Saturday, October 29, 2011

Elizabeth Warren's Famous Rant



Elizabeth Warren achieved national fame overnight with some pungent words, widely reported"There is nobody in this country who got rich on his own — nobody.


"You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for..."


The rest is quoted below. She makes a powerful appeal in the populist, soak-the-rich tone the White House has been setting. But I find her understanding flawed. It overlooks (or ignores) that before we, the "rest of us," pay for anything, there must be enterprise and profit first of all. Most of us pay taxes out of wages, and wages come ultimately from the existence of profitable enterprises. That is true even of wages paid by the government--since those come out of taxes, and taxes come out of wages, and out of profits.
That has, of course, been true all along and it is true now. The government would have nothing to spend on roads, schools, police or fire fighters if there were no business being done. She has put the cart before the horse.
 She is arguing the status quo, as if it justified more of the same. That is a trifle dangerous: Could not the reverse be argued at least as well? All that is at issue is the amount of profit that should transfer from the private sector to the government. She obviously believes the proportion should increase, but that is not the case she made.
We already have rather considerable levels of taxation and regulatory overhead and business leaders are saying less of that  kind of thing would help them expand their enterprises. To turn Elizabeth Warren's argument on its head for a moment, "You built a factory out there? Good for you. But I want to be clear. You already paid, directly or indirectly, for all the government services we have. You paid, by paying the wages the rest of us earned, for the roads, for the taxes we paid to educate our children, for the cops and firemen. What that didn't cover you paid for directly, through business taxes and fees and all the rest. God bless--keep an even bigger hunk of it, so you can do even more business. Grow the economy, employ more of your neighbors, build a thriving economy in which we all may benefit. We can struggle along with less government spending, somehow."
Of course she's saying the opposite. What she is doing is a little too clever, arguing the obvious as if it supported her case. You're not supposed to notice that.







"I hear all this, you know, ‘Well, this is class warfare, this is whatever.' No. There is nobody in this country who got rich on his own — nobody.
You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.
Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”

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