Rigging the Economy in the Name of ‘Fairness’
The more we meddle with capitalism to fix its supposed injustices, the worse it gets.
October 14, 2009 - 12:23 am
The demands of forced economic equality are usually justified by the “growing income gap” between rich and poor, and men and women, as well as various groups of minorities. Such demands are usually followed by a plan to improve on reality by aggressively tampering with market forces — which, as we already know, can only make the existing income gap worse due to the resulting poverty, economic stagnation, and limited upward mobility.
In a free society, an income gap results from the success of some and the failure of others, and is, on the most part, fair. A rational, constructive way to diminish this gap is to increase the number of successful people by ensuring that everyone has the freedom and opportunity to earn an honest income. An irrational, destructive approach is to blame the successful, restrict their growth, and redistribute their property. Its proponents would never call it that, though — they prefer the familiar Orwellian “economic equality and justice,” and sometimes “fairness” for short. Resulting in state-sanctioned inequality, it punishes effort, rewards sloth, fosters corruption, and keeps people down by restricting their freedoms, which is neither just not fair.
That is why the only unfair income gap that deserves to be looked at in today’s U.S. economy is the gap between the market-based, non-union wages and the artificially inflated union wages — a gap that was deliberately created by twisting the arms of businesses, paying off politicians, and lobbying for anti-business regulations.
Observe an absurd charade: union-forced unequal pay for equal work has the blessing of the champions of “fairness” who like to preach equal pay for equal work, while all they really advocate is equal pay for unequal work — otherwise known as the communist principle “from each according to his abilities, to each according to his needs.” And these are the same people who can’t shut up about the unfairness of capitalism.
They argue that the gap wouldn’t exist if all workers joined in solidarity and demanded higher wages, benefits, and job guarantees — or, better yet, elected a government that would force the employers to pay up. Let’s test this theory and assume that, as of this morning, all Americans have become equally entitled to union-style wages and benefits. What happens next?
The prices will go up on all essential products. Unionized workers will lose their current advantages. Naturally, the unions will go on strike and use all means in their arsenal to upgrade their members to a “more equal” status. Once they’ve been upgraded, things will return to the old unequal ways — only now the cost of living will be much higher and the people’s savings accounts will be severely depreciated. The country will emerge from the pay hikes poorer than before.
And that will only be the tip of the iceberg. The unreasonably high cost of American products will make them less competitive internationally. To maintain a comfortable standard of living in a shrinking economy, Americans will increasingly rely on the influx of cheap products from countries that hadn’t been touched by the wage cycle. A skyrocketing trade imbalance will undermine America’s standing in the world. A greater number of American businesses will now be outsourcing jobs or hiring illegal migrants in order to stay afloat.
The worsening unemployment, economic recession, and the growing income gap — both domestic and international — as well as the media campaign blaming the crisis on greed, selfishness, and other evils of the free market, will rally more people under the banners of economic equality and redistribution. In the absence of articulate opposition, free enterprise will lose its former attractiveness and Americans will elect a socialist government that will nationalize key industries and begin openly to dismantle the framework of capitalism.
If you find such a dystopia frightening, I have news for you: it is already happening.
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”?
In his inaugural speech, President Barack Obama famously declared, “We can no longer afford indifference to suffering outside our borders; nor can we consume the world’s resources without regard to effect.” I share his concern, but I’m even more worried that his solution — redistributing unearned entitlements while restraining producers — is what caused the problem in the first place.
The global income gap has already devoured trillions of dollars in foreign aid over the decades, without any sign of improvement. If something isn’t working for so long, any rational person would reexamine the theory behind it. Not the champions of equality, however. They continue to demand foreign aid with the moral smugness of someone who owns exclusive rights to the definition of “fairness.” But there is a reason why aiding despotic quasi-socialist regimes has never resulted in a prosperous nation.
So far it has only resulted in a bizarre symbiosis between the self-righteous champions of “fairness” in the West and the crooked third-world despots, who have long figured out that “equality” is a great excuse to violate property rights, “fairness” is a license to abuse the law, “justice ” legitimizes dictatorial rule, “redistribution of wealth” allows looting, and foreign aid is their reward for doing all of the above and keeping the people hungry.
It couldn’t have happened any other way because the enforcement of all such ideas requires a serious intrusion into the people’s lives by the omnipresent state, which also must own all of the nation’s resources. This makes any president of such a state an ultimate omnipotent ruler of the land and its people. Naturally, in the absence of individual rights, opportunities, and the rule of law, the president’s seat becomes a magnet for an endless array of warlords, military thugs, and leaders of nationalistic mobs driven by collective greed and selfishness. Most of these leaders have no idea how to run a country, don’t care, and may never have wanted it — if it weren’t also a magic key that makes its master a virtual owner of all the foreign aid, gold, diamonds, or whatever else Western geologists can find in the bowels of the state-owned land. This helps to account for the record number of military coups, civil wars, and bloody atrocities happening in the third world today.
This kind of bloodletting would be greatly curtailed if political elites didn’t have control over the ownership and redistribution of the nation’s property. Few warlords would want to stage a bloody coup and take over a government whose functions are limited to protecting individual rights and liberties. For that to happen, property must be privately owned by individual citizens and protected by the rule of law from fraud, coercion, violence, and the dictate of the state. Unleashing the powers of capitalism and free markets would make foreign aid unnecessary; it would be replaced by private investments once the opportunities and the rule of law are in place, and a more prosperous population would eventually be able to take care of itself without anyone’s help.
But the self-righteous defenders of “fairness” would never allow that to happen. For them it would mean to surrender their “civilizing” influence over the minds of people in favor of “greed,” “selfishness,” and “evil corporations.” It would also entail the loss of their moral authority, and with it, the power to control world affairs, which they presently enjoy.
Note that all the currently warring mobs justify their actions by the desire to take better care of the people, enforce fairness, improve redistribution, and use similar quasi-Marxist rhetoric, which has become a prerequisite for the official recognition of a regime by the “world community.” Once in power, they spend their days stealing foreign aid, pilfering the country, looting their neighbors, and fighting off uprisings led by similar thugs who also promise to fight corruption, enforce fairness, and improve redistribution. A sufficient warning sign that the system is failing is the fact that no foreign-aid-sponsored president steps down voluntarily. The greatest fear of all ex-dictators is to become equal with the people they once “cared about” — poor, powerless, and vulnerable to abuse by any new thug in power.
Granted, the “caring” rhetoric as a disguise for abuse and thuggishness is not limited to third world despots. It exists in any society that accepts rigging the game in the name of “fairness” as its official ideology.
I have seen it in abundance while living in the USSR, but that is what my next chapter will be about.
Coming soon: “How Much for a Forced Global Equality?”