My opponent and I likely have a similar goal: to improve the financial position of Americans and provide everyone opportunities for success. At the very least, I'd like to state that as my main goal. Too often the debate over tax cuts focuses on "fairness" - a subjective term almost universally exploited to benefit one portion of Americans over another. On the contrary, my orientation is what is better for everyone. If we suspend the ideological lenses through which we naturally view these contentious tax cuts, we may consider the implications of a decision one way or another and whether these are in line with our goals - mine being to strengthen our national economy for everyone.
One of the greatest wisdoms of modern economics is that markets naturally allocate capital and resources to those who use that capital to produce the most social value. Governments, whether run by Republicans or Democrats, have trouble with this concept because government cannot actively predict this allocation. Apple has the largest market cap in history and more cash than any company I can name, not because a politician decided it had value, but because people want their products. Had government looked at the technology sector and decided which products should be winners, we might all be walking around with Microsoft smartphones right now because some administration believed its values were more "American," or "fair" (or "Christian," or "progressive," or any other doctrine we may choose). The markets make us all better off, naturally.
The market for human capital works in the same way. Capital naturally flows to those people who use that capital most effectively. Steve Jobs was filthy rich and for good reason - he created unfathomable social value. The same is true for investment bankers and venture capitalists. By taking on the risks and providing resources to start-ups, these financiers are increasing the social welfare for everyone. We cannot deny that even the poorest Americans are vastly better off today than at any point in history. Our goods are better, varied and cheaper.
The people who make that possible should receive the wealth determined by their social value as an incentive to take on risk and improve our society. While the immediate effect of extending Bush tax cuts may be to decrease the burden on the very wealthy, allowing income to be determined naturally will improve society in general by allocating capital and resources in ways that maximize economic wellbeing for everyone. When money is instead redistributed from the wealthy to those the government deem more worthy, this money is not invested in ways that will maximize common welfare. Ultimately, everyone - even those that the policy was intended to help - will be worse off.
Alex Drechsler '15 is not interested in your Obama bumper sticker. He can be reached at alex_drechsler@brown.edu.
