Politics, et Cetera
A publication from The Political Forum, LLC
Tuesday, February 4, 2014
They Said It:
The State sets up as trustee for the lower-income group and doles out services and benefits. In order to avoid the creation of a “protected class,” a discrimination fatal to political equality, the tendency has been to extend the benefits and services upward to all members of society, to cheapen food and rents for the rich as well as the poor, to assist the well- to-do in illness equally with the needy.
The more one considers the matter, the clearer it becomes that redistribution is in effect far less a redistribution of free income from the richer to the poorer, as imagined, than a redistribution of power from the individual to the State.
Insofar as the State amputates higher incomes, it must assume their savings and investment functions, and we come to the centralization of investment. Insofar, as the amputated higher incomes fail to sustain certain social activities, the state must step in, subsidize these activities, and preside over them.
This results in a transfer of power from individuals to officials, who tend to constitute a new ruling class . . . This leads the observer to wonder how far the demand for equality is directed against inequality itself and is thus a fundamental demand, and how far it is directed against a certain set of “unequals” and is thus an unconscious move in a change of elites.
Bertrand de Jouvenal,The Ethics of Redistribution, 1952.
INEQUALITY AND THE STATE OF OUR UNION.
Just over seven years ago in November 2006, the Democrats scored a sweeping electoral victory, taking control of both houses of congress, as well as six new governorships and new majorities in a number of state legislatures. A few weeks later, the Wall Street Journal ran a front page story noting that the recently empowered leaders of the Party had decided that the domestic theme for their new stint in the majority would be to “target the wealth gap.”
According to the newspaper, this “gap” “was not far behind voter anger over Iraq and congressional corruption in driving Democrats to victory.” In support of this wealth gap theme, the Journal said that the Democrats’ new “campaign manifesto” will be the catchy phrase, “We will make our economy fairer.”
Needless to say, the subsequent efforts of the Democrats to close the “divide between the rich and poor” have not been successful. And so, last week, in his State of the Union Address, Barack Obama, who was raised on the beaches of Hawaii, attended private prep school, pursued multiple degrees in the Ivy League, and has become quite wealthy since entering politics, once again raised this beat-up old battle flag of the Left, declaring that “after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled.” This, he continued, will not do. And so it is “our job is to reverse these trends.”
Of course, he made no mention of the many failed efforts in the past by Democrats to solve this “problem,” or of the long-term intractability of it, as evidenced by Jesus Christ’s observation over 2,000 years ago that “you will always have the poor among you.” Indeed, there was a strong element of his trademark buffoonery and out-of-control ego in the sense of urgency he gave to the issue, all of which was reminiscent of his prior claim that his presidency would mark the “moment when the rise of the oceans began to slow and our planet began to heal.”
Why not even the Constitution itself would stand in the way of “The One” to right this terrible wrong. “America,” he said, “does not stand still, and neither will I.” “So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”
The members of the media, of course, loved both President’s plans and his tone. They too are sick of the Republicans and their stupid legislative branch of Congress, just as they are sick about the inequality in this country. After all, it can be distressing to have to step over those poor, homeless urchins every night while walking from the car to the door of a tony Upper East Side or Georgetown town house. It ain’t easy, bub. Let us tell you that. And if the greedy Republicans from out there in . . . well . . . wherever they’re from . . . don’t understand this, then it’s time for Obama do what’s right without them. As Thomas Friedman so famously put it, “what if we could just be China for a day?”
What’s fascinating about all of this is that neither the President nor his allies in Congress and in the media seem to have even the foggiest idea of the fundamental nature of the issue that he chose last week to highlight as the single most important problem in the “state of the union” today, or of the extensive damage that they could do to the country by their futile efforts to balance the proverbial scales. But the truth is that there is a clear and present danger that if left to their own devices, the Democrats will, like a mad scientist trying to burn down his own laboratory, exacerbate the true inequality in this country, even as they push “the last, best hope of earth” further and further from its democratic and republican roots.
