It is one of the great puzzles, true throughout all human history, that during an economic downturn, people turn on the rich. They call for them to be taxed, harassed, beaten, and jailed. Because they have money when others are losing money, envy is unleashed and encouraged by the political establishment. It amounts to a kind of lashing out at the most conspicuous target, even though doing so won’t actually accomplish anything.
On the face of it, this should be obvious. In hard economic times, the goal should not be to harm the rich, but create conditions that enable more people to become rich. Punishing those who have created and accumulated wealth doesn’t do this. In fact, it does the opposite. It sends the signal that the creation and accumulation of wealth will not be tolerated—and this is exactly the opposite signal that an economy in recession needs.
There are additional problems with this impulse. The rich in a market economy are the main holders and providers of the capital needed to regenerate a growing prosperity. I am not talking about the “trickle down“ theory that is so often berated by the opponents of the market economy. I am speaking here of the economic reality that the wealthiest sectors of society are those responsible for the creation of new jobs, the provision of new investments, and the funding of entrepreneurial projects that generate new wealth that benefits us all.
Some people are under the illusion that if we just expropriate the wealth of the richest one percent, society will find itself with all needs met. This is a fantastic illusion that amounts to burning the wood that builds the house in order to provide warmth on a cold day. The effects are temporary, and then you find that you have a bigger problem to deal with in the long run.
There is also the charitable sector to think about. Foundations, which are funded by the rich, have been seriously harmed during the downturn. Their funding is off by as much as half, and this has wrought massive upheaval in the charitable sector. Many charities are going out of business at the very time when they are most needed. For both the receivers and providers of charitable services, this has created an environment of crisis.
There is a danger here that what is a crisis for the nonprofit sector offers an opportunity for the government to build the welfare state. We could end up with a situation very much like Europe today, where government provision has crowded out a once vibrant charitable sector. In Europe, the ethic of giving money to good causes has been harmed by this intervention, and this is one reason that charities have such a difficult time starting up and thriving there.
The United States has always been different, but the trajectory right now doesn’t look good. Attacking the rich and taxing them even more threatens the life of the foundations that are already hurting. It could end in the destruction of an important sector of the economy that provides funding for millions of charitable ventures. For this reason, an attack on the rich really does result in an attack on the poor, the middle class, and everybody else.
So it is not just the rich who have an interest in protecting the right to earn and accumulate wealth. Every house of worship, hospital, school, shelter, symphony, and educational scholarship fund also has an interest in this cause. The whole of society, in a market economy, benefits from its wealthiest members.
But do the rich share some of the blame for the current crisis? Of course, there are some that do. In any large social changes, the people with financial means turn out to be the largest actors. But that observation provides no case for expropriating people as a class.
In his parables, Jesus frequently told stories involving wealth. There were bad rich people in his stories, but there were also good ones: the merchant who traded pearls, the owner of the vineyard, the master who taught his servants to be good custodians of the money with which he entrusted them. It is not the case that the wealthiest were always evil. They were also great benefactors to society and vehicles through which holy lessons were learned.
Rev. Robert A. Sirico is president of the Acton Institute for the Study of Religion and Liberty, in Grand Rapids, Michigan.
