Friday, January 11, 2013

The Myth of "Makers" and "Takers"

A persistent theme we have been hearing for quite some time argues that society is made up of wealthy “Makers” – those who create wealth and are to be thanked for all of the good things we have in the world, and parasitic “Takers” who are unwilling or actually do any work and, instead, live off of the wealth that the “Makers” produced.

This is the theme established in Ayn Rand’s famous book Atlas Shrugged - which then suggests how the “Takers” can be made to suffer when the “Makers” decide to quit producing food for the parasites.

This theme includes the threat that if the demands of the “Makers” are not met, they will pack up and leave and everybody else – who apparently lacks the capacity to create economic wealth – will either wallow in squalor or finally get busy and do some real work, thus becoming “Makers” themselves. We are not to raise their taxes, regulate their activities, or in any way limit their ability to “Make” wealth because they provide the jobs that regular people need for income as well as the wealth of goods and services regular people buy with that income.

This description of the world is not entirely accurate.

It would be more accurate to report that many of these “Makers” do not acquire their wealth and power by producing wealth that the parasites then feed off of and providing the rest of us with jobs and economic goods. These “Makers” get their wealth by being “Takers” on an industrial scale. These “Takers” do not take a few thousand dollars that then go to pay for a college education or to survive a period of unemployment. Instead, these “Takers” rake in hundreds of millions to billions of dollars at a time, adding these takings to already acquisitions of economic, political, and social power.

This is most clearly the case with respect to the financial crisis. Hundreds of billions to trillions of dollars were transferred, not to the poor and middle-class, but to the wealthy and very-wealthy. Wouldn’t it be nice, if your personal debt started to exceed your ability to pay and the value of your assets was declining, to be able to call up the Secretary of Treasury and have them negotiate a bail-out package that would put you back on sound financial footing? Unfortunately, I expect that most of us would have trouble getting a government official to take one’s call. However, the super-rich do not have this problem.

It is important to note that I am not criticizing the bailout itself or saying that it ought not to have happened. That is a separate question. In this posting I am simply pointing out the fact that the bailout – regardless of whether it was good or bad – was also a case of very-wealth people “Taking” on a grand scale. It calls into the question the paradigm we are taught that the world is made up of wealthy “Makers” and poor and middle-class parasites that live off of them.

These types of direct payment represents only the most conspicuous way in which ultra-wealthy takers profit by using the government to obtain benefits that they can only acquire by doing harm to the well-being of others.

For example, let’s say I destroy your home in order to improve the view from my living room window. This is one form of “Taking.” I obtain a benefit – a better view, which is something that I value, by engaging in an activity that makes you worse off.

Economics tells us that where the benefit exceeds the costs, I should be able to convince you to sell me your home – in which case I can then choose to have the house destroyed and improve my view. If I cannot get you to voluntarily move, this means that you value living in the house more than I value an improved view. However, if I am willing to improve my view by an act of “Taking”, you are forced to give up your house no matter how much value you put into living there.

Advocates of free-market economics – the type of economics where wealth is kept in the hands of those who produce it unless they can be voluntarily convinced to give it up – would not allow this type of activity.

Yet, many of the very wealthy live off of this type of activity – this type of “Taking”. In fact, they routinely protest against the adoption of free-market principles precisely because it would take from them the wealth they acquire thorough this type of “Taking.” Far from being “Makers” on whom the rest of us defend, they are “Takers” who, in part, purchase a certain amount of political and social support for their “Taking” by sharing some of their ill-gotten gains with others.

Climate change denial provides an example of “Taking” on this model. In this, ultra-wealthy individuals add to their wealth by selling products that, in turn, destroy the life, health, and property of others. This is, literally, “Taking” on the scale of hundreds of billions to trillions of dollars.

These people are profiting from the “Taking” of the life, health, and property of others the same way that I would have been profiting from a better view by “Taking” from you your home in the example above.

Many of the protests we hear against environmental regulation, worker safety, product safety, and consumer protection are not arguments in defense of a free market. They are arguments in defense of a form of “Taking” whereby people are allowed to profit by activities that do harm to others.

