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economic inequalityThat a French socialist economist is trashing the American economy for fomenting inequality should hardly be news. But Thomas Piketty is enjoying some moments in the popular press, before returning to the usual comfortable sinecure for the left—academia. Why? Well, we are told, economic inequality is on the march again, and must be stopped. Stopped how? By massive governmental programs aimed at taking from one person to give to, well, the government actually. But the government will then give some of it to people in the form of various subsidies and transfer payments, so it will all be good, right?

The usual domesticated “conservatives” (e.g. The New York Times’ David Brooks) are making the usual noises about how this is all the usual hypocrisy from wealthy and prestigious liberals envious of the even wealthier hedge fund managers on their political right. The left, meanwhile, diverts attention from its own well-established and long running bad faith through a series of snide comments about oligarchy and the chutzpah of rich people actually objecting to being trashed in the media.

It is all rather appalling, really. Our nation continues its descent into cultural anarchy to the delight of the left and the indifference of establishment Republicans. Real people are struggling to support their families, squeezed by a largely fictitious recovery, in which many can not find decent jobs and most find their standard of living sinking under increased education and healthcare costs, along with the uncalculated burden created by governments, utilities, and insurers dumping clerical duties (and burdens of proof) onto their “customers.” And snarky journalists and academics trade barbs about who is the bigger hypocrite, who has the higher status, and, presumably, the importance of the distinction between a BMW and a Maserati.

The true, dirty secret about our economy is how much it has empowered preening, self-satisfied “geniuses” at the expense of real workers and real entrepreneurs who create value for themselves, their workers, and our society. Our ruling class in the United States has become one of the more venal in the Western world, convinced that it “earned” its place by scoring higher than most people on their SATs and “making it” up the ladder by putting in lots of hours massaging spreadsheets and egos.

Both sides have prospered in large measure through governmental interference. Recent fights over the Export-Import Bank—the source of more corporate socialism than almost any other institution on the planet—belies the claims of corporate welfare mothers and fathers to have “earned” their money. The smug “entrepreneurs” on our left coast have been gouging employees and the public through outsourcing and manipulation of investment capital for decades. And the press/academy “critics?” The battle to get that “top” appointment at the right institution, the “right” mentions in the press and the “right” new toy, have motivated those small minds since the New Deal gave them the delusion that they should run the country.

The fact is, inequality is inevitable. There will be inequality of income so long as there is income. All societies “choose” for some skills and set up some rules benefitting some people and penalizing others. And, surprise, surprise, bad people get rich and good people get or stay poor. Just because a jerk gets rich is no reason to pretend he is not a jerk. But it is also no reason to destroy economic freedom along with the material well-being it makes possible for all of us. Freedom will be used for good or ill, according to the characters of the persons involved, but government cannot, never has, and never will be able to make us virtuous. Welcome to the fallen, sinful world in which mankind has lived since its inception.

There are, of course, differences between today’s societies, which generally support or at least tolerate market activities, and previous regimes. Most importantly, where our society rewards certain sins perpetrated by individual persons and groups, most previous economies rested on the power of rulers to hand out favors. Socialism, of course, reverts to this older calculus, though it allows power brokers to hide behind claims to represent “the people.”

The issue is not how we shall make everyone equal. We cannot do that, though we can hand tyrannical power over to those who promise to do it for us. The question is how we can establish and maintain a decent social structure that ties, however loosely, the garnering of great wealth to the promotion of the general welfare while limiting evil conduct in the pursuit and use of that wealth.

From the royal monopolies of the Elizabethan Age to the corrupt subsidies handed over to rail barons in the nineteenth century to the Obama Administration’s gravy train for “green” corporations, governments have used other people’s money to create unjust and unwise concentrations of wealth. But, while the government can create monetary monsters, it rarely succeeds in slaying them. Harsh policies (like those in France) simply chase away the rich—or at least their money and the jobs it once supported. More stealthy tax policies merely enrich tax accountants and lawyers while making the middle classes and entrepreneurs lose hope.

Economic equality matters in only one very limited sense. As Aristotle recognized more than 2,000 years ago, a successful polity must have a strong middle class. People who have a substantial stake in the economy while still having to work within it are necessary for that economy’s stability. Such folk also are necessary for political and social stability because they thrive, not on “creative destruction” (which is, after all, destructive) but rather on hard work aimed at steady, intergenerational improvements. And what kills a middle class? Big government. Not just socialism (thought Mr. Piketty’s policies, aimed at “equalizing” wealth, certainly would do the trick) but big government. Whether it is the Obama Administration’s social democracy or the simple incompetence and lack of discipline of the George W. Bush Administration, profligate government programs stifle competition, undermine the work ethic, and reward hucksterism. The results may, in fact, be rather profitable for those in business willing and able to manipulate the rules to their own advantage. Wall Street has always known how to deal with regulations—they are just more shells in the game. But Main Street, where most Americans live and work, needs fewer, clearer, cleaner rules that allow us to get on with the business of making a living so that we may do the more important work of raising our families.

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4 replies to this post
  1. A good article.