For if you pay any attention to the public discourse on inequality, the first thing you will notice is that the proposed policies do not match the politics. Or to it another way, the actions do not match the rhetoric. The Left insists, as Obama himself has put it, that the risks associated with inequality can no longer be ignored. They must be addressed immediately, if not sooner. Yet in response to these manifest and increasing risks, which they claim threaten not only the American way of government but also the American way of life, the Democrats and their partners propose pathetically insignificant solutions. They want to raise the minimum wage. They want to increase or “strengthen” the Earned Income Tax Credit. They want to create new, small-ball savings programs. In short, they want to nibble around the edges, even as they insist that the world as we know it is swiftly and irreversible changing for the worse because of this inequality.
The reason for this is obvious. As important and pervasive as the Left believes the issue of “inequality” to be, the electorate does not appear to agree. Last month, for example, a Gallup survey showed that “income inequality” was way down the list of “most important” issues facing the country, well behind such concerns as the ineffectiveness and corruption of government, the economy, unemployment, health care, and even the budget deficit. True, the majority of those polled in various other surveys agree that raising the minimum wage would be a good idea. But very few people think it should be a priority. Moreover, very few people think that the more radical purported solutions to inequality are a good idea, much less necessary, which explains why the Left is reticent to speak about them openly.
Of course, we all know that what the Left really and truly wants, but is afraid to put it before the American people, is confiscatory taxes on “the rich.” Why? Well, the simple answer is that wealth redistribution is the wellhead of the Left’s political power and the tax code is the easiest and most readily available means to accomplish this.
A more complicated, and albeit less cynical answer is that the Left truly and sincerely believes that unfettered capitalism is deeply unfair and that it is the obligation of all good humanitarians to devise means to remedy its faults. And one of these means is increasing the taxes on upper-end incomes, increasing taxes on investment income, increasing taxes on inherited wealth, and so on. This, the Left argues, can be done without hurting the economy, thereby making everyone happy, or at least most people happier. Hogwash? Well, maybe. But for what it’s worth, Andrew Fieldhouse, a budget analyst with the Left-leaning Economic Policy Institute, made the case as follows:
Recent economic research has shown that productive economic activity is relatively unresponsive to increases in the top income tax rate, and the top income tax rate is well below the levels where it maximizes revenue. Economists Peter Diamond and Emmanuel Saez estimate that the revenue maximizing income tax rate is 73 percent (combing federal, state and local taxes).
As I explain in a new paper, this implies that policymakers could raise the top federal statutory income tax rate from 39.6 percent to roughly 66 percent before reaching revenue-maximization, meaning there is substantial scope for top rate increases without unduly burdening economic growth.
Raising top income tax rates from their relatively low current levels would be the least harmful policy option for deficit reduction and would potentially yield large reductions in income inequality growth.
To this end, the latest and greatest economist in the Left’s estimation is Thomas Piketty, a professor at the Paris School of Economics and author of a new book on inequality, its causes, and its solutions. He is also a Socialist, or at least a strong supporter of Socialist political candidates.
Piketty’s book, titled Capital in the Twenty-First Century, is, to date, unavailable in English, though an English version is due out in March. In any case, we know what Piketty argues in the book, largely because it is merely an expansion of the ideas he has set forth previously. And what he argues is that income inequality is not a bug, but a feature of capitalism. Moreover, he says that increasing disparities, based on the dominance of capital over wages, can and should be remedied by politicians, in the form of confiscatory global taxes. Last week, in the New York Times Thomas Edsall summed up Piketty’s book and its impact as follows:
Thomas Piketty’s new book, “Capital in the Twenty-First Century,” described by one French newspaper as a “a political and theoretical bulldozer,” defies left and right orthodoxy by arguing that worsening inequality is an inevitable outcome of free market capitalism. Piketty, a professor at the Paris School of Economics, does not stop there. He contends that capitalism’s inherent dynamic propels powerful forces that threaten democratic societies.
Capitalism, according to Piketty, confronts both modern and modernizing countries with a dilemma: entrepreneurs become increasingly dominant over those who own only their own labor. In Piketty’s view, while emerging economies can defeat this logic in the near term, in the long run, “when pay setters set their own pay, there’s no limit,” unless “confiscatory tax rates” are imposed.
Now, far be it from us to engage in an extensive argument over economics with Piketty, who is nearly universally lauded for his careful collection of data. But, for what it is worth, we would contend that the proposition that inequality is the expected and predictable result of market economics does not necessarily lead to the conclusion that this is a threat to democratic societies.
