It is probably obvious that the people from whom the wealth is taken will become less willing to incur the risks that entrepreneurial investment involves – and so will produce less wealth, and thus less tax revenue.
President Barack Obama delivers the State of the Union address in Washington. He pledged to fight for a ‘fairer America’
What was it everybody used to say about the United States? Look at what’s happening over there and you will see our future. Whatever Americans are doing now, we will be catching up with them in another 10 years or so. In popular culture or political rhetoric, America led the fashion and we tagged along behind.
Well, so much for that. Barack Obama is now putting the United States squarely a decade behind Britain. Listening to the President’s State of the Union message last week was like a surreal visit to our own recent past: there were, almost word for word, all those interminable Gordon Brown Budgets that preached “fairness” while listing endless new ways in which central government would intervene in every form of economic activity.
Later, in a television interview, Mr Obama described his programme of using higher taxes on the wealthy to bankroll new government spending as “a recipe for a fair, sound approach to deficit reduction and rebuilding this country”. To which we who come from the future can only shout, “No?o-o, go back! Don’t come down this road!”
As we try desperately to extricate ourselves from the consequences of that philosophy, which sounds so eminently reasonable (“giving everybody a fair share”, the President called it), we could tell America a thing or two – if it would only listen. Human beings are so much more complicated than this childlike conception of fairness assumes. When government takes away an ever larger proportion of the wealth which entrepreneurial activity creates and attempts to distribute it “fairly” (that is to say, evenly) throughout society in the form of welfare programmes and public spending projects, the effects are much, much more complex and perverse than a simple financial equation would suggest.