Saintly Thoughts

On the Advantages of Economic Flexibility

I often hear pundits and economists argue about whether it is better to lower taxes in the belief that allowing the rich (who have shown that they know how to use money to make more money) to invest their money themselves will ultimately create a larger general pool of money resulting in a trickle-down of said resources to the less "enlightened" classes, or whether a higher percentage of this money should be taxed and redistributed to those classes that are more deserving (read, hungry).  Now I think that we can all agree that it would be a ludicrous policy to both lower the taxes on the rich and increase spending upon the poor; for such money would have to come from somewhere and presumably it would mean taxing the poor to feed the poor. 

Granted, this dichotomy is grossly over-simplistic.  But my purpose herein is not to paint an accurate picture of our economy, but to highlight an issue facing those who must make policy decisions concerning the economy.  It is easy for people to believe either one thing or another; that it is always good policy to tax the rich or never good policy to tax the rich (and I suppose the intermediate position would be to tax the rich just a little bit more than usual).  But it seems to my untrained eyes that the correct answer may be somewhat more complex.  Given the vicissitudes of existence, may it not sometimes be necessary to lower taxes on the rich so that their capital might blossom (because there does seem to be some truth in the belief that rich people know best how to get richer) and that there are other times when we must strip them of their capital so as to redistribute it among the masses?  Why is this not an acceptable principle? 

Well, say my critics, laws exist so as to allow people to plan their estates and lives in the belief that the legal regime will remain more or less the same; it is a form of security and stability.  This is true, I respond, and stability is a good that society should strive to maintain.  But stability, while a great good—perhaps even the primary good—of society, is not the only good of society.  There may come a time when the reigning orders, though such orders proved good and necessary in the time that they were implemented, might overstress the society.  And if such orders are allowed to stand, they may cause more social harm than would some destabilizing change of orders.  And this is so whether that season of change calls for a rapid accrual of capital to the rich or for a rapid dispersal to the poor. 

This is a principle I borrow from Machiavelli, that master of political pragmatism, who uses as an example the land laws of Rome.  In the beginning, upon conquering new lands, the Romans were forced to subdivide the conquered lands amongst the peoples of Rome.  This served both as to prevent any of the senatorial class from becoming too powerful due to new land holdings and as a means to placate the masses.  So long as the conquered lands lay relatively close to the Roman homeland, these laws were good ones and worked relatively well.  But as Rome expanded, the masses were unable to effectively work the lands further into the frontiers and wished to unload these lands into the hands of the nobility, who had the wealth to consolidate them into large estates.  This was the only practical solution, and so the land laws were changed. 

Thus, there are no immutable laws that need govern man for all time.  For, while there may be some fundamental characteristics which may be said to make up the core of our shared humanity, one of these characteristics is surely our mutability and inconstancy.  What, then, should govern whether we should tack to the right or to the left?  There is no easy answer to this. Again, taking our guidance from Machiavelli, the answer would seem to be the prudence of the ruler or ruling class developed against a backdrop of political intrigue and a sense of their own political self-interest.  And, of course, how would any endeavor succeed without the favor of the dread goddess fortuna?  I apologize for the gross oversimplification of this sketch.  My intention is only to point out how ludicrous it is to align ourselves with hardened ideological positions when it comes to economics.  What is needed in this great endeavor is not hardened ideology, but flexibility; and this is a truth that has been recognized by great economists as diverse as Adam Smith, Ricardo, Keynes, and Milton Friedman.  Let us not forget the uses of flexibility.