Government, Private Enterprise, Taxes and What It Means to Be American
You’ve just read the title of this blog post and are probably thinking, “that’s a really ambitious blog post.” It’s not. Thats because all of these things work and have been working in tandem to make the United States one of the greatest countries in the world.
Today the two candidates both did something I liked. They both stopped talking about surface level issues like tax rates for 5% of Americans and $500 million dollar line items in the budget. President Obama and Governor Romney started to talk about their view of America.
Obama gave a speech saying that government is good for business. He pointed out that interstate commerce is made possible by government roads (which are crumbling and need to be repaired by a person who needs a job), the government created the internet, the government got the ball rolling on computers and the government freely educates the workforce that companies need in order to operate. Regulations are in place to protect consumers and ensure fair competition. Essentially, there is no such thing as purely private enterprise. American companies are great because they are American, and government has a role to play in our economy.
Romney has echo’d the same sentiments on the campaign trail today (almost exactly) but he has also come out as a strong proponent of free enterprise. He wants to lower taxes, deregulate and basically let CEO’s run the economy. Today in particular, he took the president out of context, when he said “you didn’t build that.” Here’s a piece from the conservative Washington Examiner, basically counter-arguing the argument I make here, but making it clear that I’m not making this up. Obama thinks that Government aids success, Romney believes it stands in the way of it.
The argument over government hands in the economy carries over into the argument about government hands in people’s wallets. No matter what the current tax rate, the GOP tax policy will always be less. But we all know to climb out of the deficit, we need to make big cuts to big programs that matter (social security, medicare, the military- which wont happen) or raise more revenue. Anybody telling you a bridge to nowhere actually matters to America’s massive coffers is lying to you. Obama believes that the wealthiest American’s should sacrifice more to help lift the country out of debt. Romney says the rich need and deserve their money.
This is where what it means to be an American in. Even though Romney’s go-to attack dog, disgraced Governer (born in Cuba) John Sununu was forced to apologize for saying Obama needed to “learn how to be an American”, I think Obama had a better grasp on both what makes a good economy and what it means to be an American.
If you want to know what happens when an economy has a lot of resources but bad government look no further than Nigeria. By all accounts, Nigeria should be at least a 2nd world country, if not a first. It has vast mineral wealth, it’s expats have the highest rate of going to college in the United States (yes Nigerians go to college more than Asians) and its is centrally located in Africa, which should make it a trade hub. But alas, lax government organization and corruption has impeded their progress. Businesses suffer because government doesn’t have their back. Safety, infrastructure, health, education and innovation, which are all looked after by the American government over here, are not well tended to. As a result, businesses suffer. If you want to know what happens when there is too much government, look at Russia. State-controlled businesses and lack of free enterprise keep Russia on ice.
The happy middle is America. We were founded on sacrifice, we grew threw sacrifice, and now we are trying to forget the word sacrifice. Many people think the signers of the Declaration of Independence all lived happily ever after but nothing is further from the truth. Our founding fathers swore an oath to give their lives, their coin and their lives. They lost children, their houses and land, their freedom, their money and yes, some even lost their lives. William Morris, known as the financer of the Revolution, spent years in debtor’s prison. This country was founded on sacrifice and don’t let anyone tell you otherwise.
Transition to the period after the Great Wars when this country really took off. In the 1951, the marginal tax rate on those making over $250,000 (not adjusted for inflation) was a whopping 91%. GDP growth that same year was 15%. We have not seen that growth in the United States since. I’m not suggesting superhigh taxes like that should be enacted today or that there weren’t other circumstances aiding that astronomical growth (on the contrary, I think Obama’s ceiling of $250,000 for a tax cut extension is a bit low should be raised to at least $500,000 if not $1mm). What I am saying, though, is that letting tax cuts expire for the rich will not be the end of the world. What I am saying is that taxes, in moderation, are not un-American. What I am saying is that a little shared sacrifice goes a long way. Finally, what I am saying to Governor Romney is this:
I admire your success. But you should know that your story would be impossible in a state without a regulated financial system. Bill Gate’s succes could not happen in China where patents mean little to nothing. The Koch’s brothers success would be impossible with out the interstate highway. The entire economy would falter without the social safety nets, like Medicaid, that companies rely on to pick up their slack in regards to salary. The wealthiest Americans didn’t do it by themselves and it’s American to give to your country, within reason, which means the rich should at least pay the same taxes their secretaries.
p.s. Release those tax return Mitt!