You’ve Gotta Pick-A-Pocket Or Two, Boys

Charles Dickens depicts Fagin in Oliver Twist as a character possessed of a ready eye for redistributing wealth from the better off  into his own pockets and particularly skilled at harnessing others to pursue the petty larceny typically involved.  Fagin ultimately meets with a ‘bad end ’ because of his association with Bill Sikes, a much more significant villain with a disposition for violence.  Ultimately, Fagin realizes his most dreaded fear, ‘the drop’, despite the  relative pettiness of his own crimes. In Fagin’s simple mind, wealth exists and is there for the taking.  It will always be there, however, much is taken. Taking is a skill that has to be learned and has to be efficiently executed.  His boys just have to pick-a-pocket or two.

In this column, the part of Fagin is played by Larry Summers and the part of Bill Sikes is played by Barack Obama.  The play takes place not in the gin-sodden wastes of early 19th century East London, but in the campaign-fund -sodden wastes of 21st century Washington, DC.  Barack is especially attracted to Larry because of Larry’s appetite for picking-a-pocket or two and for his willingness to fence the less liquid of Barack’s stolen goods. Barack has made sure that Larry will be well-served by his ‘artful dodger in the Treasury Department, a collaborator who has already skillfully negotiated his own challenges from the legal system.

Larry has a well-laid plan for pocket-picking from the better off.  According to his calculations, wealth redistribution is a zero sum game ripe for the playing.  He explained the rationale at a conference hosted by the Harvard Business School in October 2008, in the final stages of the presidential election. In the last 29 years, he noted, US citizens in the top one per cent gained $600 billion. Those in the bottom 80 per cent lost about $600 billion. Those within the 80-99th percentiles stayed even. The ‘transfer’ of wealth (note the term) amounts to an additional $500,000 per year to the top 1 per cent and an $8,000 loss every year for those in the botton 80 per cent.  Larry’s solution to this ‘iniquity’ is to require every household in the top 1 per cent of the distribution , those making on average $1.7 million per annum, to write a check for $800,000. This money would then be pooled and used to send out a check for $10,000 to every household in the bottom 80 per cent of the distribution, those making less than $120,000 per annum.  Of course, Larry does not divulge that there would be quite some seepage from this transfer, into his own pockets, into  the pockets of  the artful dodger and into the very large pockets  of  his master villain, Barack, whose limitless appetite for transfers must be assuaged.

The question that remains to be answered is whether the futures of Larry and Barack will mirror those of Fagin and Sikes. Will some fortuitous Oliver chance across the paths of these shady characters before they can fulfill their dreams while destroying the market system that created the wealth that they covet?  Will both meet the dreaded drop in 2012,  if not before?  Or will pocket-picking accelerate to the point at which Atlas Shrugs and the wealth-creators remove themselves from the economy, leaving those who cannot create wealth to  share in the economic collapse of a negative-sum game as the United States begins a long decline into economic mediocrity? In the latter scenario, of course, Larry, Barack and the artful dodger will have ‘reviewed the situation’, and will be long gone, enjoying the loot that they have stolen through their pocket-picking skills.

Tags: economics, public choice, soaking the rich, taxation policy, wealth redistribution