Monday, September 1, 2008

The Rich Get Richer…

And the poor demand more welfare.

Come to think of it, the middle class wants more welfare too. Many are calling for universal healthcare, a graduated tax code, and more.

And so the United States waddles towards fascism. Or maybe socialism. It depends on which party is in power. Either way, the prospects are bleak for lovers of liberty, until we fix the underlying dynamic.

More Liberty Requires More Equality!

Liberty, oligarchy and democracy are mutually exclusive. You might have two out of three, but not all three at once.

You can have oligarchy and democracy at the same time – if the government gives out enough largesse to keep the plebeians happy. It’s happening now in the United States. Government has ballooned during the past century. In other First World nations, the process is further along. In Western Europe, everyone is a welfare recipient.

You can have oligarchy and economic freedom at the same time – if you dispense with democracy. Lichenstein and Dubai come to mind. Another example would be Hong Kong when it was ruled by the British. The United States managed to have small government and democracy at the same time because: 1. The right to vote was limited to property owners. 2. We had an open frontier so ambitious wage serfs could become property owners. Once suffrage was extended to the poor and the frontier closed, government ballooned.

Actually, I was a bit too optimistic in the previous two paragraphs. While Western Europe is still theoretically democratic, the European Union bureaucracy is taking over. And while small principalities sometimes flirt with market economies, they often do not. Furthermore, civil liberty and oligarchy do not mix. Protection of a wide wealth gap requires a police state.

Liberty requires equality. Not complete equality, for we are all different. But liberty requires a wealth gap that is somewhat proportionate to our relative abilities and ambitions. In most countries the wealth gap is far larger. Ability and ambition produce wealth, and once wealthy, the rich get paid further for being rich. Differences magnify. Envy expands. Theft ensues.

When the party of The People gets in power, the government does the stealing. The legislature levies steeply progressive taxes, and doles it out as it sees fit. The poor get paid to be poor. The middle class loses its independence by living on entitlements.

When the party of the productive gets in power, the government cracks down on the poor. We get outrageously long jail terms, Three Strikes laws, drug wars. And we get yet more police state fun, such as that taste of totalitarianism you experience at the airport – unless you can afford our own private jet.

With bipartisanship, we get a contradictory mess. The income tax gets riddled with loopholes. The tort system hammers the productive and acts as a lottery for the lucky poor while at the same time the legal system is too expensive for the poor to use unless the stakes are high enough to justify contingency payments. The government pays the rich and punishes the rich.

In all scenarios, government grows.

The Secret Subsidy

Those who love liberty must first pursue equality. Either that, or they must dispense with democracy and hope for well-behaved dictatorships or private protection corporations.

This seems a contradictory strategy. Socialists were the chief enemies of liberty during the past century, after all. Their pursuit of equality at any price led to police states, gulags, and mass starvation.

We who love liberty can do better. The formula for more equality can be found in Adam Smith’s book. Mercantilism still lives. The rich may be taxed, but they are also subsidized – heavily. I am not talking about “corporate welfare” here; that’s small potatoes. Each year the government redirects a trillion dollars towards those who already have money.

A trillion dollars, every year!

This is a gigantic subsidy, and hardly anyone talks about it. About the only ones who talk about this subsidy are the conspiracy theorists, who pin the blame for this subsidy on robber baron families, the British crown and/or Jewish bankers.


This gigantic subsidy is supported by millions: Democrats, Republicans, liberals, conservatives, college professors, union members, soccer moms, and more. Maybe the old money super-rich have secret meetings to keep the gravy train going, or maybe not. It doesn’t matter. They could be easily out-voted. The real “conspiracy” is a “conspiracy of ignorance.” The victims vote for welfare for the rich.

Over the next few months I will expose this gigantic subsidy. I will also point out smaller subsidies for the rich, and ways by which the government holds down the poor. Fix these and we will have true meritocracy, true equality of opportunity. And we will have liberty in the process.

Stay tuned.


Daviticus said...

The citizenry is hypnotized by the Circus of the Narcissistic Nincompoops. The long version of 3 card Monte.

Enjoyed the granularity of your political quiz, and the "new map". "Tanj"!

willienelso3 said...

this is good. really good. as good as (or better than) when I first read it.
I found the 2d quiz and holistic politics last fall. then the free liberal and this blog. (then I took a detour into learning about monetary policy and theory)
anyway, you have some of the best ideas which are available for public consumption.
and you have given this politically homeless freedom-lover a little ray of hope.
keep writing. please.

Carl M. said...

@willienelso3: been doing my writing at lately. Wrote a couple of blasts of Rand under Greed vs. Freedom.