The National Catholic Review

Earlier this week, after a couple startling missteps leading up to his trouncing in the South Carolina GOP primary, Gov. Mitt Romney released his personal income tax information covering the previous two years. In a tradition curiously enough started by his father during his run for the White House, Romney made public his most personal financial details.

There wasn’t, however, much new information to be learned. Romney is very wealthy, collecting nearly $40 million over the past two years from smart investments he made largely during his tenure at Bain Capital. Romney is also very generous, as demonstrated in his nearly $7 million in donations to charity, much of it to the Church of Jesus Christ of Latter-day Saints, where he nearly met the prescription that Mormons tithe ten per-cent of their income to the church. Finally, as Romney himself had already alluded to, it was revealed that he paid a staggeringly low percentage of his income in taxes, coming in at about 14 per-cent, far lower than the 25 per-cent or so that billionaire philanthropist Warren Buffet’s now lionized secretary pays on her income.

In last night’s State of the Union address, President Obama seemed to address Romney personally when he called for laws that would require every individual who earns over $1 million annually to pay at least 30 per-cent in taxes, while leaving the rates unchanged for those bringing in less than $250,000. Speaking before Obama delivered the address, Romney lamented that the President would seek to divide the nation: "Tonight we're going to be treated to more divisive rhetoric from a desperate campaigner-in-chief. It's shameful for a president to use the state of the union to divide our nation," he said.

Romney has convinced himself and is now trying to sell to the electorate the notion that by advocating for a fairer tax system, Obama is engaging in class warfare. Perhaps Romney is shocked that a party that has idolized wealth and deified capitalism is now backtracking on the once imminent nomination of a man who has personified the blueprint of a successful businessman. Why, Romney may wonder, is he the target of so much vitriol? Where was the anger in 2004 when fellow Bay Stater Sen. John Kerry, who is just as wealthy, paid an even lower tax rate than Romney?  

Romney believes that people begrudge his wealth. They don’t. It is true that many awe at Romney’s wealth, in part because how he made it is so difficult to comprehend, but also because it seems that his only job for the past 6 years has been running for president. But few people actually bemoan Romney for the amount of money he has. He doesn’t seem to grasp that the real scandal, as The Daily Beast termed it, is that he is unsatisfied with even this low tax rate. He thinks he and his privileged peers, and the corporations they lead, should pay even less, leaving the burden of funding the programs that make a society on the poor and the middle class.

For all its ills, capitalism seems to be the best way for individuals to thrive socially, economically, and perhaps even spiritually. Such a system will inevitably produce winners and losers, though the hope is that the vast majority will find themselves somewhere in the middle. Government should enact laws, including tax regulations, that help ensure the freedom for all to realize their full potential. But it should also ask those who have benefited from such a system, from the work and talent of others, to give back their fair share, to be part of a society that provides economic and social opportunities for as many as possible. In the economic sense, Romney is definitely a winner. People are outraged not because he won, but because he advocates for a system that simply doesn’t allow for others who haven’t won to have a fair shake at it.

Comments

C Walter Mattingly | 1/28/2012 - 4:55am
Ed (#15),

"...Mattingly already said progressives are cheap and has some Cato institute story to bore us with."
It is not easy to work three inaccuracies in a single clause, but you may have somehow managed the feat.

As for saying progressives are cheap, that is the least inaccurate of your claims. What I did say was that studies indicate that compared to conservatives, those who self-identify as liberals, according to their tax returns, give 40% less charitable donations on average than their counterparts, and that this trend extends to giving blood, personal time to charitable endeavors, etc. But as the US ranks at the top of the world's nations in personal charity, concern for the stranger, etc, by a prominent source, perhaps liberals here do not fare as poorly when compared with other countries rather than their fellow conservatives. I concede, however, that VP Biden's contributing .14 of 1% or his big 6 figure income according to his tax records doesn't look too charitable on the face of it.

"...from some Cato institute story...." While I have a high regard for the Cato Institute for solid information and analysis from a conservative viewpoint, my information came from an article published in the NYTimes. I think you will agree that widely respected source is far to the left of the Cato Institute. The author of the article, Nicolas Kristof, is a highly respected liberal humanitarian with international qualifications, not easily blown off by references to right-wing partisanship. You may well have preferred that it came from a source you could consider highly partisan from the conservative viewpoint, but that is not the case here.

"...to bore us with."  It seems to me that had this information, not easily blown off as "Faux" News or Cato bias, truly bored you, you would have simply ignored it. In fact, it severely undercuts the liberal truism that in the US liberals are more concerned for the poor and disadvantaged than their conservative counterparts by the evidence of several important measures of their respective actions, not words. I would think some of liberal leanings would not want this to become too widely known. Yet most believe exchanging truisms for truth is the necessary starting point to progress, to be a genuine, rather than a "Faux," progressive.
C Walter Mattingly | 1/28/2012 - 3:49am
Jim(#33),

"Poverty isn't a problem, unless you experience it."

Don't want to experience poverty? Best bet, graduate from high school and go on from there.

Live in an inner city location where the poverty rate is high and the public schools have low graduation rates? Attend a parochial or similar school which has high graduation rates where you are very likely to graduate.

Don't have the money to pay parochial school tuition? Get a voucher.

