Why the Rich Are Rich

The clueless chuckleheads contaminating the public greens and airwaves for the past several weeks seem to be losing the patience of mainstream America to tolerate much more of their silliness. They are reminiscent of the flower children of 40 years ago who may have spawned some of these dropouts. Their railing against the same economic system that supplied them with their Androids, iPods, and designer jeans is comical. And their protest against “economic inequality” is equivalent to protesting the sun’s rising in the east.

There has been economic inequality as long as humans have lived in societies and it has been the strongest motive factor for each generation to better itself. In fact, Sir Dudley North writing 300 years ago observed this fact in his Discourses Upon Trade:

The main spur to Trade, or rather to Industry and Ingenuity, is the exorbitant Appetites of Men, which they will take pains to gratifie, and so be disposed to work, when nothing else will incline them to it; for did Men content themselves with bare Necessaries, we should have a poor World.

About 90% of the millionaires and billionaires so despised by the Occupy Wall Street crowd and the Left are self-made as North predicted; only 10% inherited that status – thanks in part to federal estate and inheritance break-up taxes. Therefore, it’s curious why someone should be the object of OWS wrath simply because he or she is extraordinarily successful. Hard work and sacrifice for years and often decades produced their economic success. But the OWS crowd wants to reverse that process. They want a society in which the riches of those successful people are shared with them without them doing anything to earn it. Note to OWS: the only place where success and wealth come before work is in a dictionary.

What also seems to have escaped their twisted logic is that these geese are the ones laying the golden eggs – aka jobs – which they and the present administration, notably the White House incumbent, covet.

Take Steve Jobs, for example.

While these modern day Robespierres were literally calling for the beheading of the rich and demanding that the hated bankers forgive their debts, Jobs lost his long struggle with cancer. No government program will ever replace what he accomplished in his short but productive life. Since he was a bored college dropout (like Bill Gates), he didn’t have a “good old boy” network of college chums to open doors for him like Obama did. He didn’t have any college debt to protest for forgiveness on the public square. His parents abandoned him before he was born and his adoptive parents had no college education or wealth and connections to help him.

Yet Jobs created companies that employed 30,000 Americans and many more in other countries. It’s estimated that the economic impact of his work was worth $30 billion in additional American wealth – annually. Moreover, after he returned to run Apple in 1997, he drove the market value of the company from $2 billion to $350 billion. That did more to bring hope and change to the shareholders of Apple than did the Obama-Pelosi-Reid triumvirate, who were busy wasting $1 trillion in “stimulus” payoffs to their cronies and implementing policies that “un-employed” nearly 14 million job-holders.

Jobs was worth over $7 billion at his death. Does it really matter how much he paid in taxes? Americans benefited far more from what he didn’t pay in taxes. It doesn’t make much sense to take money from someone with a proven track record at creating jobs and give it to someone who has never held one outside of the taxpayer-funded public sector. Yet an amazing number of otherwise sensible people believe with Obama that government makes a better society than private enterprise and that more private wealth should be transferred to the government in order for jobs to be created by a rookie.

In an article published last year, Robert Reich, former Labor Secretary in the Clinton Administration, recalled an old Russian parable about a poor peasant whose neighbor was a rich and well-connected man. When the neighbor bought a cow, something the peasant would never be able to afford, the peasant prayed to God for help. God responded and asked what the peasant wanted from Him. “Kill the cow!” the peasant replied.

A “kill the cow” mindset often leads society into self-destructive social behavior, as Reich demonstrated in a classroom experiment he has conducted for years as a Harvard professor. He asks students to pair up with a classmate – presumably most choose a friend – and he gives one person on each team a “play money” $1,000 bill. He then asks each team’s recipient to write on a slip of paper how much of their new-found money they would share with their teammate. The kicker is that the teammate has to agree to the amount shared or else neither of them gets anything. Once the shared amount is written on the slip of paper, it is passed to the teammate. The offer is “take it or leave it.” There is no negotiation.

Rationally, a teammate should accept even as little as $1. It may not seem fair or generous, but it’s more than he had before his partner’s “inheritance.” And indeed, some students settle for $1. But most refuse anything less than $250, and a surprising number hold out for $500, knowing that the refusal prevents either party from receiving anything.

Reich’s experiment reveals an embarrassing quality in the human experience. Inequality makes some people vindictive and envious to the point of interfering with their rational thinking. When questioned why they would engage in such self-defeating behavior, the students said it was worth their loss to prevent their partner’s gain.

Immature twenty-something college students aren’t the only ones afflicted with this disorder.

When he was on the campaign trail as candidate Obama, an interviewer sat down with him to get his views on taxes and wealth redistribution shortly after the “Joe the Plumber” encounter. The interviewer explained that the top 1% of Americans earns 17% of the nation’s income but pays 37% of the federal taxes, and the top 10% of Americans earns 43% but pays over 70% of federal taxes. The interviewer then asked Obama why he thought those taxpayers should pay more. After thinking for a moment, Obama replied “fairness.” In other words, kill the cow.

Notwithstanding the negative impact that confiscatory taxes have on investmet and job creation, people on the Left including Obama and Pelosi (who is a billionaire) think that because such taxes hurt the rich more than other taxpayers they want them increased. As long as those at the top lose, the Left is willing to inflict hardships on the economy and the unemployed. Kill the cow.

To people who are not extraordinarily successful (or even ordinarily successful) the rewards of extraordinary success seem unfair. Does Peyton Manning deserve an annual income of $38 million? How about Rush Limbaugh at $37 million per year? Oprah at $275 million? That’s earning over $30,000 per hour compared to less than $8 an hour for a hamburger flipper at McDonald’s. CEO Bob Iger earns $53 million from Walt Disney, CEO John Hammergren of McKesson Corp. makes $131 million, and $14 million each is paid to CEOs John Chambers of Cisco and Paul Otellini of Intel.

To put these incomes in perspective, the top 5% of incomes begins at $155,000 and the top 1% begins at $344,000. That means the salaries of the people mentioned are in the stratosphere of the top 1% in income rankings. That’s an important point that I’ll come back to.

Are these people worth those incomes? The answer is yes. Why? Because someone is willing to pay it.

That’s not a flip answer. Here’s why.

Rush Limbaugh would not be paid what Clear Channel Communications is paying him unless he was bringing in advertising revenues far in excess of his $37 million cut. Likewise, the Colts wouldn’t pay Peyton Manning his astronomical salary unless his performance on the football field generated revenues from fans and advertisers that the Colts owners considered Manning’s cut a fair share. This is the principle of Reich’s classroom experiment.

However, the fact that a top performer in sports, entertainment, and business contributes millions to the employer's bottom line isn’t the sole explanation for justifying an extraordinary share of that bottom line. There also must be competition from others for that person’s services in order to give the person the leverage to bargain for a share of the value they produce. Absent competition, a dissatisfied high performer has no alternative except to withdraw his services. This would be equivalent to the lose/lose irrational behavior in the Reich experiment. By preventing negotiation between teammates, Reich made “take it or leave it” the only possible outcome, which happens when there is no competition.

Before free agency injected competition into professional sports, for example, top performers earned only a fraction of their current salaries, despite producing the same economic value for their owners then as now. Today, a dissatisfied top athlete can move to another team that is competing for his services and is willing to pay a higher salary.

