Friday, May 20, 2011

Disliking Demagoguery

  • dem•a•gogue noun \ˈde-mə-ˌgäg\ a leader who makes use of popular prejudices and false claims and promises in order to gain power
  • dem•a•gogu•er•y (d m -gô g -ree , ) noun\ The practices or rhetoric of a demagogue.

In my last post I wrote about the demagoguery employed in the debate over the “Debit Card Rule”, but plenty of other examples abound. Politicians love to use class warfare or other means to demonize entire categories or groups of people in order to stir the populace into a frenzy.  Their goal is to make the latter clamor for passage of new laws, which ultimately grant more power to politicians.

The classes of villains that politicians conjure up to scare the masses are predictable. They usually include the so-called “rich” (vaguely defined as anyone who makes significantly more money than you do) or any noun preceded by the modifier “big” as in “big business”, “big corporations”, “big banks” “big insurance companies” or “big oil”. (Another curious characteristic of demagogues is their limited vocabulary.)

“Big corporations” are an easy target for disingenuous demagogues who thrive on people’s ignorance of what constitutes a corporation. Politicians thrive on conjuring up the image of a corporation that is wholly owned by an evil tycoon, a J.R. Ewing type. They trot out the image of a fat cat, overpaid Chief Executive Officer, as if he were the sole proprietor of a huge conglomerate that makes money hand over fist at the expense of the environment and by exploiting the little guy.

But what is, in fact, a corporation? Most “big” corporations are publically traded companies. That is, ownership of the company is broadly spread to thousands of stockholders by virtue of the shares they own. Who are these shareholders? I am sure some of them are of the sort that is another favorite target of demagogues, the Warren Buffet types, the Wall Street mega investors. But I am equally certain that the majority of the shares are owned by ordinary people like you and me, who own company stock either directly or as part of the mutual funds within their IRAs and 401-Ks. Their stocks are found in the pension funds of federal and state government workers, even teachers’ unions—all of which makes me wonder why everyone gets so upset when corporations make a handsome profit. Isn’t that what they are supposed to do?

Something else individual shareholders like us might be aware of—that is, if the demagogues haven’t lulled us into not noticing—is that we pay taxes on the profits of the corporations of which we are part owners. The dividends we receive from our mutual funds and individual stock is our share of the profit, and we are appropriately taxed for it. That wouldn’t be so bad, but our company as a whole pays another hefty “corporate tax” on top of that. Thanks to the demagogues, the USA has the second highest corporate tax rates in the world. And then the demagogues complain that the corporations have the audacity to pull up their stakes and move elsewhere.

As for the corporations that stay and have to pay taxes through the nose and otherwise deal with onerous regulation, how do you think they cope with it? Do they just cry in their beer and resign themselves to making less money because of their heavy tax burden? Of course not! The taxes are just another cost of doing business, so it is passed on in the cost of goods and services they provide. So who pays the corporate income taxes? As usual, we do. But the demagogues will ease the pain by trying to make us feel good that they are sticking it to those rich fat cats and standing up for the little guy.

When will we ever learn?


Rick said...

Good rant. I imagine what I call "bumper sticker" politics has been around forever. When ideas are flung around in sound bytes, without benefit of an explanation, and no explanation is expected, you end up with no questions asked, assumptions made, and the power hungry triumph.

JD Curtis said...

Absolutely right MDC. Once I hear some idiot spouting off about 'Big Oil' I know they don't know what the heck they are talking about.