Tree of liberty

In his inauguration speech two weeks ago, President Obama mentioned that “our country cannot succeed when a shrinking few do very well and a growing many barely make it,” echoing the view of many liberals that income inequality is problematic and unfair in our society.

In the midst of the clamor for wealth redistribution and yet more progressive taxation, almost no one has stood up to defend the wealthy and the enormous productivity it often takes to achieve their status.

Actually, income inequality is among the noblest aspects of a free society: It reflects the fact that productive geniuses, who enhance our standard of living, are not robbed of their effort and are allowed to rise to their highest potential. In short, income inequality is chiefly the result of justice.

I do not care to speculate on the motives of those who would penalize the successful in the name of “fairness.” Let me just say this: No one is harmed by the mere fact of her neighbor having more income or wealth.

Income inequality does not create social instability — except perhaps in a statist or feudal regime where wealth disparities might arise due to corruption. In the laissez-faire society I advocate, where the government does nothing but protect individual rights to life, liberty and property, it is impossible to legally acquire wealth via the use of force.

Others claim that income inequality undermines the “American Dream.” A recent study by the Congressional Research Service is often cited as having shown that income inequality undermines social mobility, since it makes it unlikely that people are able to improve their position in the distribution of income. For instance, the 5 percent lowest income group is likely to stay in the 5 percent lowest income group.

This argument is misleading for two reasons. Firstly, it relies upon the erroneous view of wealth as being a fixed “pie” that is distributed among the population. Secondly, the focus on social mobility in the distribution of income, i.e. relative social mobility, is a red herring. What matters is absolute social mobility, which refers to the ability to improve one’s standard of living.

The view of wealth as a fixed sum that is divided among citizens is so short-sighted that it is difficult to believe it persists in 21st century society. Such a view drops the context of wealth creation and looks solely at the product — the wealth that currently exists.

But wealth arises out of the free, independent effort and thought of men and women pursuing their values — such as by scientists doing research to discover better medicines, software engineers developing more efficient programs, and farmers figuring out how to provide ever greater quantities of higher-quality food. As Ayn Rand once said, “wealth is the product of man’s capacity to think.” (For the New Intellectual)
It is clear, then, that wealth is not a zero-sum game. Everyone can benefit from the wealth creation of others, as it raises the standard of living in society. So the greater wealth production of others, and resulting income inequality, does not imply that the rich are taking away opportunities for the poor to create or receive wealth. In fact, the opposite is often true, such as when entrepreneurship creates employment opportunities.

Similarly, the focus on relative vs. absolute social mobility amounts to an attempt to transform productiveness and value-creation into a twisted competition; in other words, it does not matter whether you are better off than you were before (or better off than your parents) — it matters only if you succeeded in being wealthier than others.

This was never the American Dream. People fled the poverty, oppression and stagnation of the Old World because of the political freedom that the United States offered: the freedom from coercion by the government. This meant, with a few unfortunate exceptions, that no coercive mechanisms existed that could prevent a person from reaping the full rewards of her skill and effort — not for the sake of the monarch, or the Church or the “common good.” Because of this, wealth-creation was able to flourish.

The American Dream does not mean a guarantee of economic welfare (which could only be provided at the expense of others), and it does not mean attempting to be richer than others for its own sake. It means that people are politically free to search for opportunities to improve their lives, and create them.

This is the noble ideal that President Obama assaulted in his speech. This is what we must defend to establish a truly free society.

TRISTAN DE LIEGE can be reached at tflenaerts@ucdavis.edu.

10 Comments

  • Locke
    February 5, 2013

    You assume a lot of false assumptions that must be in place for your logic to be true.

    The most important mistake you make is that you forget that many people could not have succeeded had it not been for the lack of laissez-faire. Public education, the banking system, etc. are all necessary to allow for those who were not born into wealth to be able to actually develop their productive facilities and figure out how they will become productive members of society. Granted, not everyone who goes through the systems will be able to contribute an equitable share back to society. Yet, your logic would deny the geniuses among the poor any opportunity to ever rise; one does not immediately figure out how to survive and become rich purely by talent if one does not have the means to do so, except in the most extreme cases.

    The freedom you seek lacks rules, and it lacks the integrity that existed in Ayn Rand’s ideal. Those who have the capacity and wish to succeed must still be given some things first in order to succeed; otherwise they are doomed to fail from the outset. Imagine if Einstein had been born in the ghettos, if public education had never existed for Marie Curie, etc.

