Paul Krugman sees America as a stratified society, with the top tiny layer controlling a staggering amount of wealth, and the rest of us consigned to a life of Sisyphean struggle. He rails against Our Invisible Rich, who he believes prosper at the expense of all of us, and waxes about how the golden sunbeam of knowledge of these rich parasites on our nation could kindle the proletariat to action.
I can’t compete with Krugman in academic honors, or experience in the hallowed halls of the Ivy League, or in the busy newsrooms at flagship newspapers. When I read such an august personality’s work, in none other than the New York Times, I expect original thought, and conclusions based on firm convictions. Instead, I find a series of propped-up arguments based on age-old myths and shibboleths, which in the end tell much more about Krugman’s politics than his economics.
Krugman in his Keynesian sensibilities has really proven nothing at all. He cites a study claiming that Americans believe the richest CEOs make ten times less than they really earn.
So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.
What does that mean? Nothing, other than proving the point that perception is everything. Average American workers see no difference between someone making $1.8 million a year and $18 million a year (based on a $60,000 salary). So what? The old saw that the Inuit have 50 words for snow comes to mind: in Anchorage, there’s a huge difference between 2 inches and 20 inches of snow. In Atlanta, there’s no difference, it’s Snowpocalypse either way.
I can no more conceive of the life of a billionaire than seeing Thurston Howell III in Gilligan’s Island reruns. Being a multi-millionaire (or even a single-millionaire) is plenty enough for most Americans’ definition of “rich”. Only the extremely wealthy themselves see the distinctions as clearly as Krugman presents them, unless one is trying to foment an argument against being wealthy.
The same distinction holds for poor people. Millionaires would never see a distinction between someone having $5 or $50 in their pocket, or eating at McDonalds versus Chili’s. A minimum wage family man with an extra $50 and a meal at Chili’s is living like a king to the one with $5 and a diet off the dollar menu. It’s all in your perspective.
Incessant griping about income and wealth inequality in America has but one purpose: to incite the have-nots against the haves. That’s a matter of perception, so the argument is really designed to show everyone in the 99% below the top strata how they are have-nots. It’s an argument filled with false and even dangerous presuppositions.
The Zero Sum Game
The first false presupposition is the “zero-sum game”. In 1980, Lester Thurow wrote a book called The Zero-Sum Society. It was bad policy then, and 34 years later, Krugman’s pen is still dripping with Thurow’s poison. The theory goes like this: in order for anyone to achieve economic success, it must be at the expense of someone else failing.
The Zero-Sum Society offers a classic set of recommendations about the best way to balance government stewardship of the economy and the free-market aspirations of upwardly mobile Americans (emphasis mine)
The inevitable conclusion of the zero-summers is that the government is the best steward of the economy. In Thurow’s and Krugman’s America, the government must choose the winners and losers in a constant struggle between the free-market and economic stability. Such brilliant men, yet they are simply wrong. The only zero-sum game is the government itself. The government serves no productive purpose. It can only consume and redistribute wealth. It collects taxes for the benefit of itself. The larger the government, the more taxes it diverts out of the economy and into its own ends.
The Wealthy are Anti-Social
The second false presupposition is the attribution of socially irresponsible motivations to the wealthy. Most liberals, including Krugman, believe that the rich’s primary motivation is to remain rich, and to use their wealth to influence politics and to accumulate power. Krugman’s premise:
Today’s political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like.
America is not like most other countries, where being rich automatically translates into having political power. Regardless of shrill pundits, rich people buying elections wholesale is a myth. The Koch brothers or George Soros do not directly control the outcome of elections. The super-rich give the most, but it doesn’t ensure an outcome. Absolutely, money can buy an election here and there (think Thad Cochran), but organization and manipulation are far better methods of rigging elections than simply pouring in rich people’s money. Boss Tweed and Tammany Hall weren’t dependent on a rich patron, rather they became rich by bilking the government. It’s far more common for the political to trade on their connections to become rich than it is for the rich to be able to control politics.
It’s easy to throw stones at the 0.01% who give more than $10,000 to political campaigns. These multi-millionaires give somewhere in the neighborhood of 1% to 2% of their income (in some cases a whole lot less) to politicians, many times in both parties. It’s good to have friends in Washington, or the state house of your home state. It’s good for business, whether you are a banker, a lawyer, or a lobbyist. There’s a return on that investment. In the end, votes determine our elected officials, and a politician who exclusively caters to bigwig money could find themselves on the losing end—it’s a gamble. Both parties love to collect those large checks, and they coddle the people who can write them. This is nothing new.
The irony is that most of the big donors live in liberal New York City, Los Angeles, Washington D.C. and of course, Las Vegas. The very same people who would agree with Krugman’s vision of a government-stewarded economy operate a billion dollar hedge fund for exclusive access to the politicians who craft policy and law. If this were a corporation, it could be sued under the Sherman Act for collusion. Seven of the top ten House members dependent on one-percenter-of-one-percenter money in 2010 were Democrats, collecting just over $2 million in direct contributions. In the 2010 Senate races, the ratio was the same, with John Kerry collecting over $1.1 million alone. As ideologies go, 75% of the top political donors give to extreme liberal causes such as pro-abortion Emily’s List, progressive fundraiser moveon.org, and Democrat funding-bundler ActBlue. The Kochs are just a straw man to be burned.
America Wants Government Stewardship of the Economy
The third false presupposition is that American society actually wants government stewardship of the economy. Americans have been frogs in slowly boiling water for fifty years or more. We just don’t know how far we’ve slid into the pit of socialism and central control. Many of us have become accustomed to big government, big programs, high taxes, and meager results. There are two flaws in the assumption that Americans crave a big nanny state.
