By Teresa Welsh |
Yes, there are "takers" in the American economy, but they're not the poor folks Mitt Romney referenced in his now-infamous "47 percent" comments. Instead, those takers look a lot more like Romney himself, and his $50,000-a-plate campaign donors.
Since the beginning of the Reagan Era, the American economy has grown dramatically. American productivity has grown dramatically. But American wages—for lower- and middle-class workers—have mostly stagnated. The economic gains of the past 35 years went almost entirely to the top: The richest fifth of Americans saw their share of the country's after-tax income grow by 10 percentage points between 1979 and 2007. Everybody else's share dropped.
Despite the charges of "socialism" and "redistribution" leveled at President Barack Obama, the trend is little changed under his watch. In 2010—the first official year of "recovery" following the recession that ended the Bush administration—the richest 1 percent of Americans reaped 93 percent of income gains. That's redistribution, all right, but not in the way most people think of it.
There are many reasons for the disparity, some legal, some cultural. Unions lost much of their power to fight for higher wages. Tax policies were rewritten to favor the wealthy. CEOs stopped being community-minded—and stopped being embarrassed when their pay grew much faster than worker wages. An ethic of "wealth creation" was replaced by one of "wealth extraction."
Romney's career at Bain Capital is an example of this phenomenon. His father got rich building cars at American Motors. Mitt made his fortune buying existing companies—such as a now-defunct Kansas City mill—loading them down with debt, then collecting profits and management fees even as workers lost their jobs. Was Romney a "maker" or "taker" in that scenario?
As a presidential candidate, Romney is no better. His current proposals would exacerbate such problems—giving even more tax cuts to the rich while undermining the safety net offered by Medicare, Medicaid, and Social Security.
A balanced free-market economy requires capitalists to invest in and profit from ideas—as well as workers to turn those ideas into reality: When everything is working right, both groups are making and taking. Right now, only one group is really benefitting. Romney is on the wrong side of that equation.
About Joel Mathis National Politics Columnist for Scripps Howard News Service
Daniel Mitchell Fellow at the Cato Institute
Phil Kerpen President of American Commitment
Daniel S. Hamermesh Professor of Economics at the University of Texas at Austin and Royal Holloway University of London