Similarly, in bygone years, business executives were promoted from within. Faced with no competition for their senior executives and rising stars, businesses paid a small fraction of what they now pay to their management team. Enter competition between companies and industries. Executive mobility became the norm as high performers were pirated away to more lucrative salaries and perks.

Like it or not, we live in a “winner take all” world in which money gravitates to the star performers. In the 2010 Augusta Masters golf tournament, Phil Mickelson walked away the winner with $1.35 million for four days of work. Second place went to Lee Westwood, three strokes back for $810,000 in prize money – $540,000 less than Michelson or $180,000 per stroke. Third place money was $510,000, which was won by Anthony Kim who finished one stroke back from Westwood. That one stroke cost him $300,000. Nathan Green placed last in a field of 48. He was +14 over par for the tournament versus Michelson’s -16, and won $21,750 for the same four days of work that the winner put in, but he went home a lot poorer.

The winners of the 2010 Super Bowl received $83,000 per player and losers each took home $42,000. The 2011 winner of the Indianapolis 500, Dan Wheldon, received $2,567,255 for beating J.R. Hildebrand in the last seconds of the race. Hildebrand received $1,064,895, not a bad day’s pay but a very expensive penalty for crossing the finish line seconds later. The owners of the winner of this year’s Kentucky Derby – Animal Kingdom – got $1.1 million; the owners of the runner-up, Nehro, got half that figure for losing by 2 ¾ lengths.

The world of business has similar disparities. According to the Tax Foundation, from 1945 to the late 1970s, the richest 10% of Americans accounted for about 35% of total income. By 2009, their share was about 43%. The top 10% of incomes start at $112,000 – not a kingly sum unless you’re part of the Left. Most of the gain in this bracket went to the richest 1%, whose share rose from 8.5% in 1980 to 16.9% in 2009. But the Left conveniently forgets to say that the richest 1% saw their share peak in 2007 at 22.8% and then fall to 16.9% due to the recession since much of their income comes from invested wealth rather than labor. Remember that the top 1% starts at $344,000 but it goes up astronomically from that figure because this bracket includes the incomes for Manning, Limbaugh, and Oprah who are in the top 1/10th of 1%. That is what is overlooked in comparing income levels – all brackets are moderately heterogeneous and the top of every bracket is the bottom of the next – except the top bracket, which is wildly heterogeneous and has no cap. The top bracket is “everyone else.”

Income disparity is a global phenomenon. The Organization for Economic Cooperation and Development found that the average spread between the richest 10% and the poorest 10% has increased in 17 out of 22 countries over the last 20 years and currently averages about 9:1. This ranges from 5:1 for Sweden and Denmark, 14:1 for the U.S., and 27:1 for Mexico, which has the greatest disparity. Mexico, like most third world countries, has a large lower class that work for subsistence wages, a modest middle class, and a small but powerful upper class. Carlos Slim, a Mexican, has been the richest man in the world for 2010 and 2011. He is also one of the world’s most philanthropic entrepreneurs with two foundations, one of which has a corpus presently valued at $4 billion.

Is it fair that there is so much disparity between the economic payoff to winners, runners-up, and also-rans? I’m not really into debating the fairness of incomes any more than I’d debate the fairness of the sun rising in the east. It is the way it is. The market decides what it wants and what that is worth. But it is the scarcity of talent and the competition for it that causes income to bunch up at the top. It is not a sinister plot by the rich to exploit low income earners – unless basing people’s pay on the market value of their talent is perfidious.

The world is changing rapidly with globalization – for the good in my opinion. In the U.S. we have emerged from an agricultural economy to an industrial, then service, then technology and information economy. The unskilled, poorly skilled, and less educated will be less and less in demand as this economic shift continues. Yet our government continues to spend trillions on schools that don’t educate students for a modern world. This administration in particular has been more interested in protecting teacher unions than producing students that can compete their way up the income pyramid like a poor kid in San Francisco did 40 years ago.

If the whiny OWS crowd wants to protest the crime of the century, protest that.

The Gunfight at the O.K. Corral

On October 26, 1881 – 130 years ago this week – a 30-second grudge fight catapulted its combatants as well as their brief clash into the stuff of legend that goes well beyond the significance of the people involved or the incident itself. Except for this street fight, we would likely never have known about Wyatt Earp and his companion Doc Holliday. Who would have cared that a town named Tombstone existed in southern Arizona 30 miles north of Mexico? Yet, hundreds of books and dozens of films have been produced about these 30 seconds which claimed the lives of three of its participants and wounded all of the others except one – Wyatt Earp.

Tombstone owes its existence to Ed Schieffelin, an Indian scout assigned to nearby Camp Huachuca. When he wasn’t chasing the Chiricahua Apaches who inhabited the neighborhood, Schieffelin would journey out into the desert wilds “looking for rocks.” "Ed, the only stone you will find out there will be your tombstone," the soldiers would jeer.

But one day Schieffelin did find the stone he was looking for. It was laden with silver. He staked a claim in 1877 and called his mine Tombstone. Predictably word of Schieffelin’s discovery got out and miners, lawyers, saloon owners and prostitutes, business people, and two newspaper publishers flocked to the area. Initially they lived in tents among the mines near the closest water spring. But when it became apparent that a proper town was needed, they located it on a nearby high plateau called Goose Flats – the only place level enough to lay out a grid of streets and building lots. It was 1879.

Wyatt Earp arrived in Tombstone in December of that year and his older brothers James and Virgil along with younger brothers Morgan and Warren arrived six months later. One thing characterized the Earp clan – they were close. They trusted few others than each other. Moreover, each of the Earp men had a quality that originated in their father – they wanted to be somebody. They wanted to be respected by the community and successful in business and society. None of them would ever achieve that aim.

One non-family person who gained the confidence of the Earps, especially Virgil and Morgan, was John Henry “Doc” Holliday. Born in Griffin GA, his family moved to Valdosta GA when he was 13. He received a classical education from the Valdosta Institute, including competence in Greek, Latin, and French, making him far better educated than the Earps. After earning the degree of Doctor of Dentistry in Philadelphia, he practiced for a while in Atlanta. The famous physician Crawford Long was his cousin, and later Margret Mitchell, author of Gone with the Wind, would become a cousin by marriage.

Shortly after beginning his practice of dentistry, Holliday developed tuberculosis. His practice suffered and, moving to Texas, he began gambling to earn money and began drinking to control his cough. That combination and his hot temper put him in lots of fights which in those days were usually settled with a gun. In time Holliday developed a reputation as a fast gun and knife fighter, made even more fearsome by his having a terminal health problem. His reputation made sure he stayed on the move and ahead of the law.

Why Holliday went to Tombstone is uncertain. He had met the Earps in Dodge City KS but they followed different paths after that. He could have been drawn to Tombstone’s climate or its reputation as a boomtown where money was flowing across the gambling tables. But it is possible that the Earps asked Holliday to join them in Tombstone because of a looming confrontation between the Earp clan and a group loosely called the “cowboys” – a pejorative for rustlers and thieves. In those days, legitimate cowmen were referred to as cattle herders or ranchers.

This conflict was not helped by the fact that the Earps were Yankees, Republicans, and Virgil and James had fought in the Union army. They were also “town people” with the sympathies of the local newspaper, The Tombstone Epitaph, and its editor, John Clum, who was also the town mayor and postmaster. Moreover, Virgil Earp represented the law in Tombstone and Wyatt and Morgan were periodically his deputies. Virgil’s position could best be called police chief, although his title was town marshal. On more than one occasion, the Earps “buffaloed” – i.e. pistol whipped – a cowboy who came to town and got rowdy.

