Fairness requires that President Obama read up on his Kurt Vonnegut.
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A good and just tax system should be designed to make the poor rich, not the rich poor. The preoccupation with equality reverses these two objectives, such as when Barack Obama says we should raise the capital gains rate even if it doesn’t increase government revenue, for “the purpose of fairness.” How is an outcome that hurts everyone fair?
IT’S EASY TO THINK of other unfavorable results of this fairness fetish. Under the social justice of equal income and wealth for all, investment would make no sense. People invest only to earn returns, which means more income. Anyone who invests more would have a higher income, which would be expropriated to the extent it was above the average. But anyone who invests less and thus has a below-average income would be rewarded with a grant from the government to ensure equality. So, again, the only rational strategy would be to avoid all investment.
China is one good recent example. During the era of communism in the 1940s, '50s, and '60s, when all land was cultivated for the “common good” and food was evenly distributed to all, regardless of how much one worked, China produced way too little food, and many millions of people, including children, starved to death. But then, starting in the 1980s, agricultural reforms began to emerge that allowed farmers to take a small plot of land and keep the food they grew. An amazing thing happened. Production of food on these very small tracts surged multiples higher than the output on the communal lands. The Chinese farmers saw output double and even triple from the previous arrangement where all food was put in a communal pot. Private ownership of the farms led to a green revolution, and China quickly became a food exporter.
Was this because the Chinese people are selfish and don’t care about their fellow man? No, Chinese culture is no more selfish than any other. It’s just that we as human beings are hardwired to put our own well-being and that of our kids above that of the fellow we don’t even know. The human pursuit of happiness begins for most by taking care of themselves and their families. That is deeply ingrained into our cores.
We would add that the alternative course of demanding equality of opportunity can (and almost always does in practice) lead to the subordination of other values, such as personal liberty. As one example, the talented almost always want to leave societies where their talents are suppressed. Think of North Korea, or Cuba, or East Germany after World War II. These regimes quickly discovered that to keep their nations from economic collapse, they had to enforce tight restrictions on emigration and international travel to avoid losing their most productive citizens. And it wasn’t just the best and brightest who wanted to leave. Many average citizens wanted to flee from economically stagnant, poor societies. So the governments had to restrict everyone from leaving and impose on the liberty of all. This is where the Berlin Wall came from. It was not a wall to keep invaders out. It was to keep citizens captive.
BUT DOESN’T THE DECLARATION of Independence itself say “All men are created equal,” and isn’t equality a fundamental American ideal? Yes, but these expressions invoke a concept of equality different from the social justice concept of equal incomes and wealth for all.
The original and traditionally American concept of equality is “equality under the law.” That means the same rules apply to all, not the same results. Baseball is a fair game because the same rules apply to all players.
Equality of rules protects the property of all, which encourages saving, investment, and work, because all are assured protection for the fruits of their labor. Equality of rules ensures that all enjoy the same freedom of contract, which empowers them to maximize value and production, and plan investment knowing they can rely on their agreed contractual rights. Equality of rules provides a framework in which all are free to pursue their individual visions of happiness to the maximum extent.
Within this framework of equal rules for all, the outcome of the market in terms of income and wealth is fair, for two fundamental reasons. The first is that people basically earn in the market the value of what they produce. Economists say more formally that wages equal the marginal productivity of labor. That encompasses both the quantity and rarity of each worker’s output. If the worker’s output is unique, that output will be worth more, to the extent that people value it, because only he can produce it. James Patterson has gotten rich writing mystery novels that readers buy because they derive happiness from his thrillers and are captivated by his plots. Every one of us can sing, but Katy Perry has a string of number-one hits that young people all over the world want to listen to over and over.
Alex Rodriguez and LeBron James each make a lot more money than any teacher, or any doctor. In a broad social sense, what teachers and doctors do is worth much more than what professional athletes do. Sure, not everyone can teach, and fewer still can practice medicine. But only Alex Rodriguez and LeBron James can do what they do, which entertains millions at the stadium, on the radio, on television, and in the paper the next morning. Each fan is willing to pay a little in return for their unique performances. What they get is not unfair. They earn it, through talent and hard work.
THIS IS WHY it is wrong to even speak of the “distribution” of income and wealth. Income and wealth are not distributed. Income and wealth are created, and in a fair society they come into the world attached to the rightful owner that produced them. As the late Harvard philosopher Robert Nozick wrote, “Whoever makes something, having bought or contracted for all other held resources used in the process…is entitled to it. The situation is not one of something’s getting made, and there being an open question of who is to get it.” If income and wealth are not attached to the owner that produced them, they tend not to be created at all.
Moreover, what is produced is not taken from anyone else. It is created by the worker, the earner, and does not come at the expense of others. The economy is not a fixed pie with slices handed out by Barack Obama. Each worker expands the pie and creates his own slices.
A society that puts equality ahead of freedom and prosperity will be in the end an unhappy one. As we have seen throughout history, high tax rates, high welfare benefits, and collectivist outcomes lead to deprivation and poverty. We want a fair society where everyone can realize his fullest human potential. And yes, that means some—Bill Gates, Michael Jordan, Tom Cruise, Albert Pujols, Lady Gaga, and Sergey Brin—will get a lot richer than others. There is no injustice in that.
We left until now the thrilling ending of Mr. Vonnegut’s story. Just at the moment when Harrison Bergeron and the ballet dancer were wowing the audience with their expertise and breathtaking talent, as the orchestra was breaking into shockingly beautiful chords, and as the crowd’s cheering reached a crescendo of joy and admiration, at that very moment, in barged the Handicapper General, Diana Moon Glampers. With a double-barreled shotgun, she shot the two lawbreakers dead to the floor, and equality was restored.
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