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Commentary: UN Wants Global Welfare State

Economist Sven Larson with Wyo. Liberty Group

07/06/2012

~~~~~~~By Sven Larson~~~~

The day we make contact with extraterrestrial aliens, what do you think would be the first thing our politicians ask them? “Give us free money, you wealthy ET’s! Send us entitlements, you galactic capitalists! Pay for our food, our health care! And throw in contraceptives, too, or else we’ll overpopulate this planet! Look at those shiny UFOs you are lucky enough to have – you’ve had a gazillion years to become rich, so you have got to spread your wealth around to our planet!”

Obviously ET would shake his head, pack up, move on and plan to come back in a couple of hundred years when we have a somewhat better grasp on the concept of economic freedom.

That would of course be regrettable. But given mankind’s penchant for building welfare states, this scenario is not inconceivable. The desire to redistribute income and wealth seems to be a global epidemic that holds our politicians and tax-paid bureaucrats in a tight grip. Consider this Yahoo News Canada report as yet more evidence of that:

The United Nations on Thursday called for a tax on billionaires to help raise more than $400 billion a year for poor countries. An annual lump sum payment by the super-rich is one of a host of measures including a tax on carbon dioxide emissions, currency exchanges or financial transactions proposed in a UN report that accuses wealthy nations of breaking promises to step up aid for the less fortunate.

Let’s see… who are these “less fortunate”? Well, there is Zimbabwe which is run by a mad dictator who has transformed his formerly self-sufficient country into a desperate food importer. Then there is North Korea, which for mysterious reasons also seems to combine deplorable poverty with a mad dictatorship. Then we have Mali where they had a military coup recently that hurled an already politically corrupt country into even more chaos with medieval savages moving in to take advantage. Then of course we have the “Democratic Republic of Congo” which is exceptionally rich on natural resources but has a government that runs the place like a slave camp. And let’s not forget Syria and Venezuela with “less fortunate” dictators at the helm.

Yes. Less fortunate. It is just bad luck that dictators can’t make their country wealthy. Sure. Absolutely…

Back to Yahoo News:

The annual World Economic and Social Survey says it is critical to find new ways to help the world’s poor as pledged cash fails to flow. The report estimates that the number of people around the globe worth at least $1 billion rose to 1,226 in 2012. There are an estimated 425 billionaires in the United States, 315 in the Asia-Pacific region, 310 in Europe, 90 in other North and South American countries and 86 in Africa and the Middle East. Together they own an estimated $4.6 trillion so a one percent tax on their wealth would raise more than $46 billion, according to the report.

Does this include wealthy dictators like the Kings and Emirs of Arabian oil countries? When Yassir Arafat – the dictator of the Palestinian territories – died in Paris, he had about a billion dollars in the bank. Would he have been on the UN’s tax-the-rich list? Or would it only apply to billionaires who made their money on the terms of a free-market economy?

“Would this hurt them?” it questioned. ”The ‘average’ billionaire would own $3.7 billion after paying the tax. If that billionaire spent $1,000 per day, it would take him or her over 10,000 years to spend all his or her wealth,” the report says. It says that the wealth of billionaires grew at an average rate of four percent a year in the two decades before the 2008-2009 financial crisis. ”If that rate of growth returned with no wealth tax, the average billionaire’s wealth would double in less than 18 years.”

Who wrote this UN report? This is how 14-year-olds reason when they first realize that there are wealthy people out there. We who live in the real world know that billionaires don’t keep their wealth in the bank as cash. We know that they have it invested, in their own businesses (that is called “stock” or “shares” for those who live on the left side of town) as well as in other businesses (that is called “risk capital” and helps new businesses start up and grow). Some billionaires own treasury bonds issued by governments with fiscally obese welfare states.

In other words: very few billionaires spend $1,000 on a pizza or buy a new Aston Martin every full moon. They live in luxury, no doubt, but most of the billionaires who have made their money on free-market terms are also hard-working business men, entrepreneurs, investors and contributors to their community. The billionaires who waste their money on pointless luxury are usually the ones who earned their money by either being a dictator, or being the dictator’s brother in law.

Can’t believe you have to make this point, but…

Back to the nonsense:

The idea could appeal to the likes of Warren Buffett, the US tycoon who has complained that he pays a lower tax rate than his secretary.

And of course Karl Rove and Dick Cheney are holding guns to his head forcing him to pay less taxes than his secretary… If Warren Buffett wants to give a billion dollars or three to Robert Mugabe’s government, then Warren Buffett is free to do so. He can send his high-taxed secretary to FedEx Kinkos and have them ship a $1bn check to the UN any time of the day. Warren Buffett can do what the heck he wants to with his money. He does not need a government to force him to do what he apparently already wants to do.