Can't get a voucher? Have your mom and dad vote for a governor and president who will support, not oppose, vouchers that would give you that great opportunity to graduate and avoid poverty.
 
Beth Cioffoletti | 1/27/2012 - 6:18pm
Regina (#27 and #28) - I understand your frustration with the mother and daughter who want to take advantage of the system to get "free" money so that they do not have to work.

Interestingly, I experience a lot of the same frustration with some of the very wealthy, with whom I work.  Like your clients, they don't work, but they expect every little frustration and chore to be taken care of by someone else.

They may not be asking for a government handout (they already have much more money than they could ever spend), but it seems that the underlying malady is the same.
JIM MCCREA | 1/27/2012 - 3:59pm
Wealth isn't a problem, unless you don't have any.

Poverty isn't a problem, unless you experience it.
David Magnani | 1/27/2012 - 3:06pm
Mr. Cosgrove-

It is important, I think, to get our terms right in such a discussion.  Mondragon is a form of free enterprise, (in goods and services) but, I might suggest, not a form of capitalism.  As I understand it, the defining apect of Capitalism is the ''rule by capital.'' In a democratic economic enterprise - like the worker coops in Mondragon, each worker ( not ''employee'' - as they are, individually and collectively, owners of the business) has one share of the company and one vote - i.e. they excercise democratic management.). In a capitalist firm each share has one vote and you have as many votes as the number of shares you own (at least in a ''publicly'' held company). Therfore the returns of the firm come to you as a worker for your production, not based on the number of shares you own, though your individual share can grow in value as do those of all others in the firm.

This is not a technical difference only, it has momentous implications for how things ultimately get produced and the gains distributed. They also limit the wage differences of the highest to the lowest to 7:1 but don't seem to have trouble finding good managers - (The average ratio for Fortune 500 companies today has risen, since 1980 from 130 to 1 to about 435 to 1).

We have a lot to learn from studying the alternatives to our current organization of production.


J Cosgrove | 1/27/2012 - 2:28pm
Marie,

Thank you the comments without any demonizing.  We can certainly disagree and why not do it cheerfully.  I have read about 10-15 books on the financial crisis and all sorts of analysis on internet sites such as from members of the financial crisis committee and have listened to both sides of the argument on radio programs.  I am a frequent listener to John Batchelor, the most eclectic radio program in the country.  So I have opinions but also a lot of facts and I come across new analysis that lists facts I have not heard before all the time.  Here is my thoughts on what happened.

The crisis started like a flu or virus but then certain actions amplified the effect of the virus so that the final carriers of the virus did the most damage.  If you read Gretchen Morgenson book 'Reckless Endangerment' you will see how the crisis or virus started.  It started in the early 1990's and by 2000 housing prices were already rising rapidly (doesn't fit the scenario that it was all George Bush' fault).  The reckless rules for mortgage lending started long before Wall Street got seriously involved and essentially distorted the supply and demand curves for housing.  (The culprits here were Jim Johnson, Bill Clinton and Andrew Cuomo.)  It was exacerbated by the easy money the Fed instigated which led to low interest rates (The culprits here was Alan Greenspan).  Low interest rates sounds good but a side effect of this was that those who were interested in getting higher interest rates for investment purposes wanted financial instruments that provided them and Wall Street was happy to provide them in some fairly reckless ways.  The most prevalent financial instrument in the world were mortgages on real estate.  All this was defended in Washington (and yes Barney Frank was a major defender as were others including several Republicans). 

Eventually it all had to crash but few foresaw the problems it would cause.  Some who did made billions betting on the collapse.  These prescient souls are now part of the 1%.  Major culprits were too highly placed to be prosecuted or blamed.  One of them is the current president who was initiated into Washington by Fannie Mae president, Daniel Mudd, and who is now under indictment for fraud.  Obama was the biggest receiver of Fannie Mae campaign contributions so I am amazed at how he blames George Bush when Fannie Mae is a major culprit in the financial crisis and probably the main force behind the mortgage changes in the 1990's.

And by the way, it happened in other countries such as Spain and Ireland in big ways.  When people have money, and there was a lot of it around the world, they don't just put it under the mattress, they want to find the highest returns for it.  When they saw the very lax lending rules in the US, selling mortgages became a prime target to feed this interest rate monster.  Then when housing prices collapsed, those holding the mortgages were left holding bag as their house was underwater and so were the lenders in a lot of places when the mortgage holders defaulted.  The most egregious place was probably Ireland as about 25% of the country was involved in construction in the 10 years before the crash.  The Irish construction was being financed by German banks and then the Irish government made the huge mistake of saying they would assume all bank debts essentially bailing out the German enablers of the Celtic Tiger which all along was really a hollow tiger.
Marie Rehbein | 1/27/2012 - 1:27pm
JR, you wrote, "For example, few in the Tea Party movment want to get rid of government, just limit its size and its control.  Both of which have caused our economic malaise."

I see the Tea Party, like you, blaming the government for our economic malaise.  I think, though, we might agree that this malaise was caused by the bust in real estate, though we likely place the blame for the bust differently.  I would say that it was due to the government doing too little to control what was happening in the market, while you probably feel that the whole blame goes to Barney Frank for wanting to encourage home ownership among the working poor.

