Let’s continue analyzing Steve Roth’s handy compilation of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors, “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i] The issue this series is addressing is: Did Roth accomplish his purpose to explain why welfare and redistribution saves capitalism from itself. (Discussions of other instructive aspects of the article can be found in PART I, PART II, PART III, PART IV and PART V.)

Roth opens his article identifying the members of “the rich country club” as the members of the OECD and then makes the following observation:

“In this measure, the richest countries all devote fifteen to thirty percent of GDP to social spending. As Bruce Bartlett pointed out recently, Germany — a darned “conservative” country that is thriving today, and which rode out our recent economic Great Whatever better than almost any other country. . . .”

First note that none of the OECD countries have pure market capitalist economies. On the contrary, as Roth asserts, they all engage in massive doses of redistribution, and universal government programs for social support and financial security.^[ii] But the massiveness of redistribution varies significantly among the countries. They all, to varying kinds and degrees, have massive regulatory and tax regimes as well. Lastly, the countries vary significantly in the levels of corruption, cronyism and culture.^[iii] Just how massively the countries interfere with free market behavior varies significantly on each of those variables.

To use the above fact to make the case that massive redistribution is saving capitalism (or what is left of capitalism after the massive redistributions, etc.) from itself, one must first tease out of this noisy data whether massive redistribution is the cause the success of these countries, or it is an effect of the success of their capitalism. If and only if Roth can show that massive redistribution is a cause rather than an effect of the economy’s success, can he logically proceed to make an argument that massive redistribution is saving capitalism from itself. Did he do that?

He’s got quite a bit of data with which to work. There are 35 member countries and very significant differences in the variables he deemed to be important and in their economic success. Does he show that the more massive the redistribution, the more economically successful these countries are? No. Does he present any other evidence that shows massive redistribution results in better outcomes? No. Is his table a fair representation of what is going on given that many of the countries in the OECD can engage in the amount of redistribution they do only because they freeload on America for most of their defense, funding of international organizations and relief efforts, cheap American drugs, and on American technological innovations? No. Does the single data point (anecdote) about Germany prove anything to make his case? No. Does he cite any study or other authority to support the idea that the happenstance of the massive redistributors being rich proves redistribution is the cause of their success? No. Does the observation that rich countries massively redistribute in any way support his claim that massive redistribution saves capitalism from itself? No.

So, with Roth’s facts and evidence we have discussed so far, one can only speculate whether massive redistribution is why capitalism can survive in those countries.

By using a Darwinian standard in an attempt to discredit those who would refute his claim, Roth must be suggesting that the emergence of massive redistribution in the most economically fit countries is somehow proof that redistribution is contributing to the fitness of those countries. Unless, however, he could show that massive redistribution is the only significant variable that enables capitalism to survive in these countries (and that the cumulative effect of the insignificant variables are not significant)—which he cannot and does not even attempt to do—then his conclusion is a non-sequitur. Here’s why: With the facts he presented, there is no way to determine whether the massive redistribution is adding or subtracting from the success the countries would have had with either more or less redistribution—or, conceivably, no government redistribution. (There will always be charitable redistribution whether or not there is government redistribution. Is it fair that he excluded charitable redistributions in his numbers? I think not.).

Then on the strength of this pile of speculation, his implicit suggestion is that evolution has selected the massive redistributive governments to be the fittest. I will readily grant Roth’s assertion that massive redistribution is an emergent phenomenon (evolutionary result), and is especially prevalent in rich countries. That fact, however, is a relatively recent phenomena (being employed in massive levels only over the last 50 years)^[iv] and says little or nothing about whether evolution has ginned up a winning formula or one that will usher in the extinction of the wealth of OECD counties (or, at a minimum, much slower improvement in the standards of living of the poor in each country). Because history is repeat with evolutionary sorties that lead to extinction, suggesting that the emergent phenomena of an insufficiently uneducated public demanding (and therefore getting in democratic societies) massive redistribution proves nothing. More to the point, it does not prove that massive redistribution is saving capitalism from itself.

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^[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.

^[ii] Technically he said that they had massive redistribution when they joined the club (I’ve already debunked that assertion in PART I) and Roth does not favor us with what he means by “massive.” Whatever it is, most, if not all, did not have massive redistribution when they joined the club, and most, if not all, have massive redistribution now.

^[iii] “Be Like Sweden.”

^[iv] The possible exceptions of Bismarck’s welfare state and The Great Depression disastrous economies—which included would fortify my argument. For good measure, I should also exclude the USSR, Mao’s China, North Korea, Cuba and the like.

My son-in-law pleasantly surprised me this morning with a “Share a memory” on Facebook with the comment, “Thought provoking comment.” The memory was something I published on Facebook a year ago yesterday. I appreciate him doing that.

Inasmuch as it elaborates on some of the issues I am discussing in my series on Steve Roth’s article, I thought it would be useful to include it in my blog. I hope you too find it to be thought provoking.

🙛

I finally found a statement by Hillary that I believe expresses her honest feelings and is true. [That is noteworthy in and of itself, but I digress.] For those two or three of you who read my posts, the statement illustrates why I keep saying Trump would be terrible, but Hillary would be worse.

Hillary’s statement was in response to this question: “And would you use [“liberal”] to describe yourself?” Her response was: “. . . . I prefer the word ‘progressive,’ which has a real American meaning, going back to the progressive era at the beginning of the 20th century. . . .” Then she went on to describe what she called “beliefs” of “early 20th progressives” that were really only the aspirational talking points they used. She did not actually describe their beliefs or the key feature of their agenda.

To understand the beliefs and the key feature of early 20th “progressives” one must first understand the “genius of the Constitution” (to borrow a phrase my cousin used yesterday). In Federalist #51^[i] James Madison summed up the situation being addressed by the drafters of the Constitution: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.” The founders came up with an ingenious way to deal with this timeless situation that both the governed and the governors are fallible and flawed.

Through extensive study and wisdom, the founders concluded that freedom is the best elixir to induce human flourishing. They understood that individual freedom would not lead to a Nirvana in which every citizen is wealthy and happy—because such a society was not possible on Earth—far from it. Rather they believed maximum feasible individual freedom would create more wealth and happiness than any other government scheme that afforded citizens less freedom. They also believed that government was necessary to maintain enough law, order and national defense to allow people to enjoy their freedoms and the fruits of their labors that also was essential to human flourishing. But they also knew that rulers of any sort tend to use whatever power they have first and foremost to serve their own interests and satisfy their desires to achieve a sense of superiority by taxing and bossing people around. Consequently, rulers tend to limit people’s freedoms and accumulate power for themselves over time. At the end of this process you get Cuba, the Soviet Union, North Korea, Nazi Germany, Venezuela, and the like.

The founders’ ingenious solution (the Constitution^[ii]) deals with these human foibles with three key features: 1) the rulers were granted only very limited powers, i.e., the rulers were not given authority to take away the peoples’ inalienable rights and fundamental freedoms; 2) in order to keep the rulers in check, three branches of government were created, each of which had the power and incentive to keep the other two branches in check; and 3) it set up a gauntlet through which any bill to enact a new law would have to pass that was so tough that there would be gridlock unless the law was so good that it would be widely accepted. Ideas contained in bills that could not endure the gauntlet could be tried in the states to be proven meritorious^[iii] or worthy of the graveyard of bad ideas, or they could be generally accepted and practiced by society such that no law is needed.

