Hedrick Smith: Partially right about the American Dream

By Hannah Bleau | gargoyle@flagler.edu

Pulitzer Prize winning journalist and esteemed author Hedrick Smith was the guest at the Flagler Forum on March 27 to promote his new book, “Who Stole the American Dream.” While it’s an honor that such an established man took time to come speak to the Flagler community, I have my doubts when it comes to his solutions to America’s problems.
Smith is right about the American dream itself. It does seem harder to obtain these days, but I believe he concentrates the blame in the wrong places.

Smith argued that corporate America has run amok. Greedy CEOs and businessmen are seething with selfishness, hungry for power and profits. Meanwhile, the government is trying to assess the corporate monsters by reluctantly relinquishing the middle class.

Throughout his address, I noticed his tendency to place much of the blame of the shrinking middle class on corporate America, leaving the government relatively blameless. Smith places most of the blame on corporations and their “evil” CEOs, but seems to give government officials a free pass. By doing this, I felt like he only focuses on half of the problem.

Why isn’t the government being held responsible for the “dwindling” middle class? Government officials go in to office as regular joes and come out millionaires. Government is spending billions of hardworking taxpayer dollars on wasteful entitlement programs and bogus research projects (long live the turtle tunnels). Government is creating intrusive mandates and shackling the private sector. Government is spending more than it takes in and has not passed a budget in five years — government is the problem.

Crony capitalism is running rampant in Washington. It’s about favors. It is choosing winners and losers, and it’s the politicians who come out rich in terms of money and votes. Crony capitalism undermines the functionality of our free market and republic. We get sick of politicians running off of broken promises and the lack of transparency, yet we keep electing them and getting mad at corporations for the “dwindling middle class.”
Think about it this way: If a student goes to a professor and asks if they will accept monetary payment in exchange for an A in the class and the deal goes through, why would you solely blame the student?

Minimum wage is a perfect example of the disasters that strike when the government operates under the guise of the common good.

Smith believes the minimum wage should be raised. This sounds appealing to many, but there would be unintended consequences of a minimum wage hike. Small businesses would have trouble. Many would have to lay off workers in order to pay the other employees. Smith recognized this and suggested that the government offers incentives or compensation to these companies for forcing them to do something they are incapable of. But isn’t this a case of the government causing a problem, then “fixing” the problem it caused, which then causes two or three more problems which government attempts to “fix?” This is the unending cycle that creates the crazy, bloated government we have today.

Another modern example is ObamaCare- the most recent government pitch for more power. The mainstream media has been blaming businesses for laying people off or cutting employees hours to comply with the intrusive mandates. In reality, the government forced their hand, and it directly affects the middle class.

Government expansion of entitlement programs hurt the people in every class that really need government assistance. Almost anyone can get on some kind of government assistance program, and a country cannot endure under that growing burden. The government does not generate it’s own revenue. Hard earned middle class taxpayer dollars go to the ever-expanding nanny state. Now, one in seven Americans receive this assistance. On top of that, nearly 50 percent of taxpayer dollars goes towards entitlement programs. Government pretends to solve problems, but only creates more dependence and helplessness.

Again, take the housing crises in 2008. The government forced banks give loans to people who clearly should not have qualified. People defaulted, and everything crashed. Blame is placed on the banks, but it was the government’s fault. Because of this, thousands of middle families are under water in their loans and mortgages, and the government is certainly not bailing them out

Government’s intricate relationship with the tax code greatly affects middle class families. Smith said there is no correlation between economic growth and individual marginal tax rates, but I don’t believe this is true. Where is the incentive to invest and make more money if taxes are sky high and nearly 50 percent of it goes to the government? It doesn’t sound so bad when you hear people talk about taxing someone else, but what if it was you? I want to be successful one day. If I one day made $1 million, I cannot even imagine having to write a check to the IRS for nearly $400,000. Can you imagine that? Wouldn’t you lose your incentive to work hard and expand? I know I would.

Businesses lack the incentive to expand under a heavy tax burden. It is all about risk and reward. Expanding a business is about assessed risk. If taxes are low, risk decreases and incentive to expand increases. When incentives are given, businesses and individuals will flourish, and when the people flourish financially, the government can do the same.

So many of government’s decisions are calculated. Government is only concerned with votes and they will gleefully victimize anyone to get there. Victimization of the middle class is key. By convincing the middle class that they’re being exploited by everyone but the government, they deceive the masses.

People are losing their incentive to work hard- not because of rich CEO’s, but because of government. Government is the problem.

Young people, we are at an amazing place in our lives. The American dream is right in front of us. The only thing that can get in our way is bureaucratic government that ignores its original place.

While I admire Smith’s experience and hard work, I felt a personal disconnection between his ideas and my own. I felt it disheartening that he didn’t criticize big government. If anything, it gave me a sense of urgency. Young people need to rise up and speak the truth.

And government? Stay out of the way.