Magazine | August 13, 2012, Issue

What Can Capitalism Do for Me?

It’s the voter question Romney must answer

The presidential campaign has become, almost by accident, a debate about the future of capitalism. What it is not yet, and may not become, is an honest, intelligent, or productive debate.

Perhaps one should not expect more, given that the debate was set off by cheap shots and a gaffe. Both were President Obama’s, and they dominated the political conversation of mid-July. The president has been hammering Mitt Romney for enriching himself by immiserating other Americans: closing plants, laying people off, sending jobs overseas, all while putting his own money in a Swiss bank account. The Obama campaign is demanding that Romney release more tax returns, and suggesting that his refusal to do so means they would reveal something nefarious.

Almost none of these shots is sincere. People with business histories nearly identical to Romney’s but different political views have been more than welcome in the Obama White House. It is impossible to believe that Obama really thinks there is anything wrong with a businessman’s decision to site operations overseas. He has no proposals to stop or seriously impede the practice. He has called for changing the tax code to advertise his notional opposition to it, an idea that will be discarded as soon as it no longer helps him politically.

Governor Romney refuses to defend himself by arguing for the legitimacy of the common business practices that Obama has attacked. His campaign spokesmen have repeatedly dodged when asked to comment on outsourcing. Hence the unsatisfactory nature of the debate: Obama is saying things he knows to be false, but Romney will not say things he knows to be true.

Instead the Romney campaign has made responses that avoid engaging with any point of principle. It says that Romney’s critics have the details of his career wrong, that Obama has outsourced jobs himself, and that Obama has manufactured a controversy about Romney’s past in order to distract attention from the president’s responsibility for a dismal present. Romney and many of his allies also say that Obama’s failure is the result of his not understanding business.

Obama made that line of attack much easier for Romney on July 13, when he riffed, without a teleprompter, about successful people who believe they made it because they are smart and hard-working. No, said Obama: Many people who are smart and hard-working do not succeed. “If you were successful,” he continued, “somebody along the line gave you some help.” He then offered examples of this helpful “somebody,” who turned out to be the government in each case. It provided a “great teacher,” “this unbelievable American system,” and “roads and bridges.” “If you’ve got a business, you didn’t build that, somebody else made that happen.”

Romney suggested that Obama was denigrating business owners. Obama’s supporters responded that the Republicans were taking his remark out of context: The “that” in “somebody else made that happen” referred to the “roads and bridges” and the “system,” not to “a business.” Sensing political weakness, Obama retreated even further a week later: “What I said was together we build roads and we build bridges. That’s the point I’ve made millions of times, and by the way, that’s a point Mr. Romney has made as well, so this is just a bogus issue.”

#page#If Obama’s clarification were true, it would raise the question of why he thinks it worthwhile to make a non-controversial point “millions of times.” He finished his July 13 riff thus: “We rise or fall together as one nation and as one people, and that’s the reason I’m running for president, because I still believe in that idea: You’re not on your own, we’re in this together.” Since by the president’s admission Romney agrees with him on the point he was making, it would seem to follow that Obama can now stand down.

Obviously Obama was saying more than that. The remarks about rich people, bridges, and togetherness came right after, and were meant to support, his plan to let the top tax rates rise. Here then is Obama’s argument, with all the context his supporters could wish: Rich people are rich in important part because the government has done a lot for them, and therefore they should pay more to the government.

That summary is more than fair to Obama. His actual remarks ignore entirely the fact that rich people have been paying taxes to the government, and make it sound as though government help does more to account for their success than do their own intelligence and drive. He points out that a lot of smart, hard-working people aren’t rich; he doesn’t note that a lot of people who have had good teachers and roads aren’t either.

Even when patched up, Obama’s argument is weak. A heart surgeon may save many people’s lives and thus enable them to make any future income they earn. It does not follow that he is entitled to any share of that income he might want. There remains a point at which the patient can say, reasonably, No, that’s mine and even No, I earned that. It is also the case that much of what the government does — and especially what the federal government does — has no plausible role in making businesses successful. Medicare does not make the Waltons wealthier; neither does Temporary Assistance for Needy Families.

