Predictably, the Buffet Rule–which would have raised tax rates on those making a million dollars or more a year–failed for lack of the 60 votes needed to break a Republican filibuster. The GOP defended its position as necessary to encourage entrepreneurship and job creation, despite literally mountains of data disproving the link between lower taxes and economic prosperity.
It may be instructive to consider a couple of observations from a new book written by Bill Gates Senior. It’s titled “Self-Made Myth.”
In the book, Gates explains that Bill Jr. could not have built Microsoft without the United States’ publicly-supported infrastructure, tax laws, government-funded scientific research, public education and patent protection.
The book cites a number of other successful entrepreneurs who readily acknowledge their immense debt to the broad-based, publicly-financed goods our society offers, from the roads over which they ship their goods to the police and firefighters who maintain public safety.
A foreign student of mine once observed that there are plenty of bright, entrepreneurial people in third-world countries who cannot succeed on the scale Americans can, precisely because they lack those public goods, and because the absence of our extensive but largely taken-for-granted public infrastructure prevents the development of a middle class with the wherewithal to purchase their products. Market-based economies require–duh!–markets.
The question we face right now is what happens if we continue down the reckless path we seem to be traveling, a path that promises–among other things–to eliminate or vastly reduce the American middle class?
Ironically, in their zeal to avoid even moderately higher taxation, their unwillingness to repair or improve our crumbling infrastructure, their attacks on the public servants who provide security and education, the wealthiest Americans and their apologists and courtiers run a significant risk of killing the goose that makes their golden eggs possible.
The reality, as Neil Pierce has recently noted, is that government has been an indispensable player in developing America’s prosperity, from the early canals to our transcontinental railways, great dams to the interstate highway system, the first telegraph lines to the government-funded research that led to the Internet. It’s equally true at the local and state level, from public schools for all to our great public universities, the first minimum wage and workplace safety laws.
None of these public goods are free. They are an investment, and over the years, they’ve generated a remarkable rate of return in general prosperity and in all of those “self-made” men.
No disagreement in potentially having a greater launching pad with more infrastructure support. But, it’s incessantly repeated in American media that we don’t get out of our enormous fiscal hole by only by taxing the rich. Someone want to pony-up an economist to disagree with that?
I want more taxes like I want more cavities, but if we implement X% of raising taxes and Y% of larger spending cuts, all of it across the board, then maybe we get off the fiscal hellbound train. I would much rather have a future of quibbling over infrastructure investment, than explaining to our kids what in the hell we were thinking in spending $5 billion each business day that we didn’t have.
Thanks for the well-written piece… and for lifting up the message in “The Self-Made Myth” as it pertains to the Buffet Rule and other current tax debates… One notable correction though: Bill Gates Sr. wrote the foreword for the book, not the book itself. He did point out, as you note, how his son benefitted from these public investments, but he did so in the foreword. BTW – I couldn’t find an email to send the correction to, so I used this post method instead. That said, feel free to treat this as an email and delete this “comment” once you’ve read it… Thanks again for the nice blog piece!
Correction noted! Thanks.