starting at “$500,000 or $1 million.” This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply “to put an end to such incomes.” It will also be necessary to impose a 50%-60% tax rate on incomes as low as $200,000 to develop “the meager US social state.” There must be an annual wealth tax as high as 10% on the largest fortunes and a one-time assessment as high as 20% on much lower levels of existing wealth. He breezily assures us that none of this would reduce economic growth, productivity, entrepreneurship or innovation.
Not that enhancing growth is much on Mr. Piketty’s mind, either as an economic matter or as a means to greater distributive justice. He assumes that the economy is static and zero-sum; if the income of one population group increases, another one must necessarily have been impoverished. He views equality of outcome as the ultimate end and solely for its own sake. Alternative objectives???such as maximizing the overall wealth of society or increasing economic liberty or seeking the greatest possible equality of opportunity or even, as in the philosophy of John Rawls, ensuring that the welfare of the least well-off is maximized???are scarcely mentioned.
Unsurprisingly, Piketty is pushing the same static-analysis snake oil every brand of left-winger tries to trick us into drinking: no, tax increases don’t retard economic growth, perish the thought! People won’t take economy-crushing steps to avoid punitive taxation – ignore the evidence of history and listen to my theories! One man’s prosperity is always another man’s theft!
Static analysis is ridiculous, but you pretty much have to believe in it, as an article of religious faith, in order to be a modern liberal. The ultimate lunacy of the idea is demonstrated by the assertion that everyone would keep skipping merrily along – every bit as productive and entrepreneurial as they are today – if 80% of every dollar they earned beyond the first half-million was confiscated. You have to be clinically insane to believe that. But it’s the same species of insanity that leads ostensibly less crazy American liberals to deny that tax cuts would spur economic growth, and it’s an outgrowth of the zero-sum belief that rich people fill their treasure vaults by robbing the poor, so the government is morally empowered to play Robin Hood and steal it back for them.
In fact, this concept of punitive liberalism is entirely alien to the American tradition. The government authorized by our Constitution is not supposed to be using destructive force to punish people who have committed no crime, without even a polite nod in the direction of due process. Piketty’s theories amount to a guilty-until-proven-innocent (actually, more like “guilty and you can’t be proven innocent”) prosecution for the “crime” of earning more than the Ruling Class judges you to be worth. You’ll never get to face your accusers in court, they are required to provide no evidence, and there are no appeals.
It’s bad enough to have perverted the American system with progressive taxation, which at least tries to justify itself as the promotion of general welfare. Punitive liberalism is another step beyond that, into a dark – and ultimately bloody – place America was never meant to go. It turns bloody because the power of a punitive state depends on a steady supply of public enemies. The people must be made to hate those the State wants to destroy, hating them so much that they forget about their own parlous condition in a depressed economy. A government that claims both the right and wisdom to decide what every citizen is allowed to earn cannot tolerate much in the way of dissent or criticism; the ruling Party must be seen as infallibly wise and benevolent, which means its political enemies must be viewed as the worst sort of monster.
And the people must be convinced to tolerate special exemptions to the principle of punitive taxation for the aristocracy and its special friends; no member of the left-wing aristocracy is going to be satisfied with living on $500,000 or $1,000,000 a year. The Ruling Class will live like kings, no matter what the top marginal tax rate is supposed to be. People will only tolerate that if they view the aristocrats as heroes, and that means they’ll need dragons to slay. Give Thomas Piketty’s theories a shot, in a nation the size of the United States, and it won’t be long before you have no further doubts about whether the result more closely resembles the ideal of socialism, or the reality of fascism.