Something said in the debate over Governor Scott Walker's tax cut proposal yesterday in Madison caught my attention. In an effort to discredit any efforts to lower income or property taxes, Democratic Representative Brett Hulsey tried to argue that they would not help the economy at all because "You know why rich people are rich? They don't spend money." The statement conjures up images of Disney's Scrooge McDuck sitting atop a giant pile of money beating off anyone trying to touch it with his walking stick.
Apparently, Representative Hulsey doesn't watch Entertainment Tonight or E! Television or Bravo--because the celebrities and "The Real Housewives of (Insert Rich Gated Community Here)" tend to throw money around like it's going out of style. But even if he was talking about the much more low-key, high-end earners here in Wisconsin he was still wrong. He would have been more on-point if he had added the word "frivolously" to the end of his statement.
The rich don't spend their money on things like tattoos and piercings, meals at McDonald's, Subway, and Burger King five days a week, 24-packs of Busch Light, Beats headphones, 22-inch spinner rims, Ke$ha concert tickets, designer baggy jeans, lottery tickets, Friday and Saturday nights at the club or illegal drugs.
You know what the rich do tend to spend their money on? Salaries and benefits for employees at small businesses, municipal bonds to fund the construction of new roads and schools, seed money for new businesses, the building of senior living centers, equipment used at the Boys and Girls Club, boats built at Cruisers in Pulaski with motors made by Mercury Marine in Fond du Lac, stocks in all kinds of American companies, college endowments for research and student scholarships, Harleys assembled in Milwaukee, meals at restaurants that pay more than the minimum wage, cancer centers at hospitals and (as has been pointed out here before) 106% of all federal personal income taxes paid.
Yes, much of that spending leads to the making of more money--a practice we like to call "building wealth". It was something that nearly all Americans strived to do at one time--until many got distracted by all of the items in the first list. However, if Representative Hulsey would like the rich to go all Atlas Shrugged and just sit on their piles of money--laughing at the plight of the "less fortunate"--I'm sure it could be arranged. It might give the Madison Democrat some interesting insight into how things actually work in the real world.
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The problem is that over the last 40 years the rich have gone all "Atlas Shrugged", but not really. In Atlas Shrugged the rich would not take subsidies, or ask for bailouts, or be "to big to fail". But what they are doing is taking more and more of the fruits of the labor of their employees. Productivity has steadily gone up over the last 40 years, while wages for regular folks have stagnated. Why? The answer is simple the extra large slice of the pie that the rich were getting wasn't big enough for them. They decided they needed more and have pushed a political agenda to make that wish come true. And it is. Slowly, but inexorably. The writer is correct in that the rich do spend some of the their money. But Hulsey is also correct in that the lower and middle classes spend ALL of their money. So which makes more economic sense giving the CEO another 20 million and he spends 4 or giving the companies employees the 20 million in wage increases and they spend every nickel?
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