The cowboys were Southerners, former Confederate vets, and Democrats. Their most vocal troublemakers were Ike and Billy Clanton, Tom and Frank McLaury, and Billy Claiborne. The cowboys had the sympathies of the surrounding ranchers and the publisher of the other newspaper, The Tombstone Nugget, owned by Harry Woods. To make matters worse, the Cochise County sheriff, John Behan, always sided with the cowboys and ranchers and against the Earps. Behan’s common law wife, Josephine Marcus, would leave him for Wyatt Earp, eventually becoming Earp’s common law wife for 48 years. When this occurred is unknown but it would have fueled the animosity between Behan and Wyatt Earp.

Contrary to the stuff of Hollywood legends, men were not allowed to be armed with pistols and rifles while within the city limits of most “wild West” towns. They had to check their firearms either at their livery stable or any saloon or hotel. Of course, that regulation was often violated by concealing a pistol. With few exceptions, pistols were not worn in holsters but rather were shoved in the pants waistband or carried in a pocket. Ammunition was notoriously unreliable in that day and would fire unintentionally, so a live shell was never carried in the firing chamber, especially because of the threat to the male anatomy when pistols were carried inside the pants. Pistols were so inaccurate that men firing at one another at ten paces could empty their pistols without hitting each other.

Virgil Earp and his brothers did not dress like Matt Dillon. They wore black suits, street shoes, and bowler hats like most town people. They were often unarmed while on duty, since the people in town were supposed to be unarmed.

On March 15, 1881, an aborted stagecoach robbery en route to Benson cost the life of the driver and a passenger. A posse consisting of the Virgil, Morgan, and Wyatt Earp, Behan, and a Wells Fargo agent followed the trail to a ranch house and took one man into custody. He identified the bandits and the Earps continued the chase while Behan and the agent took the witness to Tombstone. When the Earp horses broke down and Behan failed to send them fresh mounts, the Earps had to walk 18 miles back to Tombstone. That caused even less love to be lost between the Earps and Behan. And when the witness escaped from Behan’s jail, helped by a cowboy confederate, the rift between the Earp faction and the Behan-cowboy faction grew wider.

On September 8, 1881, a stagecoach en route to nearby Bisbee was held up. There was no strong box on board so the passengers were robbed. The stage driver said one of the robbers referred to money as “sugar” – a phrase known to be used by Frank Stilwell, one of the cowboys. Stilwell had recently been one of Behan’s deputies but had been fired for “accounting irregularities.” A special boot heel worn by Stillwell and a print at the scene positively put him at the robbery site. The Earps found him in a Bisbee saloon and arrested him. Because sympathetic cowboys vouched that he was elsewhere during the robbery, he was released. The Earps rearrested him for interfering with mail delivery. Cowboys saw this as harassment by the Earps and warned the brothers that there would be retaliation.

On October 25, 1881 Ike Clanton and Doc Holliday had gotten into a shouting match that ended with mutual threats. Clanton was a known loud-mouth and both men had violent tempers. Clanton continued an all-night drinking binge and began boasting that he was going to kill Holliday. By noon on the 26th, he had armed himself with a rifle and pistol and was fully drunk. When word of this got to the Virgil, Wyatt, and Morgan Earp, they began looking for him, and once found, Virgil and Morgan “buffaloed” him into unconsciousness and then dragged him to the Recorder’s Office to await a judge to fine him for carrying firearms inside the city limits.

During the hearing, Wyatt and Ike began hurling threats and accusations at each other. Fuming, Wyatt stormed out of the court room after disarming Ike and came face to face with Tom McLaury who had come looking for his companion cowboy, Ike. More shouting and threats erupted between these two until Wyatt ended it by “buffaloing” McLaury and stalked away.

As he left, Wyatt saw Billy Clanton, Frank McLaury, and Billy Claiborne go into Spangenberg's Gun Shop. Claiborne was a 21-year old show-off who had fashioned a persona as a gunslinger and liked to be called Billy the Kid. Ike soon joined them in Spangenberg's. More provocative, however, was that Frank McLaury’s horse was up on the sidewalk – a violation of a city code. Wyatt walked over and grabbed the bridle in order to back the horse into the street when Frank rushed out and grabbed the bridle also. After a moment of silent stare-down, Frank backed his horse off of the sidewalk.

When Wyatt rejoined his brothers and Holliday, word came that the Clantons, McLaurys, and Billy Claiborne had gathered in an alley off Fremont Street next to C.S. Fly’s boarding house where Holliday lived. The Earps also lived in houses on Fremont and would have to pass the alley to go home. Billy Clanton and Frank McLaury were visibly wearing holstered pistols. Although the O.K. Corral would be mythologized as the location of the famous shootout, Fremont is one block north of the O.K. Corral, which fronts Allen Street, and the alley is six lots down from the corral’s rear pedestrian entrance.

Virgil decided that he should disarm the cowboys and he deputized his brothers and Holliday to go with him. While Wyatt was at Spangenberg’s, Virgil had stopped at the Wells Fargo office to pick up a short barrel shotgun which he hid under the long coat that he and the others were wearing. There was a cold wind blowing that day and patches of snow were on the ground. Holliday was wearing a pistol in a holster and carrying a cane. Virgil handed the shotgun to Holliday, telling him to put it under his long coat, and he took Holliday’s cane. The Earps had pistols in their coat pockets.

Around 3 p.m. the Earp party started north on Fourth Street and turned left on Fremont walking toward Third Street. Nearing Third Street, they saw the Clantons, McLaurys, and Billy the Kid Claiborne all talking to Johnny Behan. Behan ran toward the Earp party and said something to Virgil, but from this point in time the details get murky. In the subsequent inquest and trial, Behan said he told Virgil that he had disarmed the cowboys; Virgil said Behan warned him – "For God's sake, don't go down there or they will murder you!"

Most witnesses were pro-Earps or pro-cowboys. Those who were supposedly impartial gave conflicting testimony of the 30-second shootout. Witnesses generally agree that the Earps and Holliday walked to within six feet of the Clantons, McLaureys, and Claiborne and Virgil or Wyatt said something. Two pistol shots were fired almost simultaneously, one most likely from Billy Clanton but the second can’t be attributed. After these two shots were fired, Ike Clanton ran toward Wyatt screaming that he was not armed, and running past Wyatt, kept running for many blocks. Claiborne also cried out that he was unarmed and ducked into a nearby building where Behan had also taken cover.

Frank McLaury fell to his knees from a bullet in the stomach that quite likely came from Wyatt, who was standing in front of him and fired point blank. Some witnesses say he regained his feet and tried to cross over Fremont, firing a shot that grazed Holliday in the waist. Holliday fired his pistol and the bullet went through Frank’s head behind the right ear, killing him instantly.

Billy Clanton was shot through the right wrist, incapacitating his shooting hand. He switched his pistol to the left hand. When a bullet went through his left chest puncturing a lung, he sank to a sitting position and continued to fire his pistol. It’s believed one of his bullets entered Virgil’s calf. Billy continued to fire with his pistol resting on his leg until he ran out of ammunition. He received another shot in the abdomen, which was his mortal wound.

