Taxes and Pie

We often hear the economy being referred to as a pie. It makes for easy to understand analogies about how our economy works. It can also be a dangerous tool. Unfortunately, I fear too many liberals do not understand that the economy, in reality, is not a pie. Let me explain.

We typically refer to pieces of the pie as our individual portions of economic benefit. So we hear analogies about who has what size pieces, and if those pieces are "fairly" cut for everyone. We also talk about the pie shrinking or growing and how that effects every individual slice of the pie as well.

So where do liberals go wrong? If taken too literally, you would naturally deduce that no matter how big the pie is, if I were to take for myself a bigger slice, by consequence someone else must be required to give up a part of their slice. If that were true, then the opposite would also be true, that if my piece shrinks, someone else's will automatically grow. Therein lies the philosophy that if we can take away wealth from some, it will automatically be available for others.

I hate to inform those of you who are pie believers, but the economy is not a pie. In fact, I can take as large as piece as possible, and guess what? So can you. And when we do so, it turns out that their are even more slices to go around. And if I take a smaller piece? Well, it just means that part of my slice doesn't exist anymore.

So what does this mean? It means that in modern, free-market capitalism Robin Hood wouldn't be very effective. And neither would Obama's tax policies. It does no good to tax the wealthy and hope that magically that wealth will be transferred to the poor. Wealth begets wealth.

What do you think?