…But first, Milton Friedman agreeing with a socialist: “One of the reasons why I am in favor of less government is because when you have more government, industrialists take it over, and the two together form a coalition against the ordinary worker and the ordinary consumer.” If today’s left can still nod its head to that, maybe there’s hope after all.
As the so-called fiscal cliff so-called negotiations plod ahead, I’ve been contemplating whether the President’s sought-after redistribution really is a mortal blow to those who believe in economic liberty–and to the GOP, who at least pays more lip service to that principle than their counterparts. Those who believe there is a right in our property and income believe that the government shouldn’t take different shares from different people, that the essence of law is that it applies equally. To some extent, Americans who believe in that principle have capitulated to yielding it somewhat to a relatively modest progressive taxation scheme.
But the President’s current posture seems to acknowledge that the proposed rate hike on “the rich” is not a means-tested compromise. That is, it’s not really a meaningful solution to our serious budget and deficit problems. The right has been banging on this point for months now, but to no avail, and that’s because it’s not really meant to be a pragmatic proposal. If it were, it would be seriously bloodied by the right’s pragmatic rebuttal. Instead, it’s an attempt to advance a principle of redistribution directly against the principle of private property. The President has insisted time and again that taking more from “the rich” is “the right thing to do.” (Please excuse the lack of source quotes and analysis—these are just my impressions, and it’s not the main point of this post. But feel free to push back if you think my characterization is unfounded.)
As a political observation, taking a hard line against this has not served the GOP well. Thus, I think the GOP should be willing to countenance a means-tested compromise. But the fact that the President appears to be negotiating a principle here should give pause, because (a) if you’re talking dollars-and-cents while he’s talking right-and-wrong, you’re talking past each other, and (b) a “compromise” in which you win on dollars-and-cents when he wins on right-and-wrong is not a compromise but a loss: a moral win trumps an accounting win every time.
If I’m correct so far, I obviously disagree with the President on principle. I believe in property rights, and that property rights derive from the individual, not from government. For purposes of the balance of this post, I’ll ask that you assume that as a working premise. I do not intend to debate the premise itself. What I want to explore is whether there is any room for compromise on the fiscal cliff rather than a winner-take-all scenario on the issue of property rights versus redistribution.
Assuming property rights belong to the individual, then, is there room for compromise in the face of more progressive taxation? There’s at least one, and it takes us back to Milton Friedman’s broader point about unholy coalitions between government and industry. One limit on the moral right to wealth is the extent to which wealth is created by virtue of proximity to government, e.g., by rent seeking. That basic argument is uncontroversial, I think, and in a post slated for shortly after the holidays I will be exploring how the sweeping extent to which the idea applies in today’s economy undermines the preconditions of economic liberalism. The gist is that most people don’t consider themselves government sucklings, yet they probably would be surprised to know how much their livelihood depends on government rents. We’re closer to cronyism than we suspect. And if proximity to cronyism impairs the moral nature of one’s wealth, it likewise undermines the objection to progressive taxation on that wealth. In short, crony capitalism undermines the very principle of an individual right to property. Progressive taxation thus could be couched in terms of the means by which government corrects (albeit in a very rough, mostly arbitrary way) the distortions that industry and the government itself perpetuate on the economy by their coalition against the rest of us.
Absent rampant crony capitalism, the conservative/libertarian principle is that there is little or no moral justification for taxing one person more harshly than another where that wealth was fairly and honorably earned and where the unequal distribution of wealth owes entirely to effort and skill, and perhaps luck. But in an increasingly crony-ridden economy such as ours where superior wealth flows from something other than effort and skill and fair practices, a stronger justification for progressive taxation might exist.
But I wonder if there is more common ground. Does the fact that we “stand on the shoulders of giants” undermine the moral claim to private property? A young Robert Heinlein argued for an “inheritance dividend,” aka “social credit” in his first novel, For Us, the Living, in which every person receives a lifetime stipend from the government and works only if he or she wants to. The wealth created by our ancestors is more than enough to serve as a dividend for us, the living. Edward Bellamy had a similar vision a half century earlier in Looking Backward, 2000 to 1887 (see my book report for a synopsis). But these are both early versions of “you didn’t build that,” it seems to me. They do not propose mere exceptions or qualifications to a private property rights framework. They propose its replacement.
Am I wrong? Can we have the bolder redistribution the President and many on the left seek while preserving the notion that there is an individual moral right to property and income? I don’t see how.