What Good Are Republicans if They Can’t Protect Us from Class Warfare?

November 9, 2012 • Commentary
This article appeared on Forbes​.com on November 9, 2012.

Mitt Romney is a good man, an extraordinarily competent man, but this presidential election was his to lose. One would have to go back more than seven decades to find another incumbent who won when there was a bad economy.

While Obama’s 2012 vote total, 60.7 million, was down 8.7 million from 2008, this didn’t help Romney whose 57.8 million vote total was actually 2.1 million lower than John McCain’s 59.9 million in 2008 (and 4.2 million lower than George W. Bush’s 62 million in 2004).

Romney lost for several reasons. The bulk of his primary advertising seems to have been spent attacking opponents, rather than defining himself, with the consequence that by the time the primaries were over, his reputation was a blank slate as far as the general public was concerned — an irresistible target for Obama’s early advertising blitz that defined him as an out‐​of‐​touch rich guy who destroyed American jobs. Romney was on the defensive from the get‐​go.

Moreover, Romney didn’t overcome the GOP’s perceived hostility to immigrants that, among other things, probably helped turn Hispanics against him, dooming his prospects in many states. Since immigrants are a huge plus for our economy, Romney might have proposed boldly phasing out immigration quotas while restoring work requirements for welfare.

Perhaps Romney’s most critical weakness was his inability to defend American taxpayers from Obama’s relentless class warfare, the moral crusade to drain more and more revenue out of the private sector. Romney appeared helpless when Obama accused him of proposing generous tax cuts! It was embarrassing to see Romney backtrack as if he were guilty of something, saying he wasn’t really cutting taxes — he was just taking away deductions, especially for the rich.

Amidst America’s alarming economic stagnation, Romney failed to champion a program for economic growth via across‐​the‐​board tax cuts like Ronald Reagan had done with spectacular success three decades ago. Incredibly, Romney hardly said a word about tax cuts at the Republican National Convention or in his stump speeches.

If the Republican Party cannot defend American taxpayers against endless assaults from the bloated public sector, then what good is it?

Class warfare involves a moral appeal (“fairness”), and it must be met by a moral appeal (liberty).

Capitalism is based on equal rights and peaceful, voluntary dealings. Consumers are free to choose among their options, workers are free to choose, everyone is free to choose.

People choose based on their values, their personality, knowledge, location and all sorts of other factors, that differ from one person to another. Some people take more initiative than others. Some people work harder than others. Some people are dependable, while others aren’t. Some people are constantly learning, while others watch TV or hang out somewhere. Some people take care of their health, while others suffer the consequences of bad habits. Some people manage to save money on a tight budget, while others always live from paycheck to paycheck. Considering all the different choices people make, it’s no wonder economic outcomes vary considerably.

The effects of different choices are subject to compounding. An individual who continuously takes initiative, gains more skills, works hard and so on, builds a foundation for later success. He or she is likely to make more friends among prospective mentors, employers, partners and customers — multiplying future options. As the years go by, everything begins to come together, and careers take off.

Of course, it always helps to have some good luck, but as we know, chance favors a prepared mind. If an individual hadn’t developed good work habits, made many friends, acquired considerable knowledge and skills, it wouldn’t have been possible to profit from a lucky break. That’s how many people seem to make their own luck.

Those who are successful have no reason to apologize for their good choices. If they become wealthy, they certainly don’t need to apologize for that. They should be proud of their contributions to a growing economy and more productive private sector jobs.

Successful people aren’t responsible for the problems of those — free adults, not slaves — who made bad choices. Probably most if not all of us have encouraged somebody else to break a bad habit. If we forcibly tried to prevent a family member, close friend or co‐​worker from doing drugs, for instance, we might have provoked anger, perhaps even violence. There are limits to how much one person can do for another who’s determined to continue bad habits. We don’t have a psychiatrist’s power to order an individual into an institution.

Since everyone is responsible for their own choices, how can some people legitimately claim the fruits of other people’s labor? By what right can government seize money earned through voluntary and peaceful dealings? Such seizures are robbery, and they’re wrong.

Also, keep in mind that all of us in the private sector are paid by consumers who, through their purchasing decisions, decide which companies will prosper and how much money they’ll have for paying investors, executives, employees, venders, etc. American entrepreneurs have amassed vast fortunes by figuring out how to give large numbers of consumers what they want, and there’s nothing unfair about that. Indeed, successful entrepreneurs typically try to have their money make more money by investing it in other companies with potential to create growth and jobs.

Three hundred years ago, entrepreneurs catered to royals who bought lavish furniture, porcelains, tapestries and jewels for their palaces. Later, entrepreneurs pioneered mass production and catered to ordinary folks. These entrepreneurs helped raise living standards by producing economical breakfast cereals, condensed soups, canned beans, bottled sauces, radios, record players, laptops, athletic shoes, iPods, cell phones and so much more.