Indeed, Adam Smith pointed out quite clearly that inequality would be the result of capitalist forces. But he contended that said inequality, born of self-interest, would work out in the end for everyone’s benefit. And so far he has been right.
Piketty argues that wealth inequality was vast in the 18th and 19th centuries, as the rich grew ever richer. Again, this is true, but so what? At the same time, living standards in the capitalist world – namely England and the United States – rose tremendously. As countless economists have noted, including especially Angus Madison and Bradford DeLong, a former Clinton administration official, per capita GDP and living standards remained constant for thousands of years, for most of human history. And then came the dawn of the capitalist era and the Industrial Revolution, which altered that historical fact dramatically, almost unfathomably. Smith was right, as Madison confirms as follows:
From the year 1000 to 1820, growth was predominately extensive. Most of the GDP increase went to accommodate a four-fold increase in population. The advance in per capita income was a slow crawl – the world average increased by half over a period of eight centuries.
In the year 1000, the average infant could expect to live about 24 years. A third died in the first year of life. Hunger and epidemic disease ravaged the survivors. By 1820, life expectation had risen to 36 years in the west, with only marginal improvement elsewhere.
After 1820, world development became much more dynamic. By 2003, income per head had risen nearly ten-fold, population six-fold. Per capita income rose 1.2 per cent a year: 24 times as fast as in 1000-1820. Population grew about 1 per cent a year: six times as fast as in 1000-1820. Life expectation increased to 76 years in the west and 63 in the rest of the world. [emphasis added]
We should point out here that these “global” increases were not globally distributed, which is to say that they mostly accrued to the capitalist economies. Even so, the capitalists’ improvements did indeed improve living standards beyond their own borders, as all regions of the planet saw considerable increases as a result of capitalist growth. All of which is to say that Smith’s expectations about the universal benefits of self-interest have largely been confirmed by history, inequality notwithstanding.
A second factor that we must consider in any assessment of capitalism and its impact on inequality is that of existing government redistribution, which is unaccounted for in most “inequality” models and which is therefore something of a hedge against the concerns about democracy’s ability to withstand the scourge of income disparity.
We note here that the contemporary measures of inequality – most notably the Gini Coefficient – don’t account for transfer payments, which is to say government distribution of income to the non-rich. As the Cornell economist Richard Burkheiser has argued, “excluding the effect of taxes and the value of in-kind benefits further reduces observed improvements in the resources of the middle class,” which is to say that the “inequality” factor is tempered a great deal by government. Those who argue for greater distribution of income do so fully aware that current distribution is ignored when figuring the needs and the conditions of “the poor.” Their argument against the inequality created by capitalism is therefore both poorly specified, in that it ignores critical variables, and misleading as a guide for future policy decisions.
We should also point out here that the dichotomy between capitalism and the re-distribution of wealth to those in need is a false construction. Again, it worthwhile to return to Adam Smith, who in his Theory of Moral Sentiments posited that sympathy or “fellow feeling” is among the chief virtues that enable a free yet fair society to exist. In Smith’s construction, the chief virtue is justice. However, as he famously wrote, justice itself is not enough, since “We may often fulfill all the rules of justice by sitting still and doing nothing.” Therefore, justice is augmented by other virtues, including sympathy, which directs the fair man and the fair society to consider the impact of self-interest on the every individual, right down to the poorest and least powerful, in an effort to encourage an economy that is mutually, though not equally, beneficial. He put it this way in the Wealth of Nations:
It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of the society.
In the end, then, capitalism, as it has always been envisioned and encouraged, even by its most dedicated and enthusiastic advocates, is an economic arrangement that promotes mutual benefit and raises the prospects and conditions of the least and the poorest, even as it elevates the great and the richest more in proportion. All of which is to say that inequality, while indeed built into the capitalist structure, is nevertheless an inequality that is universally advantageous, if not in precisely the same measure for everyone.
This brings us to the final and, in our estimation, the most important aspect of the case against Piketty and the other Leftists who insist that the principal threat to democratic governance and to the well-being of man can be found in inequality of income. When commenting on the West and on the broad Western consensus in favor of liberal-democratic governance, it is, we think, important to examine the combination of events and decisions that forged this consensus and led to the point where Anglo-American capitalism and a free society are thought of as part and parcel of the same phenomenon. What we mean by this is that we think it is of far more value to assess the ideas and experiences of the West over the last several hundred years than it is merely to scrutinize esoteric and sometimes contradictory data.
