“When you see that in order to produce, you need to obtain permission from men who produce nothing – When you see that money is flowing to those who deal, not in goods, but in favors – When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – When you see corruption being rewarded and honesty becoming self-sacrifice – You may know that your society is doomed.”
Ayn Rand, Atlas Shrugged
Some years ago, I debated Robert Reich, President Clinton’s former Labor Secretary, on a PBS program about income inequality. It wasn’t much of a debate, really, as I was a bit intimidated. Stephen Moore, one of President Trump’s economic advisers, at that time a Wall Street Journal editorialist, was originally supposed to have been on the program when I had agreed to go on. His not showing, despite some warning ahead of time, put me in an unexpected spot in a venue I’d never before experienced.
But enough excuses. At the time I argued that income inequality in the United States is an artifact of how our market-based economy works. Inequality benefits us because highly productive and innovative people are highly rewarded, which incentivizes them and others in the future to be highly productive and to innovate. This benefits everybody, so that the United States has some of the richest poor people on planet earth. Robert Reich, on the other hand, simply cited statistics and talked about how income inequality leads to social upheaval, and so we needed to do something about it. His solution was income redistribution. Since I didn’t see a problem, other than Reich’s agitating, I proposed no solution.
But now, Houston, we have a problem. Among young people, socialism is as popular as capitalism. Our social fabric is increasingly frayed, and conservative populists are no happier than young socialists.
To this day, I believe that when income inequality is caused by market and demographic forces, it is a strength rather than a weakness. But now, after many years of constant drumbeat by the likes of Robert Reich, and decades of miseducation in the public schools, income inequality, indeed, appears to present an existential threat to the United States.
If income inequality were solely due to market forces, though, it’s doubtful it would present a threat to the nation. Americans have always accepted income inequality when getting rich meant you’d had the proverbial “big idea” or had exceptional talent and worked hard. Ask around, and it’s likely you will find only a handful of people with any resentment over the fortunes of Steve Wosniak and Steve Jobs, who started Apple in a garage. Nobody is decrying the riches of Kobe Bryant, whose most highly-valued skills were only suited for entertainment that, nonetheless, enriched the lives of many.
The problem with income inequality in the U.S. today is that so much of it is caused by crony capitalism (a redundancy for Marxists) or simply, cronyism – the pursuit and use of government policy to favor a few over the many. This is the subject of a recent Wall Street Journal editorial entitled “Boomer Socialism Led to Bernie Sanders” (gated) wherein it is argued that government policies such as zoning and other land-use regulations, rich pensions for government employees, and various labor regulations, have made it difficult for younger generations to become prosperous. When they were created, these policies benefited those who were already established in their careers and in their homes. Others have always paid, and now continue to pay, the costs of those benefits.
We have added a new tagline to our logo at the 1889 Institute: Expanding Opportunity|Fighting Privilege.
No, this is not the sort of privilege so many talk about these days where some of us are supposed to apologize for being born into better circumstances than others. The privilege the 1889 Institute fights, and wants our government leaders to check, is that which was artificially created by policymakers at all levels of government, whether due to naiveté or less wholesome reasons. These policies that benefit a few at the expense of the many include occupational licensing of all kinds, special tax breaks in various forms for businesses (usually big corporations in the name of jobs), outright subsidies, permitting practices, zoning, a general lack of accountability, and programs that supposedly help the poor, but make some richer (like Medicaid).
Ayn Rand’s quote above comes all too close to reality today. It seems too coincidental that our cultural unrest, with conservative populism on the one hand, and socialism gaining popularity among the young on the other, are peaking following epic financial bailouts of banks and other financial entities a decade ago. That event allowed billionaires who should have gone bankrupt to continue enjoying lifestyles they never really earned. The problem with our social unrest today is not inequality of income; it is inequality before the law, and privilege unjustly granted.
Legally granted, unjust privilege can, and should be, undone, not just to preserve the United States for future generations, but simply to do what is right.
And so, the 1889 Institute will continue to represent and advocate the ideals embodied in Oklahoma’s first land run: On April 22, 1889, pioneers gathered at a starting line and raced to claim tracts of land from the U.S. government for the price of staying on the land for five years. The land run typifies the American ideal of opportunity – readily available to anyone with the personal initiative to take it, but without expecting equal results. Regardless of status, education, or station, no participant in a land run had an official advantage. In this way, the land run illustrates 1889 Institute’s commitment to fighting privilege granted by government, and expanding opportunity where government has intruded excessively.
Byron Schlomach is Director of the 1889 Institute and can be reached at [email protected].