In my opinion, the best way to raise money for government at this point would be to tax transactions on Wall Street, and the best way to improve the economy would be to require holding an investment for five years, rather than one, in order for it to be considered long term for taxation purposes.
J Cosgrove | 1/27/2012 - 1:06pm
Mr Magnani,

Very interesting about  Mondragon.  I think things like this very successful enterprise should be studied and where possible implemented as experiments.  In reality it is a form of capitalism.  One of the  things necessary for such an effort to exist is a fairly free society.  I pointed out in past comments that a libertarian oriented society allows sub-groups which are more cooperative or authoritarian to exist within it but an authoritarian system accepts neither freedom to do what will work or other authoritarian sub groups.


Robert Owen, one of the early proponents of socialism, ran a very successful mill in Scotland where the workers were well cared for and received numerous benefits not available other places.  But when he tried to implement the same ideas in the US as part of a socialist project, it was a failure.  


We should judge things on how they succeed or fail and make the small changes necessary to move ahead.  Not wholesale changes to a system that has provided more wealth, education and health than any system in the history of man kind.  Systems such as Mondragon should be put into the mix.  


Thank you for pointing it out 
Katherine Schlaerth | 1/27/2012 - 12:55pm
The other day, I produced a"disability"form for a woman 21 years younger than myself, who said she could not toilet herself and needed the state to pay for a full time caregiver, who was of course her daughter. She and her daughter then jauntily walked out of the facility, her "arthritis" apparently amazingly improved by those forms. I see this every day! People who want to work find a way, and those who do not, find a way to make others finance them because they are "sick" and "poor". Having worked in a third world country, I have seen REAL poverty too.  And, may I add, I am amazed that the "poor"  on welfare and disability can always manage to buy cigarettes at a cost...is it 4 or 7 dollars a pack these days? And smoke a couple of packs a day!
Sorry, folks, I don't cry for the poor in this country. My admiration and respect goes to the families who, against great odds, care for disabled children or parents, or have physical handicaps and still manage to work at however menial a job. Often they don't even speak English! Those individuals and families will eventually make this country great again.
Katherine Schlaerth | 1/27/2012 - 12:55pm
The other day, I produced a"disability"form for a woman 21 years younger than myself, who said she could not toilet herself and needed the state to pay for a full time caregiver, who was of course her daughter. She and her daughter then jauntily walked out of the facility, her "arthritis" apparently amazingly improved by those forms. I see this every day! People who want to work find a way, and those who do not, find a way to make others finance them because they are "sick" and "poor". Having worked in a third world country, I have seen REAL poverty too.  And, may I add, I am amazed that the "poor"  on welfare and disability can always manage to buy cigarettes at a cost...is it 4 or 7 dollars a pack these days? And smoke a couple of packs a day!
Sorry, folks, I don't cry for the poor in this country. My admiration and respect goes to the families who, against great odds, care for disabled children or parents, or have physical handicaps and still manage to work at however menial a job. Often they don't even speak English! Those individuals and families will eventually make this country great again.
David Magnani | 1/27/2012 - 12:36pm
There are many alternatatives to capitalism, and we do not live under capitalism - we live in a mixed economy where government, nonprofits, and for-profits all play different roles.  All of these sectors produce wealth or value added (through the application of labor to capital) and all of them distribute it.

The debate ought to be not what system produces the most wealth or the most fairness, but which produces the greatest quality of life for all of its citizens.

There are no single or easy answers, but at least we do better when we ask the right questions.

Small experiments in alternatives have worked well, ( Kibbutzim, Moshavim, Native American reservations,  intententional  communities, etc.  but not for large populations. The Mondragon System of Worker Cooperatives in Spain may offer the most successful model that combines high production with high distribution and reasonable environmental policy. It is a market system in goods and services, but not in labor or capital. ( e.g. no stock market and no hired labor). A Central Bank, owned and run by the member cooperatives, finances business from loans that begin at low rates until a business is successful - then they rise to make up the difference, ( i.e. the loans act a bit like equity, but no equity position is taken by the bank). Like Macdonald's (without the  wide internal differences in compensation ) they have grown tremendously over 6 decades and never had a business fail because the bank steps in and fixes whatever major problems occur before that happens (management, product, etc.). Also, they start new businesses that grow to efficiency scale, but they do not allow them to grow to alienating size - but rather the economy grows through the creation of spin off businesses.

( How great it would be if such discussions could occur in the context of a presidential election.
Vince Killoran | 1/27/2012 - 12:00pm
I'm not a fan of Obama (too neoliberal, too "moderate" for me) but he DID talk about the poor-when he spoke about employment programs and closing the gap between the rich & the poor.
Joshua DeCuir | 1/27/2012 - 11:00am
"Capitalsim doesn't work unless you want a world of the very few rich and a vast impoverished majority (the result BTW Marx predicted).  Not a strategy for peace let alone justice. "

Look, I have a lot of problems with capitalism, but this is an idiotic claim.  There would be no middle class without capitalism!  Capitalism is not perfect, and I do agree with you that "crony capitalism" is a great evil.  But what strikes me about some of my progressive friends is that they point out the problems with capitalism while ignoring the problems looming for government - unfunded liabilities as far as the eye can see, entitlements going increasingly to older upper middle class voters who don't need them, unions who strangle opportunity from education in favor of bigger contracts for ineffective teachers.  I'm for tax reform that requires all to PAY their taxes (and favor increasing the rates on certain income earners), but the notion that we can just tax our way to heaven is foolish.