It is, in our opinion, no mere coincidence that Thomas Piketty is French and, as such, that his philosophical and moral understanding of equality, representative government, and capitalism come from outside of the culture most responsible for the advancement of these principles in the post-Enlightenment age. As a Frenchman and as a Leftist, Piketty’s conception of the pact between a government and its citizens is radically different from that which spawned capitalism and republican governance in their most successful and enduring forms.
As we have noted countless times in these pages, the differences between the Right and the Left very often boil down to the differences in beliefs about the nature of government, the rights of the governed, and the interaction between the two. In short, the differences are often best exemplified by the contrasting conceptions of the social contract. The Left, as a general rule, traces its understanding of government and citizen to Jean Jacques Rousseau, while the Right is more a product of John Locke’s ideas.
Among the other differences between the two, Rousseau and Locke clashed over the idea of the sovereign, from whence said sovereign draws its powers, and what that all means for those under its rule. Rousseau believed, and argued, that the state exists only to guarantee liberty and that true liberty can only be expressed and understood in the will of the people, which is to say the “collective will.”
In the Lockean contract, by contrast, liberty, justice, and man’s rights exist independently of the sovereign; they precede the sovereign and the state, having been bestowed upon man by his creator. To Locke, the sovereign and the state exist only to protect those rights, chief among which is the right to property, including not merely personal property, but life and liberty as well.
Representative government as we understand the concept in theory is derived principally from Locke’s conception of the social contract. British Common Law, the Magna Carta, the 1689 Bill of Rights, the American Declaration of Independence, the American Constitution, and the arguments forwarded in favor of that Constitution in the Federalist Papers, are all derived in whole or in part from the conception of the relationship between government and the governed that either influenced Locke or was influenced by him. And all therefore acknowledge the supremacy of man’s rights over the will of the sovereign.
What this means, then, is that when Thomas Jefferson declares that “we hold these truths to be self-evident that all men are created equal,” he is saying that all men are equal under the law and not even the sovereign can claim superiority over another outside of the law. This is the very foundation of consensual government as it was understood by the British and by the American Founders. As John Adams’s Massachusetts Constitution put it, the “end” was to be “a government of laws and not of men,” or as Locke memorably wrote in his Second Treatise on Government:
Where-ever law ends, tyranny begins, if the law be transgressed to another’s harm; and whosoever in authority exceeds the power given him by the law, and makes use of the force he has under his command, to compass that upon the subject, which the law allows not, ceases in that to be a magistrate; and, acting without authority, may be opposed, as any other man, who by force invades the right of another. This is acknowledged in subordinate magistrates. He that hath authority to seize my person in the street, may be opposed as a thief and a robber, if he endeavours to break into my house to execute a writ, notwithstanding that I know he has such a warrant, and such a legal authority, as will impower him to arrest me abroad. And why this should not hold in the highest, as well as in the most inferior magistrate, I would gladly be informed. Is it reasonable, that the eldest brother, because he has the greatest part of his father’s estate, should thereby have a right to take away any of his younger brothers portions? or that a rich man, who possessed a whole country, should from thence have a right to seize, when he pleased, the cottage and garden of his poor neighbour? The being rightfully possessed of great power and riches, exceedingly beyond the greatest part of the sons of Adam, is so far from being an excuse, much less a reason, for rapine and oppression, which the endamaging another without authority is, that it is a great aggravation of it: for the exceeding the bounds of authority is no more a right in a great, than in a petty officer; no more justifiable in a king than a constable; but is so much the worse in him, in that he has more trust put in him, has already a much greater share than the rest of his brethren, and is supposed, from the advantages of his education, employment, and counsellors, to be more knowing in the measures of right and wrong.
Likewise, Adam Smith understood that equality before the law and the preeminence of justice were critical to the functioning of a proper and free economy. Smith, like his friend and mentor David Hume, was generally dismissive of the notion of a “social contract.” Still, like Locke, he believed that some virtues, namely justice, preceded the state and therefore preceded the sovereign as well. As Smith put it in The Theory of Moral Sentiments, “[a]mong equals each individual is naturally, and antecedent to the institution of civil government, regarded as having a right both to defend himself from injuries, and to exact a certain degree of punishment for those which have been done to him . . . .”