Enter the early 20th “progressives.” They believed both technological and political science had advanced so much since the founding that politicians, bureaucrats and their experts could achieve better results than would be achieved by society via the free exchange of ideas, free trade, entrepreneurial innovation and state-by-state experimentation,^[iv] i.e., cultural evolution. They generally viewed citizens and state and local governments as too uneducated and/or dumb to take care of themselves. They honestly believed (as do today’s “progressives”), that government knows enough, is smart enough and effective enough to run our lives better than we could, and that politicians will put the best interest of the citizens ahead of what is in the politicians’ own interest (retaining and growing their own power, wealth and prestige), i.e., that they are near enough to angels to do the job. [This general belief by rulers that they can run things better than “The People” has been around since the beginning of time— it is a fallacious belief of which the founders were fully aware. If the belief were true, surely everyone would now (after over 100 years of much “progressive” government action) behold the wonders of government running everything—and the Soviet Union would be ruling the world by now. History has shown time and again that these beliefs are invalid—but I digress again.]

The Constitution prevented the early 20th century “progressive” geniuses from doing what they wanted to and believed they should do. “Progressives” had a problem, however. The vast majority of the voting public loved the Constitution.^[v] It had propelled America from an insignificant group of colonies to an economic powerhouse and a major world power in an amazingly short period of time. The only way “progressives” could gain the power they so savored was to undermine the legitimacy of the Constitution. This has been the common denominator of all “progressive” presidents from Teddy Roosevelt to BHO. The most effective demolition of the Constitution’s legitimacy has been done by Woodrow Wilson, FDR, LBJ, WJC and BHO. No slouches in this enterprise were Hoover, Nixon and GWB. Hillary, by her own admission and by what she says and does, wants to carry on in this grand enterprise of abandoning individual freedom in favor of collectivism and unlimited government. Hillary and her “progressive” predecessors occasionally mention the Constitution, but it is with no reverence [did you see there were no embarrassing and divisive American flags at the Dem convention yesterday?] and only when it happens to say something with which they happen to agree. Otherwise the Constitution [and it looks like the flag is next] is considered a relic. See the recently published book: “Relic: How Our Constitution Undermines Effective Government–and Why We Need a More Powerful Presidency.” Right on cue for Hillary’s run for the White House.

Have “progressives” been successful? Richard Posner, a renowned and influential progressive federal appeals court judge, reflecting the sentiments of most other progressives, said recently, “I see absolutely no value to a judge of spending decades, years, months, weeks, day, hours, minutes, or seconds studying the Constitution, the history of its enactment, its amendments, and its implementation. . . .”^[vi] By and large this statement was positively received, when it was noticed at all by the “liberal” main-stream media. When Speaker of the House Nancy Pelosi was asked to site the provision of the Constitution that authorized Congress to force citizens to buy health insurance under Obamacare, Pelosi responded, “Are you kidding? Are you kidding?”^[vii] Next question.

By contrast, there is no sign that Trump knows anything about the Constitution. He would know more about it if he were out to tank it. I’ve heard him more than I can stand, but I’ve never heard him rely on the Constitution’s precepts to support his positions (he appears to rely only on his own instincts). Some of the things he says he will do appear to violate the Constitution and its precepts. On the other hand, while he may violate the Constitution from time to time (all presidents do that), there is no apparent reason to believe that he will actively seek to further undermine the Constitution as BHO has and Hillary would. Hillary would love nothing more than to be the person who ultimately fulfills the dreams of “early 20th progressives.” It is for these reasons that I say, Trump is terrible, but Hillary would be worse.

BTW: I put the term “progressive” in quotes because “progressives” want to regress back to something akin to the divine right of kings rather than to continue to progress with the ideas the founders had in mind.

[Edited July 27, 2017 to eliminate some grammatical errors in the original. The grammatical errors that remain are in the original and to add some reference material. None of the endnotes, some of which elaborate on certain points, were not in the original version.]

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^[i] The Federalist Papers No. 51.

^[ii] The United States Constitution

^[iii] A kind comment to this Facebook post a year ago advised me that the verbalization of the idea that states are the nation’s laboratories of political and economic science experiments is first found in the 19^th century—not the 18^th century in which the Constitution was devised. While we cannot exclude the possibility that some of the founders had this idea in mind, I do not have a specific references that can be attribute this notion to the founders. I apologize to my readers for that possible error in what I said.

^[iv] By the time the “progressives” came along, the idea of states being the nation’s laboratories was well understood by political scientists.

^[v] Back then when the federal government was vastly less involved in education, teaching children the value of the Constitution and its ideals, and reverence for the founders was commonplace. Those teachings are nearly the opposite of predominate teachings with respect to the Constitution and founders that we find in government run or subsidized schools and universities today. This is all a testament to the effectiveness of the “progressive’s” strategies and plans to rewrite history—and a confirmation that the winners write the history.

^[vi] “Judge Richard Posner: ‘No value’ in studying the U.S. Constitution.” (I am aware that Posner wrote a follow up op-ed in which he mischaracterized the substance the criticism of his original piece. In that op-ed he doubled-down on what is wrong about his position. He said, “constitutional law is and must and maybe should be entirely a judicial creation, like fields of common law.” Common law is the law that emerges as judges exercise their authority to decide how controversies should be resolved in light of what the courts have said before and statutes on the books.  Unlike common law, judges do not create constitutions. The primary purposes of constitutions is to authorize the executive, legislative and judicial branches to do things and to limit specify the limits of that power.  Consequently, unlike the common law which is created by judges, the constitution is created by the people to limit what judges can create. Posner’s claim is that judges should not feel constrained by the limits the antiquated constitution would dare to place on them.

^[vii] This too contained an error. She actually replied to a question about the constitutional authority for her action, “Are you serious? Are you serious?” Thankfully, I had the substance correct.

Let’s continue analyzing Steve Roth’s handy compilation of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors, “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i] This series of posts addresses the following question: Did Roth explain why welfare and redistribution save capitalism from itself? (Prior posts on this question can be found in PART I, PART II, PART III, and PART IV.)

Author’s Note: I bear no animus toward Mr. Roth. As the article being discussed is the only writing of his I’ve ever read, I do not know if it is typical of his work. I assume he believes what he is saying and believes his ideas are in the best interest of society. I’m picking on this article because it is so illustrative of many of the myths and fallacies that underlie the left’s narrative. I do bear animus toward pedaling the article’s faulty notion that giving government more money and control over the economy has in the past and will in the future result in better outcomes, and that trimming the government’s overgrowth will lead to ruination. My hope is that a focus on the article’s illogic and faulty interpretations of history will help reveal that Pied Piper tales like this one may sound nice, but that they lead us astray. Everyone should also be aware that many of the leftist “facts” and historical perspectives presented in the article are highly contested by many academics, including at least three Nobel Prize laureates in economics, whose works are antithetical to the interests of power grabbing politicians and the academics hired or subsidized by the government to produce papers and testimony that support the politicians’ power grabs. (In my opinion much of what comes out of academia is political propaganda). Sadly tales like the ones Roth spins are (not surprisingly) taught in our government subsidized schools. Let’s continue sorting this out.

Let’s first touch on a relatively minor—nevertheless clarifying—matter. Exactly what is the difference between “welfare” and “redistribution” such that they needed to be separately identified as necessary to “save capitalism from itself”? It is not self-evident, and Roth didn’t say. Because he failed to explain why either or both “save capitalism from itself,” perhaps this question is not important. Roth may have just been preening before his fellow leftists—with no actual thought behind the word choice. For this reason I’ll use the word “redistribute” to cover both items.

What does “saves capitalism from itself” mean? Let’s take a look at what capitalism is.