No pistol was found on Tom McLaury, although a witness who had just arrived in Tombstone to visit relatives and who could not have been partial to either side said that she saw Tom firing from under the neck of Billy’s horse. Witnesses say that when the shooting started, Tom ducked behind the horse and was reaching for a rifle in the horse’s scabbard when Holliday fired the shotgun blowing a hole in Tom’s right rib cage.

Morgan Earp was wounded in the melee by a bullet that either grazed or passed through both shoulder blades and a vertebra. Wyatt was the only person in the shootout to emerge unscathed.

When the smoke cleared Behan told Wyatt that he was under arrest. Supposedly, Wyatt replied: "I won't be arrested today. I am right here and am not going away. You deceived me. You told me these men were disarmed; I went to disarm them."

Later, the Earps and Holliday were charged with murder. The trial lasted 30 days, and the testimony was so contradictory that the judge threw the case out and dismissed the charges.

But a few days after Christmas 1881, Virgil was crossing a street in front of a saloon when five shots were fired at him from a building under construction. Two hit his left arm inflicting such damage that his arm was unusable for the rest of his life.

On March 18, 1882 Morgan was playing pool with the owner of a billiard parlor while Wyatt watched. As Morgan bent over to line up a pool shot, an unknown assailant shot through an outside window hitting him in the back. He fell over on the table where he died.

Wyatt suspected the killer was Frank Stillwell, with whom he’d had a run-in in the Bisbee stage coach robbery. Stillwell’s wife confirmed that he has boasted about the murder. After loading the casket carrying Morgan’s body on a California-bound train to their parents, Wyatt, Holliday, and another man found Stillwell in Tucson. No one witnessed what happened, but Stillwell’s bullet riddled body was found near the train track where Morgan’s body had been put aboard.

Behan tried to arrest Wyatt when he and Holliday returned to Tombstone but they ignored him and soon left Arizona Territory for good. Holliday headed for Colorado where he surprised himself and others by living another six years after the famous shootout. He died at age 36 in a sanatorium near Glenwood Springs. Five months prior to his death Ike Clanton died in a hail of bullets from a posse chasing him for cattle rustling.

Billy the Kid Claiborne challenged one man too many to a gunfight. He was shot to death on Allen Street one year after the shootout.

Johnny Behan was not nominated by the Democrat party as their candidate for the sheriff in 1882. He never again worked as a lawman, but spent the rest of his life employed in several government jobs. He died of natural causes at age 67 three decades after the shootout.

Virgil and his common law wife, Allie, accompanied his brother’s body to California for burial. He bounced around from saloon keeping to mining to law enforcement several times. He was a county deputy sheriff in Nevada when he contracted pneumonia and died 24 years after the shootout at age 62. Allie lived on for 42 more years, dying at age 99 in 1947.

Wyatt lived 48 years after the shootout, dying impoverished at age 80 in a dingy Los Angeles apartment. His common law wife, Josie, was too grief-stricken to attend the funeral. She had his body cremated, and since she was Jewish, she buried him in the Jewish cemetery of unincorporated Drennan, CA. When a post office was established there the next year, the town was renamed Earp, CA in his honor. Josie lived 15 more years and her body was cremated and buried next to Wyatt. It is the most visited grave in the cemetery.

In death Wyatt Earp gained the renown that had eluded him in life.

The Death of Erwin Rommel

In the ten weeks following the Allied landings at Normandy in June 1944 – known in history as the D-Day invasion – the war went badly for Germany. Allied planners had estimated it would take eight months to advance to the Franco-Belgian border. It had taken only three. And the fighting in Normandy had cost Germany 240,000 killed or wounded and more than 200,000 missing, the majority of whom were Allied prisoners.

The destruction that Hitler’s Third Reich was visiting upon its citizens and the atrocities that were being committed by German fanatics – like the SS – against the citizens of the invaded countries had turned many in the officer corps against their Führer. Despite the fact that these officers had taken an oath of “unconditional obedience” to Adolf Hitler, rather than allegiance to the nation and its constitution, a growing resistance movement was gaining influence among the highest ranks of Hitler’s General Staff and command structure. Only Hitler’s death would release them from their oath of allegiance to him and twelve attempts had been made on his life.

Erwin Rommel was Hitler's favorite general. He had begun to be noticed in 1940 when his exploits as a commander of a panzer division smashed through French defenses. From there Rommel was sent to command the Afrika Korps where he displayed uncanny tactical genius, an ability to inspire the loyalty of his troops, and the resourcefulness to fight effectively when outnumbered in men and matériel. Hitler promoted him to the rank of Field Marshall and in 1943 put him in command of fortifying the "Atlantic Wall" along the coast of France which was designed to repel the anticipated Normandy landings.

When he took his new command, Rommel was beginning to doubt that Germany could win the war, especially if Hitler continued to be in command of it. He was appalled to see the destruction caused by Allied bombing raids on German cities and the effect the war was having on the morale of private citizens. He learned of the existence of death camps, slave labor, the extermination of the Jews, and the other atrocities of the Nazi regime.

During this time Rommel also became aware of the growing German resistance movement, and some of its members contacted him to discuss plans for ousting Hitler and making peace with the west. Some high-ranking officers had even spoken to him about assassinating Hitler. Notable among them was General Karl-Heinrich von Stülpnagel, the military governor of France, who invited Rommel to Paris for secret talks aimed at recruiting Rommel into the plot.

Rommel agreed that Hitler had lost touch with reality in continuing the war and believed that the Fuehrer should be forced to concede the war or else be removed from power. But Rommel was morally opposed to assassination. He also believed assassination would spark civil war and make Hitler a martyr. At most he believed Hitler should be arrested and tried by a German court for his crimes – a tall order in a totalitarian state.

In their secret meeting, Rommel told Stülpnagel that he would give Hitler one last chance by sending a "blitz" telegram to him. He would outline the prospects of further war in the gravest terms and urge Hitler to immediately open the diplomatic front and reduce Germany's losses by ordering the Werhmacht to evacuate France and fall back to Germany’s borders. Rommel had little hope that his recommendations would be heeded thus a coup seemed inevitable.

On June 6, 1944 the Allies began landing at Normandy. Many of the senior German commanders were on leave, including Rommel who was in Germany to celebrate his wife’s birthday. With news of the invasion, Rommel rushed back to the front to counterattack. But Hitler refused to release needed armored divisions which were under his personal command and were stationed near the Pas-de-Calais, believing it, not Normandy, would be the main invasion target. Not even entreaties in person by Rommel and Field Marshal Gerd von Runstedt, the Commander-in-Chief-West, could persuade Hitler that Normandy was the main attack. Rommel's defensive nightmare came true as the Allied beachhead built up over the next six weeks.

On July 15, Rommel wrote his “blitz” telegram to Hitler, recommending that Germany should seriously consider ending the war on favorable terms while it was still possible. For reasons unknown, its delivery to Hitler was delayed, and two days after he wrote it, Rommel’s staff car was strafed by a British pilot, killing his driver and ejecting him into a ditch where he suffered a severe skull fracture. His injuries removed him from battle and sent him back to Germany for treatment. He would never return.

On July 20, while Rommel was recovering from his injuries, a failed attempt to assassinate Hitler was made when a bomb exploded in his secret Wolf's Lair (Wolfsschanze) field headquarters near Rastenburg, East Prussia. Two weeks later, Rommel’s blitz telegram was handed to Hitler. Rommel was unaware of the assassination attempt, but his brutally frank letter now took on a traitorous and defeatist tone, which it likely would not have had if it delivered as intended.

