Barack Obama keeps saying we need to tax the rich, most recently in his State of the Union. He really believes that federal spending can create jobs, and that he can spend our money better than we can to prop up GM, “create” green jobs, manage health care decisions, or do much more.
His speech, in addition to Occupy Wall Street’s denigration of the 1%, raises important questions about how and why some people are so rich, and what should be done about it. With unemployment among young people so high, many have an entitlement attitude instead of an entrepreneurial mindset.
Why are some people so rich? Listening to Obama might cause you to think the rich only get that way through exploitation or corruption. However, the most successful people actually become rich by serving others. An entrepreneurial mindset drives them to make something or provide a service that is desired, and find a new or better way to provide it. This is not only moral, but essential to the flourishing of a free market system. Mitt Romney said last week “I’ve witnessed our free enterprise as it rewards the hard work of many and creates prosperity for all.” But what does the entrepreneurial mindset mean?
There is nothing wrong with being rich when honestly earned through being a “maker” as opposed to a “taker.” Makers use their entrepreneurial mindset to provide something people want and are willing to buy. Facebook, Apple, Amazon, Southwest Airlines, and Chick-fil-a are examples of makers who provide a service that makes our lives better. But the result is also financial rewards through profits for those who took risks to provide that service in the first place.
Obama says he wants to reward job creators, but taxing them heavily is not a reward. Plus, he proposed all kinds of tax breaks for hiring and manufacturing while simultaneously saying that those who earn more than $1 million per year should get no breaks. We can’t have it both ways.
In contrast, takers like GM and bailed-out banks use other people’s money to provide a service or get ahead. Those with an entitlement attitude who seek profit through government subsidies or loans (ahem…Solyndra) fall in this category. As Stephen Moore reports, our country is trending toward many more takers than makers. And it’s becoming more difficult to be a maker because of increased regulations. Start-ups are down 23 percent in the last five years.
Romney critiques takers by comparing Obama’s “record of crony capitalism with my record of free market success.” Essentially, Romney is contrasting makers and takers in this analogy. The State of the Union contained many ideas that perpetuate the entitlement attitude as well as proposals that squelch free market success through higher taxes and further regulations.
With the distortion of free markets by government intervention and crony capitalism, young people are confused about the future of freedom and the American Dream. It’s not fashionable to have an entrepreneurial mindset and strive to be rich anymore. The hurdles to successful entrepreneurship are becoming higher and higher.
Obama insisted last night that we are not a country in decline, yet the U.S. continues to decline in economic freedom rankings. I think this administration measures whether or not we are in decline by the amount of federal spending. It doesn’t have to be this way. Our country can return to an entrepreneurial mindset where makers are welcomed and celebrated (yes, the rich), and takers with an entitlement attitude are frowned upon and discouraged. The government is the problem, not the solution.