Verily, it is a dilemma. We have to distinguish between principle and practicality. There is no question that this state of affairs is bad in principle. But what can be done about it in practice? The fact of the matter is that the beneficiaries of this largesse receive it quite voluntarily from providers who are under no compulsion and presumably consider it to their advantage to give it. So, if we pass legislation to outlaw the giving of obscene remuneration we oppose the interests of both parties, the giver and the receiver. What good would that do and who would benefit? You guessed it. Nobody would benefit and the only good that would result would be to our emotional well being, the satisfaction that an inequity has been removed.

Another solution would be to tax the excess profit away. In fact. it would be the only other solution since government is the only agency that could legally separate the earner from his gains. This avenue has been tried many times. Excess profits taxes have a long history worldwide. In our country they started with the New Deal as a reaction to the depression of the 1930’s if you consider a tax rate much above 50% as taxing excess profits. It represents a transfer to the government and assumes that government can put this money to better use than the earner could. Or would. This was the reasoning behind the New Deal. The reason for the depression was deemed to be the lack of spending by taxpayers, so the government would take the money from them and spend it in their stead. They did this for eight years and it did not work, in spite of Lord Keynes, an influential economist of the time, offering an appealing rationale for why it should.

It is hard to argue that government spending is better for the economy or for the people than private spending is. If government taxed excess profits and returned the proceeds to the people, that would be one thing. But it never does this. Instead it is most likely to simply waste the money. Left in private hands it would go either to consumption or to investment, both essential for the economy and the prosperity of its inhabitants. Or to charity which also has its place in civilized society.

This leaves us with the unsatisfactory conclusion that we must tolerate obscene profits, not because they are likeable but because there is no satisfactory way to avoid them. We live in an imperfect world where the good co-exists with the bad and where the better sometimes is the enemy of the good. It does no good to blindly insist on principle.