One of the perennial, unexamined assumptions of American politics – at least as seen from the left – is that liberals favor the poor and the conservatives the rich. Conservatives (especially conservative libertarians like me) are supposed to be Social Darwinists, red in tooth and claw, who want the rich to get richer at the expense of the poor. Libertarians are regularly denounced as champions of the capitalist casino, determined to keep the chips falling where chance dictates. Left-liberals, on the other hand, are said to be friends of the poor; they favor the noble ideal of “social justice” and want the wealth of America more equally distributed. Let’s leave aside for now whether a casino is the best metaphor for a free economy. Let’s leave aside too the issue of whether redistribution conducted by politicians is likely to yield social justice (short answer: it won’t). Just on the question of whether left-liberal policies really do favor the poor over the rich, the conventional wisdom is dubious. In my view – not to put too fine a point on it – the opposite is usually the case. People adopt uncritically the conventional view of left and right because they see the distribution of wealth as something static. They see the rich controlling enormous wealth, and applaud when the left calls for ever more steeply progressive income taxes to take it away from them. They fail to consider, however, that real economic life is dynamic. Some people are always getting richer and some poorer, all the time. Looked at dynamically, it’s clear that the practical effect of many left-liberal policies is to keep the poor poor and the rich rich. From a dynamic point of view, for example – from the point of view of a young worker on the bottom rung of the economic ladder – a progressive income tax is really a wealth-prevention tax. The more money you make, the more is taken away from you. It’s a tax on social mobility. This of course hurts disproportionately the people at the bottom. It makes it much harder for them to achieve financial security and to afford things like college for their children. Meanwhile, the rich (the majority of whom self-identify as liberals) already have their wealth and the means to protect it from politicians. But how can you say the poor can’t afford college? We liberals love to subsidize college tuitions! Yes, you do. But perhaps you’re unaware that what you’re really doing is letting colleges increase the sticker price of education at a rate three or four times the rate of inflation. Read Thomas Sowell on this (America’s least-recognized Great Thinker). Elite colleges like Harvard boast that few people pay the full price for their education – just the ‘rich’, i.e., those parents who actually saved for college. They point out, correctly, that most get tuition assistance. But the elite colleges that can afford such policies are few: less than 1% of institutions of higher education in America. The vast majority of colleges and universities in the U.S. depend on government-supplied student loans. The result is that relatively poor people are tempted by easy money to get useless degrees and are saddled with enormous debts. Another roadblock in the way of social mobility. Or take corporate taxes. Left-liberals love them; conservatives and libertarians hate them. But what happens when you tax a corporation? Most of the time the cost of the goods the corporation makes increases and is passed on to consumers. So you have in effect inflicted an extremely regressive tax on the poor. Everybody has to pay more, and the poor pay proportionally more of their income than the rich for the same product. That’s a regressive tax, folks. The other alternative is that the corporation goes out of business, unable to compete with foreign corporations, almost all of which are taxed at lower rates. U.S. workers lose jobs. Again, the less well-off and the less-skilled are disproportionately hurt. The same regressivity, the same hostility to social mobility, is characteristic of many if not most fiscal policies favored by statists. There isn’t space to deal with them all here and now. Sin taxes, the minimum wage, many housing policies, regulatory regimes, crony capitalism, bailouts, quantitative easing – many if not most of these policies either favor the wealthy, actively disadvantage the poor, or block social mobility. I’ll try to explain why in future posts. But for now, try asking yourself this question: In a dynamic society like America’s, which governing philosophy is really fairer – one that makes it easier over time to translate effort and ability into economic success, or one that has the effect, if not the goal, of protecting the haves and keeping the have-nots in their place?
Posted on: Fri, 18 Apr 2014 23:29:42 +0000
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