Taken together, what all of this means is that both contemporary representative government and capitalist economics argue in favor of one specific form of equality – equality under the law – without which neither would be possible.
The Left – and in this case, the likes of Thomas Piketty and those who think as he does – advocates a political calculus that runs counter to the foundations of both contemporary representative government and capitalist economics. One may argue that the imposition of confiscatory taxes passed by popular legislatures meets the test of equality before the law, and in a narrow sense this is true. But in the broader, contractarian sense, that is not the case. In the Anglo-American tradition, the will of the people – the sovereign in Rousseau’s formulation – cannot supersede the natural rights of man and specifically his to right to property. In order therefore to justify the confiscation of property in pursuit of economic fairness, the Left must surrender to the arbitrary nature of the sovereign’s wishes and concede that no fundamental principles exist outside of the sovereign. This then places the sovereign above the law and makes it answerable to no one, rendering equality before the law inoperable.
The collapse of equality before the law leads, as we have said and as the history of the Left has amply demonstrated, inevitably to tyranny. For those who worry about the “future of democracy” and who purport to seek objectives in line with the perpetuation of democratic governance, this would therefore seem to be an odd course to choose. Robespierre, history’s best known and most dedicated follower of Rousseau’s advocacy of the will of the people, should serve as a warning to those who would seek to elevate the will of the people to sovereign status. It will not end well, politically speaking.
We’d argue, moreover, that it will not end well economically speaking and may very well contribute in some sense to the economic equality that the Left insists is its sworn enemy.
In his analysis, Thomas Piketty argues that the last three decades constitute a reversion to the mean for democratic capitalism, in that growing economic inequality is the norm, while the economic compression of the six decades previous was an exception, a fluke. Again, Thomas Edsall summarizes Piketty’s argument for us:
There are a number of key arguments in Piketty’s book. One is that the six-decade period of growing equality in western nations – starting roughly with the onset of World War I and extending into the early 1970s – was unique and highly unlikely to be repeated. That period, Piketty suggests, represented an exception to the more deeply rooted pattern of growing inequality.
According to Piketty, those halcyon six decades were the result of two world wars and the Great Depression. The owners of capital – those at the top of the pyramid of wealth and income – absorbed a series of devastating blows. These included the loss of credibility and authority as markets crashed; physical destruction of capital throughout Europe in both World War I and World War II; the raising of tax rates, especially on high incomes, to finance the wars; high rates of inflation that eroded the assets of creditors; the nationalization of major industries in both England and France; and the appropriation of industries and property in post-colonial countries.
At the same time, the Great Depression produced the New Deal coalition in the United States, which empowered an insurgent labor movement. The postwar period saw huge gains in growth and productivity, the benefits of which were shared with workers who had strong backing from the trade union movement and from the dominant Democratic Party. Widespread support for liberal social and economic policy was so strong that even a Republican president who won easily twice, Dwight D. Eisenhower, recognized that an assault on the New Deal would be futile. In Eisenhower’s words, “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear from that party again in our political history.”
The six decades between 1914 and 1973 stand out from the past and future, according to Piketty, because the rate of economic growth exceeded the after-tax rate of return on capital. Since then, the rate of growth of the economy has declined, while the return on capital is rising to its pre-World War I levels.
While there is undoubtedly some truth in this argument, we would forward our own explanation for growing inequality of the last few decades, one that is attributable to the Left and its worldview far more than to capitalism.
As we have argued in these pages countless times, the twentieth century represents, more than anything else, the triumph of the administrative state. Over the course of the last one hundred years, the Progressives, led by the like Woodrow Wilson and Herbert Croly, managed to alter the American governmental ideal, convincing the preponderance of the political class that they and their professional technocratic aides were the indispensable men of the American experiment. Whereas all men were once equal under the law as Locke and the Founders imagined, the Progressives pushed the notion that the general will and the common good should be supreme, thereby pushing the country in a Rousseauian direction. To borrow a formulation from George Orwell, the Progressives and their heirs pursued a governmental ideal in which all animals are equal, but some animals – namely those with the expertise and the emotive capacity to promote the common good – are more equal than others.