By the way, it's curiously odd to me that the ONLY person to talk about the poor on Tuesday night was a Republican Midwest governor - who spoke passionately about the effects of the looming fiscal crises on the POOR, and how we need to take care of the POOR.  And what response here?  Silence.  Curious, don't you think?
Tom Maher | 1/27/2012 - 10:57am
Capitalism is not defined by fragmentary and gross personal impressions on the whys and hows an economy works and what should be reasonablely expected of an economy.

By definition economics is about coping with and allocating scarce resources.  In other words economics recognizes the human conditon is not one of abundance of resources but one of scarcity of resources   We do not live in paradise. All human societies must constantly work h?a?r?d? at meeting all its many economic needs for s?ecurity, food ,? clothing, shelter ?e?t?c?.? ????????????????? Any economic system must deal with the basic human condition of scarce resour?ces.

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?Captialism best recognizes, enables and rewards the creation of new resources.? 
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J Cosgrove | 1/27/2012 - 10:40am
''JR, it seems that you are saying it's not broke so we don't need to fix it.''


I am not saying that at all.  Because many see the system breaking down right now as we watch it and want to prevent it from getting completely broke.  It is interesting how people here can take a comment about an absurdity which is what Fr. Malloy's comments were and then take it to extremes.  For example, few in the Tea Party movment want to get rid of government, just limit its size and its control.  Both of which have caused our economic malaise.  That does not mean take them to zero or eliminate all help for the disadvantaged or have open pollution of the atmosphere and waters.  But that is how many will portray it. If we had a government that was as big as it was in 2006 and kept it that way, we would balance the budget in about 8 years.


Attempts to dismantle capitalism will have no good effect.  Very few in the United States want a complete ''wild west'' but those who espouse a dismantling of captialism as Fr. Mallowy is doing have no good future in mind for anyone but a select few.  If you love the poor than the way to create more of the poor is to do away with capitalism or free enterprise.  Then you will have a lot more individuals to love.


''Really? Would JR care to elaborate on''  I suggest you do your own research, it is not hard to find.  And as far as subculture, look to education and stable two parent marriage as the forumula for success and economic movement upwards of children.


''But there is no way to eliminate the trillion dollar deficits without raising taxes. If the trillion dollar deficits continue, taxes will have to be raised anyway, ''   Not so, reducing the activity of the federal government would be a good start and lowering taxes would create more revenue for the government.  See my comment above about limiting the size of the federal government to 2006 levels when most in the country thought it was still too big.  If you raise taxes and get less economic activity, that may lead to even lower tax revenue and a much deeper hole.


Now some here will take this as an extreme comment but it is only meant as an example of a lot of things that could be done.  What will be done will probably be quite different but more than likely it will not solve the problem because of political reasons.  There is a lot of paths to travel out there and many will lead to good results unfortunately they are probably all hard and no politidian likes to propose hard ways.  Paul Ryan did it and the response was a commercial showing him pushing a grandmother off the side of a cliff and people cheering the commercial.
Amy Ho-Ohn | 1/27/2012 - 10:17am
JR says: "Taxation reduces economic activity and what we need more of right now is more economic activity not less."

Yes, taxation suppresses growth. But there is no way to eliminate the trillion dollar deficits without raising taxes. If the trillion dollar deficits continue, taxes will have to be raised anyway, because interest on the ensuing debt will have to be paid somehow. And national bankruptcy (literal or virtual) is bad for growth too.

Spending isn't going away. Costs are increasing. Soon, there will be more people on Medicare than ever before and health care is going to cost more than ever before.

We can't keep hoping to someday grow out of the kind of debt we're piling up. The economy isn't going to boom like that any time soon.

Only kooks think the deficit can be significantly reduced without raising somebody's taxes.
JOHN SULLIVAN | 1/27/2012 - 9:21am
I suppose #19 was intended to evoke dialogue on this blog. "Those in the top 20% come and go................"; Really? Would JR care to elaborate on "...... what prevents movement is more likely one of sub-culture........"? I can only image where that's going.
Marie Rehbein | 1/27/2012 - 7:31am
JR, it seems that you are saying it's not broke so we don't need to fix it.  I agree.  That is why I object to efforts by the Tea Party and Libertarians to make our government a bare bones operations that leaves everything up to markets and individual inclination.
J Cosgrove | 1/27/2012 - 12:02am
''Capitalsim doesn't work unless you want a world of the very few rich and a vast impoverished majority (the result BTW Marx predicted).  Not a strategy for peace let alone justice. ''


I am sorry but this is nonsense.  This is nothing more than just an ill informed opinion not based on any data I have ever seen.  The concentration of wealth in this country hasn't changed much in 80 years.  The top 1 % controlled about 40% of the wealth in 1930 at the start of the great depression and for the last 40 years it has averaged about 20-22%.  During that time I can show you millions who have progressed from working class families where the parents had barely a high school education to children who are college graduates with lives of comfort.  That is why immigrants from all over the world have flocked to the US because of the amazing opportunities available here for an average person.  They might not have found spiritual peace but they certainly have no material worries.


