Taxation, citizenship, and the State
A Reaganite asked: Why do social democrats not understand that the quality of life will be increased through growth of capital and not redistribution?
Any question that begins with “Why don’t x not understand” is, in my experience, stark evidence that the person concerned is himself too thick or too ignorant to understand something. It is an indirect statement that you are incapable to understand the other person or group. And in this case, it is utterly wrong in point of fact, and implies a contradiction that simply is not there. There is no contradiction between producing wealth and redistributing it. Do the shareholders in a company “produce” wealth? Hell no. It is the workers, the admins, and, if you are lucky, the CEO. who do. Yet the shareholders receive part of the wealth produced by the company (dividend). You will say that the shareholders have placed their capital in the company for use. Yes, but it still not the capital that produces wealth: it is the intelligence, hard work, promotion, and planning done by the company employees, from the CEO to the last shelf-stacker. Capital by itself does not grow. It only grows if invested; and invested means, vested into someone, or a group of someones, who will use it to work and produce. It is the group of people who create the wealth; and what proves it is that, while capital left alone in a drawer or in a safe effects precisely nothing, people without capital are still capable of producing wealth - though most often not as much as they could with the capital. The people are the essential wealth creators. The dividend, the interest, the profit gained by the capital holder is just the consideration owed to him for placing his capital at the disposal of the actual wealth creators. Wealth is being redistributed immediately, as an integral part of the creation of wealth.
On a larger level, no economic activity of any kind could take place without a framework of law designed to protect honest endeavour and to punish thieving and swindling, and the (inevitably expensive) apparatus to punish thieving and swindling, and (equally important but somehow never noticed by libertarians and Ayn Randians) the apparatus to certify and notarize transactions so that all parties know what is expected of them. These are all public matters. It may or may not take a village to raise a child, but it takes a whole goddamn society with an elaborate code of written law and the public power to enforce it, to transact as much commerce as is involved in buying a stick of chewing gum. The seller who sells the stick, and the child who buys it, both implicitly rely on the money printed by the public power to have the value required to pay for the stick, and on the cop down the road to come around and deal with things if the child tries to take the stick without paying or the shopowner tries to keep the money and give nothing in exchange.
All these things cost money. Taxation is not something that the state imposes on noble wealth creators after they have created all the wonderful wealth; it is the precondition for any wealth existing at all. Without the constant background presence of public institutions, nobody could work, and certainly nobody could trade. That the public power has a legitimate share in the products of peaceful work and legitimate trade is something any sane person should understand without being told. And what is more, taxation is the point at which the citizen gains a share, an interest, in the State, in the doings of the public power, so that the public power is not alien to him. Because he pays tax, he has a right, and a duty, to be certain that tax is properly spent and that the State provides those services for which it exists. It is as taxpayer that he is a citizen.
As for taxpayers others than individual citizens, the stake of the state in all business is a larger case of the stake of the shareholder in an individual company. The shareholder makes the company possible, and gets dividends from it. The state makes all trading and profitable labour possible, and gets a share of the proceeds in taxation. So much for the supposed contradiction between wealth creation and redistribution. I said it above and I say it even more forcefully again here: redistribution (taxation, dividends) is not only not opposed to wealth creation, it is a necessary and inevitable part of it.
Now let us talk about the things that modern "conservatives", actually a watered down version of Ayn Randian right-wing anarchists, actually imply: that the public in general would be better off if “wealth creation” were allowed to go on as it pleased, the state serving at best as a policeman. That is contradicted by plain evidence. In the nineteenth century, Britain was the richest country in the world, at the peak of a cycle of capital accumulation and wealth growth that had lasted for centuries. Read some Dickens and find out how little the wealth that had accumulated at the top and middle of society percolated to the bottom. The lower orders of society lived in conditions that would horrify slum dwellers in Sao Paulo or Nairobi today. Wealth kept on accumulating, but it never “trickled down”. And the result was bad for all of society, because you cannot isolate yourself from your fellow citizens. “ There is not a drop of [the slums]'s corrupted blood but propagates infection and contagion somewhere. It shall pollute, this very night, the choice stream (in which chemists on analysis would find the genuine nobility) of a Norman house, and his Grace shall not be able to say nay to the infamous alliance. There is not an atom of Tom's slime, not a cubic inch of any pestilential gas in which he lives, not one obscenity or degradation about him, not an ignorance, not a wickedness, not a brutality of his committing, but shall work its retribution through every order of society up to the proudest of the proud and to the highest of the high. Verily, what with tainting, plundering, and spoiling, Tom has his revenge.” (Charles Dickens, Bleak House, ch.46)
Housing estates, health reforms, eventually the National Health System, were not enacted with public money because those terrible socialists have a sick desire to spend “your” money. They were enacted, with the basic support of all the country, because they were in everyone’s interest. You cannot have a part of your country festering and just live as if it wasn’t happening. The dwellers of gated communities in America are trying the experiment again. It failed in England 150 years ago, and it will fail again.