Wednesday, June 3, 2015
A False Dichotomy: Freedom vs. Equality
Although there are significant differences between America’s two major political parties in terms of economic philosophy, it seems to me that you can boil most of these differences down to a contest between freedom and equality. If these two ideas lie at either end of a continuum, then Republicans would cluster toward the freedom pole, while Democrats would gravitate toward equality. As you might expect if you’ve been following this blog for long, even though I am unaffiliated I favor equality above freedom, at least as economic freedom is defined by conservatives in America today. That, however, is a major qualifier because I also believe that the conservative definition of freedom is incomplete, which effectively makes this whole freedom vs. equality debate a false dichotomy. In this case, it is quite possible that these two concepts are not mutually exclusive.
If you follow the online comments to the opinion pages of both Salt Lake daily newspapers, as I do, then you are aware that some LDS conservatives believe rather strongly that the rich have every right to get as rich as possible without government interference, and that the poor should stop taking government handouts, pick themselves up by their bootstraps, get a better education, cast of their obvious laziness, and thereby join the ranks of the wildly successful. Some of these comment composers are offended at the idea that government might redistribute a little wealth to help level the playing field, and the whole idea of taxation is simply theft from the “productive” members of society—this despite all the things they as conservatives still want government to provide for them. They just don’t want to pay for all this stuff with taxes. Of course this is a bit of a caricature, but not all that much really. (Read the online comments.) Much of this attitude represents a mind-set that has been carefully cultivated by Fox News and certain talk-radio personalities. Unfortunately, too much of it filters up even to the highest levels of party politics, but that is another story.
My primary concern today is with the mistaken notion that economic freedom is so paramount that economic equality (one of the two major goals of the American Dream) should not even be mentioned. Equality is evil because in some minds it implies redistribution. Basically, those who have invested in a business should be free to pay any wage they can get away with and accumulate as much wealth as possible, the more the better. The very real trajectory of where this line of thinking will take us is irrelevant, because it is ideologically kosher. Facts be damned.
Of course I have some serious macroeconomic concerns with this simplistic view of economic freedom. In a nutshell, if wealth keeps accumulating at the top at the rate it is today, soon the consumer classes will not have enough disposable income to purchase all the products that our beloved corporations need to sell in order to stay in business. The result would be falling demand, which would translate into fewer jobs, which would require more people to seek government assistance and would cause less money to circulate in the economy. This is the recipe for recession, and we know where that leads. The economics experts today are somewhat baffled by the current situation in America. They think the economy should be doing better, but it isn’t. Growth is weak. Employment is okay, but wages are stagnant. One significant factor in all this is the massive inequality we’ve created with over thirty years of supply-side economics, but I’ll save that topic too for another day.
Today I want to focus on the conservative definition of economic freedom. Whenever Republicans talk about economic freedom, they refer only to the “job creators,” whoever these people might be. What they really mean are the wealthy, many of whom are not actually job creators, but “job creators” is a fine euphemism, so I’ll go along with it. The problem with the Republican view of economic freedom is that it excludes the vast majority of Americans, those who actually hold the jobs the “job creators” purportedly create. Wage laborers, as I have pointed out in an earlier post, are not really free. Oh, certainly they are free to leave one place of employment and search for another. Or, as defenders of the current arrangement remind us, they can always start their own business. Yes, if they have either sufficient funds or enough credit to start a business, but that again eludes the vast majority of job holders. Let’s face the music. We have become a nation of hirelings, which means most Americans do not enjoy either economic freedom or economic equality. So the conservative utopia Republicans keep trying to promote is really a land in which a few are free and the rest are, well, not so free. The aristocratic precapitalist society we thought we had banished through the great American experiment is not so different, in practice, from the society corporate capitalism is giving us. In significant ways, we are back where we started.
