Tuesday, August 02, 2005

The Scrooge McDuck Fallacy

I recall Ann Coulter putting it very well when she said that Democrats were convinced that somewhere in America there is a hidden room containing vast quantities of self-renewing wealth that was serving no constructive purpose. If only Democrats could find it, and, like the good little Robin Hoods they aspire to be, distribute it to the needy. I think of this as the Scrooge McDuck Fallacy.

Scrooge McDuck was the enormously rich uncle of Huey, Dewey and Louie and he took great pleasure in cavorting in a huge swimming pool filled with some 30 cubic acres of lucre. Scrooge was both shameless and miserly. As a child I rather liked him and had enough sense to realize that rich people put their money into the bank or invested it just like ordinary folks putting away something for the future. Apparently some children couldn't figure this out and grew up to be Democrats.

The rich enjoy a very high standard of living. They get to buy expensive cars, live in expensive houses, have vacation properties, buy nice things and employ others to look after them and their children. However, those expenditures typically entail very small fractions of their net worth. Grostesque levels of conspicuous consumption are rare among those who have earned their wealth or they are prevented by trust fund managers controlling and conserving inherited wealth. The rare exceptions are more often than not entertainers. Michael Jackson's Neverland fantasy world is probably the most flagrant example of the self-indulgent squandering of wealth that you can find in America.

Estimates of John Kerry's wife's wealth range between $800 million and one billion dollars. Teresa likes to live well and certainly isn't inclined to forgo purchasing what she wants out of a misguided thriftiness. Nevertheless, it is very likely that she spends less than 1% of her net worth a year to pay for her life style. The other 99% or more of her fortune isn't hidden in a secret room or filling a huge swimming pool in the basement of one of her residences. It has been skillfully invested by professional money managers and is very likely producing a good return that more than covers her life-style expenditures.

In order to fulfill their Robin Hood fantasies Democrats are determined to confiscate a larger portion of what rich people earn. This in turn will reduce the amount they invest in the economy which in turn will lead to lower growth. If Democrats confiscate enough investment capital they can cripple the economy. We need look no further than France, Sweden and Germany in order to see that you can kill the duck laying all of those wonderful golden eggs that were once taken for granted.

Thank God for the rich (Michael Jackson, Paris Hilton and miscellaneous others excepted). Let's express our appreciation for the enormous good they do for us all by cutting their taxes. They will invest more and we will benefit along with them.

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