Capitalism: An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.^[ii]

Capitalism (this poor word eschews the essence of the system it attempts to describe)^[iii] is what enables people to create wealth in excess of what is necessary to fulfill the basic needs of those from whom wealth is taken in order to give that “excess wealth” to people deemed to have insufficient wealth.^[iv] (This statement is simpatico with Roth’s acknowledgement of the “immense, world-changing, manifest benefits, market capitalism”^[v] bestows on humans.) Functionally “capitalism” is a system in which individuals specialize in producing things valued by other individuals and voluntarily trading their products with others who specialize in producing other things of value. There is much inherently good about this cooperative human activity. First and foremost, it induces people to cooperate for the benefit of all and involves no coercion or threats of violence. The process is indifferent to the participants’ race, color, creed, or origin, and, therefore, encourages cooperation among all people.^[vi]

As I have discussed in “Wealth” and many other posts, specialization and trade create wealth. The existence of wealth 1) is essential to fund research, innovation, production, and delivery of the cornucopia of things which have contributed so mightily to human progress and flourishing, 2) increases the time that can be spared for contemplation, play, leisure, and sleep, and 3) provides the wherewithal to be charitable. Do humans really need to be saved from capitalism? Surely not. Consequently, Roth’s central claim is nonsense.

Rather than saying something accurate and helpful, Roth, as leftists so often do, is smearing (perhaps for political purposes) the word “capitalism” by conflating it with 1) the fraud, corruption, cronyism, illegality, mistakes, and other malefactions humans bring to capitalism— just as they do to any economic system, and 2) the envy, jealousy, etc. (the most significant of which were discussed in PART IV) that are negative reactions people have when some wind up with significantly more wealth than others (which under capitalism is inevitable by virtue of the fact that certain people are significantly more productive than others). “We” do need to be saved (if possible) from the consequences of letting bad actors and bad ideas operate in conjunction with a capitalist economic system become so large that those negatives exceed the “immense, world-changing, manifest benefits” capitalism generates. This is the “saving”^[vii] with respect to capitalism that is important or meaningful. Because he does not discuss these, Roth does not address the real issue of the topic about which he is writing. Worse, his commentary fans the negative embers or flames that smolder or rage in the minds of some people who, for whatever reason, wind up with significantly less than the most productive individuals.

Taking property under threat of force in order to redistribute it to people who do not produce enough to sustain a lifestyle acceptable to them is fundamentally antithetical to the voluntary exchange implicit in capitalism. The more “we” redistribute wealth, the less wealth to be redistributed will be generated, and the less 1) research, innovation, development, and delivery of the cornucopia of things which have contributed so mightily to human progress and flourishing and 2) time that can be spared for contemplation, play, and leisure. The blessings of capitalism are most vivid among the rich. Capitalism’s ability to improve the absolute standard of living of the poor is the much more remarkable wonder of capitalism—regardless of the fact that the poor never seem to realize, much less appreciate  it.^[viii]

To be sure, I am not saying, “Therefore, there should be no redistribution.” I am trying to bring important clarity to a tradeoff that is being made when “we” redistribute. Certainly, voluntary charitable “redistribution” should be admired and otherwise encouraged. That is another form of voluntary exchange in which givers get good feelings (or, in less virtuous cases, good PR) and recipients get things they need and would not otherwise have. Moreover, some forced redistribution, when done well, does more good than harm. However, most of how government actually redistributes does more harm than good.^[ix] I may not even be opposed to “massive” redistribution, depending on how much “massive” is and how effective the programs are at accomplishing the stated goals.

Again, does Roth’s discussion of capitalism advance his claim that capitalism needs saving or that welfare and redistribution save capitalism? I think not.

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^[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my posts about the article.

^[ii] Capitalism definition.

^[iii] See What are the biggest misunderstandings about capitalism?

^[iv] id. Also see, “You will always have the poor among you. . . .” to see why (1) America’s poor are in the top 1% of the wealthiest humans to ever live, but are, nevertheless, fairly described as “poor,” (2) they will remain poor even with vastly more redistribution of wealth to them, and (3) the absolute standard of living of the poor will rise faster if the amount redistributed to the poor were less.

^[v] I have no idea what Roth thinks he is adding to the concept when he puts “market” in front of “capitalism.” Is there some other kind of capitalism? If anyone knows, please let me know.

^[vi] “When goods don’t cross borders, soldiers will.” Frederic Bastiat

^[vii] Just as there are no “Solutions,” there is no “saving” from all negative consequences and human reactions no matter what economic system is employed.

^[viii] See, “Wealth Creation. No Happiness, Why Bother?”

^[ix] I understand and respect those libertarians who place such a high value on liberty that they reject any utilitarian justification for curtailing liberty. That position has much positive to be said for it. I also see the slipperiness of the slope once one moves off that high plateau—once the principle is conceded, a slide to the bottom of the abyss may become inevitable. America’s trajectory appears to be a confirmation of that fear. However, I believe that all things human involve slippery slopes and that massive utilitarian benefit in exchange for a slight loss of freedom is warranted. The Constitution is evidence that the founders believed absolute freedom is not optimal. I also believe that America is currently far beyond the point of diminishing returns with the compromises to freedom it has already made.

This is a respite from discussing the overt errors in Steve Roth’s article “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i] Previous discussions of these can be found in PART I, PART II, and PART III.

Here, I want to 1) acknowledge something good that Roth did in his article, 2) acknowledge that income inequality (the evils of which are Roth’s unstated presumption for the article) creates problems for individuals and society, and 3) offer some comments about income inequality. I’ll also discuss Roth’s presumptions.

I commend Roth for having acknowledged that market capitalism creates “immense, world-changing, manifest benefits.” (It would have been much better had he elaborated on how truly marvelous, wonderful, ^[ii] and essential “market capitalism” is to the creation of massive innovation^[iii] and the wealth that he is so anxious to redistribute, but we should cut him some slack because no one article can contain everything that needs to be said on any subject.)

Let’s also be charitable and assume that Roth meant to say something reasonable about “market capitalism” like, “as a general rule, 1) ‘market capitalism’ tends to distribute wealth into the hands of people who make or do things that satisfy the wants and needs of others, 2) distribution is roughly in proportion to the quality (as measured by the people who need or desire the things) and quantity of things people produce, 3) because of their varying combinations of skill, effort, perseverance, and luck, some people are exponentially better at producing needed and desired things than others,^[iv] and, as a result, 4) money tends to exponentially wind up in the hands of the exponentially more productive people.” That would have been an accurate statement. (The implications of this accurate statement on the subject, however, are quite different from the implications of the actual statement Roth made.)

Some will surely protest that the general rule described above is too full of exceptions to stand. I would counter that the vast majority of exceptions to the general rule in free markets of money flowing into hands in rough proportion to the value of the things produced by those hands arises when government gets involved in business (or via voluntary charity). When government passes laws or regulations that create competitive advantages for particular companies or regulators enforce unbiased laws or regulations in such a way as to protect certain businesses from the vicissitudes of a free market, government is thereby directing the flow of money to some companies and away from others that could otherwise compete for the funds in the marketplace. Indeed, the fact that people spend vast amounts of time, money, and effort lobbying the government to intercede on their behalf vividly helps prove this rule. (Stated differently, this is about the need of people/companies to be protected from the competition that a free market would generate.)

