In a recent interview Nick Clegg has called for the introduction of a new tax aimed at the wealthy. In doing so he has reminded us of one of the effects of centralised government; surprisingly inept people can command power that exceeds their abilities in ways a free market would not support.
The Deputy Prime Minister would aim his new tax at the very wealthy. The goal is not to tax income, but wealth. Wealth is a very general term, encompassing a great deal, and the desire to tax it is the goal of many governments.
We are told it is to be an emergency tax to help us through the recession; like most tax, the promise is that it will be temporary. As it is targeted at the rich we are assured others will actually pay it, and if it affects us at all it will only be in a positive way.
This worldview is not restricted to the Deputy Prime Minister. Many believe cash lying about in the bank accounts of the wealthy is going to waste. Freeing it from bondage can make an immediate impact on society. It is only a small jump from this to a belief in government managing all wealth in order that it can be properly allocated to areas of need. This common delusion suffers from the same weakness as almost every statist proposal – the conviction that wealth, money or capital is best used when it is consumed. This is false, as societies based on consumption do not flourish.
If we spend one million pounds on welfare we make no real investment beyond some vague notion of helping the needy. The money is consumed in a non-productive way. If we invest instead in a factory producing goods we can create wealth. If we sell the goods overseas we bring more money into the country.
It is not an exaggeration to claim that schemes based on confiscating wealth to then immediately spend it are destructive. Less capital means less investment leading to fewer jobs and fewer life opportunities for everyone. All to satisfy the envy of some who will vote for parties that promise to indulge in the theft of private property to dole out unearned income to favoured groups.
Taken to its logical conclusion, where the State controls more and more capital, we inevitably become a consumption-oriented society. This is sold as equality or fairness, with the less well off getting their due. In practice it is a system that creates dependency, with increasing numbers dependent on the powerful confiscating wealth and distributing it to those who have not earned it.
Even socialists who are aware of the reality of this delude themselves into believing the majority benefit. In practice the money goes to those with the most political clout and is stolen from those with the least. Some of the poorest people in the UK are already surrendering over fifty per cent of their income because they will never have any political currency, but the entire green energy industry survives on the basis of government subsidy. Strip away the egalitarian rhetoric and what we see is a system based on corrupt ideals, the source of which is the immoral practice of confiscating private property to achieve the social goals of some.
Every democratic government is consumption-oriented. They must buy votes now, not ten years from now. Nick Clegg’s attempt is a well-worn socialist mantra that exploits the easy-to-imagine treasuries of the rich with their wealth going to waste. It is surely more just to invest it in the needs of the many.
But it is a dangerous game to assume wealth must be consumed rather than invested. The arch-consumer is the State; it produces no goods or services of its own and all its income is derived from the productive efforts of others. When we allow politicians and bureaucrats to dictate what we do with private property we inevitably must accede to their grand designs and social outlook. A casual jaunt through the history of the Soviet Union ought to arm us with enough horror stories to forever banish the belief in enlightened statism, but instead we let the Nick Clegg’s away with childish notions of discredited wealth redistribution schemes.
Even for those who believe they will somehow benefit from ideas like this we must first accept the principle that it is acceptable for governments to confiscate wealth. If we do so, we must also accept the consequences. Our emergency situation will in time be replaced with another emergency, crisis or meltdown. Given that most western governments view gender inequality a scandal worthy of attention their idea of a catastrophe may not conform to ours. Who will they tax then?
The author of this article is Gerard Docherty.
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