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QUESTION: Hello Martin,
[Analyst} recently …. raise[d] the alarm that the US is headed towards a very bad debt crisis. During an interesting part of the segment, he was asked if the rich should pay higher taxes, and he said “of course”, but he clarifies that what really matters is whether the tax dollars are deployed productively or not.
I was wondering if you agree with his assertion that the US needs to raise taxes on the wealthy. And also, whether you think it is possible for the US government to redistribute wealth productively to address the upcoming crisis.
ANSWER: Absolutely not. The person you speak of, in my opinion, is completely unfamiliar with history. That proposition assumes the government can actually do anything correctly. There is absolutely no evidence of that whatsoever in the historical records going back thousands of years. I do not care how much they raise taxes. The pension crisis alone will wipe out government as we know it. For every person that retires, they must replace them and the cost of government doubles. A child with a pocket calculator can give you a better forecast. It is absolutely impossible for this to ever end nicely. The system is not sustainable.