In my discussion of Roth’s article, it is important for me to acknowledge that income inequality creates many problems for some individuals and for society—as my blog posts on income inequality often state. Among those many problems, income inequality 1) engenders unhappiness in several ways, including a) jealousy and envy,^[v] b) various combinations of guilt, embarrassment, self-deprecation, and hopelessness (from not having the ability, drive, and/or “it” to achieve as much as others or falling short of the expectations imposed by others or by oneself), 2) heightened awareness of cosmic unfairness (some call it “social injustice”^[vi]), and 3) anger. Too much anger in too many people can result in riots, revolutions, police states, or anarchy. These negative effects of income inequality alone create great challenges for society. Some lay on the doorstep of income inequality many other evils, including mass death. While some common claims in this regard are overblown or bogus, there is some merit to most of the claims of the negative effects of income inequality. As discussed in my “Solutions” post, however, believing that the existence of a problem means that government can both solve and afford to solve the problem is childish. Additionally, given all of the problems created by government action, blind faith that a proposed government “solution” will cure more problems than it creates is folly. There are, of course, situations in which government “solutions” do more good than harm, e.g., our justice system. It is very likely that there are no government programs that do not create many harms and injustices, e.g., our justice system.

I find leftists to be all over the place as to exactly what the goals of redistribution are. The stated goals include: 1) it is economically advantageous to society (this is the primary focus of Roth’s article), 2) taking from the rich and giving to the poor is what moral people do (generally without regard to the effect of doing so has on the economy, innovation,^[vii] or anything else—including the harm done to the intended recipients of the redistributed wealth and their descendants), 3) the poor deserve help (usually without regard for any culpability a person may have for her state of affairs^[viii] and often based on imaginary or grossly overblown metrics), 4) the world will be a better place the more “we” redistribute, 5) it enables people to be healthier, thereby causing them to be more productive, 6) it will extend the lives of more people, thereby leading to more innovation, and 8) if “we” do not massively redistribute, the rabble will burn the place down. Note how strange bedfellows some of these goals are to others—some actually work at cross-purposes to others. For example, is support for redistribution motivated by caring for others or saving oneself from rioters and revolutionaries? The fact that there are so many justifications might be an indication of how uncompelling or insufficient each justification is.

Nevertheless, the problems created by income inequality cannot be safely ignored by society. It would have been fair for Roth to have discussed the evils of income inequality, but he did not do that. Rather, he appears to presume that income inequality is uncompromisingly bad and that massively reducing it would be an unalloyed benefit to both society and the recipients of the redistributed wealth. He also appears to believe either that forcible “massive redistribution” by the state cures the problems of income inequality (of course it cannot^[ix]) or, at a minimum, that it does more good than harm.

Standing atop some combination of inconsistent, flawed, and/or highly compromised presuppositions, Roth advances flawed economic claims as to “Why Welfare and Redistribution Saves Capitalism from Itself.” We will return to that in the next part.

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^[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.

^[ii] See “It’s A Wonderful Loaf” by Russ Roberts

^[iii] See “Income Inequality Is More Than It is Cracked Up To Be.”

^[iv] See “Jordan Peterson on creative productivity and the One Percent.” (What Dr. Peterson says here is a fair and accurate discussion of the general state of affairs with respect to highly productive people. I do not, however, vouch for the precision of his numbers, as they might not apply to every organization. Also, his discussion of Monopoly is highly instructive, but only roughly correlates to the real world. Nevertheless, as usual, Peterson nails the big picture.)

^[v] “Deirdre McCloskey on the ethics of income equality.”

^[vi] See “What is Social Justice?”

^[vii] For discussions of the many benefits of income inequality see, “Income Inequality Is More Than It is Cracked Up To Be,” “Wealth,” and “Wealth Creation – It’s For The Children, and their children, and their children. . . .”

^[viii] See “Equal Rights or Equal Outcomes?”

^[ix] See “‘You will always have the poor among you. . . .’”

Here’s some more on what is wrong with Steve Roth’s article “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i]

Roth’s next burst of brilliance is this:

Market capitalism — especially modern “holding-company capitalism,” in which corporations own corporations which own corporations, ad infinitum — inevitably concentrates wealth and income into fewer and fewer hands. It’s just the nature of the beast. Along with its immense, world-changing, manifest benefits, market capitalism labors under that inescapable burden.

So far Roth is batting a thousand on blatant falsehoods.

According to Forbes Magazine, “The 1996 annual ranking of the 400 wealthiest Americans by Forbes magazine includes a record 121 billionaires, 27 more than last year.”^[ii]

According to Forbes Magazine in 2016, “America boasts 540 billionaires, more than any other country on the planet and more than all of Europe combined.”^[iii]

Mr. Roth, how’s that “fewer and fewer hands” comment working out for you so far?

The number of newly minted millionaires between 1996 and 2016 (3.5 million^[iv] compared to 10.8 million^[v]) is massively greater than the number of newly minted billionaires, but more of the difference in millionaires can be attributed to changes in the value of the dollar between the two dates. Nevertheless, these numbers reveal that, rather than “concentrate[ing] wealth and income in fewer and fewer hands” (as Roth claims), the numbers of hands filled with income and wealth grows dramatically in America over time (to say nothing of the astonishing quality and utility improvements and the lowering of real costs of the things that can be purchased with that money).

Consider also that America is considered one of the most “market capitalist” countries among the OECD members; that is, America’s massive redistribution programs are less proportionately massive than the others’. Nevertheless, “of the 1.8M net increase in global millionaires [in 2012], more than 9 out of 10 were Americans.”^[vi] Clearly the approach of one of the least redistributive country (America) is concentrating wealth in relatively^[vii] more hands than those who attempt to more massively redistribute wealth.

Consider these facts:^[viii]

1. “Using a panel of tax returns from 1999 through 2007, this report^[ix] finds that nearly 60 percent of households in the bottom quintile in 1999 are in a higher quintile in 2007 (and more than 16 percent are in one of the top two quintiles in 2007). Roughly 40 percent of tax returns in the top quintile in 1999 are in a lower quintile in 2007 (and more than 14 percent moved down by two or more quintiles by 2007).
2. The report also examines the persistence/transience of millionaires and finds that this group of taxpayers, which has been the focus of millionaire surtaxes among some states and some tax policy proposals at the federal level, is highly transient. Roughly 50 percent of those taxpayers who were millionaires at some point during the 1999 through 2007 period attained this status just once. In contrast, only 6 percent of this group of taxpayers were millionaires in all nine years. . . .
3. “Millionaires are a highly transient group of taxpayers, and it appears that the realization of capital gains is at least one explanation. This income source tends to be lumpy and periodic and is a major explanation for why taxpayers reach millionaire status.”

Contrary to what Roth would have you believe, market capitalism neither reduces the number of hands into which wealth flows nor creates perpetual dynasties of riches. Trust-fund babies have at their disposal only what is left over after estate and inheritance taxes are collected (and presumably spent for the good of society at large). Trust-fund fools and their money are soon parted. (And this represents many trust fund babies if “only 6 percent” of millionaires remain millionaires for as little as nine years.) Wise trust-fund babies tend to give away much of their money (the guilt—which is no fun—of having unearned riches is no doubt a significant factor) and invest what is left over wisely. Wise investments create businesses that efficiently create jobs and serve the wants and needs of people. All in all, many people getting rich ain’t all bad.^[x]

All of this assumes that America’s economy is “market capitalism” and that market capitalism is what causes a greater concentration of wealth than Roth would prefer. I’ll address the fallacy of that assumption in the next post.

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[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.

[ii] See “121 Billionaires Top Forbes List of 400 Richest Americans.”

[iii] See “The Full List Of Every American Billionaire 2016.”

[iv] See “Amway Produces More Millionaires Than Any Other Type of System.”

[v] See “A record number of Americans are now millionaires, new study shows.”

[vi] See “Land of opportunity: Of the 1.8M net increase in global millionaires last year, more than 9 out of 10 were Americans.”

