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Extravagance and Benevolence

Condemnation of affluence has become the dominant theme of leftist rhetoric in the Obama era. The iniquitous “corporate jet” is just one of the president’s frequently used symbols of American excess and inequality, the intention being to illustrate a zero-sum society in which the poor suffer because the rich indulge. Though, in a free society, there is nothing further from the truth.

Yet, even those of us who embrace the freedom philosophy—who know that as demonstrated in a recent study by the Heritage Foundation, the rich get richer and the poor also get richer—may frown upon the kind of self-serving opulence that would lead one to spend $3.8 million on a purse, especially when such a sum could, say, feed the population of Zambia for a week. With so many noble causes around us, outlandishly vain expenses tend to prick our moral sensibilities. Even without a moral component, we could judge on the basis of commonsense inefficiency. Indeed, a dollar spent toward education has a much greater potential for return than one spent on cigarettes.

Some view such “unnecessary” luxuries as downright sinful. But economic thinking requires that we consider not just surface transactions that affect a buyer or seller, but to the whole chain of transactions that enable, or are enabled by demand. If we do this, we see that even the most frivolous expenditures still contribute to the growth of jobs and opportunity at every income level.

One should not consider corporate jets, for example, without considering the largest private jet manufacturer in America: Boeing Business Jets. Thousands of Boeing employees feed their families by helping—in some form or another—to sell private jets, due only to the ability of individuals and companies to buy them. But the spillover effect extends far beyond Boeing. The US aircraft engine and parts manufacturing industry alone is made up of around 1,000 companies, including Rapco, Inc., a parts manufacturer employing citizens of Hartland, Wisconsin.

To get Rapco’s products to market, distributers in 14 different countries and 24 American states have stepped into the chain. It so happens that one of them is headquartered in my home-town of Houston, Texas. Falcon Crest Aviation Supply, managed by Burley Gunter, is housed in a small metal building in a predominantly Hispanic and African American community, where employment is needed.

When politicians vilify the wealthy by highlighting extravagance, they are forgetting people like Burley and his employees, who are directly affected by policies intended to impede industry. Five-star hotels have housekeepers. Limousines need their oil changed and tires rotated. Yachts require the manufacture and upkeep of fiberglass, windows and fixtures. Whether a purchase is made in good judgment is subjective and debatable, but trade of any form fuels the economic engine without prejudice.

Grasping this concept is fundamental to the development of an effective policy toward poverty reduction. Food stamps, extended unemployment benefits and similar “anti-poverty” programs are lauded merely because they appear to meet direct needs at the household level of analysis. But as a household is one participant in a complex economy, we must ask where these resources originate, and whether the cost of transfer is indeed greater than the reward.

It is precisely because all government benefits must first be extracted from the private economy that federal spending does not and cannot create sustainable jobs or economic growth. Put simply, the debit cancels out the credit. The supposed solution—the Keynesian stimulus theory of job creation—teaches that the extraction does not have to come from the current economy; money can be borrowed against the future economy and injected essentially as false GDP. But just as a loan can surely get a household through a turbulent time, it must be paired with tight budgets and greater productivity—a formula that America has failed to heed.

Today’s high unemployment numbers and rising prices reflect a sustained deficiency in real private sector growth due to a growing government. It is not for want of, but because of government “assistance” that poverty continues its prevalence. To claim that tax loopholes help “millionaires and billionaires” buy corporate jets at the expense of helping the poor dismisses the role of the private sector in creating low-wage jobs. A temporary position cleaning the floor of an aviation parts warehouse may not be glamorous, but when it comes to helping the poor, it is more meaningful and effective than government cheese.