When captains of industry and billionaires offer pronouncements on public policy, their opinions often receive attention out of proportion to their merits. These wise sages must know what they’re talking about, mainstream media pundits argue. After all, they’ve succeeded financially far beyond the rest of us. The same skills that brought them wealth ought to be applicable to public policy, right?
To the contrary.
The acquisition of wealth demonstrates the exercise of skill, perseverance, and perhaps a tad of good fortune. It means that the achiever has a very deep, but narrow knowledge in one area of business endeavor.
Buffet, a savvy investor whose net worth is estimated in the vicinity of $45 billion, tells us that the wealthy should pay more in taxes. But as Tim Carney and Dan Mitchell point out, his knowledge may be deep, but it’s narrow to the point of parochialism.
Carney, in today’s Washington Examiner, points out that Buffet benefits from the current estate taxes because he focuses on purchasing family businesses faced with high estate taxes. In addition, Buffet benefits from high levels of federal government spending.
Mitchell points out that Buffet, at least as it relates to public finance, is fiscally innumerate.
Buffet’s pronouncement reminds me of Gerard Swope, at the time the President of General Electric, who 80 years ago offered his own solution to the economic decline of the Great Depression. In a September 1931 speech to the National Electrical Manufacturers Association (yes, the same trade association that 75 years later successfully lobbied for the ban of the current generation of incandescent light bulbs) Swope proposed his plan to abolish antitrust laws, cartelize every industry in the country through industry associations dominated by the big companies, establish price and wage controls, and develop and enforce industry codes of conduct. Known as “The Swope Plan,” it became the model for FDR’s ill fated 1933 National Industrial Recovery Act. The famed attorney Clarence Darrow, who investigated the National Recovery Administration a year later, would conclude that the massive number of “business codes” authorized in that law were designed to benefit the large companies at the expense of small companies.
The wealthy and powerful Swope didn’t understand something very important about that law. Four small businessmen in Brooklyn–Joseph, Martin, Aaron, and Alex Schechter–the owners of Schechter Poultry instinctively knew it. Fred Perkins, a small businessman who along with his crew of ten employees, manufactured batteries in York, Pennsylvania, knew it, as this 1935 newsreel shows. Swope and FDR each had net worths easily 1,000 times greater than the Schechters or Perkins. Our constitution, they knew, guaranteed the exercise of individual liberty in the conduct of their own business.
But the Schechters and Fred Perkins were right about the law. And in May, 1935, the Supreme Court unanimously agreed with them that the National Industrial Recovery Act was unconstitutional.
So the next time Warren Buffet offers some public policy advice to the rest of us, remember this–his net worth may be orders of magnitude greater than ours, but, unlike Mr. Buffet, we understand the constitutional principles upon which this country is based. And we don’t conflate “self-interest, rightly understood” with self interest covered with a thin veneer of do-goodism.
Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series and co-founder of Top Conservatives on Twitter and the Nationwide Tea Party Coalition. His new e-book, I, Light Bulb: A Death Row Testimonial, was published earlier this week. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .