BLOG VIEW: You cannot enrich a financially bankrupt nation with intellectually bankrupt politics. Unfortunately, too many members of today's American public are broke, and too many powerful people are daring to underestimate their intelligence by whipping up scapegoat scenarios as a means of explaining their financial distress.
Increasingly, the too-convenient diagnosis for today's toxic economic environment is to blame the mess on people who earn high salaries. In this scenario, the basic problems with the U.S. economy are the result of successful individuals enjoying the fruits of their labors. And this scenario includes a dark argument that the successful individuals are not contributing back to the fiscal stability of the economy.
This scenario comes with a solution for solving the problems facing the country: We need to borrow the playbook from legendary English bandit Robin Hood and take from the rich in order to give to the poor. In today's environment, that means proposals for jacking up taxes on financially successful people (a.k.a. ‘the rich’). Over the past several weeks, a constant shower of political speeches have centered on berating the financially successful for being parasites and borderline traitors.
For example, Elizabeth Warren launched her campaign for a U.S. Senate seat with an idiotic rant that blamed an imaginary factory owner – and, by extension, all business owners – for failing to contribute anything back to the wider economy, and a video of her babbling became something of a YouTube hit.
President Obama has also embraced the strategy of blaming successful Americans for the nation's failures. In a Dec. 6 speech in Osawatomie, Kan., Obama used alleged income inequality as the root of today's problems.
‘Those at the very top grew wealthier from their incomes and investments than ever before,’ Obama said in reference to the past decade of the U.S. economy. ‘But everyone else struggled with costs that were growing and paychecks that weren't – and too many families found themselves racking up more and more debt.’
Even The New York Times' editorial board has gotten into the act, praising the Obama speech as the foundation for the president's re-election campaign.
‘Mr. Obama correctly framed the choice for voters,’ said the Times' editorial board. ‘The country can return to policies that stacked the deck for the wealthy and left everyone else to fend for themselves, creating what he called 'you're on your own economics.' Or, elected officials can step in to keep competition fair and ensure the government has enough money to protect the vulnerable and invest in education and research.’
As with any scapegoat strategy, the ability to pinpoint the poisons of contemporary society on a small demographic is quick and easy. It is also reckless and stupid, and it conveniently ignores the basic facts that brought this country's economy to where it is today.
For starters, the Times' assertion that ‘elected officials can step in to keep competition fair and ensure the government has enough money to protect the vulnerable and invest in education and research’ has no concept of reality. In the aftermath of the September 2008 crash, elected officials did everything they could to maintain the status quo by bailing out the too-big-to-fail financial services companies and keeping the money-losing Fannie Mae and Freddie Mac alive.
And the notion of fair competition will come as a surprise to both the nation's community banks – which have been pinned down by an avalanche of Byzantine regulations – and the dormant private-label secondary market – which cannot regain its strength as long as the government-sponsored enterprises dominate the market with an endless supply of taxpayer money and no meaningful oversight of their operations.
Also, expecting the government to ‘protect the vulnerable’ will comes as a surprise to mortgage bankers, who witnessed years of astonishing Washington-based social engineering that pushed thousands of financially unstable individuals into home loans that they could not afford. The president's reference to how ‘too many families found themselves racking up more and more debt’ conveniently forgets that the federal government encouraged these families to assume their debt burden.
And this doesn't even scratch the surface of how the government happily ignored the havoc created by the credit card, student loan and payday lending industries.
Furthermore, the ‘vulnerable’ are certainly not being protected by an incompetent Department of Justice that refuses to prosecute any of the Wall Street masterminds of the 2008 crash and is equally unwilling to pursue mortgage fraud with any degree of urgent priority. And as for the Times' dream of more federal investments in ‘education and research,’ can you say ‘Solyndra’?
But when the president berates how ‘those at the very top grew wealthier from their incomes and investments than ever before,’ he ignores a basic truth: These people earned their money through hard work, and many of these business professionals achieved their success through extraordinary financial struggles (especially those who needed to take out huge student loans to cover the costs of law school, medical school and other pricey graduate studies).
Yes, there are some people who seemed to become wealthy without breaking a sweat (i.e., trust fund babies and trashy reality television stars). But they are not the cause of the nation's fiscal illness.
If financially successful people broke the law by getting richer, then they should be prosecuted. But if they worked hard for their money, then why hold them up for scorn? Encouraging jealousy or hatred for people with handsome incomes and successful investment portfolios is abhorrent, and statements that advocate an us-versus-them environment clearly suggest that the president is bankrupt when it comes to intelligent ideas for moving the country forward.
Besides, Obama has been in office for nearly three years, and he never previously raised any ideas on how to reform the tax code in order to ensure that everyone pays their fair share. In fact, the only person this year who had the courage to suggest reforming the tax code was Herman Cain via his 9-9-9 plan. While the Cain plan raised more than a few questions – particularly in regard to the future status of the mortgage interest tax deduction – at least it opened a conversation on the subject. Unfortunately, the mainstream media's vicious obsession with unsubstantiated charges against Cain's character forced the candidate to abandon his hopes of bringing serious change to the tax system.
Robin Hood was the right man for his time. However, the solutions of 12th century England have no relevance in 21st century America. The public deserves better of its leaders and would-be leaders than efforts to demonize the successful for being successful.
And as an aside, President Obama chose Osawatomie, Kan., as the site of his Dec. 6 speech because that was where Theodore Roosevelt made one of the most prominent economic speeches of his administration. However, if Obama was genuinely interested in following in Roosevelt's footsteps, he would do well to heed one of Roosevelt's most famous observations: ‘A typical vice of American politics is the avoidance of saying anything real on real issues.’
Editor's Note: Our Monday Blog View will not published over the next two weeks, in observance of the year-end holidays. This column will return on Jan. 9. Happy holidays, y'all!
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
(Photo courtesy of Warner Bros.)