France’s new Socialist government has caused consternation by vowing a 75 percent tax on salaries above one million euros ($1.24 million). But the UN acknowledged that the idea is unlikely to get widespread support from the target group, saying that for now its tax on the unimaginably wealthy remains “an intriguing possibility.” ”It has not been regarded as a means of raising revenues for international cooperation,” the report says.

Aha. So this is the ice breaker. Once they get their billionaire tax they want to go after millionaires. Just like with the Alternative Minimum Tax here in the United States. It was created in the 1960s to make sure a very small group of very wealthy people paid at least some federal income taxes. Now the AMT is a middle-class problem. This UN “tax the rich” scheme is apparently going to go the same way.

And as if I should have to make this point, but… Once you tax incomes above $1 million at a confiscatory 75 percent, how many people are going to strive to make that much money? The extra work effort is not worth the return. If a tax-paid bureaucrat at the UN begs to differ, then he should go out and roll up his sleeves and make that much money himself – and then voluntarily give government 75 percent of every dollar he makes above $1m.

Can you stomach more? More taxes, that is:

The document gives other ideas for international taxes, including: – a tax of $25 per tonne on carbon dioxide emissions would raise about $250 billion. It could be collected by national governments, but allocated to international cooperation.

Does that tax apply to CO2 emissions in Nigeria as well? What about cars in Bangladesh? They are about the most polluting cars you can find anywhere in the world.

– a tax of 0.005 percent on all currency transactions in the dollar, yen, euro and pound sterling could raise $40 billion a year.

Sounds like a nonsensically small tax, so who could be against it? Well, once the tax is in place you are going to see that “5″ creep farther and farther to the left. At which point there will be a flight to tax-exempt currencies like the Swiss franc, the Swedish krona, the Australian and Canadian dollars, etc.

The only thing more flexible than financial capital is a statist’s economic fantasy land.

– taking a portion of a proposed European Union tax on financial transactions for international cooperation. The tax is expected to raise more than $70 billion a year.

I’m sure the Germans, who are already paying for excessive government spending in Greece, Spain, Italy, Portugal and Ireland, will be thrilled to also have the honor to sponsor the political corruption and economic ineptitude of dictators from Pyongyang to Ougadougou.

It also suggests expanding a levy on air tickets that a number of nations already impose to raise money for drugs for poor states through UNITAID, a UN initiative. The report says more than $1 billion has been handed over to UNITAID since the levy started in 2006. France has a one euro tax for a domestic flight in economy and six euros for international flights — with 10 euros for business class on domestic flights and 40 euros on international tickets.

These are the same international organizations that want socialized health care systems all over the world. And as any student of history knows, socialized health care systems are not very good at promoting advancements in medical technology (including pharmaceutical products). They don’t have the resources to buy state-of-the-art equipment, new drugs or implement advanced treatment methods – unless of course the only purpose of those methods is to cut costs. As a result, countries with socialized medicine score poorly in terms of advancing the medical profession.

In other words, if those who want to use this airline tax to pay for pharmaceutical products had it their way, they would soon find that there would not be any products for them to spend the tax on.

And now for the finale from the tax-paid ultra-statist bureaucrats at the UN:

[Because] of budget cuts, aid and development assistance to poor countries fell $167 billion short of promised levels in 2011, according to Rob Vos, the report’s lead author. The UN expert said the taxes make “economic sense” as they stimulate the green economy and “mitigate financial market instability.”

Aside from the nonsense about mitigating financial market instability (Has any tax thus far accomplished that? Why would a new tax do what existing taxes have not accomplished?) and stimulating the green economy (How are you going to guarantee that Robert Mugabe will spend free money on “the green economy”?) perhaps the dumbest statement is the one about the budget cuts. International aid was created to help poor countries get out of poverty. Logically, it was supposed to be a temporary fix where those who had more helped those who had less get wealthier on their own. As a result, you would expect the recipients of international aid to work their rear ends off to lift themselves out of poverty, just like we did in America and Europe, and be grateful for the extra help they got that we never had.

But this is not the attitude of the redistributive statists that wrote this UN report. The fact that they want the industrialized world (think America and Europe) to compensate for a budget shortfall in international aid tells us that they see this global redistribution as something permanent. If it was temporary, the recipients – and their mouthpieces in the UN – would say “this is a great opportunity for us to increase our self sufficiency”. But instead of doing that they cry foul and demand compensation for the loss of some of their free money.

The only way that a country can elevate itself from poverty to prosperity is by reforming away its big, onerous government. That begins with ending openly oppressive dictatorship, and continues with the liberalization of the economy, the full recognition of free speech, and the creation of an accountable government.

A global welfare state is the safest way to discourage all kinds of advancements, be it economic, social or cultural.

Not to mention that it would scare ET away. As soon as he realizes how tax hungry our governments are, he’ll realize that he better keep his money and business off this planet.

(Published by permission of Sven Larson and Liberty Bullhorn)

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