Rand Paul Lives in an Economic Fantasyland

Earlier today we saw that Scott Walker doesn’t understand the realities of pregnancy and abortion. We also learn today that Rand Paul has no idea how economics and income inequality actually work:

Asked if his flat tax plan would further separate the haves from the have-nots, GOP presidential hopeful Sen. Rand Paul (Ky.) said Sunday that income inequality is the result of some Americans working harder than others, rather than economic policies.

“The thing is, income inequality is due to some people working harder and selling more things,” Paul told host Chris Wallace on “Fox News Sunday.” “If people voluntarily buy more of your stuff, you’ll have more money.” Paul has proposed what he calls a “flat and fair tax,” which would put a flat 14.5 percent tax on all types of income. An analysis by the Tax Foundation found that under the plan, households earning more than $1 million per year would see their incomes rise by 13 percent. Households earning between $50,000 and $75,000 per year, meanwhile, would see their income rise only by 3 percent.

“Doesn’t your plan massively increase income inequality?” Wallace asked.

“It’s a fallacious notion to say, ‘Oh, rich people get more money back in a tax cut,'” Paul responded. “If you cut taxes 10 percent, 10 percent of a million is more than 10 percent of a thousand dollars. So, obviously, people who pay more in taxes will get more back.” “We all end up working for people who are more successful than us,” Paul went on, “and that’s a good thing, that more money will be back in the economy.”

First, Rand Paul doesn’t understand what a “fallacious notion” is. Fallacious notions are, by definition, either false or logically invalid. The statement that rich people get more money back in his flat tax cuts is both factually true and logically valid.

Beyond that, Rand Paul has no explanation for why income and wealth inequality have been growing to nosebleed levels in the last two decades. Does Rand Paul believe that the rich just didn’t work as hard in 1940 or 1970? Does he have a theory on why the problem is so much worse today than it used to be? Are the middle and working classes lazier than they used to be? Increasing productivity numbers belie that notion, of course. Surely a United States Senator can come up with something a big more cogent and less absurd than this.

We also know, of course, that giving the ludicrously wealthy more money does not, in fact, put that money back in the economy. Tax cuts for the rich do do not lead to economic growth, but they do contribute to increasing inequality. That’s because the very rich tend to hoard their wealth, either saving it in tax shelters or buying up assets internationally (thereby inflating crash-prone asset bubbles), while those who live paycheck to paycheck tend to spend it in the real local economy.

We also know that the majority of the very rich don’t actually produce real goods, but work in the financial sector goosing the short-term shareholder value of corporations by reducing quality, extracting rents and slashing jobs and wages. This makes them wealthy, but actually worsens the health of the economy as a whole. As we saw in the run-up to the financial crisis, financialized wealth is also deeply bubble-prone, exposing the entire world to grave risk.

We also know well by now that supply-side economics is a complete failure and that wealth does not, in fact, trickle down.

The important lesson to learn here is that Donald Trump is not a crank in a roomful of serious GOP candidates. The entire Republican field is filled with candidates making provably false claims with horrific policy consequences–the public policy equivalent of the man on the street corner screaming about chemtrails turning people gay.

The only reason anyone takes them seriously is that very wealthy interests want to get richer at the expense of the other 99.9% of us, and that a sizable number of prejudiced Americans have fallen prey to the cultlike reinforcement of patently false talking points about the economy and social policy. But that doesn’t mean they should be taken seriously by educated people or reported without critical pushback by journalists.

David Atkins

David Atkins is a writer, activist and research professional living in Santa Barbara. He is a contributor to the Washington Monthly's Political Animal and president of The Pollux Group, a qualitative research firm.