Policies Meant to Achieve Equality Are Very Unfair to the Least Equal
November 29, 2012
This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published November 29, 2012 on Forbes.com.
Steve Moore begins his brilliant new book, Who’s the Fairest of Them All? The Truth About Opportunity, Taxes and Wealth In America, quoting President Obama saying, “We’ve sought to ensure that every citizen can count on some basic measure of security. We do this because we recognize that no matter how responsibly we live our lives, any one of us, at any moment, might face hard times, might face bad luck, might face a crippling illness or layoff.” President Obama is only unique in this in thinking that he is unique in this.
Obama consistently frames the issue as this is what he is for, while his political opponents are in favor of letting the poor starve, or those without health insurance die for lack of medical care. But after more than 30 years as a political activist, I have never even met one Republican or conservative who holds those views that Obama ascribes to them. Everyone I have known agrees with Obama’s statement above. That includes Reagan’s own long time senior welfare policy advisor, who I worked for directly at the Reagan White House.
I agree with Steve Moore, an editorial board member and senior economics writer at the Wall Street Journal, and a regular economic commentator on CNBC TV and Fox News. Moore says early in his book, “Inarguably, a top priority of U.S. economic policy should be to help expand opportunities and raise the earnings of those stuck at the bottom….That in a nation of such affluence, there are still some forty million Americans living in poverty today is a travesty and a failure of our economic and social institutions.” Even more so when our government spends a trillion dollars a year on welfare. That’s not counting Social Security and Medicare.
Moore continues, “The issue is: How do we make sure that the middle class and the poor can get ahead.”
He frames that issue this way: “The Left argues that conservatives don’t care about poor people, and this is why they oppose income redistribution in tax policy” and other liberal/left policy nostrums. But, Moore explains, one of the premises of his book is that
“it is equally (maybe even more) plausible to say that liberals don’t care about poor people. The welfare state has trapped generations in poverty. Liberals opposed welfare reform when it was a great success in lifting the incomes of the poor. High tax rates are not an effective way to redistribute income. The minimum wage eliminates jobs for those at the bottom. The Left defends inner city schools, but those dismally performing schools have done as much as anything to hold back the economic progress of the poor. The dissolution of the black family, in part because of welfare, has forced several generations of black children to be reared in fatherless homes, which is a prescription for troubles later in life.”
Moore shows that it is economic growth, which stems from capitalism not socialism, that best advances opportunity and prosperity for the poor and middle class. Moore writes, “the free enterprise system is the on-ramp to economic progress and rising incomes….[T]he poor are always and everywhere better off in economically free countries than in nations that are not free. So, in other words, if we judge society by how well it serves the poor, then free enterprise is far and away the greatest anti-poverty program known to man.”
The real question posed by President Obama is “Will we put the pursuit of equality ahead of the pursuit of growth?” Moore explains, “Mr. Obama and his left-leaning advisors are telling the electorate that the best way for the middle class and the poor to improve their economic condition is not through hard work, saving, risk-taking, and other economic virtues, but by taking – or stealing – from the gains that the rich have made ‘at everyone else’s expense.’ It’s a radical ‘Robin Hood’ philosophy.”
We can demonstrate the inherent conflict between the pursuit of equality by President Obama and the Left, and the economic growth that most benefits the middle class and the poor, with a simple thought experiment. Suppose the government enforced a policy of absolute equality of income and wealth for everyone. If your income was above average, the government would take the “excess” and give it to those whose income was below average, so the income of everyone would be exactly the same. If your wealth was above average, the government would take the “excess” and give it to those whose wealth was below average, so the wealth of everyone would be exactly the same. Such policies would inevitably lead to exactly zero savings, investment, economic growth, and even work.
If you save and invest more than average under such policies, the government would just take all of that “anti-social” savings and investment, and give it to others. If you save and invest less than average, the government would reward you with grants to make sure you had the same wealth as anyone else. The only rational response to such policies is to save and invest nothing at all, as the government would give you the same wealth as everyone else in any event, without the sacrifice and risk-taking of savings and investment.
But the difference between the modern prosperity we enjoy today, and the standard of living of caveman days, is entirely due to the savings and investment that provides the modern tools and equipment of today, from computerized steam shovels, to skyscraper tall cranes, to the desktop at work, to the laptop you take on business travel. Zero savings and zero investment means zero economic growth and prosperity.
The same would result in regard to work. If you work more than average, and so earn more, the government would take the extra earnings, and give them to others, who worked less than average, and so earned less. If you worked less than average, and so earned less, the government would reward you with grants so that you would enjoy the same average income as everyone else. The only rational response to such policies is to not work at all, as the government would still give you the same income as everyone else, without the trouble and self-sacrifice of going to work.
We have seen exactly these results in the real world examples of societies that have pursued the most extreme equality policies, such as North Korea, or Cuba, or the old Red China of the Cultural Revolution, or the old Soviet Union, where the workers pretended to work, and the government pretended to pay them, in worthless currency with nothing of value to buy.
I don’t believe in human suffering. So social safety net policies to protect the poor from deprivation and want are justified on these grounds, as indicated at the outset. Trying to modernize our current old and outdated poverty programs so they can serve the poor far better, at far less cost to taxpayers, as Paul Ryan and others are trying to do, does not mean opposition to any such programs at all.
But going beyond such policies to impose increased taxation and spending to achieve more “equality” tends toward the same results as described above, to the extent of such policies. That means more poverty and a reduced standard of living for the middle class, as Barack Obama and his neo-Marxist Democrat Party are proving once again today.
That is why such “equality” is not even a proper or valid social goal. Indeed, such policies are not fair either, since they deny the productive the rewards they have earned. And what is fair about more poverty, and a declining standard of living for the middle class, as we see today?