Let me put this bluntly. If you are an employee in almost any business, small or large, you are, in a very real sense, property. You are owned by either the stockholders or the proprietor of the business you work for. You don’t believe me? Let me illustrate with a common example. Let’s assume a company is being sold by its founder, and the business’s primary asset is its workforce of 100 technicians and researchers. The company would be quite worthless without these employees, so what is really being sold is a group of people, along with a few peripheral physical assets—an office building, computers, desks, and whatever else the employees need to create their product. This happens all the time. Businesses are bought and sold, and the workers are simply part of the package, part of the property being exchanged for money. When corporate executives say, “Our employees are our greatest asset,” they are not speaking figuratively.
So, now that we have established that unpleasant little fact, what are we going to do about it? Nothing? That’s not much of an answer. But how can we change a system that is so entrenched that most people don’t even realize they are property of the businesses that employ (use) them? Well, we can start by educating ourselves and others so that we can see through the charade. We can also stop supporting politicians who defend their efforts to increase economic inequality by trotting out the silly argument that they are devoted to economic freedom when what they are really dedicated to is economic liberty for a just small, favored minority of Americans.
What are we to think of a political party that stacks the deck so that those who are already wealthy can accumulate an even greater percentage of the wealth that is created by all Americans, in thousands of businesses, leaving most workers with a shrinking share of the prosperity they help create? What are we to think if this party then develops a rationale to support this strategy that includes the demonizing of the poor? Remember the 47 percent? An unfortunately revealing remark by a man who certainly knew better. But it plays well with those who have been living in the conservative sound bubble. A 2014 Pew Research Center survey showed that over three quarters of conservatives believe that the poor “have it easy” because of government benefits.1 This thinking is the result of a concerted program of propaganda against the unfortunate. And this propaganda is very effective. It also enables the GOP to pursue policies that stack the deck even further against those who are being excluded by a skewed economic system. Two related exhibits: (1) In April of this year, the Republican House passed legislation that would repeal what has been called the death tax, a change in the estate-tax law that would benefit only about 5,400 of the wealthiest families in America. Only two-tenths of 1 percent of Americans who die are wealthy enough to pay any money under the existing law.2 Fortunately, this legislation will likely die in the Senate, but it would be vetoed by President Obama anyway. Still, it sends a message. (2) At the same time, the Republicans unveiled yet another proposed budget that would cut benefits to the needy. As they say, actions speak louder than words, but in this case the words and the actions are in perfect harmony. In essence, the Republicans, in pure ideological devotion to their limited definition of economic freedom, are working overtime to accelerate the rampant inequality that is threatening our nation’s future. I see this not just as an economic issue, but also as a moral issue.
The problem with the inequality bubble we are seeing today, which is worse now than in 1929 or even 1789,3 is that it is not sustainable. It may end in collapse, or it may end in revolution, but end it will. In either of these two scenarios, we would be in a much more difficult spot from which to effect change. But there are things we can do now, before it is too late, to reverse the trends we are seeing. If we don’t, then we will surely arrive at the destination for which we are heading, and it is not a very pleasant place. In the coming weeks, I’ll tackle some of these possibilities. And I hope, in the process, to show that true economic liberty for all is not really incompatible with economic equality.
1. Christopher Ingraham, “More Than Three Quarters of Conservatives Say the Poor ‘Have It Easy,’” Washington Post, June 26, 2014, http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/26/more-than-three-quarters-of-conservatives-say-the-poor-have-it-easy/.
2. Editorial Board, “Real Estate Tax Would Reward 0.2%: Our View,” USA Today, April 16, 2015, http://www.usatoday.com/story/opinion/2015/04/15/estate-tax-exempt-congress-president-obama-editorials-debates/25852243/.
3. Paul B. Farrell, “Opinion: The Inequality Bubble Is Accelerating, Worse than ’29, even 1789,” MarketWatch, April 20, 2015, http://www.marketwatch.com/story/the-inequality-bubble-is-accelerating-worse-than-29-even-1789-2015-04-14?siteid=bigcharts&dist=bigcharts.