A member of Rockridge Nation recently alerted me to a column on SmartMoney.com assailing the "entitlement mentality." Its author, a hedge fund manager, writes that "the problem in America isn't with those who are succeeding, but with those who are struggling." These struggling people, he asserts, wrongly believe they are entitled to "the things necessary to live." From this classic strict father explanation, we can see how conservatives use language to mislead and how we can challenge it.
In his essay "The Entitlement Mentality Doesn't Fly in Investing," Jonathan Hoenig writes to his audience of investors, "Aren't we all looking to get in on the next Microsoft (MSFT) or Google (GOOG)?" He then proceeds to write that investors who profit from such investments "rightfully feel pride in our accomplishments" because "we earned it." He laments that people "resent" successful CEOs because of their wealth.
After bemoaning the plight of the millionaire and billionaire CEOs, who apparently are very sensitive to criticism, Hoenig prescribes tough love for "manufacturing workers" who need the blunt message that "they need to learn new skills." "Families [that] have trouble making ends meet" need to be told to be "responsible for choosing where to put their money."
The "entitlement mentality" that Hoenig then outlines includes "welfare, Social Security, Medicare, Medicaid" and subsidies for individual farmers.
Let's look at what Hoenig's framing of entitlements leaves out. He blames individual farmers for claiming that they are "entitled" to be farmers, despite the greater efficiency of agribusiness and foreign farmers. He fails to note that agribusiness is among the largest beneficiaries of government subsidies. The libertarian Cato Institute found in a 1995 study that agribusiness giant Archer Daniels Midland had received billions in government subsidies over the years, a practice that the environmental website Grist confirms continues to the present day. If Hoenig is concerned with an "entitlement mentality" among the nation's largest agricultural corporations, he certainly does not show it here.
Similarly, Hoenig fails to scrutinize other industries for signs of "entitlement" by large corporations. He would find many such examples, if he were to look. According to the conservative National Taxpayers' Union, the airline industry, for example, received at least $9.5 billion in government benefits following September 11, 2001.
But Hoenig is leaving out far more fundamental "entitlements." When he writes that we are all looking to invest in the next Microsoft or Google, does he believe that such companies could thrive without the opportunity that government makes possible? I'm not talking about direct subsidies such as the 100 million dollars in tax breaks that Google is expected to receive from the state of North Carolina for a new server farm or the $12 billion in tax breaks that the Center for Tax Justice found Microsoft received from 1996 to 2000. I'm talking about government investments in a society that makes their business models possible.
Executives of both companies have emphasized the vital importance of finding the highest quality employees. Hoenig does not question why companies act as if they are "entitled" to a steady supply of employees, most of whom are beneficiaries of public education. The availability of qualified employees is a direct result of our public investments in education. Conservatives can criticize low-income families for feeling a sense of entitlement, and slash funding to public education, but companies like Google and Microsoft will then find it far harder to find qualified employees. Even private universities, such as Stanford, where Google founders Larry Page and Sergey Brin attended graduate school, are the beneficiaries of substantial government funding. Of course, without adequate public education and widespread literacy, most of the products and services of companies such as Microsoft and Google would have little appeal anyway.
The business models of Google and Microsoft are also made possible by decades of government funding that resulted in the creation of numerous innovations in technology, including the Internet. As George Lakoff and the Rockridge Institute explain in Chapter Five of Thinking Points, without these public investments, the financial successes that successful investors have enjoyed would not have been possible.
As an investor, Hoenig benefits greatly from investments in the common wealth in other ways as well. Government regulation and oversight, the courts system, and protection of intellectual property are all among the foundations that support financial markets and businesses in today's economy.
Finally, it is difficult, but no less important to envision what conditions investors would face if government were to eliminate what Hoenig calls entitlements, chiefly assistance for the poor, elderly, or disabled. In an interview with Bill Moyers, Bill Gates, Sr., an attorney and the father of the Microsoft founder, observed:
There's nowhere else in the world, nowhere else in the world, that people can accrue the kind of fortunes that happen here. And that's because of the kind of country we have.
And the kind of country we have is a function of the taxes that we pay to provide security, we have a stable market, you can predict next week will be pretty much like the week before.
While responsibility to members of our community leads us to assist people in need through government action, when we do so, we are also providing our society with the stability on which investors depend. As the legendary investor Warren Buffett explained, he would not likely have achieved his great fortune had he lived his life in Bangladesh. Our investments in our common wealth, including investments in people, strengthen our society.
I say let Hoenig crunch the numbers. If he concludes that Bangladesh's impoverished millions receive fewer "entitlements" than do those Americans who are struggling, then perhaps Hoenig will relocate to that nation and put Buffett's theory to the test.
Written by Evan Frisch, an employee of the Rockridge Institute, who blogs as evan_at_rockridge at the Rockridge Nation blog, where this is cross-posted.