Income tax day, April 15, 2010, now divides Americans into two almost equal classes: those who pay for the services provided by government and the freeloaders. The percentage of Americans who will pay no federal income taxes at all for 2009 has risen to 47 percent. That isn't the worst of it. The bottom 40 percent not only pay no income tax, but the government sends them cash or benefits financed by the taxes dutifully paid by those who do pay income tax. The outright cash handouts include the Earned Income Tax Credit (EITC), which can amount to as much as $5,657 a year to low-income families. Other financial benefits can include child tax credits, welfare, food stamps, WIC (Women, Infants, Children), housing subsidies, unemployment benefits, Medicaid, S-CHIP and other programs. – Phyllis Schlafly, TownHall.com
Dominant Social Theme: It's not fair, and it's planned that way.
Free-Market Analysis: Phyllis Schlafly has been sounding the alarm about the degradation of American freedom for virtually her whole public career. And this article about taxation is no exception.
She's very worried that a country in which 50 percent pay significant taxes and 50 percent pay no taxes is bound to be a country divided by factionalism and mistrust. Tax policy in this case, she believes, is being used to create a permanent underclass dependent on government that will vote for yet more government programs and undermine whatever is left of the nation's republicanism and classical liberalism.
But in commenting on her editorial, we want to point out that there may be a larger and more fundamental two-class problem in the United States. This problem has to do with the polarization in the US of the super-wealthy and America's increasingly problematic middle class. To us, this is a far more profound problem, even, than the US tax structure and the resentment it fosters. The growing polarization between rich and poor is symptomatic of inequitable and authoritarian countries that have little freedom and static and non-innovative societies.
Wherever government is intrusive, society polarizes in this manner. America, with an entrepreneurial culture and vast middle class has proven to be resistant to this sort of polarization. But the economy itself, with its dependence on central banking and its regulatory emphases when it comes problem solving, is geared toward continuing polarizations (from both a tax and income point of view). Central banks issue great gouts of paper money that causes booms and then busts. And with every bust, jobs are lost and never regained and government steps in to "help" those who have lost their livelihoods.
The good news – whether it has to do with taxes or fiat money – is that the Internet (which Schlafly has used to great effect) has virtually shattered the consensus over what only a few decades constituted a modern economy. While it would seem obvious (to us anyway) that a power elite had organized Western societies in a way that continually exacerbates these problems, there is considerable pushback throughout the Western world to a continuation of these policies.
Perhaps the most startling statistic as regards such a pushback can be seen in recently announced polling that libertarian/Republican Congressman Ron Paul (R-Tex) (pictured above left) is in a statistical dead heat with current president Barack Obama. Ron Paul's classical liberal views (gold-as-money, a modest, Constitutional government and a revivified, entrepreneurial middle class) have struck a chord. Here's something from the Washington Examiner (via AP) on Ron Paul's surprising poll numbers:
Hating the government finally goes mainstream … Three years ago, the Republican establishment piled scorn on the presidential candidacy of Ron Paul. Today, he is in a statistical tie with President Obama in 2012 polling. His son, an ophthalmologist who has never run for elective office, is well ahead of not only the GOP's handpicked candidate for Senate in Kentucky but also both Democratic contenders – all statewide officeholders.
What happened? Did America suddenly develop an insatiable appetite for the 74-year-old, cranky congressmen from Texas? Is the gold standard catching on? Paul will not likely be the next president. And his son still faces the most arduous part of his journey as Democrats spend millions to paint him as soft on defense, lax on drug enforcement and too radical on welfare programs.
But there's no doubt that hating the government and the powerful interests that pull Washington's strings has gone from the radical precincts of the Right and Left to the mainstream. It turns out that watching Goldman Sachs, the United Auto Workers, public employee unions and a raft of other vampires drain the treasury at America's weakest moment in a generation will make a person pretty hacked off.
The idea that Ron Paul could poll alongside Barack Obama is most startling when one considers only a decade ago that Ron Paul's ideas and political perspectives where seen as hopelessly anachronistic. In Congress he was known as "Dr. No" because he would not vote for laws that contravened the US Constitution. But he was virtually a constituency of one in the House of Representatives and seen by many within the political community as an anomalous crank.
Ron Paul's ascension, based on classical-liberal lines that hearken back thousands of years to the Athenian Greek city-state, is a perfectly logical reaction to the evisceration and polarization of civil society undertaken by the power elite over the past century or so. That his message has been heard by so many within the past few years is a testimony not only to the power of ideas but to the power of the Internet itself, which has spread his platform of freedom far and wide.
There are many within the libertarian community and the larger Internet-based alternative media who still do not believe the Internet is a fundamental "game-changer" insofar as Western societies are concerned. But it is the Bell's firm position that the Internet's communication revolution is only starting to be felt. It is far too late to "ban" the Internet in Western society, for its free-market ideas have already spread throughout Western society both in America and Europe. They have affected China as well.
The current system of Western governance – polarizing in so many ways – has been all-but-shattered by freedom-oriented solutions promoted by the Internet. Many observing the impact that the Internet is having on the West's sociopolitical environment continually make the mistake of perceiving its influence as static. But it is not static. The Internet's aggregate message is evolutionary, one that is therefore resistant to the kinds of strategies that the power elite has used in the past to beat-back free-market thinking.
There is nothing so powerful as an idea whose time has come. Western society is polarized today. But increasingly the polarization is between those who believe in freedom and those who cling to destructive status-quo that has been organized and implemented by a power elite using spurious dominant social themes. These themes – promotions really – have intimidated the West and continually concentrated power and wealth in the hands of a few. Tomorrow such promotions may be increasingly difficult to implement. We believe a renewal (at least a modest one) of Western freedoms could result.