Progressivism: The wrong solution to the wrong problem
Credit to Author: BEN KRITZ, TMT| Date: Mon, 28 Jan 2019 16:17:22 +0000
IN the few short months since last November’s midterm elections in the US, it has become politically fashionable to condemn wealth as the root cause of all the world’s ills.
Alexandria Ocasio-Cortez, the immensely popular strident young congresswoman from New York, perfectly summed up the philosophy du jour in a recent interview, when she agreed that “a system that allows billionaires to exist is immoral.”
“Wanting to be a billionaire and own more than millions of families combined is not an aspirational or good thing,” said Ocasio-Cortez, a former waitress who earned a job with a $174,000 salary and $1.57 million per year operating budget by convincing voters that it was, like, really unfair that some people have to work as waitresses.
The big issue, according to “progressives” like AOC, as she’s popularly called, is wealth inequality. It is simply wrong, somehow, that some people can amass fantastic amounts of wealth, while others struggle to survive. According to a highly misleading factoid that someone blurted out during a discussion at last week’s World Economic Forum meeting in Davos, Switzerland and dutifully repeated ad infinitum in the social media, the 26 richest people in the world own as much wealth as the 3.5 billion poorest. The implication, of course, is that if those 26 people were not that rich, the other half of the human population would not be that poor.
Some tangible ideas to redress the moral imbalance have begun to emerge, although whether or not they are actually good ideas or even feasible ones is highly debatable. AOC has proposed a 70 percent marginal tax rate to fund something called the “Green New Deal,” a vague set of ideas for massive investment in sustainable energy and other environmentally friendly concepts. Not to be outdone, Massachusetts senator and early presidential candidate Elizabeth Warren has proposed a “wealth tax,” a punitive 2 percent levy on fortunes over $50 million, and 3 percent on wealth in excess of $1 billion.
Both Ocasio-Cortez and Warren are, not coincidentally, advised by Berkeley economics professor Emmanuel Saez, a former collaborator of French economist Thomas Piketty, who made wealth inequality the central focus of his widely heralded 2014 book Capital in the 21st Century.
What is wrong about the “new socialism” fad of condemning capitalism and making wealth redistribution a moral imperative, and why it will ultimately fail if allowed to flourish, is that it is based on two connected, fundamentally flawed assumptions: The first is that inequality and poverty are essentially the same thing, and the second is that wealth is somehow a finite resource.
Ask anyone claiming to be a “progressive” why wealth inequality is bad, and you will invariably get a response something like AOC’s comment to a reporter in the same interview mentioned above: “Are we comfortable with a society where someone can have a helipad while [New York City] is experiencing the highest rates of people experiencing homelessness since the Great Depression?” She was referring here to the plan of Amazon founder and CEO Jeff Bezos – the world’s richest man – to install a helipad for his use at the company’s new headquarters in New York.
The implication of the novice legislator’s feisty retort is that people are homeless in New York City because Jeff Bezos can afford a helipad. The argument is that because the city is extending a substantial amount of tax perks to Amazon in exchange for its locating its new headquarters there, it will not have additional revenue to provide housing to all its inhabitants; or in other words, it is favoring the needs of the world’s richest retail concern over its own people.
But putting the accusation in more concrete terms doesn’t make it any less of a non sequitur. Amazon has not so much turned a shovelful of dirt to build its new headquarters in New York, yet the city has a large homeless population. If Amazon didn’t exist, or had chosen to locate its offices in a different city, New York City would still have a large homeless population. The fantastic wealth of Amazon and its founder is not the problem, the impoverished state of New York’s many, many street people is. Poverty is defined by one’s lack of wealth, not by someone else’s possession of it.
“Yes, but…” the progressives counter, “If people like Jeff Bezos didn’t have so much wealth, there would be more to go around for everyone else.”
That argument is just plain stupid. If people like Jeff Bezos didn’t have so much wealth, that wealth wouldn’t exist at all. Wealth is constantly being created; there is no fixed limit to the asset value of the world. A good example is the legacy of the recently-deceased Henry Sy, the founder of the SM empire. As SM grew, the economy of the Philippines grew right along with it; granted, the monster he created did capture a great deal of wealth, but it was created wealth – the rest of the country did not become poorer as he became richer.
That is not to say there are no deep flaws in the global economic system. There are, and these must be corrected. Too much government and too much central bank engineering have perverted the empirically pure and inherently fair concept of capitalism into an unsustainable system whose only logical end can be a Malthusian-style collapse. To be fair to the progressive point of view, it does at least sense the actual problem. But it completely misdiagnoses it, and as a result presents completely useless solutions proposing even more government management — the very thing that caused the problem in the first place.
Email: ben.kritz@manilatimes.net
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