Those who make a lot of money come and go.  Those in the top 1% in income may not be there a few years later.  Those in the bottom 20% could be in the top 20% a few years later.  There was a brief discussion about upward mobility a couple weeks ago and there is  evidence that what prevents movement is more likely one of sub culture rather than societal barriers that exist.


''Free market capitalism doesn't work unless you want to abandon Biblical principles like love your neighbor and care for the widow, the orphan and the sojourner''


A non sequitur.  Nothing in capitalism says to abandon Biblical principles.  Neighbors, widows, orphans and sojourners have never been so well kept as they are in the US today because of the influence of capitalism on our total wealth.  If anything will deteriorate both the human material condition and spiritual condition it is socialism.  It reduces all to a low common denominator except for the privileged elite who control the masses.  One could argue that Jesus was an ardent admirer of capitalism as the parable of the talents indicates.
Rick Malloy | 1/26/2012 - 11:19pm
Thanks to many for toughtful and articulate comments. 

To those who think free market capitalism is what we practice, please note that corporate capitalism run amok in 2008 was bailed out to the tune of $750 billion tax payer dollars.  If we had practiced capitalism, all those recipients of government generosity (i.e., corporate welfare) would be broke.  Instead, we bailed out the banks, Wall St., GM, etc.  In other words, we practiced family economics. 

The problem is we favored some sons and daughters (the rich, Wall st.)  and abandoned othjers (those with home mortgages underwater).  The stimulus was too small and we continue to abandon the 9% unemployed.

Capitalsim doesn't work unless you want a world of the very few rich and a vast impoverished majority (the result BTW Marx predicted).  Not a strategy for peace let alone justice. 

Free market capitalism doesn't work unless you want to abandon Biblical principles like love your neighbor and care for the widow, the orphan and the sojourner
Rick Malloy | 1/25/2012 - 11:09pm
Mr. O'Loughlin writes: "For all its ills, capitalism seems to be the best way for individuals to thrive socially, economically, and perhaps even spiritually." 

Really?  Capitalism is the best way?  Than why do the vast majority of families operate on startlingly non-capitalist principles?  Most families I know work on the principle of members "giving according to their abilities and taking according to their needs." Karl Marx had a better idea than Adam Smith (and to be fair to Smith, corportate capitalism today is a far cry from what Smith advocated.  Smith did not want a system where the rich bleed the middle class and crush the poor while collecting dividends from stocks often bequeathed them by even richer ancestors).  Those born between third base and home plate shouldn't get to decide the rules of the game. 

When I make this argument from the economic practices of family structures, many say, "True, but you cannot widen the family circle too far."  Why not?  Religious orders have done so for centruries.  Jesus calls us to be brothers and sisters, not co-investors in mutual funds or derivatives.  Jesus calls us to love and care for one another, not oppress and cheat one another in a "dog eat dog," "winner take all" capitalist nightmare.

Individuals cannot thrive socially, economincally and certainly not spiritually, if society falls apart, torn down by the top 1% accruing vast percentages of wealth to themselves while leaving all of the rest of us to starve (of course, once we're dead, we won't need healthcare or housing). 

We live in a mixed socialist-capitalist system in the USA.  Much of the "means of production" are in private hands (capitalism) but much of our economy is largely socially "owned" (socialism), e.g.,  much of healthcare, the miliatry, much of the education system and government services.  If we become purely capitalist and dismantle the social safety net, the rich better gets bars for their windows and thick walls around their houses.  That's the way it is in too many parts of the world.  The NAFTA and GATT agreements in the 1990s are not making Mexico like the USA; more and more the USA is becoming like Latin America where a small sector of society own all, and the vast majority are impoverished.
J Cosgrove | 1/26/2012 - 1:30pm
''Oil trains??????''


When I was a kid my dad sometimes took me out in the morning to go and count the coal and tanker cars at a local railroad siding.  It was an event that I really enjoyed as a kid.  He would dutiful put up a lionel train set every Christmas which I loved.  Our train set had a coal dump car as part of the set which I would spend hours every Christmas playing with.  It also had something called tanker cars with names like Sunoco, Sun and Texaco on them.  In my life time I have frequently seen trains with endless tanker cars carrying oil as they pass by on a local over pass.  Guess who owns the tanker cars and railroad that transports a lot of the shale oil and Bakken oil.


http://www.bloomberg.com/news/2012-01-23/buffett-s-burlington-northern-among-winners-in-obama-rejection-of-pipeline.html

A quote from the article:


“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”


And as far as Warren Buffet's secretary, here is some thoughts on the scam using his secretary


http://pjmedia.com/instapundit/135997/ 


I never said anything about Gates and applaud any donation of his money for charitable purposes.  It is a far better use of the money than if it was in the hands of politicians and government bureaucrats.  I will applaud Buffett's donations too and he should put his money where his mouth is  and donate to charity the difference between what he pays and his proposed rate.  I have spoken frequently in recent posts about this and similar pheomenon where the rich have helped our society through their generosity.
ed gleason | 1/26/2012 - 12:33pm
@ JR Cosgrove... Bill Gates also has come out and said billionaires should pay a higher rate too. Please post your analysis of how he scams us all like Buffets oil trains... Oil trains??????. Please leave out Gates $750 million he just donated to world health because  Mattingly already says progressive are cheap and has some Cato insitute story to bore us with .
Marie Rehbein | 1/26/2012 - 12:23pm
In theory, the idea that we are all equal in this country and, therefore, should be equally invested in it by paying the same percentage of our income in taxes as we, in theory, are expected to pay the same percentage of our income to our church despite our varying wealth, seems like the right one.  However, in practice, this would prove a hardship to some given that at lower income levels every penny goes to paying for necessities.  Therefore, the door is opened to the graduated income tax, which is based on a theoretical ability to pay - sort of Marxist.

