Wealth in the Hands of the State

The always perceptive Sowell wrote about the values of private property and the failed efforts to overcome them. In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler’s Holocaust in the 1940s.

How can that be? Value and wealth are not static. Today is influenced by yesterday as today will influence tomorrow. You can only confiscate the wealth [and income] that exists at a given moment. You cannot confiscate future wealth [or income] — and that future wealth [and income] is less likely to be produced [or earned] when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops, when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally keep tending and feeding while raising them to maturity. This behavior was considered by the State to be criminal.

As was this: Many farmers, furious at what they perceived as injustice, burned their produce rather than handing it over to the party overseers.

RESA is a plan percolating through Congress that plans to confiscate future wealth. It is a new tax on the retirement plans of Americans. A cap of 450,000 dollars is placed on what can be inherited, the rest goes into short term insurance products--an idea that will reap who knows how much advantage to the retiring congressmen who devised this. We'll see how successful this raid will be.