Thursday, August 1, 2013

America's Economic Troubles a Result of Lack of Free Markets, Not the "Widening Wealth Gap"

One of the biggest straw men erected by statists to justify more government control is the "crisis of income inequality." It's thrown around as if it's a self-evident fact that economic inequality is bad, and the only debate is how to reduce the inequality. 

As an example, this is how former New Jersey Governor James J. Florio opens a recent op-ed titled 'Current extreme economic division raises social as well as economic threats':

If we needed any confirmation that there are huge disparities in wealth and income in this country, a new report confirms that the rich are getting richer and the rest aren’t. 

Florio goes on to describe the statistical nature of those disparities. He says that the great majority of people have seen their incomes and purchasing power stagnate while the rich have grown richer. He then declares "that the unfair distribution of family wealth and income has resulted in our uncivil venomous politics."  

Florio talks a lot about the "tension" between those who want to preserve the status quo because they benefit from it, and those who want "remedial change" and political "moderation" to correct the imbalance. He warns darkly of "social as well as economic threats" and the need to alter policies to head them off. 

This "tension" is a new manifestation of the historical battle, he says, between the individual good vs. the common good. "Upholders of the status quo resist remedial change at every turn, be it in regard to financial services, health care or energy policy. . . . A rigid ideological facade is created to justify policies of blatant self-interest unmindful of the public interest. " 

Florio creates another straw man; the false choice between the status quo and more statist intervention into the economy. Florio is a major Leftist, as signaled by his praise of Warren Buffet's call for more "equitable"—i.e., higher and more progressive—taxes. The "remedial change" that the "upholders of the status quo" oppose in "financial services, health care or energy [and tax] policy" is inevitably of the statist variety. 

Florio ignores the many proposals for change in these areas that leads to less government intervention and freer markets: Blank out—there are no such proposals. There are only stale defenders of the status quo vs. statist proposals for more and bigger government. The third alternative—free market capitalism—doesn't get mention, buried as it is behind Florio's "rigid ideological facade."

I left these comments:

Florio's denigration of opponents' "rigid ideological facade ... to justify policies of blatant self-interest unmindful of the public interest" is an anti-intellectual attempt to silence debate by discrediting pro-liberty arguments without a hearing. 

But Governor Florio's incantations to "the public interest," the "the common good," and the like, and his lament of "the unfair distribution of family wealth and income"--as if wealth is a tribal product rather than the creation of individual producers--reveals his own "rigid ideological facade." Don't be fooled by Florio's call for "remedial change." That seeming "moderation" is a front to sneak in a call for increased government power over a nation of shrinking individual liberty; a continuation of the past century's incrementalist approach to complete collectivism. He may deny this is his end goal, but his tribal premises lead inexorably to that end.

The "wealth gap" is a straw man. One man's success does not come at the expense of others, but by mutually beneficial trade. Most fortunes are created by individual's whose ability and energy creates values enjoyed by thousands, millions, even billions. Just look around at all of the values created by others that give value to your money.

The real threat to the average person's economic well-being is the regulatory welfare state. It's no coincidence that so many articles such as this one are appearing just as the welfare state reaches its most expansive ever. The growing welfare state shrinks the very individual liberty upon which upward mobility and economic prosperity depend. The Great Recession, which was caused and aggravated by government monetary, housing, regulatory, and spending policies, is proof for any objective person of the destructiveness of egalitarian "big government."

Upward mobility is not an entitlement. It is the consequence of individual character, ability, and ambition. The regulatory welfare state thwarts upward mobility in two ways: First, by hampering productivity through regulations, taxes, inflation, and laws such as minimum wage and occupational licensure requirements, and second by killing incentives for self-improvement through redistributionist programs that penalize work and reward non-work.

Related Reading:

A Brief Comment on Income Inequality

The Myth of Middle Class Stagnation by Donald Boudreaux and Mark Perry

From Middle Class to Welfare Class

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