[vii] Currently America’s population is approximately half of Europe’s.

[viii] See “The Highly Transient Millionaires.”

[ix]  “The Tax Foundation, “Income Mobility and the Persistence Of Millionaires, 1999 to 2007.”

[x] See “Income Inequality Is More Than It’s Cracked Up to Be.”

Here’s some more on what is wrong with Steve Roth’s article “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i]

Roth’s next main claim is this:

Now contrast these [massively collectivist] countries to all the countries that have eschewed those freedom-sapping, serf-ifying government programs, and that have emerged as thriving, prosperous utopias of liberty.

Name one.

Why hasn’t it happened? Not even once.

First, observe that Roth has put the cart before the horse. Massively collectivist countries can be massively collectivist only because they have become wealthy enough to become massively collectivist. Mozambique, Niger, and Burundi have no chance of joining the rich countries’ club by adopting massive redistribution programs. (Roth admits as much later in the article.) First of all, they do not have massive amounts of anything to redistribute. Attempting to redistribute more than they currently do would make the countries even poorer (because the redistribution of wealth always involves taking money from those more capable of producing wealth and giving what is left over after “the system” skims off^[ii] a significant amount for political and other unproductive uses). On the contrary, their only chance of becoming prosperous is to adopt the most pro-free trade policies that the populous will stand.

Put succinctly, no country can emerge from relative poverty and join the rich club without keeping freedom-sapping programs sufficiently at bay over a long enough period so that it can create the wealth to become massively collectivist.

Then, realize that, in two respects, Roth has moved the goal posts he established in the preceding paragraphs. In his opening salvo, Roth holds up as the optimum standard “massive doses of redistribution, and universal government programs for social support and financial security.” Note that he refers only to “massive doses.” He did not say that the wealth of the country must be completely redistributed (so that everyone had identical levels of income as well as social and financial security). Therefore, implicit in his claim is that, to some degree, the current members of the rich and prosperous club have and currently do “eschew” full implementation of “freedom-sapping, serf-ifying government programs.”

Note also that nowhere does Roth claim that any of the rich collectivist states he reveres are utopias. He has not taken upon himself the challenge of naming even one collectivist government-run utopia. Nevertheless, Roth suggests that he is proving some point by asking his readers to name a “utopia of liberty” that has thrived and become prosperous. Asking a preposterous question that you would not ask of yourself proves nothing.

While I cannot claim that England, America, Germany, and all of the other current members of the rich countries’ club were or are now utopias, I can claim (and in the immediately preceding post did claim) that they all became members of the club when they eschewed to a very considerable degree the “freedom-sapping, serf-ifying government programs” that Roth is touting.

In short, had Roth set the same standards of measurement (goal posts) for his opponents as he set for himself, it would have become clear that not only one, but many if not all of the current members of the club became members because they sufficiently eschewed “those freedom-sapping, serf-ifying government programs.”

To not engage in half-truths,^[iii] Roth should have named all countries that became too massively collectivist and either fell out of the rich club^[iv] or cut back on collectivist policies in order not to fall out of the rich club.^[v] He also should have noted how much less rich and technologically advanced most of the members of the rich club would be if America did not provide most of the innovations, defense, and funding for the collective state action (e.g., the U.N. and NATO, trying to keep bad actors in the world at bay) upon which they rely. America could not carry such a heavy load and would not be the world’s fountain of innovation if it were to become even more collectivist.^[vi]

China is a glorious example of a country joining the club only after it eschewed much of its quintessential “freedom-sapping, serf-ifying government programs” in favor of free markets and less redistribution. How does Roth reconcile this gigantic contradiction to his thesis? Crickets.

In short, the second claim does not prove that “Welfare and Redistribution Saves Capitalism from Itself.”

Perhaps he will get around to actually advancing his thesis later on in the article. (Don’t hold your breath.)

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[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.

[ii] See “Obamacare – Repeal, or Repeal and Replace? PART I,” specifically Siphoning.

[iii] See “The Truth Is Hard For The New York Times.”

[iv] E.g., Latvia (which went from reasonably non-collectivist to almost completely collectivist as part of the USSR), Venezuela, Greece, Portugal, and Spain remain in the club only because they are being bailed out by the EU (and relying on the U.S. for innovation, defense, and other benefits).

[v] E.g., Sweden.

[vi] See “Income Inequality — the Gap Is Not as Large as You May Think,” “A Comment Worthy of a Post,” and “Two Paths for America.”

A friend who holds a degree in political science from a prestigious university recently shared on Facebook this article by Steve Roth: “Why Welfare and Redistribution Saves Capitalism from Itself.”^[i] It may be the most quintessential example of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors I’ve ever seen. Sorting out the many wrong things about the article should be quite useful to obtain a deeper understanding of political debates about economics in America.

[BTW: I’m taking a new approach to this series of posts. See Author’s Note below the endnotes.]

As the title of Mr. Roth’s article implies, the author claims (and seeks to convince his readers) that “welfare and redistribution saves capitalism from itself.” He tries to make that case by several different means. Let’s sort out whether he accomplished his objective.

Mr. Roth’s first point is this:

“No country has ever joined the modern, high-productivity, rich-country club without massive doses of redistribution, and universal government programs for social support and financial security. Not one. Ever.”

(For the sake of brevity, I’ll use the words “collectivist government”^[ii] to represent the government described in this claim.)

Let’s first observe that the claim is patently false. To see this, note that no “modern, high-productivity, rich-country” achieved that status yesterday. All those countries are the product of policies in place as they became more productive and rich relative to other countries. As we will see, collectivist governments of today are nothing like the governments of those countries when they joined the relatively “high-productivity, rich-country club.”

Most “modern, high-productivity, rich-countr[ies]” achieved that status as a result of their participation in the First and Second Industrial Revolutions (1760 to sometime between 1820 and 1840 and between 1840 and 1870, respectively). Although there were many attempts at collectivist governments over the centuries, few, if any, of the countries that had massively collectivist governments before 1870 became highly-productive or rich as a result of the First or Second Industrial Revolutions.

It was only after Germany became rich at the end of the Second Industrial Revolution that Chancellor Bismarck kicked of the modern era of collectivist government. The UK initiated its “welfare state” with the election of the “Liberal Party” in 1906. America kicked off its “welfare state” in the 1930s. The period between 1906 and 1930 was a period in which the US put the UK in the shade economically. All of these welfare states started after counties distinguished themselves as “modern, high-productivity, rich-countr[ies].”

Note also that Mr. Roth offers no example of a country with a massively collectivist government economically gaining on, much less overtaking, a country with a less collectivist form of government.

Worse, he ignores clear examples that refute his claim. I’ll mention one. (While there are several, just one is necessary.) Estonia clearly contradicts his assertion that “no country has ever joined the modern, high-productivity, rich-country club without massive doses of [collectivist government].”

“After Estonia moved away from Communism in the late 1980s and became an independent capitalist economy in 1991, it emerged as a pioneer of the global economy. . . . The country has been quickly catching up with the EU-15; its GDP per capita having grown from 34.8% of the EU-15 average in 1996 to 65% in 2007, similar to that of Central European countries. It is already rated a high-income country by the World Bank. . . .  Because of its economic performance after the Soviet breakup, Estonia has been termed one of the Baltic Tigers.

“In 2008, Estonia was ranked 12th of 162 countries in the Index of Economic Freedom 2008, the best of any former Soviet republic. The same year, the country was on bottom of Europe by labour market freedom. . . .” ^[iii] [Emphasis Added.]

