… is from an e-mail sent to me yesterday by my emeritus GMU Econ colleague and Nobel laureate Vernon Smith; Vernon’s e-mail was prompted by this letter of mine in which I criticized Matt Yglesias’s assertion that Sen. Elizabeth Warren’s economically calamitous and grotesquely unethical scheme to radically restructure corporate governance in the U.S. – a scheme that would effectively seize massive amounts of property from investors – would not cost us “a dime”:
And why would anyone work to replace the wealth created, if any they created was simply going to be taken away? Besides the wealth destroyed there would be a massive transfer from non-profits to the government since the wealthy contribute so much to these entities.Welcome to the world of Venezuela and North Korea, whose leadership follows the same pathway.
DBx: When sending me his kind permission to share his e-mail, Vernon added the following:
The thought/belief process behind these schemes is one in which the wealthy are wealthy because they have taken it from others and made them poorer–the Marxian fallacy. They cannot explain why income grows across generations, even at the lowest end.
The only reasonable conclusion is that you don’t interfere with that wealth creation process if you want to help the poor.
Policies, however, that reduce the mercantilist-crony-capitalist means of acquiring wealth through government favors needs to be more effectively addressed. We bailed out the big banks, but still have the Federal Reserve-Treasury-Investment banking revolving door complex, which is why the bailout. Instead, we punished the banks, they reduced lending for recovery, and hurt everybody.