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Rigging the Economy in the Name of ‘Fairness’

The more we meddle with capitalism to fix its supposed injustices, the worse it gets.

by
Oleg Atbashian

Bio

October 14, 2009 - 12:23 am

The deeper we go, the more Lenin’s words seem like a prophecy. But there’s more: the unions are instrumental in fulfilling yet another of Lenin’s directives: “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.” And the current U.S. government is going down this path, trying to mend the income gap and the runaway cost of living by increasing the minimum wage. Unsurprisingly, trying to fix an artificially created imbalance by inventing more artificial measures is proving to be as effective as quenching fire with gasoline.

In the meantime, the self-righteous campaigners for economic equality apply the same approach to narrow the global income gap by sending aid to poor nations — knowing full well that most of it ends up in the coffers of local autocrats whose people continue to live in abject poverty.

Granted, the disparity between rich and poor countries exists to a large extent due to the stark differences in the productivity of labor. But that doesn’t tell the whole story. The gap has reached such absurd proportions in large part because the wages inside the industrialized rich nations have been artificially raised to unrealistic heights in the course of repeated, futile cycles of union pay increases, followed by price hikes on most products, with the rest of the national wages trying to catch up.

Who is footing the bill? In an isolated closed system, when things reach a limit of tolerance, the system must either balance itself or break apart. But a country’s economy is never a closed system. Western economies are connected to poorer nations, whose lower wages and cheaper raw materials temporarily compensate for the unsustainable costs of maintaining overpaid unionized labor at home.

If poor nations are selling their products at market prices while buying Western products at a price that includes the full cost of the union wages, pensions, health care, and other benefits, they are clearly being taken advantage of. For this they should send their thanks to the campaigners for “economic equality and justice” — who, incidentally, are also the loudest voices in the chorus denouncing rich nations that get richer by robbing poor nations that get poorer. The tired leftist adage is actually true — but its real causes have nothing to do with imperialism, neocolonialism, capitalist globalization, or any of the other phony labels they fabricate.

These labels imply that capitalists are deliberately conspiring to promote “unfairness” out of personal greed and selfishness — while their opponents, by virtue of defending “fairness,” speak from the position of morality and transparency. But if “moral” is that which advances poor nations and “immoral” is that which inhibits them, then morality is clearly on the side of capitalism. Likewise, if “fairness” means a level playing field, then it entails the elimination of inflated wages and other unearned entitlements, both at home and abroad, making all price creation equally transparent.

The expression “level playing field” alludes to the requirement for fairness in games where a slope would give one team an advantage. I am not an athlete; if I play against an NFL professional on a level field, I will lose fair and square. But if we apply the theory of “economic equality and justice” to sports, a fair game would be played if I had a slope and the NFL professional wore foot shackles, while the referee would continually tamper with the scores and rule consistently in my favor. I wouldn’t even have to practice, build strength, and learn strategies; the revised rules would already give me a chance to win. Any sports fan will tell you this is unfair and such rules would be the death of football. And yet, when the same rules are applied to the economy, very few call it unfair or worry about the demise of the market. On the contrary, many agree that this would give someone a mythical “fair chance,” although no one knows exactly how and who will be the beneficiary of this.

When the game is rigged, what becomes of its purpose? Who decides what is “fair” and which team is entitled to a bigger advantage? How do we know what bribes are being passed under the table? How can we tell who is a better player or what training, techniques, and strategies are the most effective?

The same questions apply to a rigged economy. Tampering with the market not only breeds economic unfairness, but it endangers the only fair gauge of the true cost of things in the world. Without the open, transparent market, what becomes of the meaning of “fair price”?

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