Saturday, November 24, 2012

The Myth of the Generous Rich

The latest myth the right wing is trying to spread is the justification that, far from being selfish-bastards, the rich are wonderful benefactors of humanity.  Their favorite statistic they like to pull out is this one:

See, they say?  We give a higher percentage of our GDP in charity then anyone else.  We're generous!
Furthermore,  those countries with higher taxes give less, therefor we'd be less generous if we had higher taxes!

Mark Twain said that there are three kinds of lies, "Lies, damn lies and statistics" and this argument certainly qualifies as a statistical lie.

Imagine for a moment, that there are two people in the economy.  Joe Richer and Jay Poorer.  It takes 30% of the total pie for Joe Richer or Jay Poorer to have everything they need or want.  How much is available to give away without feeling the effects if they each have 50%.  The answer is 40%, right? each has 20% surplus.

Now, lets suppose Joe has 90% and Jay has 10%?  How much can Jay give away? Obviously nothing, he's below the poverty line.  But Joe can give away 60% without feeling it.  Thats more then the 40% above. A lot more.

The fact of the matter is, the more uneven the distribution of wealth, the more surplus the rich have to give away.  But they get that surplus at the expense of the poor.  If this analysis is correct, you would expect the US to also have a very high poverty rate to go along with that charitable giving number above, and we do.  The worst in the developed world.

The Poor in Developed Countries - The United States(

If the rich were really generous, they would do something about this. Instead, they and their representatives fight for an ever increasing part of the pie in terms of lower taxes.  A few do fight that trend,  the true patriots who want to help their fellow Americans in a meaningful way.  But alas the Bill Gates' and Warren Buffet's of the world are few and far between.

The final part of this lie of course is the statistic that those developed countries with higher taxes have lower charitable giving.  What it does not do is correlate that to the actual *need* in those countries.  They all have far lower poverty levels and far lower need for charity.

When we were kids, if we bought a candy bar with a friend, and he said "give me the whole bar so I can be generous and give you back what I don't want" we wouldn't take that deal.  Its amazing how easy it is to confuse many people into exactly that deal once they have grown up.

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