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If You Want “Income Equality,” You’re a Statist
Too harsh? Maybe, but let me explain.
First a qualification: Some people talk about “income equality” as a product of crony capitalism, but they don’t actually support active government intervention to promote greater equality. Those individuals aren’t acting like statists, but they should be aware of the complications that come with adopting the language of the left. The fundamental problem with corruption isn’t that it produces economic inequality, but that it undermines economic liberty and equal justice before the law. This is an important distinction.
If you want to stop corruption, then say so. Don’t hide behind the seemingly sympathetic call for economic equality because you think it’s politically advantageous. That just muddies the waters and makes it harder to enact the bold changes that need to be made to reduce the size of government and end corporate favoritism.
Most of the time, however, the demand for economic equality isn’t about cronyism—it’s about disparities between different groups and the need for government intervention to reduce those disparities. To those calling for economic equality, government is not seen as the problem; it’s seen as the solution. For them, the answer to wealth disparity is not reducing the size and scope of government but creating programs to help “level the playing field.” The idea is, for example, that the young man born to a single mother in a poor neighborhood doesn’t just need to be treated equally before the law so he isn’t discriminated against; he also needs a government program to help him better compete with wealthy kid from the suburbs.
Now, no one really wants absolute equality. When people talk about income equality, they generally mean that there shouldn’t be such a big gap between the rich and the poor. So why do I call those who are concerned about income equality in this sense statists? Because they believe government should step in and do what it can to close that gap.
Here’s the problem with this kind of thinking: First, the solution to inequality of wealth is greater opportunity through open competition, not centralized programs and regulations. Second, government intervention will never deliver the desired results—in fact, in a worst-case scenario, it will actually lead to an Orwellian “equality” only enforceable by totalitarians. Finally, government intervention to bring about more equality is essentially (even in its most benign form) anti-justice, anti-individual, and anti-freedom.
Imagine a highway where individuals are free to travel wherever they want, in whatever car they want, using whatever fuel they want. Let’s call it Freedom Highway. The outcomes of everyone’s travel will be different and unpredictable. They’re just living their lives, obeying the rules of the road, and fulfilling their dreams—some better than others and always with a little luck thrown in the mix.
Before they set out on their journey, they know there are rules to be obeyed—rules they can predict and anticipate because they apply to everyone and don’t change. What are those rules? For the sake of our analogy, let’s just say there are two: They can’t speed and they can’t pass on a double yellow line. Simple. It doesn’t take much of a government to enforce such basic, straightforward, and general rules. Government is limited. The individual is not.
This is what freedom looks like. This is what human progress looks like. The rule of law is respected. The individual is not bound by the collective will, but chooses his path according to his own interests, circumstances, and abilities. No one is equal on this road, but everyone is free.
Now, let’s look at another highway. Let’s call it Equality Highway. On this road, the government has set up arbitrary rules to make the travelers more equal—or at least to give them more equal opportunities. It’s only fair, after all. Why should some people drive new, fancy cars while others plug along in clunkers? If the government can do something to fix that, it is only right and just that it should.
When people set out on Equality Highway, they can’t anticipate what the laws will be. Justice is not a matter of the rule of law, but rather of the malleable standard of equality. Therefore, the rules change as different groups vie for their form of equality. Unlike Freedom Highway, where the rule of law reigns supreme as a matter of formal justice, Equality Highway is ruled by men in the name of social justice, achieved through redistribution.
At one point on the highway, travelers are stopped and forced to change cars because it’s not fair that some people are driving Mercedes while others are driving Hondas. At another stop, everyone is forced to travel at a lower speed because some cars aren’t able to go as fast as others. At another point on the highway, traffic is diverted in one direction as all travelers are forced to end up at the same destination. It’s not fair that some people are going to the Ritz Carlton while others have to stay at the Motel Six.
Which highway is America traveling on? Given the growth of government, the increase in corruption, greater spending, higher taxation, programs like ObamaCare and Common Core, and punitive regulations, can we say that we’re traveling on Freedom Highway?
We’re on the path to greater equality, not greater liberty, and it is only through liberty—the freedom of the individual—that humanity will progress. Equality leads to despair. Liberty leads to joy. As Lord Acton said, “The finest opportunity ever given to the world was thrown away because the passion for equality made vain the hope for freedom.”
According to the Heritage Foundation and Wall Street Journal’s 2014 Index of Economic Freedom, the United States is categorized not as a “Free” nation, but as a “Mostly Free” nation. It ranks 12th behind Hong Kong, Australia, New Zealand, Canada, and Ireland (among others).
Mostly free? We’re the United States of America and we’re mostly free? Are you kidding me? According to the index, the United States is the only country to have lost economic freedom each of the past seven years!
How did this happen? Through the growth of a centralized government controlled by economic planners and backed by big corporate cronies and special interest groups.
In the name of more equality and fairness, regulatory agencies have expanded to manage economic activity, particularly in the financial, health care, and energy sectors. As the report says, this has opened the door wide to cronyism and corruption. “Although property rights are guaranteed and the judiciary functions independently and predictably, protection of property rights has been uneven, raising charges of favoritism.”
