July 24 2012
When Government Graft Is the Key to Business Success
Carrie L. Lukas
A friend who was a successful Hollywood child actor once explained why so many entertainers are liberal: Becoming a Hollywood star depends a lot on chance. There are many talented, attractive, hard-working, would-be actors. Just a handful “make it.” The sense that success or failure has little to do with merit lends itself to support for redistributionist policies.
President Obama revealed a similar perspective last week when he lambasted the idea that business owners and other successful people earned that outcome. "If you were successful, somebody along the line gave you some help," the President explained.
And it is no wonder that he has reached this conclusion given that his Administration is in the business of giving “help” to select businesses all the time.
As the President surveys the economy, he sees an array of economic entities that he has either bestowed with favors—taxpayer-backed loans, bailouts, waivers from regulations, government contracts, an infusion of stimulus cash—or that he has punished, with tax or regulatory penalties or by favoring their competition. Given that success or failure can be traced back to government policy and the meddling of individual politicians, the President feels it’s only right that government take a cut from the winners it created so it can also offer consolation prizes to the system’s casualties.
Consider just a few of the ways that this Administration has been in the business of picking winners and losers. Most famous are the bailouts of select (heavily unionized) auto companies and the energy programs, which have been a vehicle to shower taxpayer-backed loans on politically-connected businesses, several of which have since gone belly-up.
Yet a similar dynamic has taken place as the federal government begins setting rules for the health insurance of 310 million Americans. This new power means the mighty rulers in Washington are in the position to offer reprieves to select groups. Hundreds of waivers were offered to unions and companies, large and small. Others were turned away. The standards used to decide which should and shouldn’t be granted clemency are unclear. That’s the point: Government alone, not the individual businesses or organizations, has the power to dictate, which burdens will remain and which will be lifted, and therefore to radically change any business’s prospects.
The EPA is also using its power to crush some, while boosting others. For example, Congress recently held a hearing to consider the EPA’s new rules phasing out the use of chlorofluorocarbons (CFCs), which banned some asthma inhalers. Naturally, the EPA’s rules didn’t effected all companies equally, with the ban being phased in for different brands, so some manufacturers now have a captive market, and others are out of luck, and likely out of business.
Americans lamenting the sorry state of the economy need to look no further than this sad reality. Many may have been appalled to hear the President dismiss the idea of American initiative. Americans firmly believe in the ideal that any person, through hard work and her own ingenuity, can build something great, including great wealth, in this land of opportunity, which has historically attracted dreamers from around the globe. We consider entrepreneurs—and not just the Henry Fords, Bill Gates, and Steve Jobs, but the smaller success stories that bloom around the country of businessmen and women who prosper and create jobs for people everywhere—among our heroes.
This part of America is changing rapidly. President Obama’s statement may have been meant to defend regressive tax policy: We can take from the wealthy and give to everyone else because we were all a part of their success. Yet there is more to it than that. The President isn’t just making the obvious point that we are all affected by our environment, and our success is fueled by the nurturing of parents and communities. In this new America, fewer and fewer businesses really are making it on their own because government has taken control of just about everything, so is increasingly in the business of doling out success.
This isn’t bad tax policy. This is a mindset fundamentally at odds with what we’ve known as the American dream and is a threat to the very foundation of our country.