President Obama and Congressional Democrats have embarked upon a policy to tax the rich in order to fund programs that all of us can benefit from. A reader sends me this anecdote, perhaps apocryphal but no matter, that illustrates the problem with Obamanomics:
An economics professor had a class of students who adamantly insisted that the best society was one in which the government taxed the wealthy and gave the money to the poor. The best society was one in which all people were roughly equal in terms of their worldly goods. The professor decided to conduct an experiment with the class to teach them why such schemes always fail.
All grades in the class would henceforth be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average, predictably enough, was a D. No one was happy. When the 3rd test rolled around the average was an F.
The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the motivation to succeed is great; but when government takes all the reward away; no one has an incentive to try, or even want, to succeed.
Maybe we should forward this to the White House.
RLC