If you only read one article on economics today, make it Robert Murphy's post debunking Elizabeth Warren's claim that the rich owe a share of their income to the community.
If you haven't yet heard it, here's the money quote from Warren being shared on the web:
There is nobody in this country who got rich on his own. Nobody. 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; you hired workers the rest of us paid to educate; 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. Now look, you built a factory and it turned 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.
Warren's argument is wrong both on principle and in practical application. It's important to spell out exactlywhy she's wrong, because her viewpoint is gaining traction among the progressive Left. Besides the obvious popularity of Warren's statements, Robert Frank's hip new book is another example of this assault on conventional property rights.
There are so many things wrong with Warren's analysis — which in context she is using to justify increasing tax rates on "the rich" — that it's hard to organize them. Let's first discuss the big-picture problems with her framing of the principles, and then we'll focus on the practical, economic flaws.
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