Saturday, September 22, 2012

Jason Lee Byas: Romney, Obama and the Real Entitlement Class

Mitt Romney has come under fire for comments he made at a fundraiser last spring that recently surfaced on the internet. They express his fear that a major roadblock for his campaign will be the poorest 47% of Americans, whom he states “believe that they are entitled” and will “vote for the President no matter what,” because Romney will “never convince them to take personal responsibility for their own lives.”
Romney is certainly right that there exists an entitlement class with strong political power, but he’s wrong about who it is. Also, while Obama doesn’t have anything to fear from the real one, neither does Romney.
In the 2008 financial collapse, many of those 47% that Romney spoke of lost their jobs. There was a social safety net for them to fall back on, but it was nothing compared to the $700 billion that large banks received in bailouts or the $25 billion that went to the auto industry.
Large banks and auto manufacturers are far from the only members of this entitlement class of government dependents, however. An exhaustive list would span several volumes, but two of the most notable members are big pharmaceutical companies and what President Eisenhower referred to as “the Military-Industrial Complex.”
Romney would likely respond as he did in a 2008 Republican primary debate, telling us not to “turn the pharmaceutical companies into the bad guys,” given the crucial service they provide. Indeed, that modern medicine is able to save the lives of countless people every day is a miracle. It would just be nice if large pharmaceutical companies didn’t try to prevent that.
A very basic lesson of economics is that competition leads to lower prices, whereas monopolies are able to extract higher prices at the expense of consumers. Through drug patents, pharmaceutical companies depend on government to maintain monopolies over specific products. This protection from competition is further bolstered by the FDA, which is regularly dominated by the leaders of the very industries it’s supposed to regulate. Inevitably, the costs of regulation are easily absorbed by larger companies, who benefit from driving potential competitors out of the market.
It’s not just that pharmaceutical companies feel entitled to use the government to sell at prices much higher than they could ever hope to in a freed market. They also do so literally at the expense of many people’s lives.
Another industry steeped in government dependency and profit from death is defense contracting. Every dollar spent on a bomb, tank or predator drone goes in someone’s pockets. As you might expect, the market for civilian tanks isn’t especially profitable. Large weapons contractors and mercenaries (like the ones currently occupying Iraq) are completely dependent on government in a way that even the other industries mentioned are not: For the very existence of a demand for their product.
Let’s reflect on what it really means to feel “entitled.” Remember that when opponents of the bailouts voiced disagreement, they were quickly shut down by claims that certain financial institutions were “too big to fail.” In other words, when they take risks and make mistakes, paying for those mistakes themselves is unthinkable. Holders of patents view their monopoly status as a fundamental right, equating competition to theft. No matter how large the deficit looms, we are told that cuts to military spending must be completely off the table.
Take a second and ask yourself who has more of an “entitlement” mentality: These industries, or people who accept food stamps because it’s preferable to starving?
Whether or not Romney or Obama would have any success in trying to convince the real entitlement class “to take personal responsibility for their own lives,” neither seems to have any interest in doing so. Both support the bank bailouts, continued war, and the patent system.
That’s because while the groups I’ve mentioned are dependent on government, those wanting to fill the seats of government are in turn dependent on them. This can be seen from even a moment’s glance at each candidate’s list of top donors.
One conclusion that might be made from this is the need to reform the system and “get the money out of politics.” However well intentioned, this response is mistaken.
The very existence of a centralized power structure incentivizes using it to concentrate benefits and disperse costs. A market free from a wealthy entitlement class can only come from one completely free from government.

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