Given the increasing intensity of the battle between socialism and capitalism in America, it’s time for rational people to focus on two issues: economic reality and freedom.
All people of goodwill can certainly agree that freedom is a good thing. Where they can respectfully disagree is whether or not freedom is the best path to prosperity for all able-bodied people who are willing to work hard to get ahead in life.
That said, I have long felt that one of the most perplexing mental disorders known to mankind, going all the way back to the days of America’s first limousine liberal, Andrew Carnegie, is the guilt-soiled minds of so many wealthy capitalists. I say perplexing, because not only has the capitalist system made them wealthy, they have been able to witness firsthand the jobs they have created, the lives they have improved with their products and services, and, in most cases, the good they have accomplished through their charitable endeavors.
Bill Gates is the most high-profile example of someone who has hall-of-fame credentials in all of these areas. But he’s not alone. Warren Buffet, Ted Turner, and a whole generation of dot.com billionaires are infamous for disingenuously crying out for higher taxes on the rich. I say disingenuously, because when confronted with the suggestion that they should voluntarily pay higher taxes, they mysteriously demur.
Guilt-ridden billionaires have somehow come to believe that the system that made it possible for them to become wealthy is inherently bad and must be fundamentally changed through government force. The problem is that government force is in direct contrast to freedom, and capitalism is nothing more than a subcategory of freedom — the freedom to sell your labor, products, and services at the highest prices others are willing to pay for them.
To the extent government force is injected into the equation, capitalism becomes less and less pure and the marketplace becomes skewed. What all industrialized nations practice today is state capitalism, which is capitalism that is controlled — and stifled — by government intervention.
Today, one of the most outspoken limousine liberals is a relatively unknown billionaire by the name of Nick Hanauer. Hanauer has founded thirty companies and was the first non-family investor in Amazon.com.
To his credit, he openly declares that he’s a proud, unapologetic capitalist. In fact, he says that capitalism is “the greatest social technology ever invented for creating prosperity,” but adds the caveat “if it is well managed.” Oops … capitalism is based on a free market, not a managed market.
Hanauer explains what he means by “well managed” in his TED Talk lecture when he says, “Government creates prosperity and growth by creating the conditions that allow both entrepreneurs and their customers to thrive.”
In this lecture, his main focus is on the necessity to raise the minimum wage to $15, which he helped to bring about in his hometown of Seattle. He says his main reason for wanting to raise the national minimum wage to $15 is that “If we don’t do something to fix the glaring economic inequity in our society, the pitchforks will come for us.”
I have news for Hanauer: The pitchforks are always coming, but they rarely gain any traction. Astroturf groups like Moveon.org, Occupy Wall Street, and Black Lives Matter will always be with us, because they are indispensable tools of the Radical Left.
Of course, there’s always the possibility that the artificial protests created by rich and powerful lefties could spin out of control and bring a Lenin or Castro out of the woodwork at just the right time to foment a bloody revolution. But in the United States of Goldman Sachs, that’s unlikely to happen, because the establishment powerholders simply have too much money, too much power, and too much legal cover to lose control.
And even in those rare cases where charismatic revolutionaries have succeed in grabbing power, the smart, the powerful, and the well connected soon rise to the top and give credence to George Orwell’s memorable words in Animal Farm: “All animals are equal, but some animals are more equal than others.”
Back to Hanauer, he also argues that raising the minimum wage to $15 is good for the economy. He says that he is not making a moral argument that economic inequality is wrong, but that rising economic inequality is stupid and ultimately self-defeating. “It’s not just the pitchforks,” he says; “it’s also terrible for business.”
Hanauer believes that those who argue that forcing employers to pay more than double the current minimum wage would result in higher unemployment are wrong. To prove his argument, he points out that since 1980, the wages of CEOs have gone from thirty times the median wage to five hundred times. Yet, raising the cost of hiring CEOs has resulted in more CEO jobs, not less.
The problem is that his analogy is wildly invalid. Raising the minimum wage of low-level workers can be accomplished only through the use, or threat, of force, whereas companies voluntarily — and for purely selfish reasons — pay CEOs high salaries. Thus, the increased cost of hiring CEOs does not reduce CEO employment because the demand for talented CEOs is greater than the supply.
Finally, Hanauer says that the economy is an ecosystem, and I agree with him on that. But his view of how the ecosystem works best is flawed. He believes that if businesses are forced to increase workers’ wages, that will increase the demand for goods and services, which in turn will increase hiring, which in turn will increase wages, demand, and profits.
On the surface, all this sounds logical, but he has his chickens and eggs mixed up. The chicken always comes first. Without entrepreneurship and capital, there are no jobs, no income, and no consumers. In actual practice, no one has ever figured out how to do it any other way.
Based on historical evidence, we know that the economic ecosystem works best absent of coercion, especially government coercion. Redistribution of wealth disrupts the economic ecosystem and misallocates resources to the detriment of everyone.
Voluntary association is the key to a healthy economic ecosystem. The less government interference, the more smoothly the ecosystem operates and the better off businesses and workers are — especially workers at the low end of the income spectrum.
Nick Hanauer calls his theories “the new capitalism,” but the truth is that there is no such thing as new or old capitalism. Economic freedom is economic freedom — period. It was true two thousand years ago, and it’s still true today.
Above all, those who want to tinker with the natural economic ecosystem fail to take into consideration that taking property from one person and handing it to another is a violation of human freedom, because without property rights, no other rights are possible. After all, if someone takes your property, he’s also taking the time, effort, and ability you put into building creating, or accumulating that property.
Thus, good intentions aside, liberty should always be accorded a higher value than all other objectives. And that is the bottom line to economic reality and freedom.