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Despite decades of economic experience and personal familiarity with the logic of market exchange, many people today still sympathize with the myth that free markets left to their own devices are prone to periodic “failures,” breakdowns, or crises, while government intervention, money-printing, and wealth redistribution allegedly “stimulate” an economy or “smooth” the business cycle. Few myths are more harmful, since the precise opposite is true: markets left free (while operating under the rule of law) work very well and create vast wealth, while state spending, taxing, regulating, borrowing and inflating only usurp economic vitality.
A simple and memorable way to keep straight the crucial distinction between “economic power” (the power to produce) and “political power” (the power to coerce) is by a terminological duality – “makers” versus takers” – as incorporated in Edmund Contoski’s 1997 book. Despite persistent Marxist claims dating as far back as 1848, these two powers (the economic and political) are in no way synonymous. Indeed, they’re antonymous.
Economic power is creative, productive, and voluntary; it offers incentives, gains, rewards. Political power is destructive and involuntary; you must obey it, for it imposes punishments, losses, and penalties. This is no brief for anarchy, as many libertarians insist; it’s a case for government limited constitutionally to undertaking its only valid purpose – the protection of individual rights (including property rights) against the initiation of force or fraud (whether from home or abroad) – and whose power is limited to penalizing, incarcerating or destroying real criminals (those who rape, rob, pillage, kill, or defraud), not market makers.
Although this distinction was well-understood by America’s founders (especially by Hamiltonian Federalists, who both respected property rights and opposed slavery), although it was incorporated in the original U.S. political system, and although it fostered a 19th Century of fast-spreading abundance and liberty, the distinction is now almost wholly lost on most people. By now we’ve had a century of premises and policies at odds with those of the original system, so that now people blithely conflate economic and political power and can’t tell the difference between capitalism (a free economy) and corporatism (a mixed economy).
In the first century of U.S. history citizens enjoyed the leadership of genuine statesmen – the wise, temperate, moral, and competent – largely because government was restricted to its only proper function; it was an age hospitable to wealth-makers, while the would-be takers of wealth were effectively handcuffed. In contrast, over the past century of U.S. history Americans have suffered under the corrupt machinations of politicians – the demagogic, hubristic, venal and incompetent – precisely because government’s role has been extended far beyond its proper functions into illegitimate ones; the recent age has been hostile to wealth-makers yet lucrative to wealth-takers and pull-peddlers. Today statists reign with impunity and handcuff wealth-makers. Meantime, lengthy political careers are erected by audacious takings – and few people seem bothered by this.
Recent political squabbles illustrate the confusions people have. President Obama, who got most of his 2008 campaign funds from millionaires and billionaires on Wall Street and at hedge funds, and voted for the TARP bailout just a month before winning the presidency, has since only intensified his hypocrisy and demagoguery, denouncing “fat cats” while repeatedly playing the “class warfare” card. Mr. Obama’s vile strategy seems heartily endorsed by many Americans, for despite his horrendous record of actual governance, most opinion polls this year consistently say that Obama will beat any likely GOP rival in 2012. Mr. Obama himself has accumulated millions, but not really from the private sector; he got them from sales of two badly (and ghost-?) written autobiographies that flew off the shelves only because he sought and won high political office.
Consider next the case of Jon Corzine, an avid Obama ally and fellow class-warrior with a history of both being rich and brow-beating the rich politically. Corzine headed the politically-connected Goldman Sachs, then became a U.S. Senator, then New Jersey’s Governor, and then, after a political defeat, re-entered the private sector – political ties and cronies in tow. He headed MF Global for just 19 months before driving it into bankruptcy; now he declares ignorance about the vanishing of $1.2 billion in segregated client funds. Corzine’s resume reveals him more as a taker than a maker; politically, he always demands more taxes from makers. He could be the poster child for cronyism and corporatism. If what he’s suspected of doing at MF Global he really did, he’d be jailed for years. Don’t count on it. Corzine leans left, so he’ll likely be left free.
