So President Barack Obama will rest his re-election hopes on class warfare. After his speech last week in Osawatomie, Kan., no other conclusion is possible. The astonishing message: Achieving success and wealth in the United States is vaguely disreputable.
He tried to make clear he was only singling out people who came by their wealth in dubious ways. But the qualifiers were overshadowed by another Obama litany bemoaning millionaires and billionaires and breathtaking greed. His root problem may be that he simply hates rich people. At least, they would be forgiven for believing it.
Michael Kinsley, nobodys idea of a conservative, came away with similar impressions. Arguing that the wealthy should pay more doesnt necessarily mean you hate the rich, he wrote in a Bloomberg column. But its hard to make that distinction if youre heaping abuse on them at the same time.
People really resent this, Kinsley wrote. (I)n addition to being unfair, conflating actual crooks and the innocent affluent makes it hard to claim that raising their taxes isnt punishment for some form of misbehavior. Taxes are not a punishment; they are a source of necessary revenue. But if you tie them to the financial scandal (as did Obama), they sound pretty punitive.
I wonder about the effect of this on young people, those who aspire to be the next Thomas Edison or Steve Jobs. Might they wonder that someday if they succeed, they could be targeted by a demagoguing politician?
From the beginning, Obama has been yoked to the demand-side parochialism that serves as his partys economic catechism. You stimulate the economy through government spending, period. Just hand out the money, move it into the hands of ordinary people. Its all about consumer demand.
This ignores the reality that supply can create demand, as Ive noted often in this space; in 1960, demand for a personal computer or iPhone was zero. In any case, supply and demand dont separate so neatly.
A manufacturer who buys a new machine does so because he wants to expand his business supply more of what he makes. But along the way he creates more demand in a wide array of industries the capital-goods company that builds the machine, as well as the companies that make the parts and the steel and the wiring and those that refine the oil for the fuel used by the trucks that ship all this stuff, and on and on.
Encouraging businesses to increase supply is critical to any reasonable economic policy. The business owners decision to increase supply, to roll the dice on the future, encompasses much more than calculations of demand. He must take into account taxes and regulatory requirements and insurance factors that increase risk and reduce return, whose future costs have been obscured for three years by an administration more hostile to business than any in living memory.
You get the impression Obama believes theres only a set amount of money and if someone gets more, its a subtraction from the whole. He speaks as if he doesnt understand the process of wealth creation.
When someone employs land, labor, capital and management talent to produce a good or service valued by the market at a sum greater than the sum of the parts, that additional increment isnt a take-away from someone else. Its created wealth, brought into existence through voluntary transactions. Its what the economy desperately needs more of. Its what an American president should be encouraging, not denigrating.