The Gestapo sifted through the debris of Wolfsschanze and identified the person who brought the bomb into the meeting room. Many co-conspirators were identified and arrested as the dragnet expanded to anyone even suspected of participating. General von Stülpnagel, was uncovered and recalled to Germany from Paris. Along the way he ordered his driver to stop and he waded into the Meuse River and shot himself in the head. Hoping that he would drown if his shot failed to kill him, he succeeded only in blowing out one eyeball. His driver rescued his unconscious body from the river and rushed him to a local hospital where his other eyeball had to be removed. During his recovery, he hallucinated and blurted out Rommel’s name, which was heard by his guards. Stülpnagel’s aide, Lt. Colonel Caesar von Hofacker, another conspirator, was arrested and severely tortured by the Gestapo, and only after holding out for so long that it won the admiration of his torturers, he said that Rommel was actively involved.

Carl Goerdeler was the main civilian leader of the plot. He would have been the Chancellor of the new government if the plot had succeeded. Goerdeler was arrested and without torture freely cooperated with the Gestapo in naming names, which made him the object of a considerable hatred from the other prisoners, who saw him as a spineless coward. His letters and other documents revealed that Rommel was a potential supporter and an acceptable military leader to be placed in a position of responsibility in the new government.

A "Court of Military Honor" – little more than a drumhead court-martial – was convened to decide the fate of officers involved in the conspiracy. The Court decided that Rommel should be expelled from the Army in disgrace and put on public trial. This would present a problem to Hitler who knew that accusing a popular military figure like Rommel of being a traitor to Germany could cause civilian unrest. Hitler decided, therefore, to give Rommel the choice to commit suicide or else face public trial, certain death, and an uncertain future for his wife and son.

Rommel was unaware that he had been uncovered and between July and October he remained inactive as he recovered from his head injuries. It would have been difficult, however, for him to be unaware of the officer corps purge going on and the execution of the inner circle of plotters.

In October 1944, while recuperating at home, Rommel received a phone call from Field Marshal Wilhelm Keitel, Hitler’s supreme staff officer, asking him to report in person to Hitler in Berlin to discuss his next posting. Rommel was suspicious. He might indeed be in line for a new command on the Eastern Front fighting the Russians, or he might be turned over to the Gestapo, as had happened to others, and never see his family again. He declined Keitel’s invitation, citing his injury recovery as an excuse. Keitel accepted that excuse and said he would send Generals Wilhelm Burgdorf and Ernst Maisel to Rommel's home with details of his next assignment. Rommel knew that Burgdorf was Hitler’s adjutant (assistant) and Maisel was a protocol officer, so it was plausible that the purpose of their visit was as Keitel had represented it.

Burgdorf and Maisel arrived at Rommel's home on October 14, 1944, and Rommel escorted them into his study. As the senior officer and Hitler’s representative, Burgdorf did most of the talking and Maisel acted as a witness. Rommel was given a letter written by Keitel at Hitler’s dictation. It revealed what Rommel had feared – that he had been implicated by other conspirators. A copy of their testimony was included and Rommel examined it. Keitel’s letter stated that if Rommel believed he was innocent, he should report to the Fuehrer; otherwise, he would be arrested and tried. He should consider the consequences of that.

On the other hand, Keitel’s letter continued, there was an alternative – suicide. Burgdorf had personal orders from Hitler to prevent Rommel from shooting himself in the head; he was to offer him poison, in order that the cause of death could be attributed to the brain damage he had suffered in the car accident. That would be the public story, and it would be an honorable way for him to die and preserve his national reputation.

Burgdorf told Maisel to leave the room, and he produced a cyanide capsule for Rommel, promising that it would kill him within three seconds, thus sparing him unnecessary suffering. Rommel was promised he would be given a state funeral with a hero’s military honors, and his wife would receive a Field Marshal’s pension for the rest of her days.

Having made up his mind, Rommel left his study and went upstairs to see his wife, Lucia, telling her his decision to take his own life. His son, Manfred, entered the room behind him. After the war, he described that his father was pale but otherwise calm. He and Manfred stepped out into the hall and Rommel told his son that he would be dead in a quarter of an hour. If he accepted this way, Rommel said, none of the usual steps would be taken against his family and his military staff would also be left alone.

With his field marshal's baton under his arm and his son Manfred and his orderly beside him, Rommel walked to Burgdorf’s car, shook hands with his son and orderly, and slipped into the back seat with Burgdorf and Maisel beside him. Rommel did not look back as the car pulled off.

The driver, Sergeant Doose, was told to drive out of the village and onto a side road; then he and Maisel were told to leave the car and Burgdorf remained behind. In about five minutes Maisel and Doose were waved back to the car. Doose said that he found Rommel slumped over in his seat and his cap had fallen off. Doose, while sobbing, replaced the fallen cap on Rommel's head. Ten minutes later Rommel's wife received a call to inform her that her husband was dead.

Rommel's body was driven to a nearby hospital for a doctor to certify a time of death. The doctor immediately realized that the cause of death was unnatural, and recommended an autopsy, which Burgdorf refused. The German government announced Rommel's death as caused by aneurysm in the brain.

To further strengthen the story, Hitler ordered an official day of mourning in commemoration of the death. Rommel was buried with full military honors as promised. Hitler even sent Field Marshal von Rundstedt as his representative to the funeral. Although Rommel had specified that no political paraphernalia were to be displayed on his corpse, the Nazis made sure he was fully festooned with swastikas.

In a personal correspondence with his wife dated October 24, 1944, Keitel kept up the ruse, saying "Rommel has died after all from the multiple skull injuries he received on a car journey, through a blood-clot." But later, in his memoirs which were written in 1945 from prison, Keitel would admit to knowing the real cause of Rommel's death. He first revealed that Rommel was forced to commit suicide when he testified about his death during the Nuremberg Trials.

Rommel fought aggressively to win the war for Germany. Yet he was one of the few, if not the only, officer in the German High Command who had not committed atrocities or allowed them against civilians during his war service. There is strong evidence that he was not anti-Semitic and in fact complained to Hitler that he was concerned by Allied carping on German anti-Semitism. "Why don't we put some Jews into prominent leadership positions and shut them up?" Rommel suggested. Hitler told Rommel to stick to military matters and, after the General left the room, Hitler told associates, "That fellow has absolutely no understanding of what we are trying to accomplish."

Allied POWs who were captured by Rommel’s troops were treated humanely. In North Africa, he ordered that food and water rations for his troops be reduced so they could be shared with POWs. On one occasion, Rommel refused the wish of white soldiers of the British Empire for separate POW camps for white and Negro soldiers. His answer was that they fought together in battle as comrades and so should share the same fate after the battle. Rommel also ignored the order to treat Free French troops as irregulars and partisans, i.e., to shoot them on the spot.

After the war, Winston Churchill said of Rommel:

He deserves our respect because, although a loyal German soldier, he came to hate Hitler and all his works, and took part in the conspiracy to rescue Germany by displacing the maniac and tyrant. For this, he paid the forfeit of his life. In the somber wars of modern democracy, chivalry finds no place ... I do not regret or retract the tribute I paid to Rommel, unfashionable though it was judged [when given in the House of Commons].

Field Marshall Erwin Rommel was forced to take his own life 67 years ago this week on October 14.

