Hatred of the rich, love of the thug

By: Hugo Marcelo Balderrama - 04/02/2024

Guest columnist.
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Hate the Rich is the most recent book by libertarian thinker, Axel Kaiser. The work, written with a sharp pen, describes the behavior of the Chilean economy after the tax measures applied by Michel Bachelet during his two governments.

In 2014, Bachelet returned to power under the discourse of completely sweeping away what was left standing of the neoliberal model. Obviously, this plan was based on a very evil pillar: progressive taxes on high net worth.

Bachelet's publicity machine was in charge of implanting a narrative against the rich, whom she accused of being selfish and unpatriotic; to exalt spirits and animosities against those who opposed the tax reform; of hollow promises about improving the lives of the popular classes, and of lying about the effects that his policies would have on the economy. Obviously, “free” health and education offers could not be missing.

However, as always happens in every experiment in wealth redistribution, Chile entered a decade with low economic growth and, paradoxically, a greater increase in poverty. In this regard, the economists, Gonzalo Sanhueza and Arturo Claro, cited in Kaiser's work, affirm the following:

Between 2004 and 2013, the average growth in real GDP was 4.8% and GDP per capita increased by 3.7%. From 2014 to 2023, on the other hand, the growth of the economy has been a meager 1.9% on average annually and if adjusted for population growth, this falls to 0.6% per capita per year. If between 2004 and 2013 an average of 206 thousand jobs were created per year, between 2014 and 2023 only 93 thousand jobs were created annually. Investment, which grew by around 10% per year between 2003 and 2014, did so at just 0.8% real annually in the decade after the tax increases. At the same time, real salaries, which grew by an average of 2.45% annually in the first period, grew by a meager 1.2% in the last decade.

However, hating the rich is not limited exclusively to the Chilean reality, but is a pathology of the entirety of Latin America. For example, Victoria Eugenia Henao, Pablo Escobar's widow, when narrating the path her husband followed to enter politics, says that it was very easy to convince the Antioquians to vote for the boss. It all came down to: "You give me your vote, but I will give you money" and "The rich are bad, they are oligarchs, I am from the people like you."

Why is the rich the target of attack by all populists?

Kaiser identifies a vital cause: the educational model.

Social Sciences, including Economics, are taught from a wrong premise: Inequality as a problem to be solved. Logically, fixing inequalities translates into using tax policy to take from some and give to others, in distributing surpluses in equitable shares for the entire society.

However, as my teacher Alberto Benegas Lynch says, all those who propose redistributing wealth always talk about the heritage of others, never their own. Likewise, they forget a great detail, wealth is not a fixed amount, but is constantly created in the market. Finally, any redistributive act from the State can only be done by force, violating a basic principle of healthy coexistence: equality before the law.

Rightly, Jesús Huerta de Soto defines socialism as a system of institutional aggression against the free exercise of business activity, as a lethal virus capable of destroying civilization. Or as Friedrich August von Hayek warned in the early 1940s, socialist measures can only be implemented with the help of the underworld and crime.

By way of closing, a small reflection.

Many people fed up with 21st Century Socialism look for a savior in the style of Javier Milei. But the exit route does not go through there, but through a revolution in the mind, a metanoia. We must begin by understanding that neither health nor education are rights, but rather services that have operating costs and that must be paid for by those who use them. It is not about asking the rich to pay more taxes, but rather about fighting for less taxes for everyone, that is the only way to build more competitive economies. It is about fully understanding the Christian commandment not to covet other people's goods.

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