John D. Rockefeller became wealthy by driving down the cost of kerosene, his principal product, about 90 percent — making it more affordable for everyone. He was one of America’s greatest discounters.

Initially, most automobiles were made for the rich, but Henry Ford amassed a fortune by producing cheap cars for the millions.

William Wrigley started out selling baking powder, and he thought that including a free pack of chewing gum would help. When the chewing gum proved more popular than the baking powder, he dropped the baking powder and made his fortune producing chewing gum. He used some of his money to build the gleaming white Wrigley Building, a major Chicago landmark.

In Lancaster, Pennsylvania, Frank W. Woolworth opened the “Great Five Cent Store” that pioneered the marketing of cheap stuff for poor people. Their purchases enabled him to build a cathedral‐​like building that still stands in Lower Manhattan.

Class warriors have suggested that entrepreneurs control consumers, but the Austrian economist Ludwig von Mises exploded that fallacy: “A ‘chocolate king’ has no power over the consumers, his patrons. He provides them with chocolate of the best possible quality and at the cheapest price. He does not rule the consumers, he serves them. The consumers are not tied to him. They are free to stop patronizing his shops. He loses his ‘kingdom’ if the consumers prefer to spend their money elsewhere.”

Class warfare isn’t a matter of high‐​minded ideals like “social justice.” It’s a matter of nasty political struggles, as politicians use government power to seize property from their adversaries and distribute it among their supporters.

In the Soviet Union, the communist regime seized property from so‐​called “rich” people who were actually Ukrainian peasants with a cow, and millions starved to death.

The power to seize somebody else’s property promotes chronic corruption. For instance, Zaire’s Mobutu Sese Seko, who gained power in a military coup, enriched himself by seizing practically everything in sight. Economist George Ayittey reported that “Embezzlement, fraud, theft, illicit economic ventures, including widespread smuggling and export‐​import swindles, were pandemic.” Interviewed on CBS 60 Minutes, Mobutu bragged that he was worth some $8 billion. He owned properties, including mansions and vineyards, in Belgium, France, Portugal, Spain and Switzerland.

Communist China continues to honor the Marxist mantra “from each according to his ability, to each according to his need” — but the New York Times recently reported that the rulers seem to live by different rules. China’s prime minister Wen Jiabao, his family and relatives mysteriously gained control of assets worth billions. They have used secret bank accounts to conceal ownership of resorts, telecommunication companies, infrastructure projects and more. The New York Times quoted an unnamed communist official as saying, “In the senior leadership, there’s no family that doesn’t have these problems.”

Naturally, private citizens fear and resent seizures. In 1970, as Chile’s Marxist‐​Leninist President Salvatore Allende promoted expropriation in the name of social justice, land owners armed themselves. Shopkeepers organized resistance. Families hid their silver and jewels. Many people fled the country. There were strikes, riots, runaway inflation and eventually a military coup in which Allende was killed.

Because Obama and so many other politicians have promote class warfare, the public must be educated about its hazards.

Ronald Reagan was especially good at this. He had an amazing command of the obvious.

For example, he explained in plain language that “The more government takes in taxes, the less incentive people have to work. What coal miner or assembly‐​line worker jumps at the offer of overtime when he knows Uncle Sam is going to take sixty percent or more of his extra pay? Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.

“If, on the other hand,” Reagan continued, “you reduce tax rates and allow people to spend or save more of what they earn, they’ll become more industrious; they’ll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all.”

When Reagan took office in 1981, he proposed a 10 percent across‐​the‐​board personal income tax cut each year for three years. There didn’t seem to be much, if any, political pressure for enacting steep progressive rates, because the top rate was already 70 percent. Reagan encountered resistance to the magnitude of the tax cut, and he compromised at 25 percent. This tax cut helped spark one of the most prosperous eras in U.S. history.

Reagan faced political pressure to push more of the tax burden onto business, a common target for class warriors. Here’s how he educated Americans on common fallacies about business taxes, in a 1981 speech:

“Some say shift the tax burden to business and industry, but business doesn’t pay taxes. Oh, don’t get the wrong idea. Business is being taxed, so much that we’re being priced out of the world market. But business must pass its costs of operations — and that includes taxes — on to the customer in the price of the product. Only people pay taxes, all the taxes. Government just uses business in a kind of sneaky way to help collect the taxes. They’re hidden in the price; we aren’t aware of how much tax we actually pay.”

This is such simple language, it might seem unexceptional, but few U.S. presidents have said anything like it.

If GOP leaders are ever going to learn how to protect American taxpayers from class warfare, now is the time. There’s sure to be plenty of it during the next four years, starting sooner rather than later.

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