The ubiquitous “47% discourse” is generating commentary ranging from a focus on short term political tactics to broad exegetic discussions about political theory. One line of analysis concerns the utility of a distorted perspective defining what constitutes “redistribution” of wealth and for what legitimate purposes that might be done.
How is it possible for any sentient being to hold up a sign in 2010 saying “Keep the Government Out of My Medicare,” or for a presidential candidate to offer this message: “Mitt Romney has a different idea. He knows that we need to foster growth and create wealth, not redistribute wealth, if our economy is to grow the way it has in the past.” [USAToday] The paucity of thought is obvious in the first example, not so evident in the second.
Message to the supposedly business oriented Republican Party: All economic transactions are a transference and redistribution of wealth.
One of the more interesting aspects of the ideological arguments between Republicans and Democrats is the variation in the meaning of the terms of the debate. For example, the manipulation of the term “Entitlement” has reverts the meaning to a definition held in the late 19th century — i.e. any government activity designed to sustain individuals in poverty, or likely to become poor. A brief historical review —
The Social Security Example
The argument took flight when the Roosevelt Administration proposed the enactment of legislation to create Social Security in the 1930’s. The right wing Liberty League, small businesses in the American south, and the National Association of Manufacturers were vehemently opposed to the implementation of the program. [DB]
“James A. Emery, chief counsel for NAM, articulated the views of the opposition business well when in 1935 he declared: “General recovery depends on our ability to enlarge our production, to employ more people, and to cut down and not raise up the price of goods. Every time we increase the price of goods in a diminishing market, we are diminishing the possibility of employing other men, because we are making it more difficult, not less, to sell goods. Until we can market goods, we cannot employ men.” [Ezine]
The Liberty League, NAM, and their allies argued that transferring government resources to, and the creation of payroll taxes for, the sustenance of Social Security would be such a burden on American business as to forestall any economic recovery. Conservatives of the time also argued that Social Security reduces individual ownership by redistributing wealth from working people to retired persons, thereby bypassing the “free market.” The “free market” in this instance is, of course, banks and brokerages which offer retirement savings programs.
Failing to demonstrate that Social Security didn’t work to keep elderly U.S. citizens from abject poverty, the opponents shifted in the 1980’s back to the free market line of attack. The political verbiage included messages like “Social Security is Going Bankrupt,” and “You’ll Get A Better Return on Private Savings Accounts.” Both are demonstrably false, not that the Right Wing is particularly interested in the facts of the matter. This, combined with the “Creeping Socialism” line, is a classic reversion to the rhetoric of the Depression Era, with bit of xenophobia tossed in for good measure: “Warning us against the dangers of Social Security in 1935, GOP Sen. Daniel Hastings stated, “I fear it may end the progress of a great country and bring its people to the level of the average European.” [CCT]
Packing the transference of wealth argument into the same suitcase as their “creeping Socialism” attack, the Republicans added another element by seeking to reclassify Social Security as an “entitlement” program — changing the definition from meaning that one was entitled to benefits because the person had paid payroll taxes to support the Trust Funds during their working lives to one which conflated it with welfare — a classic conflation dating back to the Liberty League and NAM opposition of the 1930’s.
The bottom line is still the bottom line. The opponents of Social Security in the 21st century are the ideological descendents of the opponents of Social Security of the 1930’s — both seek to establish a system in which the banks and financial institutions are the means by which wealth is distributed — to their profit; and not one in which a non-profit agency (in this case government) is responsible for the distribution.
Out of Thin Air
Second message to supposedly business oriented Republicans is wealth cannot be created if it is not distributed. The question is not IF wealth will be distributed but where. The only thing that generally happens over the long haul to wealth that is not distributed in some way is shrinkage. Inflation happens.
Those seeking to foster growth and create wealth have no choice but to redistribute it. Where? Consider the following illustration of the income level of tax return filers in 2009.
We know that in 2009, the most recent for which complete data is available from the Internal Revenue Service, some 8,461,137 filers reported adjusted gross income of less than $50,000. 6,738,675 households filing income tax returns reported adjusted gross income between $50,000 and $200,000. That leaves approximately 338,103 homes in which the adjusted gross income over $200,000 annually. [IRS]
How does it make any economic sense whatsoever to argue that promoting (distributing) more accumulation of wealth within a small minority of the total number of households will cause economic growth?
In 2011 there were 2,966,133 automobiles manufactured in the United States of America. [WrldMtr] Those reporting income above $200,000 per year would have had to purchase about 9 cars apiece in one year to clear the sales lots. What makes more sense in terms of economic growth — having the top 2% accumulate more wealth, or pursuing policies which leave more discretionary income in the hands of those reporting less than $200,000 annual income?
All the lamentations of the arch conservatives clutching the economic elitism of a bygone era notwithstanding, in the simplest possible terms — the U.S. economy will not see significant growth if we “Double Down on Trickle Down.”