Wednesday, April 30, 2014

Inequality – A Screed

As “inequality” has become the premier buzzword among the progressive cognoscenti, I have proposed the obvious solution: That the government should take money from everyone who has more than median wealth and give it to those who have less – and do the same for income as well. Then garbagemen will have the same assets and income as CEOs, rock stars, and senators. What’s not to like? This is, after all, the goal of Elizabeth Warren and the Occupy movement she (claims she) engendered: A state where no one ever has to do anything he doesn’t want to do and never has to go without anything he wants.

But those who protest inequality also protest that this is not at all what they mean: The problem is not that inequality exists, but that there is “too much” of it. Yet it seems obvious to me that if inequality is the problem, then equality is the solution and, contrariwise, if equality is not the solution, then inequality cannot be the problem.

So what is the problem? Everyone outside the Obama administration can see that the American middle class is dying, that poverty is rising, and the rich – especially those with close political and/or family ties to the Obama administration – are getting richer. The Democrats’ answer is to demonize the Koch brothers and to ignore George Soros, the Kennedys, the Rockefellers, Bill Gates, Warren Buffett, Jeff Immelts, Robert Rubin, &c., &c., &c. The odd fact is that the richer one is, the more likely one is to be a Democrat.

(To prevent criticism, I should say that I’m not accusing Obama of not caring about poor people. Far from it! It’s because he loves them so much that he’s made so many more of them.)

But the Democrats are the party of the little guy ... does this mean that rich folks (other than the Kochs, of course) are finally seeing the error of their ways?

Well, no.

When one is at or near the top of the heap, one’s first priority is to ensure that one and one’s family stay at the top. There are two ways to do this: to make even more money and acquire even more power or to use one’s existing power and influence to ensure that no upstart is able to challenge one’s position.

The first method is hard work and is subject to the risk that some poorer person could outhink and outwork the existing elite. The second method is foolproof – and given that the children of the wealthy tend to be fools (have I mentioned the Kennedys already?), that’s obviously the best choice.

What we are seeing is the death of capitalism and the birth of a patronage-based society. Every successful large business has many government contracts, from defense contractors to school textbook publishers. These businesses are motivated to ensure that they keep their contracts; if this means lobbying Congress to restrict competition, then they will do that. If it means hiring the dimwitted scion of a political family (say, Chelsea Clinton), then they will do that. The Federal government is now so huge that no new fortune can be made except with its explicit permission.

Nanotechnology? Better get the EPA and FDA on your side. Information technology? Better work with the NSA. Automotive technology? Back to the EPA, but also the Deparment of Transportation. Financial innovations? Better buy yourself some SEC commissioners.

But it takes large amounts of money to hire the lobbyists, ex-politicians, ex-regulators, lawyers, and other flacks you need successfully to bend the government to your will. Only the largest and wealthiest can compete in that arena.

If anyone tried today to build computers in their garage, the EPA would be on them immediately to require that they first build a multi-million dollar plant with all the safety features the most paranoid fantasist can dream up. (Cost-benefit analysis routinely goes out the window when one is working “for the children.”) Messrs Hewlett, Packard, Jobs, Wozniak, and Dell could not have survived such an inquisition.

If anyone has a truly new and transformative idea – the kind that makes jobs for some people, destroys jobs for others, and causes general prosperity to increase – then those with interests already vested in the status quo will turn to the government to squelch the parvenus. See what’s happening with Uber, Airbnb, and food trucks.

Other strategies that would help keep the elite in their rightful place would be to, say, restrict education to the elites, or artificially depress the wages of the poor so they cannot hope to acquire capital. One could do this by, for instance, encouraging the development of an organization of teachers so devoted to milking local governments for wages, benefits, and pensions that they have no time to concern themselves with the education of children – something like the NEA and AFT. Or one could open America’s borders so that there will be an endless stream of workers eager to make even a few bucks an hour – something like “comprehensive immigration reform.”

The middle class is dying at the hands of government and its cronies. Only when the government is too small to affect the economy will the middle class have a hope of recovering. And only the Tea Partiers have any hope of accomplishing this – all the proposals by Republicans, Democrats, Liberals, and Progressives have the ineluctable effect of further cementing the position of the current power elite.