In reality, furthermore, if we were a purely capitalist society, which was the intended direction that the government deregulation was meant to take under Greenspan, inspired by Ayn Rand, we would not have bailed anyone out 2008.  The market would have had to correct itself.  This, obviously, did not happen, and as it happens, the deregulation provided some with opportunities that probably were not fair given that there would be no consequences. 

On the other hand, had the market been left to itself, it would have been shown that the trickle down of good things in good times would have been a slam down of bad things onto the folks at the bottom, while those who might have been trickling things down on to them in good times still managed to avoid the worst. 

Therefore, the lesson has to be that pure capitalism cannot function any more than pure communism can.  The only functional economic style is a hybrid that prioritizes meeting human physical, emotional, mental, and spiritual needs.
J Cosgrove | 1/26/2012 - 11:55am
''far lower than the 25 per-cent or so that billionaire philanthropist Warren Buffet’s now lionized secretary pays on her income.''


A couple things about Warren Buffett as this OP and comments gets into a multitude of issues.


First, Warren Buffett's secreatary and her husband must make $200,000 plus to pay the 36.8% tax rate she claims she pays.  Maybe if she did some investment, she might pay a lot more in taxes and help the country in two walys.  She would be paying a lower tax rate but providing the government with more tax revenue and two she would be creating more economic activity and providing jobs for people with her investments.  In other words she should put her efforts into helping others and in the process would be paying lower tax rates but more actual taxes.



Second, Warren Buffet stands to make tens of millions of dollars by the postponment of the Keystone pipeline.  A lot of the oil will instead be transported by rail cars which is very inefficient and guess who owns the rail roads that transport the oil.  If you were smart, you would say Warren Buffett.  Talk about crony capitalism, here it is at its best as he talks up the president and the president gives him a huge gift in return.  No wonder his secretary was in the Obama box.  Everyone say PT Barnum and something about certain people born every minute.

Vince Killoran | 1/26/2012 - 11:48am
Autoritarian state socialism (e.g., Soviet Union) isn't the answer but neither is the "casino capitalism" (aka, "market populism") offered by conservatives to the public (and the "crony" variety centrist Democrats and Republicans practice).

I can never quite get a clear answer from conservatives as to which model they embrace. Given their occasional acknowlegement of capitalism's devastating effects (even Newt G. noted this a couple of weeks back in his critique of Mittens).  I suppose the purest would be libertarianism (is that the same as "free enterprise"?) but that is a utopian scheme that seems unjust and unworkable.  Ayn Rand liked it but she took government payments while she wrote her tomes on the virtues of individualism and selfishness.

I would argue that we need to place "citizenship" at the center at any consideration of economics. 
J Cosgrove | 1/26/2012 - 11:11am
I have a series of comments.  It seems that frequently when people discuss economics here there is a lot of non sequiturs or failures to connect reality with their thoughts.
 
 ''Really?  Capitalism is the best way? ''  By far the best way to operate an economy is one based on capitalism or better than capitalism, free enterprise since often a lot of good comes from people with little access to capital. Because capitalism has some flaws, people rant and rave about it.  For example Marx wrote about 6000 pages complaining about capitalism but only about six pages on what to replace it with.  He had no clue what to replace it with  In fact he predicted a highly organized capitalistic society as the necessary precursor to his utopia.  I suggest all those who have grievances against capitalism buy or rent Professor Jerry Muller's course on capitalism from the Teaching Company.  Maybe then they can speak with some knowledge and coherence.  Also read the works of Deirdre McCloskey and then come back and discuss alternatives and what they provided.  We would still be at the level of Bangladesh without capitalism.
 
''Most families I know work on the principle of members ''giving according to their abilities and taking according to their needs.''   To suggest that the family is the model to organize society on is fatuous at best.  My experience is when one gets outside the family or the tribe, a lot of negative things happen as each unit protects its own.  An economics professor said to me once that socialism can work only as far as the horizon or essentially where the eye can personally see.  The implications are that we only trust those who we know intimately and after that what we have to have in common is a rule of law that respects the individual units or better yet a common culture that all buy into.  If the individual units like the family or tribe want to live a socialistic life style, fine but it is not possible past that level.  It is interesting that in defending socialism one points to the very homogenous and small Scandinavian countries.  But in reality they operate on a mostly capitalistic model.  Again read Professor Muller.
 
 To give a modern example, consider sports teams and corporations.  Within each there is tremendous cooperation and sharing for the common objective but outside of each there is tremendous competition and seeking to excel over others.  So the world of capitalism is one of social cooperation operating in a very competitive arena.  Those who offer extended social models are in fact offering a formula for decay and decreased economic activity and all that it involves.  That is why so called ''social justice'' solutions are not socially just and in fact are just the opposite as they impoverish many they intend to help.
 
