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Elizabeth Warren’s Piffle
The folly of a supposed “underlying social contract.”


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Rich Lowry

A campaign riff from the Massachusetts Senate candidate Elizabeth Warren has rocketed around the Internet and been greeted by the Left as a rhetorical triumph practically on par with Teddy Kennedy’s “The Dream Shall Never Die” speech.

Warren’s theme is that the rich should pay more taxes as part of “the underlying social contract.” This is taken as a slam-dunk rejoinder to the charge that Pres. Barack Obama’s proposed new tax increases are “class warfare.” A Democrat and former honcho of the Consumer Financial Protection Bureau, Warren is the Left’s great populist hope now that John Edwards has retired from the field.

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As a sincere and substantive person, Warren isn’t as slick as Edwards, and presumably she pays less to get her hair done. But she’s just as jejune.

“I hear all this, you know, ‘Well, this is class warfare,’” she says of Democratic tax policy. “No. There is nobody in this country who got rich on his own. Nobody.”

She goes on to cite the proverbial factory owner who relies on public services like roads, schools, and cops. Warren could just as easily have mentioned as contributors to the factory owner’s success freedom and a government strictly bound by the rule of law, but they must not have been top of mind.

She argued that these goods are things “the rest of us paid for,” the “rest of us did.” When it comes to federal income taxes — the focus of the current debate — this isn’t right. About half the country doesn’t pay them, and the top 10 percent pays about 70 percent. Insofar as those taxes fund Warren’s public goods, her rich industrialist disproportionately contributes already.

Her remarks and the celebration of them capture the Left’s romance with collective action over individual initiative. Most people don’t look at a successful manufacturer and say, “Yeah, but he’d be nothing without a surface-transportation network.” Although all of us (not just the rich) travel roads and bridges, few of us open factories.

Focusing on infrastructure as the crucial support of entrepreneurial activity is like crediting the guy who built young Bill Gates’s garage with the start of Microsoft. Yes, Gates needed a roof over his head, and garages are useful. But it was Gates who had the ambition to do more in his garage than store his car and lawn-care products. Incalculably more important than his physical surroundings were his imagination and business sense.

Could Gates have done it in Mogadishu or Peshawar? Certainly not. But the goods cited by Warren as the foundation of a workable business environment are extremely minimal. If all the government did was build roads, educate kids, and provide for public order, it’d be a libertarian paradise almost up to the standards of Ron Paul. Then our government could easily be funded exclusively by taxes on the rich.

In the real world, Warren wants her factory owner to fund runaway spending that threatens the country’s future, unreformed entitlement programs, a public sector that is often effectively a jobs program for the Democratic party, a failing education system, subsidies for other people’s factories so long as they are “green,” and a burgeoning regulatory apparatus crimping his business. All of this is supposed to activate the owner’s sense of mutual obligation?

Besides, why is anyone musing about raising the taxes of factory owners in a stagnant economy? Warren’s acclaimed remarks demonstrate a concern for social justice over economics. She’s evidently not worried about the practical consequences. According to the census, one in five American children is living in poverty, and the average earnings of the typical man working full time are beneath 1978 levels. Anyone worried about our social contract should care first of all about creating more economic growth, and more factory owners.

Elizabeth Warren, and President Obama with her, looks at business success largely as an occasion for higher taxation. Whatever this is, it is not, as the president would have it, simply an exercise in math.

— Rich Lowry is the editor of National Review. He can be reached via e-mail: [email protected] © 2011 by King Features Syndicate



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