In September 2011 while running for US Senator in Massachusetts, Elizabeth Warren was recorded in a statement that became popular on the Internet. You can see the YouTube recording here.
There is nobody in this country who got rich on his own. Nobody. … You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.
In this statement, Senator Warren draws a line between two groups of people. First, there are the rich: “nobody in this country … got rich on his own.” Then there are taxpayers: “the rest of us”.
Senator Warren makes the point that the rich person’s factory uses services and infrastructure provided by government, paid for by “the rest of us”. Since she mentions nothing that the rich person brings to the table, the implication is that government is the key element in creating wealth, and that rich people should dial it down a notch and be properly grateful. There are some problems with this.
The rich versus taxpayers
First, the line drawn between the “rich” and “the rest of us” is both indelicate and false. Senator Warren says “the rest of us” pay for services, while the “rich” consume services. Actually, almost all of us pay the taxes that pay for government. I’m straining to think of who in the US, other than infants, does not pay taxes. If you’re jobless and without income, you probably still pay sales tax. When you buy gasoline, part of the price is a Federal tax of 18.4 cents per gallon. If you’re an adult and not in prison, it’s almost certain that you pay taxes.
In fact, the vast majority of tax revenue comes from the “rich”. For example: “According to the IRS, the top 1% of income earners for 2008 paid 38% of income tax revenue, while earning 20% of the income reported.” Go ahead, add in all the other sources of tax revenue: payroll, investment income…if it’s a tax paid by an individual, then most of it came from someone who is ‘rich’.
Government is the key
Second, there is the idea that the infrastructure and services provided by government are key to the success of the ‘rich’. If true, then we don’t need entrepreneurs or the capitalist system. Just provide government, and whammo: up pop the factories, and the iPads and Teslas start to flow. Right?
However, government by itself is insufficient. In fact, with government by itself the economy will eventually grind to a stop, probably because no one is doing productive work. Two cases make the point: China and Russia under a communist system. They both failed. The spring ran down, people were starving and unhappy. Once capitalism was restored, the economies rebounded. Government by itself is not enough: the key ingredient is inventors, investors, and risk takers. Capitalists. Without capitalism, an economy dies. Yes, government is needed, but it is not sufficient.
Be grateful
Third, Senator Warren counsels us to be grateful for what government provides. “You didn’t have to worry…because of the work the rest of us did.” In fact, government is a cash-driven business: taxes pay for everything the government does. Taxes are collected. Contracts are negotiated. Work is spec’d, performed, and approved. Checks are written and mailed. Government is a paid agent, not a charitable enterprise.
Additionally, in any government function, the various clients of government get their slice of the pie. MWBE (Minority and Women-owned Business Enterprises) get a slice of every public works project. The Davis–Bacon Act applies to every foot of roadway, tunnel and culvert. Politicians’ names are memorialized forever in place names across the country: Dan Ryan Expressway, Albert Rosellini Bridge, and Robert Moses State Park. People, there is no need for us to feel gratitude, we paid the fare.
We’re all on welfare now
The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’
— Ronald Reagan
There’s a dilemma when the government arrives, offering to help. Do you turn it down, out of pride or a sense of independence? Think of Clint Didier in his 2010 campaign for US Senate in Washington State. Didier was a rancher, and opposed to government handouts. However, he received farm subsidies and was criticized for the apparent hypocrisy. Dider pointed out that ranching is a business, and he competes against other ranchers. If other ranchers accept a subsidy and he does not, that puts him at a disadvantage. “If your neighbor has an advantage, he is in the position to buy the next farm up for sale.”
Think about the struggling grad student with a young family, opposed to GMO, opposed to use of animals in research, whatever. Research grants are available to help her up to the next rung on the professional ladder. What to do? The research grant requires her to do work that is ethically compromising. Accepting government help can be compromising.
The bottom line
Sen Warren offers a false morality. Yes, the rich did not get there on their own, but government can’t claim the credit. Government provides services as directed by taxpayers, paid for by taxpayers. Do not worship the government as a beneficent entity; government was paid, and extracted its full use of every cent. There is no need to feel queasy about taking government help, and no need to take any lip about it afterwards.