Some people think that “the left” and “liberalism” are two ways of saying the same thing. Absurd. The Left have abandoned classical liberalism long ago. Two articles highlight that distinction.
First, let’s start with Naomi Klein’s article (author of “The Shock Doctrine”):
Today, the basic promises of the ownership society have been broken. First the dot-com bubble burst; then employees watched their stock-heavy pensions melt away with Enron and WorldCom. Now we have the subprime mortgage crisis, with more than 2 million homeowners facing foreclosure on their homes. Many are raiding their 401(k)s–their piece of the stock market–to pay their mortgage. Wall Street, meanwhile, has fallen out of love with Main Street. To avoid regulatory scrutiny, the new trend is away from publicly traded stocks and toward private equity. In November Nasdaq joined forces with several private banks, including Goldman Sachs, to form Portal Alliance, a private equity stock market open only to investors with assets upward of $100 million. In short order yesterday’s ownership society has morphed into today’s members-only society.
The mass eviction from the ownership society has profound political implications. According to a September Pew Research poll, 48 percent of Americans say they live in a society carved into haves and have-nots–nearly twice the number of 1988. Only 45 percent see themselves as part of the haves. In other words, we are seeing a return of the very class consciousness that the ownership society was supposed to erase. The free-market ideologues have lost an extremely potent psychological tool–and progressives have gained one. Now that John Edwards is out of the presidential race, the question is, will anyone dare to use it?
I admit that Klein is able to phrase her arguments in the sort of matter-of-fact way that many other “progressives” are not. Hence, her arguments are more convincing to people who are not set in their ways on the subject, since they don’t perceive a strong emotional bias in her writing.
Now, let’s move on to Stossel’s perspective:
And as the Chinese and other people get richer, they improve their diets and eat more meat, putting pressure on world food prices.
So media handwringers suggest we should worry about the poor becoming rich.
Actually, we shouldn’t. It would be a sad world if one person’s economic success depended on another’s failure.
Before continuing, note here that Stossel dismisses the zero-sum thinking that many (actually, most) people have.
When the price of, say, oil goes up, entrepreneurs and inventors have a strong incentive to: 1) find more, 2) find alternatives, and 3) find ways to use oil more efficiently. You and I cannot foresee what they will invent, but that means nothing. Predictions about the end of progress have been issued countless times. There is no reason to think they will be right this time.
Assuming government stays out of the way. Our current “leaders” are full of promises about “protecting” workers and industries, creating new “green” industries, and starting worker-retraining programs. For example, Hillary Clinton promises government support for “research (to) stimulate the development of new technologies and life-saving medicines.” Mitt Romney wants “to initiate a bold, far-reaching research initiative — an Energy Revolution, if you will. It will be our generation’s equivalent of the Manhattan Project or the mission to the moon.”
The media lap it up, apparently believing that no one will produce unless our wise leaders create an inducement. Nonsense.
Note that Stossel points out that higher prices (due to emerging market prosperity) will be a driver for continued innovation, including by those “three billion new capitalists” who are entering the market. Short of an imminent world conflict over resources, we now have a larger pool of potential innovators and entrepreneurs.
So who’s right? Or are both perspectives valid to varying capacities?
My view is that progressives don’t get economics and don’t understand the historic impact of market economics to solve real-world problems (hunger, being just one example). Progressives tend to lean on governments to do too much, like provide the means of survival (and even luxuries) as entitlements. That’s a dangerous policy, and that’s why classical liberals (not the same as “liberals” in today’s jargon here in the US) have it right on economics. Leave it to market forces as much as possible and make sure government doesn’t get in the way.
When government becomes involved, market forces often become diluted in the bureaucracy. And although governmental policies could step in and alter the trajectory of market forces to the benefit of populist causes (environment, income disparity b/w rich & poor, etc), that sort of intervention by the Visible Hand of government can be very dangerous in the long run. Breaking competitiveness and innovation in the market place is not a precedent that I’d like to see in this country.
“Just” vs “Unjust” Wealth Disparity
So what about Klein’s central claim about haves and have-nots? Income and wealth disparity is a very big deal in all parts of the world, rich and poor. But allow me to pose the following argument: that there is a distinction between “just disparity” and “unjust disparity.” In other words, if I don’t feel like working very hard at my job, I will earn much less than my peers. On the other hand, if I work very hard and, importantly, take the financial risk to start my own company, I might become very wealthy, more so than the average person.
So, is it “fair” that I become wealthy through my own initiative, risk, and sacrifice? Yes, it is. That’s “just disparity” by my definition. “Unjust disparity” is primarily a problem in parts of the world that are less economically developed and/or derive a significant share of their wealth from natural resources. In the case of countries with natural resource wealth, the government plays a prominent role in doling out money from those resources, often showing great favoritism to certain groups (including the government itself and “inner party” workers). Hence, government is often not a source of equalization of income/wealth, it is a creator of (unjust) disparity.
So do we want a system where economic incentives encourage diligence, innovation and risk-taking? If so, our model represents the quintessence of this, and is, in fact, the envy of the world in free-market capitalism. If, instead, we want a system where the government controls what we earn, then we should model our system after the “grand experiments” of the 20th century that were tried in the former Soviet Union, eastern Europe, Cuba, and N Korea. You can be the judge as to what system works best from the economic, political, and moral stand point.