 
''The essential point is not that Romney and his peers should not pay more taxes; it's that Romney and his peers can't be the only ones to pay more taxes.''  This is an interesting statement which recognizes that there is not enough money with the super rich or just plain old rich to fund the social machine.  But it fails to recognize two things.  Taxation reduces economic activity and what we need more of right now is more economic activity not less.  Second, people will change their behavior when faced with additional expenses.  We all do it.  Do you think Romney or other very rich people would do exactly the same thing and let their revenue stream be taxed at 35% just because we change the law.  No, history tells us that they will change their behavior and somehow will not pay the supposedly additional taxes by diverting their activity elsewhere or just not investing at all.  That is why there are numerous examples of actually increasing tax revenue when tax rates have been reduced.  It is how Clinton and the Congress balanced the budget in the late 1990's, lower taxes on capital gains.
 
''Abbe not only made great advances in optical design science and practice, but also introduced the 8 hour day, pensions and benefits.  He had the goofy idea that corporations should serve societal good.''  Sounds like how capitalism is supposed to work in the long run.  The progress we have today is due to cooperation of individuals with the society in expressing everyone's needs.  It is when one restricts the individual too much by insisting to doing things a certain way or prohibiting others that we run in to problems.  Business schools are full of people researching how to make businesses more efficient in a human way and exploring ways to make our society better.
 
 ''Likewise Chile. An economic basket-case, its threatened leader employed Friedman trained economists to consult with the Chicago school and make drastic reforms. ''  I have been to Chile for a total of about 5 days which certainly is not a definitive sample of the country.  There are definitely pockets of poverty but also lots of economic activity.  Santiago is one of the most modern cities I have been to.  That is probably due to the large amount of construction going on there as it expands and modernizes.  Chile is commodity based which makes it subject to swings in commodity prices.  Right now it is booming.  I would describe Chile like the US in the 1960's and 70's in terms of living conditions.  It is like 30-40 years behind us in the quality of their living but is progressing.
 
Across the Andes from Santiago is Mendoza in Argentina.  There are now about 10,000 wineries in the Mendoza area where 35 years ago there were only a few producing table wines.  Now it is one of the top 6 fine wine producing areas of the world because they let capitalism work.  Capitalism is not the best word to describe what conservatives value.  Free enterprise is the better description.  A lot of capitalism is what is now called ''crony capitalism'' which is anathema to conservatives and just favor s the money of some over others and essentialy rigs the game in favor of the few.
C Walter Mattingly | 1/26/2012 - 11:02am
Stanley (#5),
There's merit to your counter-examples. A few of the Germanic countries have done realtively well, with modified free market economies, such as Sweden, Norway, Germany. (Your notation that most of the free market turnarounds relate to formerly communist systems is less convincing, as South Korea, Chile, Japan, Singapore, etc were not communist systems which thrived after adopting free market systems more fully.) While it is true as Josh states that Germany has lower corporate tax rates, and that Sweden, which has lower rates as well and has just lowered them further, likely contribute to their success, there are a few other factors to take into account. In all of these countries, religion plays an important part in state education. In Norway and Sweden, for example, all children in early years are exposed to the common history and values of their respective churches. In the case of Norway, that continues and expands to include other faith traditions. That way, they have a common base of morality and a developed moral sense that our public schools, which forbid such education, do not share.
Elsewhere, I have pointed to a study that demonstrates that those who self-identify as conservatives are far more committed to charitable donations and activities than their liberal counterparts. I didn't stress another conclusion of that study: the real constant, the most determinative factor, in those more likely to give everything from money to blood to time at food banks was whether or not they were churchgoers. That was the great divide between those who were other-centered and those who were more self-centered in regard to personal charity. Those who attended church were far more commonly conservative, which accounts for the liberal/conservative discrepancy. Therefore, if you want to see more support for charitable consciousness in our country, you might consider supporting religious educational options in the public schools or, failing that, supporting vouchers to give the inner city poor a chance to obtain that moral sense and discipline so important for the success of that population and our country as a whole.
Joshua DeCuir | 1/26/2012 - 10:14am
"In the economic sense, Romney is definitely a winner. People are outraged not because he won, but because he advocates for a system that simply doesn’t allow for others who haven’t won to have a fair shake at it."

Link?  Because if you look at Romney's actual policies, you'd notice that what he advocates is a fundamental tax reform that ensures that people actually pay their taxes rather than an ad hoc system where the government gets to pick the winners and losers.  This op-ed from Sunday's NY Times piece by ROmney's primary economic advisor nicely summarizes Romney's position on taxes: http://www.nytimes.com/2012/01/22/business/four-keys-to-a-better-tax-system-economic-view.html

As for the notion that corporations serve the societal good, I couldn't agree more with the principle.  And the primary way corporations do that is by increasing long-term shareholder value, i.e. capital gains on investments made in them by shareholders.  And who are these shareholders?  Largely "insitutional investors" like pension funds (funds that most of today's workers get their retirement benefits from) and university endowments.  As for Germany's economic miracles, perhaps one key to their success is their low corporate tax rate compared to the US.