    The Left’s “equality” shibboleth is not (and never has been) what it seems….a genuine concern for the have-nots. It is more in the nature of a mind-game whereby the egalitarian makes himself feel virtuous. I have written many times on this subject including this one: The Anatomy Of A Bleeding Heart http://www.newenglishreview.org/custpage.cfm?frm=6936&sec_id=6936

    “A most revealing aspect of the liberal left is that it seems to matter surprisingly little to them that their political aims are not actually achieved. Consider the history of that universal shibboleth social justice. It is now virtually unheard of to question the assumption that the better off are somehow to blame for the mire into which other parts of humanity can sink and that they should therefore do something about it. And yet as we survey the results of a hundred years of “social justice” what do we find? There is still an educated and savvy middle class just like before and there is still an ignorant and brutalised underclass just like before.”

  2. Scapegoating big government for our problems is like using any other whipping boy, it externalizes evil and is done without making distinctions and thus without understanding who are the culprits.

    We should note that in one sense government is like love in that size doesn’t matter, fidelity does. A gov’t that is too small is in the same boat as a gov’t that winks and nods at injustice. However, a gov’t that is faithful to all of its people can grow and shrink in relation to what is needed.

    It is obvious that our gov’t isn’t being faithful to its people. Why is that? It could be paritally because of our economic culture. Our economic culture places so much value on self-interest and getting as rich as one can to enjoy as many luxuries as the free market bestows that the people tend to favor a laissez-faire relationship with the gov’t. That is that they depend solely on elections because they don’t want to pay any more attention to the gov’t than they have to. And so we reduce democracy to only voting every x number of years and only for candidates from one of two parties. And we call this kind of democracy self-government?

    As a result of these factors, we tend to vote for those who provide immediate economic good times without asking why the current times are good or bad. And if things are not working, we will reflexively vote for the candidate from the other party. With this practice, the question is not why aren’t things better, the question should be why aren’t things worse.

    So what is wrong with our economic culture? We’ve been sold a false bill of goods. We’ve been told that our free market is self-correcting so that it can convert greed, usually called self-interest, into wealth without creating toxic emissions. So people have been taught to both indulge in self-interest and feel free to ignore the market’s victims.That emphasis, though having already existed almost from the beginning of time, causes greed to grow because faith in the market encourages it to grow. Thus, because of the free market, visions of wealth dance in our heads while concern for others is crowded out if not choked. Again, we’ve always had greed. But now, with our concept of the free market, the initial financial rewards it brings causes it to grow and metastasize throughout all of society.

    So perhaps we need to change our economic values by changing our economic culture. And this can only begin by openly discussing the tradeoffs that come with embracing the free market. Karl Marx cited one possible negative we have to endure if we continue to embrace the free market. He said that the Bourgeoisie has

    left remaining no other nexus between man and man than naked self- interest, than callous “cash payment”.

    And one doesn’t have to agree with his solution to at least partially agree with his analysis. Yes, greed can build great wonders but we also need to ask at what cost and who pays the bill.

  3. “Economic equality matters in only one very limited sense. As Aristotle recognized more than 2,000 years ago, a successful polity must have a strong middle class. People who have a substantial stake in the economy while still having to work within it are necessary for that economy’s stability. Such folk also are necessary for political and social stability because they thrive, not on “creative destruction” (which is, after all, destructive) but rather on hard work aimed at steady, intergenerational improvements.”

    Yes.

    “And what kills a middle class? Big government. Not just socialism (thought Mr. Piketty’s policies, aimed at “equalizing” wealth, certainly would do the trick) but big government. Whether it is the Obama Administration’s social democracy or the simple incompetence and lack of discipline of the George W. Bush Administration, profligate government programs stifle competition, undermine the work ethic, and reward hucksterism.”

    No.

    While size of government analyses do bring some perennially neglected facts and dynamics to the table, governments are not clothes on a rack ordered by size for easy selection. Presently, the middle class is being killed by weak demand in the economy that benefits the very wealthiest rentiers at the expense of those rightly praised in the first quote. That builds the constituency for social legislation, and that constituency is the clear majority of American voters.

    Just as Keynes proved that productive workers and owners need institutions that can maintain demand, so Piketty may possibly have proved that they also need a state that recovers some unproductive gains through taxation. Governments that do such ‘big’ things may be smaller than the intrusive governments demanded in the bad times that come when these tasks are neglected. If we don’t want to pay the unemployed, then we need to hire them to build bridges and roads, or to make and sell things for others who do. If we want a state that will do this, then we need one that is less disproportionately responsive to the top .001.

    A credible conservatism must be an impartial conservatism, somewhat closer to the middle class, probably, and much farther from plutocrats, clearly, than most varieties we know. The first quote lucidly explains why.

  4. Bowman and Curt, conservatives talking sense, thank Heaven, and not the apocalyptic, anarcho-libertarian nihilism that passes for conservatism today. The focus on simplistic big state/minimal state dualisms and fighting talk about liberals and reds-under-the-beds is a dead end and the enemy of hope. It might be theatrical and pleasingly grandiose to strike such poses but it seems create a great deal of heat and precious little light.

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