Finally, take the case of Newt Gingrich, who despite posing earlier as the sober GOP candidate who’d run a positive campaign and wouldn’t trash his GOP rivals, this week chose to trash one of them: Mitt Romney, the only genuine wealth-maker among the entire GOP bunch. For context, note that when Gingrich first won a House seat in 1978 he was making a mere $10,000 a year; he went on to win nine more terms, the last couple as Speaker of the House (1995-1999). In 1994, the year before he became Speaker, Gingrich reported annual income of $675,000 a year – or many multiples of his official salary. In 1999 Gingrich was forced to resign from the GOP-controlled House and as Speaker, after being disciplined for wrongdoing (with a lop-sided vote of 395-28) and paying a $300,000 fine; it was the first time in U.S. history a Speaker was disciplined for ethical wrongdoing.
By the time Gingrich left as Speaker in 1999 – as a so-called public servant - his net worth had grown to astounding $7.5 million. What possible market value did Gingrich produce to attain such net worth while occupying political office?
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Since leaving public office in 1999 Mr. Gingrich has accumulated millions more by peddling his political influence with in-office Republicans, pushing for the destructive policy preferences of pharmaceutical firms, Wall Street banks, Freddie Mac, and the environmentalists. Now Gingrich wants to be president and, according to polls, religious conservatives simply adore him. They don’t mind that Gingrich is an inveterate sinner; they’re impressed that he so frequently seeks the Christian white-wash/hogwash of “forgiveness.” Gingrich is a taker, not a maker – but even worse, as he lacks the decency to refrain from assaulting makers.
Mitt Romney, in contrast, has been a genuine creator-maker of wealth who earned his millions honestly and productively, first as a management consultant and then as a venture capitalist. After earning graduate-level degrees at Harvard Law and Harvard Business School, for decades he worked for Boston Consulting Group (BCG) and Bain Capital in Boston. As a venture capitalist he helped finance, grow and restructure under-performing or failing firms, the most famous being Accuride, Brookstone, Domino’s Pizza, Sealy Corp, Sports Authority, Staples and Artisan Entertainment. In some cases layoffs were necessary to the process, but on the whole and long-term, Bain-backed firms under Romney made money, grew rapidly and expanded employment.
Romney ran unsuccessfully in 1994 trying to defeat incumbent Senator and liberal icon Ted Kennedy, but was elected Governor of Massachusetts for one term (2003-2007); in December 2005 Romney announced he wouldn’t seek re-election because he’d run for the GOP nomination for president in 2007-2008. Mr. Romney’s current net worth is estimated at $50-100 million – and there’s no evidence that he made any material sum of money due to his position in elected office (beyond his official salary).
This year Romney has been right to lambaste career politicians, from both parties, and attributing to them much of the blame for America’s current sorry state. He is especially justified in criticizing career-long takers like Gingrich. Asked recently whether Gingrich should give back the $1.6 million he took from Freddie Mac for promoting taxpayer-backed sub-prime mortgages during the George W. Bush years, Romney said yes. He reminded the interviewer that Gingrich himself, in debates, had called for jail terms for those like Rep. Barney Frank and Sen. Chris Dodd who actively enabled Fannie Mae and Freddie Mac and thus made possible the residential mortgage debacle, the home-price collapse and the financial crisis of 2008-2009. Yet somehow Gingrich believes himself to be immune from any blame. In retort, he said “If Governor Romney would like to give back all the money he has earned from bankrupting companies and laying off employees during his years at Bain Capital, then I’d be glad to listen to him.” In a debate a few days earlier, trying to defend his life as a career politician, Gingrich ridiculed Romney by saying the only reason he too wasn’t a career politician is that he failed in 1994 to defeat 32-year incumbent Ted Kennedy in a senatorial race.
That Gingrich would equate his record of taking with Romney’s record of making is truly despicable.
This is a career-long taker of wealth viciously and shamelessly assaulting a career-long maker of wealth, to the glee and applause of GOP conservatives, Barack Obama and the liberal media alike.
This is Newt Gingrich the demagogue, assaulting Mitt Romney the epitome of a good, productive capitalist. Indeed, this is the same smear campaign run against Mitt Romney by Ted Kennedy in 1994. Newt Gingrich is a corrupt, unprincipled power-luster who’ll say anything and take any position necessary to attain high office, and if he can’t do that, he seeks to take wealth by selling his access to political offices.
Nothing reveals more the deep rot within the GOP itself than the fact that its conservatives-evangelicals so despise wealth-makers like Mitt Romney and so sympathize with wealth-takers like Ted Kennedy, Barack Obama and Newt Gingrich.
http://www.forbes.com/sites/richardsalsman/2011/12/15/why-do-takers-obama-and-gingrich-attack-creators-like-romney/
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