“With a population of just 1.5 million, Estonia does not have a very large welfare budget in either absolute or relative terms.”^[iv] [Emphasis Added.]

Estonia, like all its fellow Soviet satellite states, was impoverished in 1991 when it gained freedom from the USSR, but it was among the poorest.^[v] Before the Berlin Wall fell, Estonia’s estimated GDP per capita was $2000 while neighboring Finland’s was over seven times that. “. . . during 1993-1994, Estonia went from an almost unknown spot in the world for foreign investors to a mecca for them.”^[vi]

How did Estonia pull off “The Estonian Economic Miracle?” Estonia had the good fortune of electing Mart Laar, a fan of Milton Friedman^[vii] (a staunch opponent of collectivist government), as Prime Minister (1992-1994 and 1999-2002).^[viii] Using free-market economics and a small welfare budget, Laar enabled Estonia to become a “modern, high-productivity, rich-country.” In short, contrary to Mr. Roth’s claim, Estonia is a country that became a member of the modern, high-productivity, rich-country club without massive doses of collectivist government.

The main takeaways of this post are: 1) Presenting a factually false claim, as discussed above, proves nothing; 2) The fact that rich countries today are “massively” collectivist proves neither that collectivism is what enabled them to join the rich and collectivist “club” nor the proposition that a country must be collectivist to become rich. Consequently, Mr. Roth’s first claim does not support the general claim that “welfare and redistribution saves capitalism from itself.”

There is much more to this story, which will be taken up in future.

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[i] Please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.

[ii] This term is intended to describe any form of government (regardless of its label) that has a primary mission to “run the economy” in way that redistributes wealth from “the rich” to “the poor.”

[iii] “Estonia Investment and Business Guide Volume 1 Strategic and Practical.” Pg. 25.

[iv] “Which are the best countries in the world to live in if you are unemployed or disabled?”

[v]  “The Estonian Economic Miracle.”

[vi] See endnote vi.

[vii]  In “Walking on Water: How to Do It,” Laars said, “It is very fortunate that I was not an economist, I had read only one book on economics – Milton Friedman’s “Free to Choose.”

[viii] “Mart Laar’s Economic Guidebook for Estonia: Free To Choose”

Author’s Note: I’ve been advised that my blog posts are too long. I plead guilty to that charge. My excuse has been that the ideas covered by my blogs are so multifaceted, steeped in misunderstanding, and dangerous that a fairly thorough drubbing of them is necessary for the sake of our children and grandchildren (and everyone else in the world). This is why I spend so much time writing blog posts. I have also been concerned that unless I cover the waterfront, skeptics will jump and cling to what they believe to be unaddressed counterpoints that refute my arguments—and dismiss my arguments on that basis. On the other hand, if my posts are so long and rambling that too few read them, I am defeating my own purposes. Therefore, in tackling the many flaws in the article hyperlinked above, I will try presenting more bite-sized pieces of data and analysis and cover topics over several posts.

In this tweet, James Martin, a Jesuit Priest, said the words in the image above. This image has been circulating around the internet ever since. Martin’s tweet was posted in the context of Congress considering reductions in the future growth of welfare programs. It is fair to consider the tweet to be urging people to oppose such reductions.

I do understand why a Jesuit Priest and his acolytes would say something like this. Wanting to help the poor and sick is highly commendable. On the other hand, whether people can achieve salvation (or deserve the esteem or self-esteem that comes from doing good deeds) by urging others to delegate their personal obligations to help the poor and sick to Caesar is doubtful. (BTW: I believe that encouraging Caesar to take money from others with threats of force does not fulfill one’s personal obligation to personally help the poor and that believing one has done good by doing that is undeserved self-flattery, does not earn salvation, and is damnable; however, that is not the point of this post.)

Before discussing why turning aid to the poor and sick over to Caesar is a failed idea, let’s survey a few other things to criticize about James Martin’s tweet:

1. If there are any politicians who “treat the poor and the sick like dirt,” there are so few of them they have no noticeable impact on policy—such immoral people are too few to be worth mentioning.

2. Presuming or projecting (which the tweet does) immoral motives on the part of people whose motives you do not understand is probably a sin. At a minimum, it is uncharitable. (That a Catholic priest would so judge so many people is remarkable, if not damnable!)

3. Martin appears to be assuming something like the New York Times’s description of Trump’s proposed budget cuts. The Times described them thus: “would cut deeply into programs for the poor,” “deep cuts in entitlement programs,” “slashing more than $800 billion from Medicaid,” “slicing,” “steep reductions,” etc.[i]

Let’s first realize that under the Senate’s proposed “Better Care Reconciliation Act,” spending on Medicaid will increase every year.[ii]

The only thing being cut is how rapidly Medicaid’s authorized budget increases. Medicaid is a program to provide medical aid to those who cannot afford medical assistance.[iii] Medicaid does not include the “unreimbursed” (free) healthcare that the government forces hospitals to give to the poor who show up in the emergency rooms across the country.[iv] Nor do these “cuts” affect any of the medical assistance provided to the poor by private charities. When the “cuts” are compared to all of the healthcare benefits bestowed on the poor through multiple programs, $800 billion is a small number. To characterize the proposal as a “cut,” “slash,” “slice,” or “reduction” is hyperbolic sophistry and mean-spirited. It is designed to prejudice rather than inform.[v]

Medicaid is just one of numerous programs and tax provisions that transfer wealth from the nation’s relatively productive people to its relatively unproductive people. All told, the U.S. government spends $1 trillion per year to fight poverty. A touted reason for Medicaid is that it enables people who otherwise could not be productive due to medical conditions to become productive. So if we are spending over $1 trillion to reduce poverty in America, why doesn’t the incidence of poverty go down? Stated differently, if the government were an effective way to reduce poverty, wouldn’t there be fewer people needing Medicaid assistance over time? As it turns out, all of the projections of Medicaid spending, including the Senate’s plan, are projections of the government’s failure to solve a problem it is trying to fix—and has been aggressively trying to fix for over fifty years. Since LBJ declared the War on Poverty in 1964, the government has spent over $22 trillion[vi] to win that war. Over that time, the number of people “in poverty” has increased from 25 million to 43 million.[vii] What Ronald Reagan said in the 1980s, “We have fought the war on poverty and poverty won,” is even truer today.

During those 50+ years, there were politicians who believed that spending less (say $21 trillion instead of $22 trillion) on this failed effort would free up resources for more advantageous opportunities. Similarly, today’s politicians who were slandered by Martin’s tweet are proposing to spend $4.2 billion instead of $5 billion per year over the next ten years on the poor people who are sick. Saying that politicians who are proposing that the government spend $4.2 billion per year on Medicaid are treating “the poor and sick like dirt” is loathsome.

4. By how much should Medicaid increase per year? For some people (probably including Martin) the answer is always “more,” no matter how much is being or is proposed to be spent. Can enough be spent on the poor to eliminate the poor? Of course not.[viii] So why does Martin think he knows how much should be spent? He surely has no clue, and he is surely even more clueless about how the poor could be better helped by spending on things other than healthcare.

