Wealth, South Dakota and the Social Contract

Oct 6, 2011

By Cory Allen Heidelberger

“There is nobody in this country who got rich on his own. Nobody.”

Elizabeth Warren, consumer advocate and Senate candidate from Massachusetts, thus blasphemes the American ideals of the rugged individual and the self-made man. We build and secure wealth, says Warren, in the context of a social contract. We pay taxes, and in return we get schools to educate workers and consumers, infrastructure to transport our goods and services, and police and banking regulations to protect our wealth.

South Dakota’s state government doesn’t quite dig how Warren’s social contract works. South Dakota’s wealthy businessmen depend on an educated workforce. However, South Dakota resists the notion that those wealthy businessmen ought to pay state taxes on their income. South Dakota state government also resists the notion that it should pay for the education that makes that wealth possible. South Dakota state government pays the second-smallest share of K-12 education funding in the nation, leaving federal and local governments to try filling the gap.

Rather than asking the wealthy to pay their fair share of the cost of civil society, we brag about our low state tax burden. This low-tax/no-tax mindset leads to the odd situation where our state’s wealth (as measured by GDP) can grow by over 4% in 2010, yet our depleted state coffers require that we cut education and other public services in 2011 by 6% to 10% or more. Meanwhile, we pave our roads and runways and care for our ill and elderly with federal assistance that exceeds by 50% the taxes we South Dakotans pay Uncle Sam.

Perhaps South Dakota’s tendency to take more from the social contract than it pays in flows from our history. Our pioneer forebears built the foundations of our wealth on government assistance. The U.S. Army executed the wars and enforced the treaties that cleared the previous inhabitants from the territory our forebears craved. Our forebears received their parcels of Dakota Territory through one of the greatest giveaways of public wealth in history, the Homestead Act. Railroads built with government subsidies and immigrant labor helped that wealth grow.

Since our first sod homesteads, no South Dakotan has gotten wealthy solely by his or her own efforts. We make and maintain our wealth thanks to the common efforts of citizens in society. We all thus have an obligation to pay taxes to support the public institutions that benefit all citizens.

Cory Allen Heidelberger writes the Madville Times political blog. He grew up on the shores of Lake Herman. He studied math and history at SDSU and information systems at DSU, and is currently teaching French at Spearfish High School. A longtime country dweller, Cory is enjoying "urban" living with his family in Spearfish.