What many of us object to about Pres. Obama's policies isn't the idea that the economy should be fair, it's that a history of big government shows that it impedes fairness rather than enhances it.  When the government gets in the business of picking and choosing winners and losers we end up with Solyndra and Nancy Pelosi making millions in IPOs because of her access to inside information.  "Crony capitalism" is the number threat to both fairness and a growing economy today, and the bigger the government, the cronier things get.
Tom Maher | 1/26/2012 - 10:09am
20th century history definitvely shows that wealth and capitalism is not the problem while overwhelimly demonstratiing the political and economic failure of Marxist communism in the internal collapse of Soviet Union and all of its satillites except Cuba which remains after fifty years poor and with no prospects of economic development under the communism economic system. 

Communist China opened itself to private ownership, capital and capital accumulation - and wealth and a banking system saand explosively stated developing and propering.  Previously it China's Great Leap Forward and Cultural Revolution state controlled development programs failed miserably. 

In the 20th century many third world countries such as India and Brazil saw the failure of communism and abandoned their own socialistic programs and massively privitized their economies and prospered. 

If socialism was great why was it so massively abandoned by more than half the nations of the world in favor of capitalism? 

In the 21st century we are seeing 10 nations of western Europe on the verge of bankruptcy due to too much soverign debt fiancing too many government programs.  And Arab countires uder stirct governement control are in widespread revolt over their stagnant economy and lack of individual economic opportunity.

So the real worldwide economic problem is not how much an individual should be taxed  but how to allow the individuals rather than government to be employed and prosper.

Unless you have taken a vow of poverty and are hiding from the world and history capitalism with maximum individual freedom is the proven way to go.

The issue in the national presidential debate will not be how much a individual has prospered or how much he should pay in taxes.  Like the 1992 election the main concern and issue will be the economy.   What policies  and who will better be able to restore robust economic growth and job creation in the private sector.  The nation is not likely to turn to socialist and utopian economic models that have not worked during the last four years.  The economic question will be asked as in 1980 are you better off today than you were four years ago?  If the answer is no we will likely not have any more failed economic stimulus prgrams of the Obama administration.
T BLACKBURN | 1/26/2012 - 9:31am
Stanlery Kopacz, thank you. I could barely restrain myself but did, and you handled it much better than my hyperventilation would have. Amy Ho-Ohn, get yourself up to date, and by the way, who is watching the backs of immigrants, legal and il-, to this country?
Amy Ho-Ohn | 1/26/2012 - 8:55am
The essential point is not that Romney and his peers should not pay more taxes; it's that Romney and his peers can't be the only ones to pay more taxes. The budget can't be balanced by taxing only "the super-rich." There aren't enough of them. Obama is not engaging in class warfare; he's surrendering in class warfare. Giving a free ride to people who earn $250,000, looks an awful lot like trying to buy their votes, IMHO.

@beth, being tired of capitalism is like being tired of gravity. Wherever people buy and sell to each other, capitalism happens whether you idolize it or not.

@Stanley, did you notice any Jews or Roma in Jena? Not many, I bet, and the Turkish Gastarbeiter watch their backs. It's a lot easier to make a country behave like a family when you eliminate people who aren't in the gene pool. Any religious order that kept limpieza de sangre regulations until the late 1940's should be able to grok that point.
Stanley Kopacz | 1/26/2012 - 8:16am
Germany and Sweden are social democracies.  I haven't been to Chile yet but I've been to Germany.  Pretty nice.  Fundamentalist laissez-faire capitalists always compare raw capitalism to centralized, totalitarian communism.  That's not the right comparison.  All in all, I'd rather live in Germany than Chile.

I recently visited Jena, Germany, where great advances in optical and glass sciences and manufacturing were made by  Ernst Abbe,  Otto Schott and Karl Zeiss.  Abbe not only made great advances in optical design science and practice, but also introduced the 8 hour day, pensions and benefits.  He had the goofy idea that corporations should serve societal good.
C Walter Mattingly | 1/26/2012 - 6:58am
Fr Malloy and Beth,
The last half of the latter century proved to the majority of the world that free enterprise simply works better than communism/socialism. The two countries which perhaps best illustrate that are China and Chile.
The story in China is revealing. A group of impoverished Chinese farmers were forced by the coop to distribute their produce through the party, which then reallocated to the individual farmers.
These farmers and their families were malnourished. Each day, the farmers would get up for work with a heavy heart and head for the fields with the recognition that no matter how hard they worked or what they produced, it wouldn't make any difference in their food allocation. Secretly, a group of the farmers banded together and decided to defy the system. Since this was at great danger to themselves, they swore not to reveal to anyone their decision. And they kept it, too. But the communist authorities were alerted by, you guessed it, the startling increase in food productivity among those in this group. Their trick was discovered, and they risked beatings, imprisonment, or worse, except that Chou EnLai, who saw how terribly socialism was holding back China, heard of it, and was powerful enough not to punish them, but took their experiment and made it a model for China. 
The ensuing boom and economic performance for the great majority of the Chinese is a case study in free enterprise history.
Likewise Chile. An economic basketcase, its threatened leader employed Friedman trained economists to consult with the Chicago school and make drastic reforms. The result? Barely two generations later, Chile is the first nation in South America to be deemed a developed nation.
Beth Cioffoletti | 1/25/2012 - 11:35pm
Well said, Rick.

I'm getting really tired of the idolization of capitalism.  Even Friedman's article in the NY Times yesterday, where he said that average wasn't good enough to make it any more, made me tired.  It's as if we all have to be die hard money-makers to survive in a capitalist world.  No more music makers, or artists, or clowns on the streets.