03 Oct 2011

Elizabeth Warren’s Blank Check

Big Brother, Economics, Shameless Self-Promotion 7 Comments

Judging from the number of Facebook “likes,” this is the best column I’ve ever written. It seems libertarians are more excited about someone trying to take their money, than about the finer points of capital theory. An excerpt:

Warren is right: there is a widespread view that really wealthy people are very fortunate — that they have been blessed. And that’s precisely why so many wealthy people give very large amounts of their fortunes to charitable causes. Warren simply asserts that the government should be the recipient of this understandable urge for the wealthy to share.

Besides philanthropy, another social practice is that parents take care of their children. Then, when the children become adults, they in turn take care of their offspring. This is exactly what Warren has in mind with her talk of “pay forward for the next kid who comes along.” That’s exactly what society expects of people, and that’s what most of us do. Here again, we see Warren injecting the government into the mix, without any justification.

The final major principled problem with Warren’s position is that the government gives the rich little choice in accepting the alleged benefits of its activities. It’s not as if a factory has a choice between getting products via government highways or privately run highways. And CEOs in Boise — who don’t think they are at serious risk of an al Qaeda attack — don’t have the option of rejecting the US government’s “helpful” foreign policy with its tremendous price tag.

To see just how absurd Warren’s view is, imagine a Soviet-era party official chastising workers who thought they had labored long enough in a Siberian work camp: “You ungrateful wretches! Don’t you realize that the bread your wives wait in line three hours for comes from the government? There is a social contract here, where we give you food and shelter, while you give us work and respect.”

7 Responses to “Elizabeth Warren’s Blank Check”

  1. billysixstring says:

    The article was great, but I want to hear more about capital theory.

  2. Prateek Sanjay says:

    It’s only tangential to what is being discussed here, but isn’t Miss Warren the leader of the Consumer Protection Bureau for Financial Services?

    I am not American, but I felt it was outrageous that a professor of law with no experience in financial markets or financial institutions is to lead in the way finance is to be organized. Sarbanes-Oxley itself drove out American non-financial business from doing business in American financial markets, but having nonexperts with no industry experience set industry rules seems like the next big blow to US finance. I have a feeling that if and when I enter international finance when I get the chance, I probably will have better prospects in Hong Kong, Shanghai, Tokyo, or London. A shame, because New York financial markets were a premier place of high standards and quality work.

    Her discussion of social contract ideas shows her to be more of a social philosopher than a technical problem solver. Ultimately, it is often not about what outcomes in society are just, but what outcomes are feasible and with the least negative unintended consequences. You can’t just discuss fiscal policy with these idiotic, abstract ideas from 17th century philosophy.

    • RG says:

      Par for the course.

      The real problem is that her and her ilk believe they are the good guys through which salvation transpires. When, as we know, they are the destoyers of life.

    • James E. Miller says:

      She designed the Consumer Protection Bureau but she was denied from running it because she was seen as overzealous by Geithner and his pals. Funny how someone who declares “Welcome to the Recovery” last summer has the balls to call someone “overzealous.” As a recent college graduate struggling to find work, I would love to get me a piece of that recovery Timmy was so excited about he penned a whole NY Times editorial about.

  3. Teqzilla says:

    Good article, Murphy. Given how much stupid there was in the vid there is the danger a response could get a bit lost but this chooses its targets well.

    One thing you might have done, though, is point out that although warren’s remarks keep getting pimped as justifying raising taxes on the wealthy the only tax rise her argument could actually be cited in support of is a tax rise on the poor. Its only those on low incomes who currently pay no income taxes that could be said to be in breach of the ‘underlying social contract’ as described by Warren. I mean, its not like people get poor by themselves either, and the government can take a hell of a lot more credit for making people poor than it can making people rich.

    If you’d have included that in your article you couldve turned warren’s own argument against itself and felt like some kind of intellectual kung-fu master. Damn, just typing my absolutely great point you neglected makes me want to narrow my eyes and stroke my imaginary moustache. Cant even imagine how straight lo leih id feel if id written it in an article and not in the comments section of a blog.

  4. yahya says:


    look at this. now even greenwald is reading your blog

    • yahya says:

      a few paragraphs down he says ‘via Robert P. Murphy’