6. Politicians of Martin’s liking told Americans that Obamacare would “bring down the cost of healthcare.” If they really believed the cost of healthcare would fall with the passage of Obamacare, why would the government project increases in the cost of Medicare over time? Note that the projected increases brought about by Obamacare are what Congress is proposing to trim. (Never mind, those promises were just sounds caused by a politician’s lips moving.)
7. Let’s assume, as Martin suggests, that the nation would be treating “the poor and sick like dirt” if it does not take even bigger gobs of money from some people under threat of force and give that extra money to sick, poor people. Throughout human history, there has been no nation on earth that has taken as much money from its citizens for the purpose of treating the needs and wants of it poor and sick as does the U.S. Has every other nation that ever existed therefore necessarily treated its poor and sick people like less than dirt? By some heavenly standard, the answer is surely “yes.” In the real, human world where spending resources on one positive thing means having fewer resources to spend on other positive things, the issues involved in how much to spend on the poor and sick are so complicated that Martin’s comment should be viewed as no more than slander by an insufficiently informed person. (See Author’s Note at the bottom of this page.)

More important than the shortcomings of Martin’s comment and his beliefs, however, is that what the government is doing in its efforts to help the poor actually hurts poor people, especially black poor people,[ix] more than it helps them.[x] In short, if people pay attention to Martin’s slander, Martin would have helped the poor much more had he remained silent.[xi] Let’s sort this out.

🙛

Author’s Note: Who are the poor in America today? For the most part, they are the descendants of the poor of the past. This is in no small part attributable to what is known in economics as the “cycle of poverty”[xii] or the “poverty trap.” While the causes of the cycle of poverty are many and varied, much of it can be boiled down to this: The attitudes, ethics, perspectives, beliefs, and customs (“mores”) of parents tend to be passed on to their children. (Note that I did not include intelligence in this list. With the exception of people with exceedingly low intelligence—much lower than is typical of the vast majority of people who live in poverty—“poor people” have sufficient capacities to flourish in America if the mores to do so are instilled in them.) Some mores produce a higher percentage of thriving people than others. The people with the least effective mores tend to live in communities with poor schools, relatively few positive role models, and other handicaps. Consequently, even in the absence of government involvement, families who find themselves in communities with unproductive or counterproductive mores tend to be stuck there for multiple generations.

Most of what the government does for the purpose of helping the poor creates disincentives and obstacles to escaping the shackles of stultifying communities. As was predicted[xiii] by Daniel Patrick Moynihan, assistant to the Labor Secretaries of JFK and LBJ, having more single-parent households in poor communities leads to poor outcomes for most children in those households. Larry Elder convincingly presented this case in his lecture Black Fathers Matter.[xiv] Not only did the War on Poverty policies enable women to marry the state and render men superfluous to the family unit, it actually made men liabilities to the financial wellbeing of families. Due, not doubt to time limitations, Elder’s video covered only some of the negative impacts that the War on Poverty has inflicted on poor families. I’ll touch on just a few of the many more.

While there are many grand exceptions to the general state of affairs (more on that below), systematically rendering men as liabilities to poor families does great damage to the sense of self-worth of poor boys and men. Feelings of worthlessness are not conducive to human flourishing. Worse, they often induce such men to seek respect in antisocial dimensions. This not only induces men to avoid being positive factors in their communities, it results in menaces to society roaming poor neighborhoods. Men not having a respected role in families has caused poor communities to be poorer than they would otherwise have been.

Again, there are exceptions,[xv] but the children from fatherless families are, on average, less parented than the children of dual-parent families. For example, disciplining children wears parents down. Consequently, two parents can provide more parenting than one. On average, about half of the children of single-parent families are boys. When those boys find themselves in communities in which men are superfluous to families and aren’t around to educate, discipline, and demonstrate how to be men and where many of the men that they see around them are up to no good, their chances of adopting the mores that would enable them to flourish are agonizingly low.

As is typical when a community considers itself to be oppressed, its members tend to circle the wagons to defend themselves against negative judgments of their community by others. Sadly, all too often poor black communities react by ascribing positive qualities to mores that are believed by those who are supposedly oppressing the community to be negative. President Obama identified two of ways in which poor black communities do this as “’acting white’ and its ugly cousin, acting ‘not black enough. . .’[xvi] Eschewing education and work and judging others by the color of their skin is not conducive to flourishing.

What is critical to understand is that the counterproductive pathologies are not the fault of the people living them out—and neither are they to blame. They are the victims of the system imposed on them by well-meaning but myopic people such as Priest Martin. (BTW: For a great discussion of the pathology Martin exhibits with his comment, see “The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy.”)

Thankfully, there are many exceptions to this general rule. For the most part, however, the people who break out of the shackles with which impoverished communities bind their members are only those who are exceptionally talented or smart. Ordinary people, much less those with below average skills or intelligence, have little chance to escape.

That those pathologies are the product of government programs and not of the people suffering under those programs is made clear in Larry Elder’s video linked above. I discussed the same issue in “Equal Rights or Equal Outcomes.” In short, it is factually and morally wrong to assume that poor people, especially black poor people, are not capable of thriving. As Thomas Sowell has documented so extensively,[xvii], “The poverty rate among black families fell from 87 percent in 1940 to 47 percent in 1960, during an era of virtually no major civil rights legislation or anti-poverty programs. It dropped another 17 percentage points during the decade of the 1960s and one percentage point during the 1970s. . .” It appears obvious that the 17 percent drop in the poverty rate among blacks in the 1960s would have been much smaller had LBJ’s “The Great Society Programs” not come online so late in that decade. The thing to note, however, is that the Great Society Programs put a stop to the progress of poor blacks for at least 10 years and have snared far too many black people into multi-generational poverty—something out of which they were rapidly climbing prior to the government trying to help. Though the rates of escaping poverty have improved since their nadir, those rates pale in comparison to the progress that was made before the government started trying to help.

Now, let’s proceed to the nub of the matter.

🙛

When Martin says “the poor,” to whom is he referring? Is it to the people alive today who are poor, or is he talking about the multigenerational descendants of those people? The number of descendants of today’s poor will vastly outnumber the people who are currently poor. For example, as mentioned above, in the late ‘60s, when the effects of the War on Poverty began, there were about 25 million Americans in poverty. There are almost double that number in poverty today. The reality is that paying people (with money or other considerations) to be poor causes more poor people to adopt counterproductive mores. Not only does paying people induce them to adopt lifestyles that conform to the statutory definition of “poor,” the statute defining the term pays more to those poor people who have more children. (The fact that it makes no economic sense to have more children is lost on people who have no economic sense.) Those children are typically raised in communities that produce more poor people.

Even worse, “the system” created by the statutes makes escaping the communities with anti-flourishing lifestyles almost impossible. The loss of benefits that accompanies a welfare recipient getting a job is equivalent to an income tax. That tax rate is the highest income tax rate on the books. Because the government pays people to be poor and punishes them with excessive “income taxes” if they try to escape, the longer the government keeps it up, the more people will live anti-flourishing lifestyles. That is a major factor in the number of people living in poverty keeping pace with the huge rise in the U.S. population since 1965. Demanding that poor people be paid even more to remain poor, as Martin does, will create more poor people over time. Why would a good-hearted person do such a thing?

It is not that these facts are unknowable or unpredictable. Ronald Reagan had it right when he said, “We’re in danger of creating a permanent culture of poverty as inescapable as any chain or bond; a second and separate America, an America of lost dreams and stunted lives.” That danger has now come to fruition. Is Martin intentionally ignoring this ugly reality?

People like Martin actually celebrate how many people are being served by welfare programs—as if trapping more people in poverty is a good thing. They also celebrate the diversity that poor people bring to the larger community and respect the anti-thriving mores of the poor communities as being equally valid as the mores of more prosperous communities—as if diversity is always a good thing. (It would be wonderful if humans could have good with no evil, but the existence of “good” is made tangible by its comparison to “evil.” This should not mean, however, that we should celebrate evil for the sake of diversity.)