Additionally, government expenditures are slightly over 40 percent of GDP, and the total public debt is more than 100 percent of the size of the economy.
Government interventions (those ever-changing rules along Equality Highway) have played a big role in the loss of liberty, whether through quantitative easing or substantial subsidies for agriculture, health care, and other welfare programs. The regulatory process has been a deterrent to investment, and “a backlog of ongoing rulemakings has prolonged business uncertainty, impeding economic growth.”
While I know that many people who talk about economic equality don’t mean to support a more centralized government, the fact is that they are. By giving credence to the idea that the major problem in our society is economic inequality instead of a loss of economic liberty, they are acting as statists — even if they don’t really support socialist doctrines.
Barack Obama said that “individual freedom is the well-spring of human progress.” How right he is. Sadly, his policies don’t support that idea. Instead, they promote his true belief—and that of all progressives: that the wellspring of human progress is the collective, managed by economic planners and the elite through redistribution in the name of equality and social justice.
My plea to all who believe that human progress is achieved through the empowerment of the individual is to abandon your passion for equality and revive your passion for liberty. Speak loudly and often of economic liberty, not economic equality. If we do this, if we stand for the individual—and all the inequality that entails—our hope for freedom will never be in vain.
Published in General
With great respect, I disagree. We need to make a distinction between whether or not inequality is a problem (which is one discussion) versus whether more or less government is the solution (an entirely different discussion). What you’re saying in this piece is that anyone who believes economic inequality is a problem is automatically (even if unconsciously) in favor or more government. Since I do think inequality is a problem, but I categorically believe that the remedy requires less government, I’m compelled to disagree.
As we said in discussions about the Piketty book (you know, the latest craze among economists), wealth comes from two basic sources: property and labor.
Note that, at least under practical capitalism, property and labor aren’t in any real competition. The wealth gap indicates that one sector is not performing efficiently on its own, not that the other sector is suppressing it.
Nice. Forwarding to misguided step-son.
It seems to me that is income equality were actually achieved naturally somehow, it would limit innovation. I’m not an economist, but it seems to me that many goods and services undergo a kind of affordability succession. They start out as only accessible to a wealthy few (e.g., cell phones 30 years ago, or video recorders 40 years ago). Those few extremely wealthy individuals mean that really expensive new goods can more easily get a toehold in the market. From there, innovation and economics of scale (I hope I’m using that term correctly) bring down the price and improve the quality. If a market has no niche for ultra-expensive luxury goods, those goods can’t evolve into something affordable to the masses (like cell phones and VCRs).
People who call for “equality” of income/wealth rarely support equality of power or equality of influence. And power is always and everywhere convertible into effective wealth: either via in-kind benefits like the dachas of Soviet apparatchiks, or cash conversion of influences as in the fortunes obtained by Gore and the Clintons.
Many people in “progressive” leadership positions are graduates of the Harvard Law School. Do you think these people want to see a society in which the career, status, and income prospects for an HLS grad are no better than those for a graduate of a lesser-known, lower-status (but still very good) law school? C’mon.
Quite a few “progressive” leaders are members of prominent families. Do you think Teddy Kennedy would have liked to see an environment in which he and certain other members of his family would have had to answer for their actions in the criminal courts in the same way that ordinary individuals would, without benefit from connections, media influence, and expensive lawyers?
More on this at my post Jousting with a Phantom.
I am one of those people who believes that Income Inequality resulting from Crony Capitalism is a huge problem in our society.
We can agree that in a truly Capitalist economy Income Inequality is actually a useful outcome. I want the brightest minds to put forth the effort necessary to become the next Dr. Ben Carson or the next Bill Gates at least in part because of the financial rewards that come with it.
It does bother me, however, when I see how individuals and corporations use lobbyists, bribes and nepotism/cronyism to gain a competitive advantage in the marketplace. That form of inequality is demoralizing to those who don’t come from an influential family or have an army of lobbyists to fight back.
KC is right in pointing out that a stronger job market helps to level the playing field. As long as the job market is weak, employers can offer little or no raises and treat employees poorly because the employees cannot easily find another employer who offers better salaries and working conditions.
But I like my Honda. I don’t want a Mercedes. If someone else prefers their Mercedes, that is cool. Let them drive Mercedes. Let me drive my Honda.
That in a nutshell is the argument against forced equality. Individuals are forced to take things they do not want, and forced to pay for the things they do not want, but are being forced to take. (Lactation services for men in Obamacare, for instance.) Worse, are expected to be grateful for having the thing thing they did not want – or else.
The only equalities a government can enforce is an equality of opportunity or an equality of misery. Equal access to Freedom Road, or equal subservience on Equality Highway.
Seawriter
One more note … put yourself into the role of an investor. On the one hand, putting your money into stocks or property will yield a respectable return. On the other hand, putting money into an investment that creates jobs is increasingly risky; even if you succeed, the job-parasites (who leech money from the profits into unions or taxes or healthcare, etc.) will give you lower return at greater risk.
