Defending Kim Kardashian

LvMIC:

Yup, you read that title correctly.

Unlike the majority of us who live relatively boring lives, Ms. Kardashian has made a career out of selling the public an up close and personal view of her own private affairs.  This recently includes a rumored farce of a wedding to NBA superstar Kris Humphries which fizzled after only three days but made the reality star millions.

Ms. Kardashian’s financial success hasn’t been met warmly by everyone however.  According to the Wall Street Journal, an activist group composed of union and left-wing political interests has started a campaign to push for a millionaire’s tax in California and is targeting Kardashian directly.  Titling themselves “Courage Campaign,” this association is dedicated to “bringing progressive change and full equality in California and across the country.”  In addition to their website TaxKimK.com, the group has created a video to promote their agenda which can be viewed here.  The video, set to an overbearing type of trance music, claims that Ms. Kardashian made more than $12 million in 2010 yet only paid 10.3% in taxes.  That’s only 1% above the 9.3% that middle class Californians pay.

Like ravenous sharks at the smell of blood, Courage Campaign has its eyes set on more income ripe for plundering through taxation.  Their aim is an increase in California’s millionaire tax from 10.3% to 13.3% for income over $1 million and 15.3% for income over $2 million.  On top of California’s already horrendous business climate, this tax will undoubtedly provide more of an incentive for Atlases to do the proverbial shrugging and flee overzealous and overburdening government regulation.

Whether or not you agree with the type of lifestyle Kim Kardashian leads is ultimately a question of morality and ethics.  However, her ability to attract fans and monetary compensation is something to be admired.  Unlike the government, Kardashian forces no one to purchase the products she endorses, view her television reality shows, attend her birthday party, or cover her exploits for various media publications.  What she gives up in terms of a private life has brought her and her family a financially comfortable standard of living.

But like Frédéric Bastiat’s important lesson on accounting for the unseen in economic affairs, the Kardashian tale goes far beyond the millions she rakes in every year.  As Mises wrote in The Anti-Capitalist Mentality:

The only source of the generation of additional capital goods is saving.  If all the goods produced are consumed, no new capital comes into being.  But if consumption lags behind production and the surplus of goods newly produced over goods consumed is utilized in further production process, these processes are henceworth carried out by the aid of more capital good…Capital is not a free gift of God or of nature.  It is the outcome of a provident restriction of consumption on the part of man.  It is created and increased by saving and maintained by the abstention from dissaving.

From the theory of diminishing marginal utility, it is derived that those with more income are in a better position to add to their saving balances.  The act of savings both forestalls immediate consumption and, when placed into a bank or financial institution, adds to the amount of available funds able to be lent to aspiring entrepreneurs.  With more funds available, longer term and better methods of production can be sought to increase the supply of consumer goods.  In an economy not subject to continual monetary debasement and inflation via a central bank, prices are allowed to fall, thus raising real income for consumers.

Reality stars such as Kim Kardashian aid in this process as their revenue generating ability allows them to set aside more of their income.  This accumulation of savings leaves more money to be invested in base capital which increases the productive capacity of the economy.  This isn’t supply side economics, it’s a simple acknowledgement of the scarcity that dominates our world.

Courage campaign wishes more money to be confiscated from the productive citizens of California and given to bureaucrats to divvy how they see fit.  But the political class will never be capable of the type of efficiency-driven economic calculation private individuals must utilize when limited in their income earned through voluntary means.  If California ever wants to improve its economy, both taxes and public sector spending must be cut significantly.  This in turn frees up more money for the private sector to create jobs fulfilling demand.  The government should not be looked at as a job creator but the parasitic institution it really is.  To really improve the lives of its citizens, California must attract successful individuals like Kim Kardashian, not scare them away with the threat of more thievery.
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I think I am gonna turn this into an article for Mises Daily, we will see.