The 400-Year Old Best Seller

Four hundred and seventy-six years ago this week, on October 4, the first English Bible was published in Zurich, Switzerland thanks to William Tyndale's courage to buck the religious and royal establishment in England and the continent. He was arrested for his efforts and the following year almost to the day, church authorities charged him with heresy and executed him on October 6, 1536 by strangulation at the stake after which his body was burned. His last words were, "Lord! Open the King of England's eyes.”

The king of whom he spoke was the much-married Henry VIII. The first of his six wives, Catherine of Aragon, produced a daughter, Mary, but not the son that Henry wanted (and needed) to consolidate the kingdom in a tumultuous time. His annulment of his marriage to Catherine and his marriage to Anne Boleyn, caused the rift between the king and pope, leading to the creation of the Church of England.

Anne Boleyn also produced a daughter, Elizabeth, but no son and lost her head for it. Henry’s third wife, Jane Seymour, produced the longed-for son, Edward, but she died in childbirth. Henry would marry three more times, producing no more children but producing one more beheading – that of Catherine Howard, wife No. 5.

When Henry died, Edward became King Edward VI at age nine. But he died at age 15, allowing the ascension of Mary, referred to as “Bloody Mary” by her Protestant opponents for having 280 of them burned at the stake in her zeal to return England to Roman Catholicism. After five years on the throne, Mary died without heirs, and the throne passed to Elizabeth I, the namesake of the present queen. She restored England to Protestantism and reigned for 45 years. Though she never married, giving her the appellation the Virgin Queen, she inspired the Elizabethan era of English drama and its most famous playwrights, Shakespeare and Marlow, and she sponsored the seafaring exploits of such men as Sir Francis Drake, who co-commanded the defeat of the Spanish Armada and was the second man to circumnavigate the globe.

As Elizabeth lay dying in March 1603, she would not openly name a successor. But she had let her wishes be known to her closest advisor, and upon her death, he declared James VI of Scotland to be the new king. He was the great-great-grandson of Henry VII and Elizabeth’s cousin twice removed. Elizabeth was the end of the House of Tudor and James, who took the title King James I in England, was the first Stuart king, uniting England, Scotland, and Ireland.

While the news that he was the new king had reached James in three days, he took almost a month to journey to London to be crowned. His journey was like a triumphal procession as people came out to meet him and wish him well. He would need it. Awaiting him in London were the disenfranchised Roman Catholics and the Puritans who believed the Protestant Reformation begun under Elizabeth hadn’t gone far enough. Presbyterian John Knox described Elizabeth as “neither good Protestant nor yet resolute papist.”

Also awaiting the new king were the Presbyterians, who were more conservative Puritans. They were devoted to doing away with vestments and rings and the church hierarchy of bishops, desiring in its place their understanding of the New Testament church model with congregational autonomy under the administration of elders, also called presbyters.

Then there were the bishops of the Church of England – an elite class with power, wealth, and privilege to protect. They had the most to lose if the Puritans won.

There was also Parliament – ambitious and eager to expand its role in governing, which it hadn’t been allowed under Elizabeth. More than a few members of Parliament were Puritans.

The backdrop to all of these parties jockeying for position and influence in the interregnum was the plague, which had hit London especially hard with already 30,000 dead. Some saw it as God’s judgment, making James’ transition to power even more suspicious.

As he had made his journey south to London, one of the groups that went out to greet James was a contingent of Puritans who presented the new king with a list of grievances and requests. To address them, King James called the Hampton Court Conference. His address of their grievances, however, would be a sham. From his early years in Scotland, James had learned to like Puritans little and Presbyterians even less. He had weighted the attendees to Hampton Court toward the influence of the Church of England. But the Puritans would get one critical proposal approved – a commission to produce a new translation of the Bible, which would be the only version authorized to be read in the churches.

The Bible extant at the time was the Geneva Bible – the Bible of Shakespeare, John Knox, John Donne, Oliver Cromwell, and John Bunyan – which had been produced over 50 years earlier by the work of scholars who fled England during the Protestant purges under Bloody Mary. It was a translation from Greek and Hebrew and more than 80% of Geneva’s English translation came from the Tyndale Bible.

The Geneva Bible, however, contained marginal notations, designed to make it “user friendly,” which were distinctly Calvinistic in doctrine. While the Geneva translation was excellent, these marginal glosses offended the bishops of the Church of England because they associated them with Presbyterianism. The Anglican Church of England had instead been using the Great Bible, authorized by King Henry VIII and produced in 1539. Its translation was flawed, however, because it had been produced by Miles Coverdale, a disciple of Tyndale, who was not a Greek or Hebrew scholar. He had finished the incomplete Tyndale translation by using the Latin Vulgate, itself a translation, rather than using Greek, Hebrew, and Aramaic manuscripts. To overcome the translation defects of the Great Bible, the Anglican bishops produced their own translation in 1568 which became known as the Bishops Bible.

In his opening words at Hampton Court in January 1604, James set the tone of the conference. The doctrine and polity of the state church, he said, would not be up for evaluation or reconsideration – notwithstanding the Puritan objections to it. He found security in the hierarchy and structure of the Church of England unlike the Presbyterian model he had witnessed in Scotland. There might be room for some cosmetic changes, he hinted. “I assure you we have not called this assembly for any innovation,” but even the best of systems is subject to corruption over time, he allowed, and he acknowledged that “we have received many complaints, since our first entrance into this kingdom, of many disorders, and much disobedience to the laws, with a great falling away to popery.”

As for the suggestion for a new translation, he liked it. He had despised the Geneva Bible because of its marginal notes, which contained commentary and interpretation that he found politically subversive. He opined, “Let errors, in matters of faith, be amended, and indifferent things be interpreted, and a gloss added unto them.” On balance a project to create a new translation that reliably expressed the original texts had much to commend itself – it would replace the hated Geneva, throw a bone to the Puritans, appear ecumenical, provide a single voice for scripture in the churches, and enlighten the nation to God’s word.

James insisted that he wanted a translation with scholarly and royal authority, observing: “I wish some special pains were taken for an uniform translation, which should be done by the best learned men in both Universities, then reviewed by the Bishops, presented to the Privy Council, lastly ratified by the Royal authority.”

And yet the starting point for this new translation would not be a blank sheet of paper. The starting point would be the Bishops Bible of 1568. This made the King James Version not an original translation, but rather a revision of an existing translation, albeit a revision going back to the work of William Tyndale. This is revealed in the preface to the 1611 King James Version:

Truly (good Christian reader) we never thought from the beginning, that we should need to make a new translation, nor yet to make of a bad one a good one, . . . but to make a good one better, or out of many good ones, one principal good one.

Out of the original 54 scholars who were considered for the project, 47 were chosen solely on their scholarly merit. They were the best that England had in their knowledge of the original texts and languages, and while a fourth of them were Puritan, all quite remarkably rose above their sectarian convictions.

The Archbishop of Canterbury, Richard Bancroft, wrote the rules for the translators, which were approved by the king.

The translators were organized into six groups, which met at Westminster, Cambridge, and Oxford. Ten at Westminster were assigned Genesis through 2 Kings; seven had Romans through Jude. At Cambridge, eight worked on 1 Chronicles through Ecclesiastes, while seven others handled the Apocrypha. Oxford had seven translating Isaiah through Malachi with another eight working on the Gospels, Acts, and Revelation.

Four years were spent by the six groups to produce the preliminary translations after which nine more months were spent at Stationers' Hall in London for review and revision of the works by two men each from the Westminster, Cambridge, and Oxford companies. The final revision was then completed by two of the scholars, one of whom wrote the preface.

