Last weekend I went a few rounds with my favorite philosophical sparring partner about the way we got into this financial mess. It’s a discussion that has gone on for decades, and I heard (for the first time) that my wild-eyed tree-hugging self of the 1970’s had something right.
To summarize our relative positions 30+ years ago, I was of the opinion that the best policies would build from the bottom of the economic pyramid upward, while my debate partner felt that we should set policies that reward success at the top, creating more wealth for all.
Her objection to my “liberal” bias was that some people would take advantage of the system and coast along letting everyone else pull the weight. FWIW, I acknowledged that there would be that element.
Still, I felt that making it easier to succeed on the bottom rungs of the ladder would give plenty of opportunity for those at the top to sell things, provide services, and otherwise profit from a wider, deeper market.
My objection to her theory was that, for the most successful in business, there is never enough, so they would never “spread the wealth” but rather treat those beneath them economically as chattel from which they would always try to take more.
Needless to say, we were both right. So why do economists get it so wrong?
The answer is that economists think people behave in a rational way to accrue the most long-term economic benefit, when they actually behave the way their emotional needs drive them to behave.
That’s why Utopian visions always fail.
From Marx we saw the Utopian vision of collective ownership of the means of production. What we got was Lenin and Stalin.
From the Friedmanites and Reagan, we got the Utopian vision of supply-side “trickle down” economics that was supposed to raise everyone’s standard of living. It would do so by providing more opportunity and more jobs, taking away the drag of government interference. What we got was Enron, Halliburton, Massey Energy, BP, Blackwater and Cargill.
It turns out that a single corporate welfare hog at the trough sucks up far more of our wealth than all the small-time individual welfare cheats combined. Of course, even the welfare cheats quickly spend the money they get at the bodega (and the corner drug dealer), so they tend to have a much higher velocity of money, adding far more to the GDP than yet another million dollars in the hands of the owners of Monsanto as they go out to conquer the world with their engineered hybrid seeds.
Then there’s the fact that there are actually dozens of those corporate welfare hogs at a dozen or more troughs. There’s the farm subsidy trough, the homeland security trough, the military supplier trough, the Medicare part D trough, the Bureau of Land Management (mining, forestry and grazing) trough, the energy exploration trough, and a few others I forget right now.
Clearly corporations that impoverish their potential customers aren’t working in their own long-term best interest, but they can’t separate their amoral striving to maximize profit from the larger reality. After all, a corporation that outsources its manufacturing to Chinese sweat shops and customer service to Pakistani phone banks while charging as much as the US market will bear can have years or even decades of outsized profits.
At least until every other company outsources too, and there are no customers left.
But there are never actually no customers left. There are always a small number of people in the laboring classes that have an idea, the drive and the right kind of timing to become wealthy themselves. The opportunity actually does exist in the capitalist systems to realize the dream. There are also some who end up depending on charity through no fault of their own, like the aged and frail.
The open question is whether the hard-chargers running the show will actually feel charitable enough to make sure all those who need help to survive get it. Will they get that help even if they are gay, speak a different language, worship a different god, or have a different skin color? You need to be able to honestly say “yes” before purely voluntary charity is a viable system civilized people should accept.
On the socialist side of the scale, there are always some people who seize the “common” ownership reins of power and use the control mechanisms of the economy to their own benefit. There are also, no doubt, a fair portion of the population who really do give as they can to society in exchange for receiving something approximating what they need. In other words, some end up realizing the socialist dream in those systems, too.
Still, absent the incentive of potential large rewards other than approval and admiration of fellow citizens, can a socialistic system enjoy the benefits of productive people? Anyone supporting purely socialistic or seniority systems had better be able to show me how most people motivate themselves to do even a good job, much less the best job they possibly can.
Neither system stays purely what the economists imagine, anyway.
Once again, that is because the emotional component of human behavior simply doesn’t fit economists’ models.
I recommend that we think long and hard about what goes wrong and why, and what “bad people” can do within our system before we decide how to change it for the better.
Our problem is not how we lose our competitive edge when benevolent employers coddle their employees in Reagan’s shining “City on the Hill.” It’s how greedy SOB’s will use the lack of government oversight to line their pockets at everyone’s expense.
Neither is our problem that we’ll lose productivity from spending too much time singing “Kum Bay Yah” in Johnson’s Great Society. It’s how greedy SOB’s will scam the system to collect when they don’t deserve the help, or collect two or three times their allocation.
But ask yourself this:
Which group of greedy SOB’s is more damaging and expensive to the rest of us and our future generations? How can we limit the damage from both kinds, or even stop them?
If you can really answer those questions without relying on the assumption that we’re all Mythical Economic Man, you’ll be on your way to supporting a hybrid economic/social model that can work for the long haul.
Until then, you’re just another white-haired Tea Party protester paying less in taxes than any time you were alive, and you’re taking 50 times as much in Medicare benefits as your “lifetime of payments” justify, all the while complaining about big government, except when it signs your check.
In the interest of equal treatment of the lefties, if you can’t support a modified capitalist system that minimizes taxation and regulation of those creating the new wealth, then you’re just another slacker who thinks you shouldn’t have to work overtime to get a wide-screen TV as nice as your neighbor’s, and I don’t have time for that nonsense, either.