I have often wondered how much of a safety net we would need if not for the fact that there is so much “Taking” being done whereby the poor and middle class are required to give up their life, health, and property, and their liberty in order to benefit ultra-wealthy “Takers”. Instead of taxing the ultra-wealthy to the tune of an few extra hundred billion dollars, if we could only reduce their “Takings” by a few hundred billion dollars we could reduce the deficit, reduce the size of the safety net, and cut taxes at the same time.

However, one thing we can say about ultra-wealthy “Takers” is that their taking is not a casual past-time. It is a business in itself packed full of well-funded lawyers, public relations specialists, lobbyists – each enacting well-planned programs.

A pitch, if honestly and accurately presented, would look something like this:

"We believe we can generate $500 million in profits by 'Taking' if we can get this law passed or get that regulation re-interpreted. Here is our plan for bringing about this change. As you can see, we estimate that this 'Taking' will require a budget of $50 million and it has a 50% chance of success. Applying standard probability analysis this yields the conclusion that the “Taking” that we propose is actually worth $250 million – 50% of $500 million – or $200 million in profits as an expected rate of return."

Of course, one of the messages we can expect to hear from this company is how they plan to "create jobs" with this $200 million, how this act of 'Taking' is actually making wealth, and how the rest of us will suffer if they are not allowed to succeed.

This is 'Taking' on an industrial scale. This is not at all what we hear about when we hear that the world is divided up between ultra-wealthy “Makers” who are responsible for all the good in the world, and poor and middle-class “Takers” who do nothing but live as parasites off of the wealth they produce. It is a form of taking that a poor person seeking to go to college or a retired couple seeking medical care cannot hope to match.


Anonymous said...

Your definition of Takers is invalid, revisit your premise.

If you have a job, you are not a taker. The Taker in the banking bailout was President Obama. He took our money to bailout banks that should have been allowed to collapse or taken over by more competent Makers.

Alonzo Fyfe said...

Your definition of "Takers" is nonsensical. Under your definition, a person ceases to become a "taker" if he agrees to wash a car for $1.00 once each year.

A "Taker" as I am using the term is anybody who acquires something of value (money, a view) by means that are destructive of the life, health, property, and liberty of others involuntarily.

The executives of the banking industry bailed out in 2008 and the owners of the fossil-fuel companies who refuse to ignore the harmful consequences of global warming more than qualify at "Takers" on a industrial scale.

Anonymous said...

But that is not Ayn Rand's definition. Takers demand that you give them something to while they offer little or nothing in return.

Bankers do not take anyone's money. We bring it to them or borrow from them. They in return, pay us interest and invest in other Makers efforts. Unfortunately, some of those loans fail and some of those investments do not perform as predicted. And as we see in Atlas Shrugged and real life, the biggest obstacle to Makers is tha actions of politicians or activists trying to make things "fair" or "right".

Alonzo Fyfe said...

A "Taker" is somebody who short-circuits a voluntary trade by forcing a person to accept something less than they would have accepted without the use of force.

If I were to destroy your $1,000,000 house and give you $900,000 in return - and force you accept that deal - I would still be a "Taker" - taking $100,000 from you. The fact that the $900,000 does not count as "little or nothing in return" is irrelevant. What is relevant is that the taker offers "Less than you would accept in a voluntary exchange."

When Bankers used the government to give them hundreds of billions to trillions of dollars in bailout money they certainly did "take people's money". There might be other money that a person did not "Take", but the bailout money was "Taken".

If a person holds down a job during the day and rob convenience stores at night he is still a thief. The fact that he has a legitimate source of income does not change the fact that the income obtained by robbery is not legitimate.

Similarly, the fact that banks have some legitimate forms of income does not change the fact that the bailout money they receive was "Taken" in the sense used in this article - and as such was a transfer of hundreds of billions to trillions of dollars substantially into the pockets of the wealthy.

Josh said...

Anonymous, you meant congress too right? They voted on this thing. Why did you single out Obama?

It's pretty clear that both Wall Street and politicians have culpability for the bailout.

Josh said...

I do know that congress at least attempted to add taxpayer protections to the bill, I haven't read the bill myself yet though and would have to do so before I could say congress did a good or poor job at trying to ensure the action wasn't taking or at least mitigate it.

Anonymous said...

The Flying Spaghetti Monster needs your help.

Anonymous said...

Obama? You mean George Bush? TARP was enacted by Bush... under executive order. Mabey you remeber Bohner crying on the floor?