    If truly you believe what you believe, you would have not attended public schools, you would not have traveled by public roads, etc.

    • ttime09
      February 10, 2013

      Locke, we don’t know what education would look like in a truly free system, since undoubtedly there would be more competition. So I won’t speculate one way or another. However, I’d like to point out that nothing I said contradicts what you mentioned about “who have the capacity and wish to succeed must still be given some things first in order to succeed.” I agree. As Aristotle identified so long ago, we cannot achieve a flourishing or successful life without a certain amount of wealth/friends/education etc. I don’t defend capitalism because I think it suddenly makes everyone wealth and successful. I defend capitalism because it doesn’t punish people for being successful, and because it allows people to rely on their own independent judgment rather than initiating force to achieve goals.

      Your last comment is nothing more than a thinly-veiled ad hominem. Even if that were true, it says nothing about whether my argument is sound. However, I think it isn’t true. Money is taken from me and from my parents by force to fund such activities. Why should I sacrifice myself further by not using those? Would you ask me to allow myself to starve rather than accepting food from the communists in Soviet Russia? I see no essential difference.

      Tristan

      • Locke
        February 12, 2013

        It’s quite true that we don’t know necessarily what education would look like in a completely capitalistic situation, but we have seen what happens when there is a nearly completely capitalistic situation: the scene in Atlas Shrugged unfolds, except that the titans of production do not all (or even mostly) act with integrity. Instead of improving their production methods to cut costs, increase production, and improve the quality of their product in order to maintain their dominance over the market, the titans instead merely cut operating costs while maintaining the same prices for customers, all with stagnating standards of quality. This is because of the power of monopolies/oligopolies and the lack of real motivation to deal in honest business once their positions are established, which is completely unlike what Ayn Rand wrote and believed in. The people she idealized are most often not the ones that are the dominant forces in the various industries. Instead, the very people she reviled are often in power.

        In short, each system’s success depends on its people, but with some systems, the capacity for damage that people can wreak upon one another is much less than others.

        Capitalism doesn’t punish people for being successful, it punishes people for not having the resources to be successful right from the start. Economic law is important not because it prevents, censors, or retards independent judgement, but rather because it prevents the dominant powers in each industry from choking out all possibilities to start rivals, bring competition, and prevent abusive monopolies.

        You may say you agree with Aristotle, but an actual capitalistic society is not compatible with his idea.

        It is easy to say that the best companies were started in a condition without regulation, without restraint. However, it is just as easy to say that many of those companies were able to start from “nothing” into great successes is because they were the first to do something well in that industry, in a time period void of a dominant force. Whether they continued their excellence after taking over the dominant market share later on is a completely different story.

        My last comment is indeed an attack on you, but that was always its intent. The purpose is to point out that you, just like all the great businesses (and their leaders), have benefited from existing in a society that is largely socialistic, and that if you really wanted capitalism badly enough, you would have taken more steps to disassociate yourself with the socialistic economy we have, and taken steps to start/immerse yourself into capitalism instead.

        Perhaps you could live in a purely capitalistic community? After all, Ayn Rand has already described a scenario in which that has occurred. If you bought a house with cash privately, if you built your own house, if you worked with others in a privately established society where the entire economy was established by each productive member and restrained by none, then that would be a capitalistic society. It is very doable to establish one, just as it is also plausible for it to succeed. Yet, the choice you have made has not been along those lines, so I wonder that you really want it.

        Perhaps to your surprise, I do not find any system to be intrinsically/inherently better or superior to another. There have been benevolent monarchies, successful anarchies, prosperous socialist regimes, etc. The success of each civilization/government has always depended on the people instead of the system. The systems only dictate how power is distributed and in what form it is distributed, and so I do not theoretically condemn capitalism any more than I condemn any other system. However, the inherent natures of systems are not what we live in; rather, we live in societies where humans run and manipulate the systems, and because of that, we must factor how people operate each system. History has led me to adhere closer to the philosophies of (despite my username) Hobbes and Rousseau; if people on the whole had integrity, the travesties of history would not have occurred on the scale and in the nature that they have: World Wars, foolish stock market bubble build-ups, etc. As such, instituting capitalism is not the release of the economy from the shackles of socialism, but rather the absence of human restraint and the unleashing of a human nature that cannot be trusted.