Flaw number one: it presumes that our government’s morality and values represent society’s wishes and are superior to any individual’s wishes. When you say it out loud, it sounds pretty ludicrous. That we should now trust the same government that Krugman skewers as being riddled with political influence peddling, cash for votes, and every kind of villainy to manage our economic future. The grimy reality is that the government is beholden to the government’s interests. The continued existence of every program, funding line, job description, and grant is the warp and woof of the Leviathan headquartered in Washington D.C. The biggest lobbyists to Congress are not on K street, but in every Federal building in America. The founding fathers intended that we elect representatives not to speak in our stead, but to hold each other accountable to the electorate, so that too much power is not concentrated in one body. At that task, we have failed.
Flaw number two: the presumption that American society, broken into individuals, is immoral and selfish. It denies the drive for philanthropy that runs deep in our veins. If the rich give only a few percent of their enormous incomes to political groups, they give much more to philanthropic interests and charity. In fact, America is the most giving country in the world. This isn’t just dealing with Main Street in Tullahoma; American billionaires give more too. Of the world’s 2,170 billionaires (depending on who’s counting), 127 have signed the Giving Pledge to give away at least 50% of their wealth.
The Giving Pledge is an effort to help address society’s most pressing problems by inviting the world’s wealthiest individuals and families to commit to giving more than half of their wealth to philanthropy or charitable causes either during their lifetime or in their will.
Of these 127, 89% are American, which represents 23% of America’s billionaires, compared with 7.8% of the rest of the world—too big a gap to be considered a statistical anomaly. Wealthy Americans are not the selfish, tent-fingered robber barons pictured in cartoons, yet that’s what Krugman would have us think.
As the cornerstone of modern philanthropy and a constitutional republic, the US has an open attitude to speaking about giving. But this is not necessarily the case in the emerging markets. In 2010, Buffett and the Gates held a dinner in China to invite 50 billionaires to join the pledge, but they came away without a single signature.
The American Dreamer
Of course America’s wealthy want to remain wealthy, but that’s not the goal in itself. The goal is a stable, growing economy, creating jobs matched with workers who possess the skills necessary to advance productivity and technological innovation. Contrary to progressive-inspired history lessons, it was the Vanderbilts, Carnegies and Rockefellers who built much of American industry, modern skilled trades, and educational institutions. These men were worth hundreds of billions in today’s dollars, and today are vilified as robber barons. The American dreamer is not a political bogeyman; he or she is a visionary spirit who fires the imagination of a thousand new ideas, willing to take risks that others spurn.
I realize at this point I’m sounding an awful lot like Ayn Rand. It’s not my intention to do so, but in this we agree: lesser people with lesser principles wish to remove the catalysts and the sparks which ignite American innovation and fuel American dreams. They do this in the name of equality and fairness. They don’t believe in a great society of giving, helping, and investing in others. They believe in a social order that condemns wealth and throws out a pound of cure for an ounce of weak medicine. I am not advocating the complete removal of all social and government safety nets for the poor. I am standing for the dismantling of the wealth redistribution system within the State. A safety net is designed to catch those who are falling, and stand them back up on their feet. What we’ve constructed is a large puffy airbag with lounge chairs and bar service. Krugman’s all-too-familiar class warfare clarion ignores the great waste of human capital in this country while attacking those who are most productive.
Instead of a foundation of ignorance, American society is very much in touch with what society is really like. We know all too well the political balance in operation today, and we hate it. Krugman seeks to divert attention away from this reality and replace it with a battle between the haves and the have-nots. It’s not, and has never been, a clash between the haves and have-nots in America. It’s a clash between the industrious and the lazy. America is a nation where industriousness, cleverness, and good character are rewarded with better lives. It’s not a formula where everyone who works hard, gets educated, and does good deeds becomes super-rich—that’s plain fantasy. The distribution of wealthy individuals is replete with scoundrels and unproductive heirs, and those simply by fortune or a well-placed friend achieve their wealth. It’s also replete with politicians who trade off their power for money (think the Clintons).
America’s chief guarantee of liberty to her citizens is the ability to improve your own life regardless of your origins or upbringing. That ideal is pitted against the zero-sum theory that anything you gain has to be at someone else’s expense. The only acceptable outcome in a zero-sum society is complete equality at the hands of an all-powerful government whose job is to guarantee non-failure. When that happens, liberty dies, along with the American Dream.
The real invisible American stewards are those who preserve their ideals and values over the chime of accumulated lucre. If the rich have 50 terms for flavors of how rich they are, within the substrata of rich to super-rich, to ultra-rich, then American dreamers have 100 terms for the level-headed, flint-eyed no-nonsense working-man and -woman.
What the zero-sum crowd calls “flyover country”, American dreamers call salt-of-the-earth. Even in the hotbeds of liberal hysteria, LA and New York, you can find American dreamers at work. They are the ones more concerned with their kids’ education than finding the trendiest schools. In less affluent neighborhoods, they are the ones who sacrifice to ensure their kids learn their values versus complain about how little they earn. The mother working two jobs to make ends meet and still raising children is more productive than the mother who protests her minimum-wage job at McDonalds. The one who doesn’t complain, and serves with a smile will rise up.
Krugman and his fellow travelers who seek a government of unlimited power to decide outcomes have a thousand terms for equality, in every possible venue or field of study. American dreamers see no differences where zero-summers see strata within strata. American dreamers see opportunity and liberty where zero-summers only see inequality. The invisible dreamers are the true stewards.