Elizabeth Warren Has A Point for Bill Gates

Elizabeth Warren is a Democrat looking to unseat Scott Brown in the next Massachusetts election. She recently attempted to provide a logical rationale for the President's Buffet Tax Rule. In the liberal press, this speech is receiving rave reviews.

If you agree with all the things Ms. Warren credits public funding for doing, you must also agree that, without such public funding, things would be radically different. So let's consider her statement point by point, and let's pay special attention to her comment about education.

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for;"

Government providing and maintaining roads has been around since the Roman Empire. Roads provide for the movement of raw materials so that products that require multiple inputs can be designed and produced. They allow workers to travel to jobs that are not conveniently located near their homes. They provide a distribution system for finished goods so that there can be greater variety in the market, something demanded by the general population, not the manufacturer. That is why, in 1824 there was such public clamor for more and improved roads that Congress and James Madison passed the General Survey Act . The act specifically stated that, “roads were of national importance, in a commercial or military point of view, or necessary for the transportation of public mail." Note, Ms. Warren ,that corporate millionaires are not identified as a reason for the development of the roadways, but a government function (mail delivery) is.

The monies paid in taxes provide for the roads. It is a decent give-and-take relationship. Better roads, paid out of public monies, provide greater economic gains which in turn lead to increased public monies because their is more wealth to tax. This money also funds many of the social programs Democrats like to promise. The poorest pay no income tax and thus have not funded the development of these roads, but they are allowed to use them for free every single day. So to claim that the development of a travel infrastructure was specifically for the benefit of 20th century industrial barons who have unfairly taken advantage of them is absurd.

“You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”

Policemen are charged with protecting the public safety. One third of police calls are due to domestic disturbances, and these are the toughest calls they make. “More police officers are killed or seriously injured when answering a domestic call than anything else they do.” So unless these millionaires are operating out of their homes and only employing their family in a fairly hostile inter-personal environment, the primary benefit of police security is to the average citizen, not the large corporation.

It is important to keep in mind that the case she is making is for millionaires, who developed large businesses in this country, to pay more taxes. The part of her statement about this freeing them from having to hire someone to protect their property absurdly incorrect. Most businesses run by the millionaires she is talking about do supply their own security, even going so far as to hire private detectives to investigate employee theft and corporate espionage. If police have to provide traffic services for a large business, many towns have adopted policies requiring them to pay for those services directly. , like the roads, police and fire services are supplied to all residents, not just businesses. They are not even the largest user of these services. Lastly and are usually paid for through local taxes, while she is arguing for federal dollars.

It is her statement about education that is of greatest interest to this blog.

“You hired workers the rest of us paid to educate."

Education is funded primarily by local property taxes and businesses pay heavily into those. Having businesses pay more to the federal government so that they can spread those funds around to various states as they see fit, does not necessarily benefit the local business.  Additionally, in order to justify taxing the wealthy because they benefited from the public education system, you would have show that they were the only beneficiaries of this system and thus assume the lion’s share of paying for it. It would have to be demonstrated that no one working at somewhere like Wendy’s or the public library learned anything from public education that they use to function in this society.   You would also have to show that without their demand for such skills, no one would learn anything.  We would all remain in some sort of extended infancy.  

Ms. Warren’s statement implies that the skills needed to work in these large corporations were obtained solely in the “free” public education system.  How does she explain all the early industrial businesses that benefited from illiterate or uneducated workers?  Can she show us where someone learned to weld a fender on a Ford assembly line in any Detroit public school?  No one learned the advance accounting skills to necessary to work at Deloitte in a “free” public high school.  And you can bet no one learned Microsoft’s proprietary source code at any public school.  This advanced specialized education was learned at colleges and universities, which the individual pays for, or in the company itself.

Before you go pointing out that many universities are publicly subsidized and thus her argument still holds, you must account for people  like Walt Disney, Henry Ford, Mary Kay Ash, Steven Jobs or Ty Warner who did not even receive  a college degree yet still founded companies that made millions. Formalized tertiary schooling is but one path to education and business success.  It is a path most of us have been socialized to believe is necessary, but it is not the only path, and its value should be and is increasingly being questioned.  

But here is where her comment gets even more interesting to think about.  She is saying that companies like Microsoft who have benefited from public education should expect to pay more taxes for that benefit.  So Bill Gates (and really most in government now) who thinks it is public education’s JOB to train his future workers will have absolutely no grounds to balk at paying higher taxes because they are pushing for education to do exactly what Ms Warren says, train their workers.