Sunday, June 10, 2012

Making Money

The piercing tone from his clock radio is his signal to stumble out of bed, collect himself, and get ready to face another day at work. Shower, breakfast, coffee, commute. He plans the day ahead, then spends it working hard — making tradeoffs, meeting deadlines, and trying to find some value in those unavoidable meetings. He closes up shop and drives home, eager to finally spend some time with the people who mean the most to him. And at the end of it all he lands in bed, ready or not to hit repeat.

The more money he makes during his days — and the more he’s made throughout his life — the more likely he is to hear politicians clamor for him to pay his fair share back to society. Senate hopeful Elizabeth Warren recently sounded off about the need for the most successful businessmen to pay their fair share in taxes, declaring, “You built a factory and turned it into something terrific, or a great idea? God bless, keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

Putting aside the fact that high earners already do pay a large share of their earnings in taxes, Warren’s point and those like it overlook the reality that a person making money is in itself a benefit to society.

The vast majority of people who make money do so only because they’ve delivered goods or services of comparable value. Both parties — employer and employee — benefit from the exchange, and each side’s gain ultimately extends to society at large. An employee’s ability to meet his employer’s needs leaves the employer free to focus on growing the business in order to tackle the needs of potential new customers. This dynamic helps those folks whose needs will now be met as well as those who will be hired to fill new positions in the growing business. In addition, the wealth amassed over the course of a person’s career won’t just be spent on yachts and palaces but also invested back into the economy, spurring the growth of existing businesses and the creation of new ones. As John F. Kennedy famously put it, “a rising tide lifts all boats.”

The wealthiest among us are in this way already contributing the most to society, and those contributions have little to do with taxes.

During a 2010 financial reform event in Illinois, President Obama said, “I do think at a certain point you’ve made enough money.”

I say you can’t get enough of a good thing.