Producers and Looters

Barack Obama is an avowed “redistributionist.” His world is fairly simple; the rich have too much and the poor have too little. It is his goal to do whatever he can to take from the rich and give to the poor; Robin Hood lives. However, this President is “weak” on economics. He has never understood the secondary effects of income redistribution.

PRODUCERS: There is an old saying; “You cannot create wealth by redistributing it.” Wealth is created by producers. Business owners create wealth by combining capital, workers, and technology to produce new products and services. Laborers create wealth for themselves and their co-workers by contributing their knowledge and/or physical abilities to make the business a success. No business can thrive without competent, focused, and inspired workers. The bottom line is that from the man who pushes a wheel barrel to the person who finances capital equipment, these people are PRODUCERS.

LOOTERS: Those who produce nothing but coerce money or goods from others are called looters. Children are not looters because their parents and loved-ones provide for them voluntarily. However, when the provision of goods or services to others is done by force, looting is taking place. By far the biggest looter-agent is the government. Politicians pass laws forcing some people to pay taxes while giving that money to other people that they deem more deserving. Receiving other people’s money is highly attractive to many. Sadly the booty of government looting doesn’t go just to provide a social safety net; middle income people and corporations also receive looted funds.

THE SECONDARY EFFECTS OF LOOTING: The problem with looting is that the recipient is less likely to work after receiving “free” looted funds. Likewise, the producers also have less incentive to create more wealth when the government steals from them. Both the looter and the producer will work less as a result of the negative incentives created by government redistribution schemes. While Robin Hood would plunder a rich man once, the government is omnipresent.

As an economist I know that incentives matter. Government-sponsored looting on the scale that it exists in the United States today is stifling the productivity of this great nation. I’m not saying that there should be no safety net or that taxes must be abolished, but when our Federal Government is borrowing 40 cents out of every dollar it spends, things are seriously out of whack. One thing is for sure; Barack Obama can’t fix what he doesn’t understand. Four more years of this and we might be living in a banana republic.

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