Romney and the 47 Percent

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them. . . . These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn't connect. . . . And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives.

This quote is from the infamous surreptitious video made of Mitt Romney's speech at a fundraiser last spring. What are we to make of it?

The first thing to note is that Romney is typical of the right wing of the ruling elite, which often portrays lower income beneficiaries of the welfare state as a threat to the established order. In this view, they are dependent on government; they wish to remain that way; and they see themselves as victims.

Of course many people who qualify for welfare-state benefits take advantage of them, but it doesn't follow that they want to remain in that postion. Katherine S. Newman, author of Chutes and Ladders: Navigating the Low-Wage Labor Market and No Shame in My Game: The Working Poor in the Inner City, maintains that low-income people are far more industrious and ambitious, as well as determined to achieve independence, than the public generally believes. (Listen to her EconTalk conversation with Russ Roberts.)

Far less interested in independence from government are the large corporations, banks and otherwise, that exist by virtue of government contracts, guarantees, bailouts, and intellectual "property." The government's security establishment provides untold opportunities for companies to live off the taxpayers, which is much more secure than attempting to achieve market share among consenting consumers. (See Nick Turse's The Complex: How the Military Invades Our Everyday Lives.)

Strangely, Romney's speech had nothing to say about that sort of corrupting dependence.

As for feeling like victims, the working poor didn't seem to display this attitude to Newman during her extensive field research. Yet why wouldn't they be justified in regarding themselves as such? The corporate state, with its myriad barriers to competitive economic activity, including self-employment, blocks many routes to prosperity.

By the way, while many lower income people pay no income tax, they do get hit with the regressive payroll (FICA) tax, which until recently helped fund the government's general operations. While formally, employers pay one half of that tax, in fact most or all of the employer's share comes out of workers' pay.

Romney is trying to distract attention with a 14-year-old audio of then-State Senator Barack Obama endorsing a mild form of income "redistribution." Government distribution of wealth, of course, is objectionable, just as government itself is. But Romney to date has had nothing to say about the systematic upward transfer of wealth that the corporate state effects in a variety of way. To offer just two examples: Intellectual "property" law prohibits free competition, creates artificial scarcities and thus extra-market profits, and privatizes value that would have naturally been "socialized" in a freed market. Second, barriers to competition (again, including self-employment) reduce the bidding for labor and hence workers' bargaining power, resulting in lower wages than would otherwise be seen in a freed market. (See these articles by Charles W. Johnson and Gary Chartier.)

It is certainly true that no one is entitled to other people's stuff. That is just as true of the powerful and well-connected business interests that through government intervention amass great wealth at the expense of the rest of us.

When Romney begins talking about that sort of "redistribution of wealth" I will start to take him seriously.