Naturally, as wealth-from-property becomes increasingly more attractive, it makes it less-and-less likely that anyone will invest to create jobs. Why take greater risk for less return? The inequality grows, because it’s feeding itself. Inequality is a problem, because it makes property investment so much more attractive than job investment.
But the analysis can’t just end there. You can’t stop and try to fix the symptoms. You have to fix the causes. If the reason the inequality grows is that job creation is too risky and offers too little of a return – that’s the problem you have to fix. Trying to make the income numbers come closer on a graph is papering over a real hole.
Some of the GOP’s positions, while not precisely libertarian, would have the effect of lessening inequality; e.g. education reform, or border security security. Border security, especially, could really make a difference.
Current government policy has created a severe imbalance between skilled and unskilled workers, as immigration laws are enforced against the former but not the latter. The solution is to either deregulate skilled immigration (which I don’t think is politically possible), or similarly restrict unskilled migration.
I’m all for income equality . . . I want MY INCOME=MY TALENT + MY ABILITY + MY KNOWLEDGE + MY EXPERIENCE + MY WORK ETHIC.
So where are motorcycles in the analogy ? Cannot have those under this premis.
How many of you would be for “Income Regulation?” Because if “Income Equality” becomes voted into law — the “Income Equality Act” — it will be implemented by regulations and create a new administrative branch of government, with guidelines issued by a non-partisan Income Regulatory Advisory Board. The Income Regulatory Administration will be supplied with a 10,000+ page bill entailing a comprehensive set of tools and rules that are to be used by the Agency in order not only to entail to whom the regulatory guidance applies, but also who will be exempted from the new income regulations. And the bottom line is that in a nutshell, the rules will be applied “as the Chief Administrator shall determine.” Which of course essentially boils down to one person’s decision, based on partisan / political considerations. Does this at all begin to sound familiar to you?
Now imagine you’re living under this new system, and I’m not going to say at the moment whether the newly appointed Czar of the Income Regulatory Administration will be Catherine Sebelius. Explain to me why this is not tyranny.
For you Star Wars fans out there, you should now be able to properly understand Darth Vader’s advice to his son, “If you only understood the Power of the Dark Side!” This Dark Side is the power that is transferred to the government when people voluntarily give up their liberty (and their happiness) so that government can take on responsibilities that a free people nominally perform themselves, as in when government focuses itself on taking responsibility for matters internal to the nation that in the ordinary, healthy course of things, would be dealt with locally or by local and state governments. The Light Side of the force, or the other hand, could be considered as the application of force and will designed to act against outside enemies and aggressors so as to guarantee the safety of the people’s liberties. This most legitimate power of government is embodied in the role of the Commander in Chief laid out in the constitution. Abdication of the responsibility to protect from unwanted foreign encroachments and over attention to controlling the lives of the citizens is a sure sign that national government is proceeding by way of the Dark Side of the Force.
If you think income inequality is a problem in general (one not caused by government corruption), but it is a problem because of market forces, then you are a statist (to one degree or another) because the only way to bring about greater income equality in that situation is through a force powerful enough to make that equality happen. The only force able to do that is government.
If you think income inequality is a problem because of government corruption, then deal with government corruption as I stated in my post. The problem with government unfairness is not income inequality but inequality under the law. The reason this focus is important is because when you fix the situation and you get rid of corruption and everyone is once again being treated equally under the law, you are going to have income inequality. You will still have the 1 percent and you will still have people who are poor. You will have more opportunities, freedom of opportunities because there is fairness in the markets, but you will not have income equality.
If you see the market as weak because of government involvement, then get government out of it. But that still won’t create income equality. I would also add, the goal should never be more equality anyway. That is the wrong focus. Our focus should be greater liberty.
D.C. Very well written and so clear about income equality. Income equality will never happen because people are all different and we were not made the same or
want the same things in life. Common sense tells me that I will never be in the families of the wealthy like the Kennedy’s or the Rockefellers or the Trumps. I will never have their kind of money no matter how many laws are passed. The government has already passed laws to make us buy light bulbs that we do not want and are dangerous to
our environment if they break. They want us to use the same washing machines (front loaders that I despise), put our home at a certain temperature and control that so that
all of us equal and using the same amount of energy. Drive small cars (I love my big car). Are we as a nation stupid to think that our incomes will all be the same? No Way. will this every happen
One important aspect of income inequality is whether the inequality is seen to be the product of merited income versus income associated with unfair advantages. Few people complain about the income earned by performers because their income is more conspicuously related to merit. The merit of income earned by CEOs is, fairly or unfairly, less easy to perceive.
What would income inequality be if we lived in a pure meritocracy. Examine the inequality among MLB baseball players, where performance is documented to three-digit precision (if not accuracy) The attached link shows that the Gini index among baseball players points to far more income inequality than exists in the country as a whole.
Our income inequality may not be totally merit-based (i.e. crony capitalism), but its levels are not inconsistent with what we might expect in a meritocracy.
http://teamsportsanalysis.blogspot.com/2014/02/mlb-salary-inequality.html