Many politicians who have been slandered by Martin object to how, in practice over the long run, the War on Poverty: 1) hurts poor people, 2) creates more poor people, and 3) is, in effect, a war on the better economy (and the higher standards of living that would have accompanied a more robust economy) that could have been. Unlike Martin, they see that a growing economy improves the standard of living of poor people more than it improves the standard of living of the non-poor. As I said in “Wealth,” “With all its faults and narrowness of focus, the wealth brought about by capitalism has lessened human suffering, solved problems, allowed humans to flourish, and enabled billions or more people to partake in the joys of life.” See also “Income Inequality Is More Than It’s Cracked Up to Be.”

America’s current welfare system is a monster that gobbles up lives and traps them there with lower odds of escaping than Jonah’s. Feeding that monster, as Martin and his acolytes do, will enable the monster to gobble up even more lives. Martin should be politicking to reform those programs rather than asking for them to get more money, which would only cause the population of the poor to grow.

__________________________________________________________________________________________

[i] “Trump’s Budget Cuts Deeply Into Medicaid and Anti-Poverty Efforts”

[ii] “Data Underlying Figures – Congressional Budget Office”

[iii] “Guess What? There Are No Cuts in Medicaid.” This article also makes the case that “Piles of studies have shown that people on Medicaid have health outcomes that are no better, and often worse, than those with no insurance at all.” BTW: I am aware that Politifact and others have claimed that the Administration’s claim that “there are no cuts to Medicaid” is “mostly false.” The basis of Politifact’s claim is that Obamacare had authorized higher rates of increases to Medicaid spending than the Senate’s proposed Obamacare replacement would authorize. In other words, Politifact admits that Medicaid spending will increase (not be cut) every year under the proposed law, but insists that Medicaid is being “cut.”

[iv] “The Impact of Unreimbursed Care on the Emergency Physician.” This benefit to the poor and the sick is, in effect, a special tax imposed exclusively on hospitals and emergency room physicians, nurses, and staff. “According to the Centers for Medicare & Medicaid Services, 55% of an emergency physician’s time is spent providing uncompensated care.” (I wonder if Martin took this into account before he uttered his slander.)

[v] See “The Truth Is Hard For the New York Times.”

[vi] http://www.heritage.org/poverty-and-inequality/report/the-war-poverty-after-50-years

[vii] Number in Poverty and Poverty Rate

[viii] “You will always have the poor among you. . . .”

[ix] “Moynihan Black Poverty Report Revisited 50 Years Later”

[x] This is a recurring theme of this blog because there are so many facets of the harm inflicted by the government and it is so consequential. A few examples of previous posts that touch on aspects of this point include:

1. 1. • “Equal Rights or Equal Outcomes?”
      • “You will always have the poor among you. . . .”
      • “Solutions”
      • “Wealth Creation – It’s for the Children, and their Children, and their Children. . . .”
      • “Wealth”
      • “Income Inequality Is More Than It’s Cracked Up To Be”

[xi] Martin and much of the public are seemingly blind to the reality that the government hurts the poor more than it helps them. That people are blind to this reality is an indictment of our educational systems, both secular and parochial.

[xii] The “set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention.”

[xiii] “The Moynihan Report (1965)”

[xiv] See also “Urban America’s Underclass: More Money Won’t Solve the Problems”

[xv] I am well aware of and believe the many studies that have found instances of great parenting from single mothers and other non-traditional families. While there is no doubt such can be the case, I believe that the combinations of education, intelligence, and the mores of successful non-traditional families are on a higher plain than is typical of families in poor communities.

[xvi] “Obama goes there on ‘acting white’”

[xvii] “Race and Culture: A World View” and “Wealth, Poverty and Politics”

Author’s Note: In the original version of this post I used the term, “simpleton” instead of “insufficiently informed person.” I had mistakenly used the term “simpleton” to refer to someone who viewed issues too simplistically.  I have since learned that “simpleton” means “an ignorant, foolish, or silly person.” I do not consider Mr. Martin to be foolish or silly. Only the definition, “ignorant,” is close to what I meant—someone with too little information to make a well informed decision about the subject at hand. Inasmuch as there are definitions of the word “simpleton” that are commentary on the intelligence of a person (something about which I did not intend to comment), I have edited this post to replace the term that is more accurate. I apologize to Mr. Martin to have used term which could be interpreted as a personal attack. I believe Mr. Martin to be mistaken, but good and well-intended person.]

On July 4, 1776, the Declaration of Independence proclaimed the self-evident truths and principles that the Constitution was designed to protect. It saddens me to hear people say that the Constitution was written too long ago to be a worthy guide in a modern world so different from the world of 1776. Those who say as much often concede that the people who conceived and wrote the Constitution were among the most learned and enlightened of their age; however, detractors insist that said age has long passed, and lessons from such enlightened people have little relevance today. Let’s sort out whether these beliefs about the Constitution are valid.

There are, of course, huge differences between today and 1776 (or 1789 when the Constitution was adopted) with respect to what people do, what people know, what people believe, and what technologies people use. On the other hand, there are essentially no differences in human nature since 1776. It just as wrong to kill, steal, rape, and rob today as it was then. The human penchant to desire more than what they have is unchanged. Human propensities of pride, covetousness, lust, anger, gluttony, envy, and sloth (written down as “deadly sins” in about 400 A.D.) are just as present today as they were when those “sins” were first identified, and the vast majority of people still believe them all to be bad. The same is true of the seven virtues: chastity, temperance, charity, diligence, patience, kindness, and humility (the naming of which is about as old as the named sins). Anarchy, the absence of government, would result in as much ruination then as it would today.

The “government” (established by the Articles of Confederation) in place at the time of the adoption of the Constitution was not serving its purposes. A new government based on the spirit of 1776 needed to be formed. The participants at the Constitution Convention in 1787 included many who were extremely learned in the history of governments and politics, philosophy and human nature. They had analyzed the recorded history of ancient Greece, Rome, and many other civilizations, each of which had tried different forms of government (with variations in the forms over time). They teased from the data the forms of government (that is to say, the formal relationships between the people and the governors) that worked best. They had multiple millennia of examples from which to identify the best such relationships. After much discussion and collaboration, the convention produced the Constitution that, over time, produced the most free and prosperous nation in the history of the world.

America certainly has many faults and has committed many errors. It has never and will never (because perfection is unachievable by humans) realized its values to the fullest. Compared to perfection, America is mean and hideous. (There are many things about America today I would change if I could.) Compared, however, to all the other attempts humans have made to strike the right balance between the citizens and the government so as to maximize human flourishing, America remains head and shoulders above every other nation conceived and constituted. The fact that the founders were not perfect is lamentable, but it does not negate the marvel they accomplished.

Every modicum of power ceded to a governor reduces the freedom and power of the people. Without governors having some power (“rope” with which to yoke the people), there is anarchy—a state in which freedom is not worth much, and people’s power is ineffective. What the founders accomplished was a Constitution that struck the best (so far) balance of power between the flawed and fallible citizens and their flawed and fallible governors. Relying on the wisdom of those intelligent students of thousands of years of human history (America’s mere 240 years of existence pales in comparison), the Constitution was designed to give the governors enough rope to govern but not so much rope that they could become the tyrants, an amount of power that essentially all unrestrained governors desire to obtain (and given enough time always do)[i]. Save the unlikely event someone will come up with a better balance of power, that balance will still be the best balance a thousand years from now.

The idea that the correct balance of power between the governors and the governed has substantially changed since 1776 reflects a misunderstanding of the purpose and effect of the Constitution and definitely eschews the spirit of 1776.

[i] “All power tends to corrupt; absolute power corrupts absolutely.”