        I do not ask that you sacrifice further yourself by not using what you pay into, I am asking why you have not removed yourself from the system completely and avoid the sacrifice, just as it was done in Atlas Shrugged. If you can take some advice from Ayn Rand, why not some of her other advice?

  • mertinburl
    February 5, 2013

    And the Economist has this as their leading article so your argument is invalid.

    http://www.economist.com/news/special-report/21570840-nordic-countries-are-reinventing-their-model-capitalism-says-adrian

  • mertinburl
    February 5, 2013

    In his inauguration speech two weeks ago, President Obama mentioned that “our country cannot succeed when a shrinking few do very well and a growing many barely make it,” echoing the view of many liberals that income inequality is problematic and unfair in our society.

    In the midst of the clamor for wealth redistribution and yet more progressive taxation, almost no one has stood up to defend the wealthy and the enormous productivity it often takes to achieve their status.

    Actually, income inequality is among the noblest aspects of a free society: It reflects the fact that productive geniuses, who enhance our standard of living, are not robbed of their effort and are allowed to rise to their highest potential. In short, income inequality is chiefly the result of justice.

    I do not care to speculate on the motives of those who would penalize the successful in the name of “fairness.” Let me just say this: No one is harmed by the mere fact of her neighbor having more income or wealth.

    Income inequality does not create social instability — except perhaps in a statist or feudal regime where wealth disparities might arise due to corruption. In the laissez-faire society I advocate, where the government does nothing but protect individual rights to life, liberty and property, it is impossible to legally acquire wealth via the use of force.

    Others claim that income inequality undermines the “American Dream.” A recent study by the Congressional Research Service is often cited as having shown that income inequality undermines social mobility, since it makes it unlikely that people are able to improve their position in the distribution of income. For instance, the 5 percent lowest income group is likely to stay in the 5 percent lowest income group.

    This argument is misleading for two reasons. Firstly, it relies upon the erroneous view of wealth as being a fixed “pie” that is distributed among the population. Secondly, the focus on social mobility in the distribution of income, i.e. relative social mobility, is a red herring. What matters is absolute social mobility, which refers to the ability to improve one’s standard of living.

    The view of wealth as a fixed sum that is divided among citizens is so short-sighted that it is difficult to believe it persists in 21st century society. Such a view drops the context of wealth creation and looks solely at the product — the wealth that currently exists.

    But wealth arises out of the free, independent effort and thought of men and women pursuing their values — such as by scientists doing research to discover better medicines, software engineers developing more efficient programs, and farmers figuring out how to provide ever greater quantities of higher-quality food. As Ayn Rand once said, “wealth is the product of man’s capacity to think.” (For the New Intellectual)
    It is clear, then, that wealth is not a zero-sum game. Everyone can benefit from the wealth creation of others, as it raises the standard of living in society. So the greater wealth production of others, and resulting income inequality, does not imply that the rich are taking away opportunities for the poor to create or receive wealth. In fact, the opposite is often true, such as when entrepreneurship creates employment opportunities.

    Similarly, the focus on relative vs. absolute social mobility amounts to an attempt to transform productiveness and value-creation into a twisted competition; in other words, it does not matter whether you are better off than you were before (or better off than your parents) — it matters only if you succeeded in being wealthier than others.

    This was never the American Dream. People fled the poverty, oppression and stagnation of the Old World because of the political freedom that the United States offered: the freedom from coercion by the government. This meant, with a few unfortunate exceptions, that no coercive mechanisms existed that could prevent a person from reaping the full rewards of her skill and effort — not for the sake of the monarch, or the Church or the “common good.” Because of this, wealth-creation was able to flourish.

    The American Dream does not mean a guarantee of economic welfare (which could only be provided at the expense of others), and it does not mean attempting to be richer than others for its own sake. It means that people are politically free to search for opportunities to improve their lives, and create them.

    This is the noble ideal that President Obama assaulted in his speech. This is what we must defend to establish a truly free society.

    • mertinburl
      February 5, 2013

      My previous comment is a repost of the great Ttime09′s article “Tree of Liberty.” Which inaccurately portrays liberals as wealthy people haters. To the contrary liberalism is bankrupt in America and only a vigorous communism can replace the liberalism that has collapsed. And there being no left in America it seems perfect timing for communists and other radicals to assert their authority in the power structure.

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