The completed work was issued in 1611, 400 years ago this year, the complete title page reading:

THE HOLY BIBLE, Conteyning the Old Testament, and the New: Newly Translated out of the Originall tongues: & with the former Translations diligently compared and revised, by his Majesties Special Commandment. Appointed to be read in Churches. Imprinted at London by Robert Barker, Printer to the Kings most Excellent Majestie. ANNO DOM. 1611.

How well did the scholars do their work? One could answer that their translation was so exacting that it translated impenetrable Hebrew and Greek into equally impenetrable English. Expressions thus resulted like a fly in the ointment, a wolf in sheep’s clothing, the skin of your teeth, scales falling from eyes, to fall flat on your face, reaping the whirlwind, pour out your heart, sour grapes, two edged sword, old wives' tales, and handwriting on the wall, which would enter the English language as incomprehensible expressions at first but became idioms later although only in the vernacular of those knowledgeable of the King James Bible.

Languages have unique ways of expressing concepts some of which are crystallized in words that are untranslatable into other languages – schwerpunkt in German comes to mind – but most require transliterations rather than word by word translations in order for the readers of one language to understand a work created in another language. Yet the translators of the King James project fastidiously chose word-by-word accuracy over understanding. Thus, since James wanted accuracy, in that respect his project was a success – its bizarre terms notwithstanding.

Shakespeare was a visitor and performing raconteur at Hampton Court on occasions when King James was in residence there, and he began work on his last play, The Tempest, the year the King James Bible was published. Over his writing career, Shakespeare ransacked the lexicon looking for new words and expressions, and yet his plays have not influenced the development of English to the extent that the Bible has done. While Shakespeare’s plays used densely packed word pictures to move his audiences, the Bible uses about 8,000 different words to express its message in terms that most ordinary people at the beginning of the 17th century could understand.

Yet forty years after the Bible’s publication, Handel borrowed large swaths of it to give voice to his magisterial oratorio, Messiah. No ordinary words could express, “Comfort ye my people; Speak ye comfortably to Jerusalem, for she hath received of the Lord’s hand double for all her sins.” Only those of King James translation were adequate.

Likewise, John Winthrop’s vision of the Puritan Massachusetts Bay colony being a "city upon a hill,” the dominating influence in colonial development, could not have been expressed more efficiently to its original inhabitants than a biblical image familiar to them all. Ronald Reagan borrowed the same phrase when speaking to the Republican National Convention preceding his second term: “We raised a banner of bold colors – no pale pastels. We proclaimed a dream of an America that would be a Shining City on a Hill.”

The poetry of the Old Testament inspired the opening words of Lincoln’s Gettysburg Address: "Four score and seven years ago our fathers brought forth a new nation," which are based on Psalm 90:10, "The days of our years are three score years and ten," in combination with the King James prose describing birth: "Mary brought forth a son."

Where would Martin Luther King Jr. have found a better description for his “dream” than the almost verbatim use of the 4th and 5th verses of Isaiah 40?

I have a dream today. I have a dream that one day every valley shall be exalted, every mountain and hill made low. The rough places will be made plain, the crooked places will be made straight and the glory of the Lord shall be revealed, and all flesh shall see it together!

The inscription on the Philadelphia Liberty Bell – "Proclaim freedom throughout the land!” – comes from the King James translation of a verse in Leviticus, and when Samuel Morse sent the first message on his revolutionary telegraph in 1844, he could think of no better words than the question posed in Numbers 23:23 in King James English – “What hath God wrought?”

More than 2.6 billion copies of the King James Bible have been sold since its publication 400 years ago. It is the book of ages, the transcendent voice of English-speaking peoples, without which there would have been no Pilgrim’s Progress, no Paradise Lost, no Negro spirituals, no Handel’s Messiah as we know them. There would be no way to describe a “broken heart” or a “labor of love” or a “cross to bear.” Without the King James translation, we would be unable to give thanks for the undeserved grace that “preparest a table before me in the presence of mine enemies,” nor could we confess the heartfelt blessedness that “my cup runneth over.”

Without the King James Bible, we would have had a poorer world.

Some Inconvenient Truths About the Buffett Rule

Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it … It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million. … Middle-class families shouldn't pay higher taxes than millionaires and billionaires … That's pretty straightforward. It's hard to argue against that.

So much unfairness! So little time!

Buffett’s August 14 New York Times editorial, “Stop Coddling the Super-Rich,” provided Obama the talking points that we will hear repeated ad nauseum until next November. The fact that they are patently false seems not to disturb either man. Obama wants to be reelected; so deceptive half-truths and untruths are his stock in trade. But Buffett’s agenda in making false statements is harder to discern. He is in his 82nd year and has been the equivalent of a rock star in the financial world – the Sage of Omaha. Let’s hope his flirtations with Obama are not conclusive that there’s no fool like an old fool.

Buffett’s editorial claimed:

Last year my federal tax bill – the income tax I paid, as well as payroll taxes paid by me and on my behalf – was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4% of my taxable income – and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33% to 41% and averaged 36%.

There are reasons why this may be true for those 20 people – like having high incomes without enough deductions – but we don’t know because Buffett won’t share his tax return and neither will the people he refers to.

But here are the facts.

The IRS reports that those who made over $1 million in adjusted gross income in 2009, the latest year for which data are available, paid an average income tax rate of 28.9% in federal income taxes, compared with 24.6% for those earning from $200,000 to $500,000 and 11.6% for those earning from $50,000 to $75,000.

It sure seems that millionaires are paying more than secretaries. However, the tax progressivity is more extreme than these percentages reveal.

When all taxpayers are listed in rank order by income, the top 20% of earners pay almost 90% of the taxes that run the government. The top 1/10th of 1% – the very rich who must make about $2 million just to get into that category – paid over 16% of the tax dollars collected. When 1/10th of one percent pay 16%, that’s pretty progressive – to the point of being arguably unfair. It’s almost like a penalty, isn’t it?

The millionaires and billionaires that preoccupy Obama’s class warfare rhetoric make a lot of money per person but there’re not enough of them to pay the government’s bills – more significantly, to pay for Obama’s socialistic schemes. There are, in fact, six times more dollars earned by the bottom 80% of income earners than there are in the top 1/10th of 1%, but notwithstanding, the bottom 80% pays less than 11% of the tax dollars needed to run the government. But hey, Obama and Buffett say, the top tier is where the rich people are. True, but they aren’t six hundred times richer than the bottom 80%. The government could expropriate all of the income of the millionaires and billionaires and still not close the deficit.

But here’s the scandal in the US tax code. Almost half of the income earners pay nothing in federal income tax. And why is that a scandal? Because if you don’t have skin in the game, you don’t pay attention to the game. We end up with a society of makers and takers. If everyone felt some tax pain around April 15, we would have better government than we have now because more people would be watching how the government spends and often wastes the money we send to Washington.

As it is, we have fewer and fewer paying the bills – the makers – whose votes pale in comparison with the votes of the growing number of free-riders – the takers. That’s not the way democracy works. Yet if it were suggested that only those who pay taxes should vote – somewhat akin to the post-Revolutionary American practice that only landowners vote – there would be a hue and cry that that’s not fair. And the present system is?

