Saturday, October 3, 2015

The Only “Fundamental Injustice of the Modern American Economy” is Government Interference

In my post of 9/26/15 I cited a New Jersey Star-Ledger article titled Obama is to blame for income inequality? Puleez. The editorial labeled the GOP as hypocritical for criticizing income inequality while sticking to its agenda of tax, regulatory, and social welfare cuts in government. In conclusion, the Star-Ledger drives the hypocrisy point home, highlighting the corner the GOP is painting itself into:

By now, everyone has a favorite statistic to reveal the fundamental injustice of the modern American economy. Ours is this: The richest 1 percent has captured 95 percent of the income gains since the Great Recession. So even when our economy grows, most people are losing ground.

Republicans can see the growing unrest over this, and know that politics demands some response. We can only hope that they offer more than platitudes about the virtues of trickle-down economics and the dangers of "punishing success" by asking the wealthy to share more of their gains.

If they want to join the fight for economic justice, then let's see the meat on the bones.

The Republicans opened themselves up to this frontal assault on their free market agenda, such as it is. The sad part is, income inequality is not even a source of anything approaching widespread popular “unrest.” As I pointed out in my Objective Standard piece, The Left’s Pragmatic Shift in Marketing is a Good Sign, the Democrats themselves are backing away from income inequality in their political messaging, because their own polling showed that Americans are interested in lifting their own income, not driving other people’s incomes down. Most Americans still revere the principles of the Declaration of Independence; and consequently still admire, without envy, economic success. Envy doesn’t sell in America, and never has.

So, not only is it hypocritical to play the Left’s income inequality game, it is politically unnecessary, as I explained in my 9/26/15 post. Even more importantly, the GOP could capture the moral high ground by championing income inequality as a sign of a just society. They’d have the majority of Americans on their side. If Republicans are to sound credible in calling for free market policies, even the watered-down version they typically advocate, they’re going to have to stop letting the Left define the terms on income inequality.

I left these comments:

What does the Left's description of free market economics as "trickle-down" say about its view of average people? In essence, that the average person is a helpless, envious incompetent waiting greedily for freebies to be handed down either as a trickle from the rich or as a larger, redistributed handout from the government.

But nothing can be further from the truth. The middle class emerged in a much freer economy with much less government regulation and welfare, and is now struggling thanks to increasing “help” from government. Since government started financing college, the cost of college has become far less affordable even as student loan debt has skyrocketed; the government’s “affordable housing” policies led to a Great Recession; the government’s alleged fix for the housing bust it caused—quantitative easing and easy money—has redistributed money up the income scale by financing financial speculation; middle class “entitlements” reduce savings, threaten to bankrupt the nation, and suck up the 15.3% of the earnings of struggling young people; myriad welfare programs keep people trapped in poverty and discourage upward mobility, which even the Star-Ledger acknowledged is “a problem liberals need to face squarely.” Everywhere one looks, one finds government “helping” turning more and more of the middle class into a welfare class—which is actually the point. It is no coincidence that, as government has grown to unprecedented size and intrusiveness over the past 15 years, the middle class is said to be shrinking.

The problem is not income inequality or the rich (except for the kind “captured” by government favor). Successful capitalists have done more good for average people than any trickle-down government “helpers” could ever conceive. Success is built on trade, the mutually beneficial exchange of value for value, in which no one gets something for nothing. People make money by creating value for others, and people who make a lot of money do so by creating a lot of value for a lot of others. Look around, and ask yourself from where the myriad products and services consumers buy come from. They didn’t originate from workers, who have always been around. They didn’t come from governments, which have always been around. They originate from creative, fortune-building entrepreneurs, who have only been around in the era of limited government, free market capitalism. Where do the jobs that consumers' income depends on come from? Where does the tax money that supports the public sector come from? All of it is generated by successful business activity. It is in every rational person's economic self-interest, especially the poor, to remove the tax disincentives and regulatory roadblocks to success and fortune-building. We should cheer the productive rich, and hope for many more of them.

“Economic justice” as it is used here is a euphemism for injustice. Real justice means less intrusive, more rights-respecting government. Reducing the tax and regulatory burden on the most productive harms no one other than big government power-lusters,  do-gooder phonies, and the sensibilities of the envious. The benefits to all levels of society provided by the fortune-builders, in contrast, are all around us. But the benefits shared by average people are not “sharing” in the sense of “trickle-down” handouts or forced redistribution. They are earned through work and trade. We average people don’t need handouts. We have nothing to gain by hampering economic success. We are perfectly capable of supporting ourselves. We just need economic policies that allow us to keep and use more of our earnings, with fewer government regulatory impediments, and less government borrowing and spending financed with our wealth—i.e., less trickle down from government.

Related Reading:

Three Cheers for "Trickle-Down!"

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