Commentary

A Different Kind of Exploitation

A country’s decline begins only when initiative and excellence are no longer valued by society. The US middle class is not exploited by the free market but by the rhetoric of redistribution and fairness that has taken hold in America.

In modem American politics, complaints about “economic inequality” have long been a staple of the Democratic Party. During the Depression, Franklin Roosevelt perfected the complaint, purporting to speak for the “little guy.” Barack Obama today champions the “middle class,” ironically undercutting the complaint — apparently, the “little guy” has moved up. But the unquestioned premise endures: out of fairness, economic inequality is a problem government must address. Really?

We inherited a much narrower sense of equality. Indeed, it’s the premise of our founding document. The Declaration of Independence, rejecting the political inequalities of the Old World, proclaims that “all Men are created equal.” But in so writing, Jefferson meant simply that we all have equal rights to “life, liberty, and the pursuit of happiness,” plus the right to secure those rights — the right of self-rule — through governments whose just powers are grounded in “the consent of the governed.”

If self-rule is to be enjoyed equally, however, government must be limited. It can pursue neither equality of result nor equality even of opportunity through redistributive schemes — not if people are to be free to pursue happiness as they wish, alone or in association with others. We’re born with equal rights — to pursue happiness, not to happiness. What we do with those rights is up to us. We can be industrious, or not; beneficent, or notindeed, we may be lucky, or not.

That’s freedom: nothing more, nothing less.

Our history, the work of mere humans, has reflected that vision imperfectly, of course. With the· Constitution’s oblique recognition of slavery, made necessary to ensure union, equality got off to a bad start. The Framers knew the institution was inconsistent with their principles. It didn’t die naturally, as they’d hoped, but only after a civil war. Segregation followed in the South, until the 1960s, all of which still colors our conception of equality, often for the worse: affirmative action, for example, treats people unequally in the name of equality.

But slowly, that kind of unequal treatment is receding. Not so with the unequal treatment that flowed from the Progressive Era, as instituted by the New Deal, which has increasingly infused American politics with the idea that government’s role is not simply to secure our rights and provide certain public goods like infrastructure and clean air, but to provide all manner of private goods, like education, retirement security, health care, and housing, all of which requires massive tax and regulatory redistribution, reducing us ineluctably to dependents on, if not servants of the state.

In fact, a recent Heritage Foundation study found that in the first two years of the Obama administration, dependency on the federal government alone rose 23 %, with 67 million Americans now relying on federal programs. To pay for those, the Bureau of Economic Analysis tells us, total government spending has risen from 27 % of GDP in 1960 to 3 7 % today.

That in turn requires more taxes — but, under the modem view, not equal taxation. In fact, the Tax Foundation reports that the “1 %”that Obama and the “occupy” crowd have so demonized pay 37% of federal income taxes, while the share paid by the top 5% of earners rose from 43% in 1986 to nearly 60% in 2008. Meanwhile, the percentage of Americans who pay no or negative federal income taxes has increased from 18.5 % in 1986 to 51 %today. Is that fair? It certainly isn’t the equal treatment that our founding principles plainly require.

But it’s not only equality that suffers when we move from private to public welfareincluding the “corporate welfare” that inevitably arises when those best able to work the redistributive system do so. Over time, the set of incentives that such a system establishes saps the moral fiber of a nation. We can live, mostly, with the envy that accompanies natural inequalities. Inequalities created by government are altogether different. The incentive to “get mine” that such unfairness unleashes has brought us, collectively, to borrowing 40% of what we spend and to a federal debt approaching $16 trillion and growing. That will not be reversed by still more collectivism in the name of equality — or fairness. Obama claims that “We’re all in this together.” We’ll see, come November.

Roger Pilon is vice president for legal affairs at the Cato Institute and director of Cato’s Center for Constitutional Studies.