I am not an economist, but I do have some personal experience with the principles of economics and the rules that allow especially Americans to prosper while becoming more self-reliant and less dependent on government.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), aka AOC, the youngest woman ever elected to Congress, graduated from Boston University cum laude, and then returned to the Bronx and worked as a bartender and waitress to help her mother fight foreclosure of their home. Nothing wrong with that, but her life experience apparently has taught her little. In some recent comments she claimed that the very wealthy became that way, not from salaried work, but from investments. A version of this economic envy has been told and re-told ever since the days of President Franklin D. Roosevelt.
The central flaw in this “reasoning” is that there is only a fixed amount of money to go around and if someone makes more than you, it isn’t fair. The opposite is true. The money supply is unlimited. People are only limited in the amount they can earn by their talents, persistence and a willingness to take reasonable risks.
AOC and her socialist fellow travelers think there is something wrong with earnings from investments and other non-salaried income. Investments in the stock market produce capital for corporations who hire people and pay them salaries. They are then able to make investments that help sustain them and their families.
History has shown that lower taxes not only bring more money into the treasury, but leaves more money in our pockets to spend, save and invest, thus building wealth for ourselves.
Just one example. The Revenue Act of 1926 promoted by President Calvin Coolidge benefited all classes, not just the wealthy. Before Coolidge entered office, the federal income tax rate was 73 percent. The Revenue Act lowered it to 25 percent.
In his first message to Congress in 1923, Coolidge said: “High taxes reach everywhere and burden everybody. They diminish industry and commerce. They make agriculture unprofitable. They increase the rates on transportation. They are a charge on every necessity of life.” Instead of reducing federal revenue, the Revenue Act caused more money to flow into the Treasury. The government ran surpluses every year Coolidge was president.
These are not difficult lessons to learn. Unfortunately, AOC, Senator Bernie Sanders (I-VT) and New York City Democrat-Socialist Mayor Zohran Mamdani have allowed their radical ideology to obscure the economic and political lessons from even the recent past. High state and city taxes are a major cause of the economic migration to lower tax states, though no one can escape the long arm of Washington.
AOC and company claim not everyone can afford to invest in the stock market and other sources. Yes, they can. They can put away a dollar or two (or more) a week and buy conservative stocks that outperform a savings account at the local bank. Socialists don’t want people to become financially independent because that means they won’t be addicted to government and the politicians who poorly manage it to the tune of a $39 trillion debt.
The late David Horowitz said: “Socialism is a plan of morally sanctioned theft. It is about dividing up what others have created. Consequently, socialist economies don’t work; they create poverty instead of wealth…”
Here’s another quote from the late economist and social philosopher Ludwig von Mises: “The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent.”
That should be the end of the debate, but it won’t be because too many of us are ignorant of economic history.
Readers may email Cal Thomas at tcaeditors@tribpub.com. Look for Cal Thomas’ latest book “A Watchman in the Night: What I’ve Seen Over 50 Years Reporting on America” (HumanixBooks).