As the 2004 presidential election nears, Americans will increasingly hear the Democratic candidate and his supporters demand that we “narrow the gap” between the incomes of the rich and the poor. That gap, however, isn’t the injustice the Left portrays it to be.
The Left’s portrait stems from its premise that economic inequality is inherently unjust — not matter if a rich individual honestly earned his wealth or a poor person is responsible for his impoverishment. The anti-capitalists evade that wealth is created and that rational thought and productive work are its source. Instead, they regard money as a static quantity, a fixed pie to be seized and divided up among the masses. To redistribute slices of this mythical money pie to poorer Americans, for example, left-wing politicians impose on relatively wealthier individuals “progressive” income and capital gains taxes.
In fact, these statist measures create whatever actual injustice exists in income disparities between the rich and the poor. Government-enforced redistribution policies essentially foster reduced- or non-productivity and dependence in their recipients. In short, they engender unnecessary poverty. Further, taxation discourages businessmen from investing their finances to expand their companies or to create new ones — all of which would create more jobs for poorer individuals, such as clerks at Wal-Mart and supermarkets, managers at Staples or Home Depot, or computer technicians at virtually any company. Ultimately, statist measures freeze or lower the standard of living of all Americans.
A proper, just economic policy, however, would not aim to narrow the ever-present economic gap between the rich and the poor, but foster the opportunity — that is, the freedom — for each individual to raise his living standards.
In reality, there will inevitably be varying economic gaps between the relatively wealthiest and poorest individuals in a free nation, just as there will always be varying gaps in physical strength between men. And just as the strong can become weaker by lack of productivity and the weak stronger by increased productivity, so the rich can lose their shirts and people in rags can earn riches.
Yet, due to their money-is-a-fixed-pie view of economics, the Left portrays the poor as forever stuck in their economic weakness. But in America the overriding pattern is that poor individuals advance into higher income brackets. In 1940, for example, 87 percent of black Americans lived below the poverty line; in 1960, that percentage dropped to 47; by 1970 it was at 30 percent. In 1991, 95 percent of individuals in the lowest income bracket in 1975 had moved up into higher brackets.
“The standard analysis treats people as frozen within these quintiles,” says economist Richard Salsman, a senior economist at Wainwright Economics. “That’s false.”
Bruce Bartlett, a senior fellow with the National Center for Policy Analysis, writes: “[I]t is worth noting that few of the poor remain poor for very long. According to the Census Bureau, over half of all those classified as poor between 1996 and 1999 were so for less than four consecutive months. Eighty percent were poor for less than a year. This sort of income mobility means that our measures of income inequality are also overstated.”
Under capitalism — the economic system that provides each individual the freedom to maximize his profits to the best of his ability — the inevitable income gaps between economic classes would generally remain the same or narrow. What is most significant, however, is that capitalism consistently raises the standard of living for individuals of all classes, so that today’s poor are always better off than yesterday’s wealthy.
The industrialized nineteenth century, for instance, when capitalism was nearest to being instituted consistently, began an unprecedented rise in life expectancy, from age 30 during the pre-industrial Middle Ages to double that number in 1940s America. In today’s technologically-advanced America, where people generally live into their mid-70s, the poor live substantially better than did the richest pre-industrial kings. The standard of relative wealth and poverty rises consistently under capitalism, and is retarded, regressed or destroyed the more statist measures are enforced, as demonstrated by Medieval Christendom and today by Communist dictatorships such as famished North Korea.
Still, the Left evades these facts to focus instead on “inequality” in order to demand that incomes be coercively made more “fair.” This egalitarianism — or equality for equality’s sake — operates on this vicious premise: since some people are inherently unable to earn a certain level of wealth, the wealthier individuals with that ability must be denied their just deserts to make them and the poor more “equal.”
Still, the Left tries to cover its evasions by portraying its measures to narrow economic gaps as an effort to improve the economic lot of the poor. But these evasions were uncovered long ago, perhaps most tellingly by the status of the average black household during the 1970s and 80s. That’s when illegitimacy rates, irresponsible parenting, and poverty rose significantly in this demographic due to the welfare-state measures President Johnson aimed at them and expanded massively in the 1960s.
What Americans must now uncover most is the Left’s basic motivation to “narrow the gap.” That motive is not concern for the poor. If it were, Leftists would have embraced capitalism long ago. Their motive then can only be hatred of capitalism and the root cause of the wealth-creation it fosters — political freedom and the reasoning, independent and productive individual. The Left’s political measures rest on the same vicious premises of communism, which championed an equal or classless society, an ideology that denounced and destroyed the most able, productive and independently wealthy individuals. The result was that the masses under communism did attain equality — an equality of poverty, squalor and death, through economic collapse, famines and mass executions.
If justice is to prevail in America, then we and our politicians must reject every element of this nihilistic moral and political philosophy. We must focus instead on upholding the equal rights of all individuals to pursue, earn and keep their own property. This is freedom, and it provides each individual, no matter his economic status, the opportunity to potentially narrow the gap from his current living standard to a higher one that’s within his choice and ability to reach