We would argue, in fact, that the growing inequality of the last few decades is very possibly attributable to the maturation of the administrative state and the slide into crony capitalism that accompanied it. Contra Picketty, we think it entirely possible that the six decades of income compression did, indeed, represent the effects of mature capitalism, whereas the growing inequality of the last three represents the effect of mature corporatism.
Given that Picketty is best known for his arguments about income inequality being, in part, the result of rent-seeking by high-end earners, it is ironic, we think, that he and his fellow leftists would miss or choose to ignore the rent-seeking and the rent-extraction on a grander corporate and governmental scale over the last thirty to forty years.
At the risk of repeating ourselves, it is no mere coincidence that the industries that have grown the most and grown the most profitable over the last three decades are also those that have found the best, most effective ways to align their interests with those of the government. Or as we put it only two short weeks ago:
Most damaging of all is the fact that if taken to its logical conclusion, the liberal-Left’s embrace of the welfare state openly accepts and welcomes that which the conservative critique of same derides as unspeakably horrific. As we have argued, the Obama economic vision is astonishingly analogous to the final-stage welfare state. It relies heavily on the contributions of favored constituencies who are allowed, even encouraged, to prosper and who, in return, gladly pay the necessary tribute to satisfy the state and to provide for those less fortunate.
In Obama’s world, Big Government cooperates – some might say “colludes” – with big business, i.e. big banks, big technology, etc. And in return for government’s “cooperation,” big business agrees to give back. The masses are largely cut off from wealth creation and any from aspirations of becoming part of the new gentry. At the same time, however, they are taken care of through the largess of the state. Big Government rubs Big Business’s back. Big Business rubs back by filling Big Government’s coffers. And the “little people” are kept fat and happy in their dependency.
The problem with all of this is that this particular condition, which the Left views as ideal, is itself analogous to the historical condition of serfdom, which, as you may recall, is the precise destination to which conservatives have been warning the welfare state will lead since 1944.
Think, back for a minute to the State of the Union address with which we began this piece. Think about the reforms that Obama proposes and how he proposes to achieve them. As a good little adherent of Rousseau and believer in his own ability to foster the common good, Obama openly brags about his desire to skirt the rule of law and to usurp the power of the legislature for his own ends. Worse yet, the policies he proposes to enact unilaterally are those that would, by any reasonable analysis, exacerbate rather than ameliorate economic inequality.
Obama has decided – in contravention of the law – to raise the minimum wage for all federal contractors. The primary beneficiary of the decision will, of course, be Big Labor, the unions who scratch the Democrats’ back and who therefore have a leg up in the war for limited and shrinking resources.
Obama has in the past administratively altered immigration law and threatens to do so again, if it comes to that. And who stands to benefit from these changes? Among others, Big Business and especially the high-tech industry will benefit greatly from an increased supply of cheap labor. Meanwhile, native-born workers will find themselves competing against more people for fewer jobs, suffering both greater unemployment and all but certainly falling real wages.
Obama has decided that he has to move – again, unilaterally if necessary – to combat global climate change. And while General Electric and other energy giants stand to benefit the most from any moves to fight global warming, other well connected players will stand to profit as well. Indeed, over the course of the Obama presidency well-heeled and well-connected hucksters, including the newly inaugurated governor of Virginia, have already profited handsomely from the taxpayers’ largesse, even as they have delivered no tangible improvements and a mountain of corporate bankruptcies.
Finally, the Obamacare “risk-corridor” is all but certainly going to wind up as little more than a grand bailout for the health insurers.
And the list goes on and on and on (and on and on . . . ).
The situation we’re sure, though we can’t in this format document, is much the same throughout the developed world, where the new clerisy and the well-connected are growing fat off the taxpayers, even as they shriek about the growing obesity of the “1%.”
As it turns out, we happen to agree with Barack Obama, Nancy Pelosi, Harry Reid, and even Thomas Piketty that there is an “inequality” crisis in the Western world and in the United States in particular. We don’t happen to agree though on either the causes or the nature of that inequality. As we see it, it’s the lawlessness and privilege of the ruling class that has created the conditions necessary for economic inequality to grow. Likewise, the real culprit is not capitalism, but its corrupted, crony-laden cousin, which is itself the inescapable result Big Government.
There’s a threat to democracy in the current economic state alright. But it has nothing to do with perfect capital markets or the greed of capitalists.