What’s most troubling about Obama’s argument is that it contains no limiting principle. Impose a 95 percent tax rate on all of Bill Gates’s income, and it will still be true that his remaining income is partly the result of the facts that he learned to read and add, his products can be shipped over roads, and so on. Nor does it apply only to high earners, even if they are the only people Obama currently expresses interest in taxing more. Microsoft employees are dependent on the roads to make their living, too.

Nobody within the mainstream of American political life denies that people, including rich people, have an obligation to pay taxes to the government so that it can do things that need doing and no other institution can do. Nobody explicitly denies, either, that people have a claim on their own money that has to be defeated by good reasons to justify their being taxed. The purpose of President Obama’s argument was and is to lower the bar of justification: to weaken the presumption that people should keep their own money.

President Obama, then, is running as a man who is against features of capitalism usually perceived as its downsides, somewhat critical of the entrepreneurs at its heart, supportive of government activism to soften its effects, and unwilling to spell out any principled limits to that activism. His rhetorical stance toward business is more hostile than that of the previous Democratic president, Bill Clinton. This is not surprising: Clinton never described working for a business as being “behind enemy lines,” as Obama famously did in his first memoir. On the other hand, Obama’s rhetoric falls well short of FDR’s attack on “economic royalists” whom he intended to “master.” Obama’s campaign marks him as a run-of-the-mill welfare-state liberal. It is what welfare-state liberalism looks like when presiding over a weak economy.

#page#Americans do not especially like the idea of a larger government, and they are suspicious of Democrats who seem enthusiastic about taxation. Criticizing these unattractive elements of Obama’s politics is an indispensable part of a campaign to unseat him. Romney is delivering this critique with increasing force and even deftness.

What the campaign lacks is a complement to this attack: a set of policies that address the public concerns that Obama is exploiting in his attack on Romney but build on the virtues of free markets. Romney needs, in other words, to advance capitalist solutions to the disappointments of capitalism.

Obamacare rests on the premise that markets cannot work in health care, or at least that they cannot work without quite a bit of central direction. They will leave too many people without insurance. A lot of people, even if they are not liberals, share that worry. They do not believe that increased initiative by individuals will solve the problem. There are conservative ideas about how to make health insurance more accessible by reducing its costs. Romney has, however, been reticent about what he would do.

Conservatives can respond to public anxiety about trade, too, without succumbing to protectionism. A lot of that anxiety is based on voters’ worries about an economy that has not produced wage gains for most people for more than a decade. They may not approve of Obama’s economic record, but they know that this problem precedes his presidency — and again they have reason to doubt that individual initiative alone can fix it. Romney rarely alludes to this concern, let alone suggests in any sustained way that his reforms of monetary, tax, budget, and regulatory policy would allay it.

Many friendly observers of the Romney campaign will at this point have two responses. The first is that Romney has offered many policy specifics. That’s true — no previous presidential candidate has talked about entitlement reform in as much detail as Romney — but it’s also true that on a wide range of voter concerns he has left the rhetorical and policy field to Obama. People are more likely to give Medicare reform a hearing if the person advancing it seems to care about making sure people have affordable health care.

Which brings us to the second response, this one usually offered with self-conscious sophistication: Most voters are not policy wonks, and offering ten-point plans on six issues will not win any votes. The premise is sound, but the conclusion does not follow from it. The political point of offering an agenda, beyond making it easier to govern if the candidate wins, is to affect the way people perceive him. In all kinds of indirect ways, it makes him look like someone who will be appropriately active in office, who cares about voters and understands their concerns, who has solutions.

To respond to Obama’s attacks on outsourcing and Bain, Romney ought to unveil something more compelling than another tax return.

Ramesh Ponnuru — Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg View, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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