Professor Advocates Grand Theft (2019 Jul)

by Barry A. Liebling

Bloomberg Businessweek, the premiere publication reporting on business from the woke leftist perspective, has identified another hero for its cause – the economist Gabriel Zucman. Dr Zucman and his collaborator Dr Emmanuel Saez are, according to Businessweek, “shaking up capitalism & politics.”

Here is the essence of Dr Zucman’s work and call to action. The professor is obsessed by the popular theme “wealth inequality.” To him, the idea that some people (and private businesses) have much more money than he thinks they deserve and others have less than he would like to bestow on them is an outrage. And the academic economist is convinced that both rich individuals and successful companies are frequently sheltering their money from tax collectors (here he is correct). Apparently, the affluent are putting some of their wealth in offshore investments, in financial institutions located in countries with lower tax rates, and in property that makes it difficult for tax authorities to identify and confiscate.

To Dr Zucman and Businessweek the interesting challenge is to estimate how much money the rich are keeping out of the insatiable hands of government tax collectors. By examining publicly available records and using sophisticated statistical techniques the professor has estimated that a huge amount of wealth is being sheltered (The exact amount is unknown because the statistical analysis is a substitute for physically finding tangible wealth.). The implication of Dr Zucman’s work is clear. Something has to be done, and soon, to locate the hidden wealth and take it away from the greedy people who have the temerity to think they have a right to keep their own property.

What is wrong with Dr Zucman’s approach? His premises regarding who deserves what and the significance of “wealth inequality” are incompatible with the proper enlightenment concepts of natural rights and human liberty. The correct way to judge what wealth a person deserves is to scrutinize how it is acquired. If your money is the result of adhering to honesty, being productive, and trading by mutual consent you have a right to all of it. Conversely, a person who uses force or fraud to acquire money is not entitled to any of it. And this applies to everyone – regardless of wealth status.

Leftists fret endlessly about “wealth inequality” and “income inequality”. To committed Marxist progressives detecting the existence of unequal wealth (in private hands) is all they need to whip themselves into a frenzy. In a free society where people pursue their interests without government force some citizens will inevitably have more than the nomenklatura wants them to have, and others who are pampered by the political elite will be less affluent than they “should be.” Discovering wealth inequality does not motivate leftist activists to make everyone equal. Instead, it justifies their stealing from those they despise and showering prizes on their allies.

Wealth inequality arguments usually refer to the total wealth in a country or in a society as “the pie.” Why should we, asks the Marxist, allow anyone to have a larger slice than anyone else? This is fallacious and insidious. Who is the referent of “we?” Obviously, this stands for state officials who are intent on controlling every individual’s life. The notion of a gigantic pie owned by “society as a whole” deliberately ignores the fact that wealth is created by productive individuals, and it contradicts the concept of private property. Notice that the “pie model” of wealth suggests (erroneously) that economic success is a zero-sum game. Every dollar that someone makes and keeps subtracts from “the pie” and makes someone else one dollar worse off. This is a recipe for stoking bitter envy and turning everyone against their neighbor. If he has more of the pie, I have less.

In a gesture to show that it is evenhanded Businessweek reports that Professor Zucman’s work has been criticized by some of his professional peers. But the unfavorable comments do not even make a dent in his case. Some academics have looked at his statistical methodology and remarked that his estimates of hidden wealth are exaggerated. Notice that his peers do not dispute that rich people and businesses are stashing away wealth, they are only quibbling about the amount that can be looted. To a leftist zealot any money that is being “hoarded” by private parties must be confiscated.

A number of “conservative” economists have pointed out that Dr Zucman is advocating higher taxation of income and wealth which will result in lower productivity and less innovation. While these academics are making a valid point they fail to identify the essential issue. The professor behaves (consistent with his Marxist orientation) as if all wealth rightfully belongs to the state. Even if the economy is dampened by high taxation that is a small price to pay for the important goal of taking money away from affluent private citizens. And be assured that the definition of “affluent” will be periodically adjusted to include everyone who dares to flourish.

The deep message of Dr Zucman’s work is that the richest people are hiding money and it is incumbent upon righteous leftists to find it and take it away. For those who value liberty and natural rights the appropriate response is to point out that grand theft is morally wrong. The challenge is to help more people understand.

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