Actors and Reactors
I just finished reading a book, The Will of the People, by T. H. Breen, a history professor at Northwestern University, that offered a rather revisionist perspective on the American Revolution. Instead of focusing on the role of the Founders such as George Washington, Benjamin Franklin and Alexander Hamilton, the author examined how the Revolution impacted ordinary people and more importantly, why the Revolution didn’t descend into a welter of murder, terror and tyranny such as occurred after the French and Russian Revolutions as well as many others. It is an interesting concept, and I was intrigued and wanted to learn more.
The author recounted how the colonists worked together to form local revolutionary councils to seek out justice and punish Tories and speculators. He draws much of his material from the sermons and publications of local preachers and clergymen. He emphasizes the collective actions of these communities and discusses how unrestrained liberty leads to licentiousness. He concludes by quoting a Massachusetts’s minister on the dangers of liberty and then warning readers about closing borders, the erosion of society by people of great wealth and learning to live with people with very different political views.
I believe that Professor Breen goes a bit too far in emphasizing the contribution of collectivist impulses underpinning the success of the American Revolution and exposes his progressive way of thinking at the close of the book (although I had my suspicions something was amiss early on). He deemphasizes the role of the Founders in sustaining and ultimately winning the Revolution. But if it weren’t for the Founders and other patriot leaders, there would have been no Revolution.
This book is just another progressive attempt to rewrite American history in order to redefine America and what it is to be an American. It is part and parcel of “you didn’t build that”, and “it takes a village” and other progressive opprobrium of the American system. Part of the progressive lexicon of “living wage”, Medicare-for-All and a fair share of the tax burden (which to our presidential candidates appears to be that the wealthy bear all of it).
It seems to me that most people are either actors or reactors. The Founding Fathers were actors. The farmers and shopkeepers that made up the American colonists, participated in the Revolution in meaningful ways, either as soldiers or maintaining the home front. But they were reacting to the leadership of the Founders. Likewise, progressives deemphasize the importance of economic actors and over-emphasize the importance of economic reactors. They use this outsized importance of employees to justify massive transfers of wealth from employers. But is this change of emphasis valid?
Jeff Bezos, the world’s richest man, started his company Amazon in his garage. In 1995 Amazon had 11 employees. Now Amazon has over six hundred thousand employees (and I just read a notice that they are looking for 30,000 more for this Christmas season). How many of those six hundred thousand employees could have replicated what Jeff Bezos has done?
Or take Steve Jobs. He transformed whole industries and created new ones. Do you think Samsung would have developed the Galaxy smartphone if Jobs hadn’t created the iPhone first? Apple has about 90,000 employees in the United States (plus many more overseas) but also claims that over 2.4 million Americans are employed because of Apple; as not only component and equipment manufacturers but also from app developers and video game creators. Sure, Bezos and other entrepreneurs are super wealthy. But they did not become wealthy by hiring people at starvation wages. Many Amazon and Apple employees are wealthy themselves.
Progressives like Elizabeth Warren and socialists like Bernie Sanders invariably portray these billionaire entrepreneurs as depraved greedy people that don’t pay their fair share of taxes. But Bill Gates and Warren Buffet plan to give away most their wealth to charitable causes through the Giving Pledge as have over 200 other pledge signing billionaires. Other billionaires are donating their wealth directly to other causes. And this is nothing new. We have the Ford Foundation and the Rockefeller Foundation that have been donating to various causes for decades.
Billionaire Leon Cooperman took Elizabeth Warren to task through an open letter that stated she had admonished him (as a parent chiding an ungrateful child) to “pitch in a bit more so everyone else has a chance at the American Dream, too” (even though it is clear that many of these greedy billionaires are creating hundreds of thousands of jobs for people chasing their own version of the American Dream). He noted his own humble beginnings and how hard work and determination allowed him to accumulate great wealth. Wealth that allows him and many of his wealthy friends to donate to various charitable causes. He also shows that this wealth has been spread around to all the employees he and his friends have hired. He states that many of the confiscatory tax proposals of the progressive candidates are based on the dubious economic studies of Emmanuel Saez and Gabriel Zucman. He does concede that some tax reform is justified and highlights easy pickings such as the carried-interest exemption, the Section 1031 like-kind exchanges and the increase of basis on inheritances.
These billionaires are the economic actors creating opportunities for millions of economic reactors. Most of us in America are reactors (myself included). We work for other people; sometimes for entrepreneurs, sometimes for large corporations (that were started by entrepreneurs).
Apparently, the biggest beef these progressives have with billionaires is that the billionaires think they can do more good giving their money to charitable causes than by giving the money to progressive politicians to spend on their leftist vision of what is best for Americans (even though almost none of their programs work very well). Their plan for Medicare-for-All will drive the entrepreneurs and visionaries (actors) out of medicine and replace them with bureaucrats (reactors). Price caps on prescription drugs will drive research and development funds (along with the researchers and developers) out of the pharmaceutical business.
The entire progressive vision is to drive entrepreneurs and visionaries (actors) out of economic activity and replace them with bureaucratic economic planning offices staffed by reactors more interested in their continued employment until retiring with a government guaranteed pension than with creating great new products.
It is not easy to be an actor in business or in any other field of endeavor. I have been a reactor most of my life. I am trying to become an actor through writing my commentaries and publishing my books. Trying - that is all an actor can really do. Becoming an actor involves taking risks. Many aspiring actors fail – serially – before actually succeeding. Even if a person is just starting a coin-operated laundry in the nearby strip mall or a fast food franchise, that economic actor is taking a risk. If he or she succeeds, they will be rewarded with more hard work and long hours as they strive to achieve their American Dream. And while they do that, they will be employing people and giving them opportunities. Add that up with many thousands of actors, big and small, and you have a thriving economy. The goal of progressives is to replace those economic actors with bureaucrats. Actors, real actors, are disruptive. They shake things up. Whether it is an iPhone or a Korean grocer in a black neighborhood.
Elizabeth Warren says she wants to use taxes on billionaires to give people a chance at the American Dream. You cannot convert reactors into actors just by giving them someone else’s money. Reactors need actors to start businesses and provide jobs. America has been successful because we have so many economic actors and we have economic actors because we provide incentives for people to become actors. Socialist countries fail because they have very few economic actors and they have so few economic actors because they punish economic actors rather than reward them.
We need to encourage and incentivize economic actors because they vital to our free market economy. Don't get me wrong. We also need the economic reactors. But the more economic actors we have, the better off the reactors are!
