The capital of takers

The splendour of empire

Sep 24th 2012, 13:22 by W.W. | HOUSTON

SPEAKING of making versus taking, the Washington, DC metro area now contains seven of America's ten richest counties. Matt Yglesias of Slate comments:

The simple explanation is that we've gone corrupt and decadent, and as the vitality of the American empire declines its capital grows more splendid. The more sophisticated explanation, offered by David Leonhardt in August, is that the DC area is affluent for the same reason the other affluent parts of America are affluent—a very high share of the population has college degrees. But that in some ways only pushes the question back a further step. All these college graduates didn't end up in DC by coincidence. Rather, the national economy has transformed in such a way as to encourage large numbers of educated people to move here in search of work or because you accepted a job offer.

Mr Yglesias rightly notes that the capital region's magnetism to the well-schooled isn't entirely a matter of an increasingly politicised economy. He mentions, for example, the movement of many publications and journalists to the Washington area as an effect of the decline of local newspapers in the internet age. But, Mr Yglesias argues,

...it seems a little implausible to avoid the conclusion that on the whole the American economy has gotten more deeply invested in influence-peddling—broadly construed—and that this is driving the Washington area to the top of the charts.

Agreed.

What, then, are we to make of the fact that the Washington area's rising affluence has resulted from an influx of highly-educated workers? If you refuse to assume that lobbying, lawyering, and contract-seeking generally create rather than consume wealth, it would appear that many of America's best-trained workers are increasingly drawn into enterprises that, on the whole, take more than they make. Which augurs ill for America's future.

This implies, moreover, that there is a non-silly "maker/taker" distinction, but that Mitt Romney has it all wrong. It's well and good to worry about welfare dependency, but it's rather more important to highlight the economic drag of dependency inherent in America's increasingly corporatist political economy. Tim Carney of the Washington Examiner nails it:

Romney was correct that a portion of America backs President Obama because they "are dependent upon government" and "believe that they are entitled." We even know these dependents' names: Duke Energy CEO Jim Rogers, General Electric boss Jeff Immelt, Pfizer lobbying chief Sally Sussman, Solyndra investor George Kaiser and millionaire lobbyist Tony Podesta, to list a few.

In the last few years of bailouts, stimulus, Obamacare and government expansion in general, we have seen median income fall and corporate profits soar. Industries are consolidating as the big get bigger while the little guys shut down.

When government controls more money, those with the best lobbyists pocket most of it. The five largest banks hold a share of U.S. assets 30 percent larger today than in 2006. Also, as Obama has expanded export subsidies, 75 percent of the Export-Import Bank's loan-guarantee dollars in the past three years have subsidized Boeing sales.

Romney, however, wasn't talking about corporate welfare queens. He was talking about the 47 percent of the population that pays no federal income tax.

If the taker economy has less to do with citizens receiving transfer payments and rather more to do with crony capitalism (or "public-private partnership", as boosters like to put it) and a rapidly expanding security state that is more parasitical than protective, then it is not at all clear which major-party presidential candidate is most on the side of the makers. My hunch is that Mr Obama is slightly more corporatist and slightly less militarist than Mr Romney, but that's no more than a hunch. Sadly, I'm confident that the opulence of the imperial seat will only wax, no matter who deals and doles from the west wing.

(Photo credit: AFP)