Obama’s Millionaire Ignorance

The president doesn’t understand the source of wealth and its real value.

Barack Obama’s shows his ignorance of history as well as his class hatred as he continues his months of campaign railing against millionaires and billionaires.

He seems not to know how American entrepreneurialism took root and how famed capitalists of the past launched the country on the road to economic growth as well as providing prosperity for many in the “middle class.” It was a time of small federal government and little stifling regulation.

The first American billionaire was John D. Rockefeller, creator of Standard Oil. Rockefeller turned his attention and riches increasingly to charities and benevolence. He made possible the founding of the University of Chicago, and by the time of his death he had given it more than $80 million. In association with his son, John D. Rockefeller, Jr., he created major philanthropic institutions, including the Rockefeller Institute for Medical Research and the Rockefeller Foundation. Rockefeller’s benefactions during his lifetime totaled more than $500 million.

In 1889, steel mogul Andrew Carnegie published a short essay entitled Wealth, in which he discussed how the wealthy should use their personal fortunes. The essay was republished under the title The Gospel of Wealth. Carnegie went on to write additional essays, published in book form in 1900. He used much of his fortune establishing over 2,500 public libraries as well as supporting institutions of higher learning. By the time he was aged, he had given away 350 million dollars.

John Pierpont (J.P.) Morgan, though not as wealthy as Rockefeller or Carnegie, made a unique contribution to the nation. During the panic of 1893, Morgan, the country’s most powerful banker, essentially bailed out the federal government. He loaned 3.5 million ounces of gold to the U.S. Treasury to ward off national bankruptcy. Then during the panic of 1907, Morgan and his network of investment bankers saved the banking industry from destruction.

The entrepreneurial explosion accelerated after the Civil War. An army of inventors and founders of corporate capitalism grew. They far surpassed Britain and France in innovation, productivity, and profitability.

“Invisible Hand: The Managerial Revolution in America” described the role of enterprise–big business and its managers–during the formative years of modern capitalism (from the 1850s until the 1920s). The book was written by Alfred Chandler, Jr., the business historian. It sets forth reasons for the dominance of big business in American transportation, communications, production, and distribution.

Chandler showed that the fundamental shift toward managers running large enterprises exerted a greater influence in determining size and concentration in American industry than did public policy.

Charles Pillsbury, a breadmaker who invented the way to make bread flour uniform in quality, Joseph Campbell’s soup, and Gustave Swift’s meat-packing plants, all used mass-processing techniques, combined with innovative packaging and advertising. William Procter and James Gamble made their millions with candles, then Ivory soap, products Americans needed and used.

Today, the country has about 400 billionaires. And where would we be without the likes of Bill Gates, the Koch Brothers, the inventions of Steve Jobs, and thousands of American millionaires, who have been more than community organizers or politicians. Gates and Warren Buffett in 2010 launched the “Giving Pledge” to unlock billions for philanthropy. So Far 69 billionaires have signed up to give away at least half of their money.

Lavish, even outlandishly lifestyles occurred among the millionaires and billionaires in a period of our history more than 100 years ago, just as some of the rich are overly extravagant today.

According to the book, “From Hayes to McKinley” by H. Wayne Morgan, one millionaire of the past, had his teeth drilled and filled with diamonds, so he literally flashed a million-dollar smile,

Few were more ostentatious than the mansions at Newport, Rhode Island. They were described at the time as Newport’s “froth of castles.” They often had more rooms than large hotels.

The wealthiest people of the time had between three hundred and four hundred times the capital of the middle class, probably the “greatest wealth gap between the rich and the middle class the nation has ever witnessed,” according to “A Patriot’s History of the United States.” The number of millionaires in this country rose from a handful to more than four thousand. As ridiculously ostentatious as some of the rich were, it meant that more than ever America was the land of rags to riches. Then, as today, most of the very rich were self-made.

Obama’s attack on millionaires and billionaires sends this clear and mean-spirited message: The Republicans don’t care about the “middle class” and want to benefit those most advantaged (the rich/elite). He continuously rails against “millionaires and billionaires” to separate that population from mainstream America.

The obvious baseness of this argument coming from the president of the United States is important. The amount of true millionaires and billionaires are so few in number, that taxing them more – as Obama wants to do – will not help with any significant deficit reduction.

History shows us that higher tax rates result in less – not more – tax collections.

With the reforms of 1986, President Reagan reduced tax rates to 28% in exchange for eliminating tax shelters. As a result, the amount of federal income collected was more at the 28% rate and a clean tax code than at 91% and tax shelters. Why take additional money from those taxpayers who have been able to create wealth and employment successfully and give it to the government to mismanage and squander?

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