Monday, July 30, 2012

A customer is not providing a subsidy

In today's paper, Dan Bice reports that Obama critic Ken Dragotta has obtained government contracts. I suppose that some will believe that this is ironic or revealing.
Sorry. I can't see it. 

Here's the story. Dragotta has been publicly critical of President Obama's now infamous "you didn't build that" speech. Dragotta seems to believe that he and his colleagues - and not the federal government - built his business, Systems Engineering and Automation Corporation.
But, it turns out, that Dragotta's company has gotten contracts to provide machine parts for the Department of Defense. Hasn't he benefited from government largess? Isn't he a hypocrite?
No, he hasn't. No, he isn't. At least not because he got some government contracts.

The import of the President's remarks - no matter how you read them - is that people benefit from government and that this somehow obligates them to the state and gives it a form of "claim" on their success.

On one level, this is, as others have pointed out, banal and uncontroversial. No one disputes that there are goods and services - national defense would be one - that are best provided by the government. It is well and meet that people pay taxes to pay for them.

If that is all the President meant, his comments are completely irrelevant to any issue in the Presidential campaign. No one is calling for the abolition of government or the elimination of taxes. Paul Ryan's budget, for example, does no more than seek to return federal spending to a level that is more in keeping with its recent historical average.

The reason that the remarks have drawn fire is that - even when taken in context and given a forgiving reading - they do three things. First, they express disdain for success in business, mocking those who believe that their success came from working hard or being smart. Second, they misunderstand the role that public goods play in individual success. We all go to school and use roads. We don't all build thriving businesses. Finally, they suggest that someone who builds a successful business got something that he or she didn't "pay for" and, therefore, owes the state something - something even more than his or her share of the costs of roads, schools and other public goods. In other words, the claim of the state is open ended and limited only be the sufferance of the majority.

Whether that the last contention is true, government contracts are certainly not an example of government larges. Mr. Dragotta' business presumably received those contracts because he offered the best deal on the parts that the military required. He got those contracts because he earned them.
I have purchased an iPod, iPhone and iPad. I download music from iTunes. But I didn't build Apple and Apple doesn't owe me anything. I did it no favors. I paid for products that I thought were worth the price.

As did the Department of Defense when it purchased parts from Systems Engineering and Automation Corporation.
If Mr. Dragotta was arguing that the government ought not to exist or that it shouldn't build the submarines for which his parts are required, he's have some explaining to do. But, as far as I know, that was not his point. The fact that he was able to provide a product that the government wanted at a price it was willing to pay does not mean that the government "built" or has a claim on his business anymore than Apple owes me some free stock.

Cross posted at Purple Wisconsin.


Anonymous said...

Ah yes, but what is "his or her share" of the cost of public goods? That's the question.

No one's calling for the elimination of taxes? Paul Ryan is calling for the elimination of the corporation income tax, the estate tax, and taxes on dividends, capital gains, and interest. You could build up wealth within a company (subject only to an 8.5% VAT tax), distribute it to yourself tax-free (or sell the company, tax-free), and pass it on to your heirs tax-free. That's a pretty good start on the elimination of taxes. Wage slaves would continue to pay income taxes, of course. What was it Mrs. Helmsley said? "Only the little people pay taxes." And so it would be in Paul Ryan's world.

jp said...

Bice’s columns are biased products produced for his customer The Milwaukee Journal.
His writing should not be confused with serious reporting.

Dad29 said...

So, Anony, no individual income tax on any of that? The heirs don't pay income tax on receipt of "the company"?

You must have strong radio signals to beam it all in from your world.

Anonymous said...

Different anony here.

Dad29, king of the tin-foil hat club.

On to more important matters...The professor is a day late and a dollar short, per usual regarding this "controversy". But, as part of any partisan mouth machine, left or right, one must perpetuate the nonsense to enable it to remain in the American political consciousness. If it starts to die out like a fart in the wind, get out a blog post to maintain the stench of the "message".

Amazing how the intentional mischaracterization of Obama's remarks began rather innocuously.

Mind you, that Romney, within the context of his speech on the matter, but conveniently left out of his campaign commercials, essentially agree with Obama.

“There are a lot of people in government who help us and allow us to have an economy that works and allow entrepenuers and business leaders of various kinds to start businesses and create jobs. We all recognize that. That’s an important thing. A lot of people help you in a business. Perhaps the banks, the investors. There’s no question your mom and dad. Your school teachers. The people that provide roads, the fire, and the police. A lot of people help.”

I get it, though. Conservatives are trying to manufacture enough outrage to get this “controversy” into the media and damage him in the election. It’s an effort to paint a narrative of him as anti-business in the minds of voters. It has nothing to do with what he meant or even if you believe the claims about what he said.

And leave it to a supposed learned man by the name of Professor Esenberg to buy it hook, line, and sinker. Then again, he just can't help his tribalism.

"But...but...but everyone knows where Obama stands on this issue. He can try to claim he didn’t say anything of the sort, but when contrasted with his words and actions over four years, it adds up."

I can just hear this statement uttered by our dear professor, yet I think deep down he knows the intent and context of Obama's remarks, but for him it’s fun and intellectually profitable to pretend otherwise.

Again, I get that the part of Obama's speech makes a great soundbite with which to get across your message he is hostile to business interests. But anyone who actually believes that he meant government gets to take the credit for the success of private enterprise, give me a break.

That’s why when any politician makes what the other side deems is a verbal gaffe, an “insult” to the poor or to racial groups, an “attack” on corporate America, etc. and then proceed to blow it out of proportion during a campaign, I just have to laugh at the idiocy of it all.

Dad29 said...

Umnnnhhhh....AnonyDenier: you forgot to mention "taxes PAID" in your cute little mis-direction play.

Where did those moneys come from? Your planet, or ours?

Anonymous said...

Dad29: Not quite sure what you're talking about. I was summarizing the proposal of Paul Ryan, the bright young thing of the Republican Party, and perhaps its next Sarah Palin. He proposes the elimination of income tax on all of the things that I mentioned. It's in his Road Map. Look it up. So, yes, under his proposal, heirs who inherit stock in a company would pay no income tax on the company they inherit. (There's no income tax on inheritances under current law, only estate tax.) Then they'd never have to pay income tax on the dividends they'd receive, because dividends would be exempt from taxation under the Ryan plan. If they sell the stock, there'd be no income tax on capital gains. Again, look it up. I am not making this up.

That this guy Ryan is actually taken seriously, as some kind of thinker, is dumbfounding.

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