An honest portrayal of Buffett’s assertion that he paid nearly $7 million in taxes which figured to be about 17% of his taxable income would require him to reveal that he is paid only a token salary of $100,000. The majority of his income comes from dividends and capital gains, which are taxed at a lower percentage than ordinary income. There is a good tax policy reason for this: people who live off of their money assets create jobs in their investing and consumption activity, whereas people who live off of ordinary income usually hold one of those jobs. Their impact on job creation is minimal because they consume most of their income and have little left to invest.

IRS data shows that people earning more than $1 million of adjusted gross income receive only 33% of their income from wages and salaries. IRS data also show that the super-rich, those with income above $10 million, get only 19% from wages and salaries. At some point a wealthy person’s assets are substantial enough and require so much attention that his or her “job” is to manage those assets. Jobs like that pay little or no salary or wages.

As shrewd as Buffett is, particularly in tax matters, you’d have expected him to point out that he pays more taxes than meet the eye. It’s true that he pays 15% on dividends and capital gains. But the corporations he holds stock in pay 35% on profits that would otherwise accrue to his account as future dividends and capital gains. So the total tax bite, Mr. Buffett, is closer to 45% – even more when the phantom capital gains due to inflation are factored in.

US corporate taxes, I might add, are the highest in the industrialized world. And don’t forget that the government is a taker, not a maker, so capital that’s removed from the productive sector of society ceases, well, ceases to be productive. Government never allocates capital as efficiently as the private sector.

But it gets worse. Buffett pays 15% on dividends and capital gains that were earned on money left over after first paying income or corporate taxes. If he hadn’t paid those taxes, his gains and dividends would have been greater. When he takes the gain or dividend, the tax on the original income and the tax on the gain should be combined to reveal the total tax bite because that’s the real impact of taxes on gains and dividends. Whether Buffett invests ordinary income or invests gains, his real taxes on gains will always exceed the statutory tax of 15%. And a person who consumes all that’s earned will always pay less than a person who invests part of what is earned and reduces consumption to do so. The US tax code penalizes savers and rewards consumers.

Oops! I seem to have left out social security payroll taxes in my analysis. And so did Buffett. Then there’s the death tax. Hard to forget that one at 45% of Buffett’s considerable wealth. He may be very rich, but his heirs will only be rich after Uncle Sam takes his cut – again – since those assets were purchased with after-tax dollars.

My, my, my! Taxes everywhere. Now what was that number you used in your editorial, Mr. Buffett – 17.4% was it? I don’t think so.

Our tax system is currently too progressive. It’s also too open-ended, allowing politicians to increase tax revenues faster than the output of the economy is growing. Furthermore, it is littered with loopholes – loopholes made necessary so the economy can function with so progressive an income tax. Our tax system needs reform. But it doesn’t need the kind of reform Obama has in mind so he can milk “millionaires and billionaires” who really make $200,000 a year. A good start would be to get rid of corporate taxes altogether.

Corporate profits were first taxed in 1909, when Congress enacted a 1% excise tax on corporate profits over $5,000. The corporate profits tax was suggested by President Taft when the Supreme Court ruled the income tax unconstitutional. Corporate taxes were intended to be only a temporary measure until the 16th Amendment establishing the income tax could be ratified, which finally happened in 1913. Unfortunately the corporate income tax was left in place, as taxes are wont to be, causing us to have had two completely separate and uncoordinated income tax systems for most of the past 100 years. The geniuses in Washington act as if corporations are owned by untaxed troglodytes instead of already overtaxed citizen stockholders.

This has had two ridiculously inane consequences. First, it allows people like Warren Buffet to basically arbitrage the corporate and personal income tax systems against each other. If the corporate tax rate is more favorable than the personal rate, the rich and very rich can reduce their personal income and incorporate assets and income generation to pay a lower rate. Buffett takes a symbolic $100,000 in labor income and billions in investment income to arbitrage his taxes.

The other consequence, which I’ve mentioned previously, is that it misstates the real taxes paid by separating personal income and corporate income, the latter being taxed twice whether it’s a capital gain or dividend. By focusing only on the tax rates for gains and dividends, Buffett and Obama can demagogue the tax system with their “fair share” polemic. But the undeniable fact is that Berkshire Hathaway paid $5.6 billion in taxes on corporate profits last year. Buffett owes 30% of Berkshire Hathaway, so $1.7 billion in taxes were paid on his behalf – not the approximate $7 million he wrongfully claimed to have paid. Corporations are the government’s tax collectors for their shareholders.

If Obama and his socialist disciples want to get more money from the people he alleges aren’t paying their fair share of taxes, there are only two ways to do it given their ability to arbitrage the tax rates and live off of investment income.

One way is to increase the tax rates on dividends, gains, and other income – derisively called “unearned income” and “passive income” as if nothing was done to deserve it or to work for it. The rate is currently 15% if considered separately – more if all taxes are combined. But this way he could target the rich and very rich fat cats who live off of unearned and passive income, not the lower income earners who live off of income from wages and salaries.

A good argument against such taxes is that they increase the tax on capital investment. The current corporate tax, 35% and already the highest in the industrial economies, is essentially a tax on capital since it taxes capital earnings. Moreover, gains and dividends are currently taxed twice so the combined taxes are getting perilously close to 50%. Additionally, excessive passive and unearned taxes haven’t worked in the past because they force the investing class to sit on gains and exploit accounting tricks. On balance, increasing theses taxes isn’t good tax policy but they’re great for class warfare.

The other way to raise taxes is to establish a minimum tax, which the alternative minimum tax (AMT) essentially does. The AMT has a long and ill-starred past going back to the Lyndon Johnson administration. It originally targeted 21 millionaires who paid no tax in 1967. The AMT was designed to penalize taxpayers who have relatively high deductions versus income – which is how the 21 millionaires escaped taxes. Today the AMT unfairly hits families who aren’t millionaires but have high deductions, like self-employed couple who pay business expenses. Like most taxes, this one has grown like kudzu, ensnaring non-millionaires but who are thankfully vengeful voters. Inflation has pushed middle income earners into paying the AMT, which now hits some four million taxpayers. In 2008, 27% of households that paid it had adjusted gross income under $200,000. On balance, the AMT is a mean-spirited tax that throws tax tables aside when the government doesn’t think it’s gotten enough of your money. It exemplifies the justice of Peter the Great: “Better to let the innocent suffer than the guilty escape.”

Of course there is an alternative to all of this “fair share’ foolishness – cut spending. That’s what most American families routinely do when they run out of money before they run out of month. But cutting spending is hard in a society where there are more takers than makers – more votes that can be bought by spending than bought by tax reductions.

According to Gallup, Americans believe 51 cents out of every dollar sent to Washington is wasted. That’s a tough sell for an incumbent stumping for more spending and higher taxes.

As nearly every poll shows, more than 70% of Americans believe the country is on the wrong track, and the number of people calling themselves conservative continues to grow, as does the number of moderates who say they lean to the right. According to Pew, the average voter places himself twice as far from Democrats as he does from Republicans. That’s a tough sell for a Democrat incumbent asking to be reelected.

What if the nearly $7 million that Buffett paid in taxes last year had not been given to the government – the takers – but had been instead invested in the makers – those who create jobs, which would have hired the unemployed allowing them to pay mortgages and college tuition and family bills instead of propping up Fannie Mae, welfare schemes, or tilting at green-tech silliness like Solyndra?

Obama’s agenda is not about fairness or tax policy or jobs. It’s about demagoguing success and advancing his socialist ideology.