BlaineStorm: How Jealous Majorities Abuse Political Freedom to Undermine Economic Freedom



If you’re a bit upset over the success that Bernie Sanders has enjoyed during this campaign season in luring younger voters to support his socialistic agenda, and if you’re distraught that Hillary Clinton really has the same agenda, then you’re in good company. The socialists’ message—which aims to punish high-end earners with bigger tax burdens and bigger wealth-redistribution programs, to be run by a bigger federal government—is entirely the wrong message, both for achieving economic growth and for offering young Americans a shot at a better tomorrow.

Yes, our economy is performing pathetically. Yes, this is killing small businesses, our traditional source of job growth. And yes, middle-class income and wealth are falling, as they have been for seven long years.

But this should not come as a complete surprise. For many decades now, our bottom-up economic freedom to create prosperity gradually has been whittled away in favor of a top-down America. The Obama administration has simply doubled down on this.

Our businesses today are the highest-taxed in the free world. So is it any wonder that, for the first time in memory, more small businesses are closing their doors than opening new ones? Is it any surprise that our bigger companies either are moving overseas to lower their tax burdens, or are moving closer to the Beltway so that they can devote their resources to getting sweetheart “crony capitalism” deals with the government?

This is what happens when top-down government takes away the people’s bottom-up economic freedom. Instead of having businesses devoting their efforts to pleasing customers, businesses sidle up to an ever-more-powerful government that is positioned to choose the winners and losers—a job that should belong to us, the people, as customers, and not to our government. But Big Government is busy offering Big Businesses special tax breaks and subsidies, while our small businesses are withering away.

This isn’t how our economy should work. Businesses, no matter their size, should succeed by pleasing customers better than their competitors are doing; and the better they succeed, the greater their rewards. This encourages businesses to focus their efforts on achieving excellence. But what’s the point in striving for excellence, if an excessive amount of the rewards our businesses earn will be taken away by taxation? It’s basic human nature to want a greater reward in return for conferring greater benefits. And it’s basic human nature to want to reward greater benefits with greater rewards.

The socialists think otherwise. They want those higher taxes, to take away earned rewards and hand them over to persons who did nothing to earn them, as a means of evening out the wealth.

Worse than that, the socialists think they occupy the moral high ground, in large part because this massive redistribution is to be imposed on us by a majority of voters casting ballots in favor of it. In the socialists’ minds, this is bottom-up “freedom” of the people—that is, true democracy—at work. They couldn’t be more mistaken.

Much of my book is dedicated to explaining what bottom-up economic and political freedoms really are. I show how economic freedom spurs us to grow our individual capacities for conferring benefits of value on one another, and to help others to grow their capacities, too. Best of all, economic freedom allows us to confer greater rewards on those who benefit us more, as we freely decide for ourselves. Through this process, we encourage and reward excellence in one another, grow our economy, raise living standards, and produce the excess wealth needed to care for the truly needy.

At the same time, our bottom-up political freedom enables us to control our government, so that it protects us and our homes and property, and it provides infrastructures that help us to exercise our economic freedom more fully. Bottom-up government becomes our ally in growing our economy, instead of our enemy.

When it comes to freedom, whether economic or political, it’s important that we recognize that freedom is both a process and an end at the same time. We strive not only to be free, but to live freely by continually exercising our freedom on a day-in, day-out basis. We exercise our ongoing political freedom as voters by casting ballots in elections every couple of years, and we exercise our ongoing economic freedom by voting with our wallets several times a week. So freedom, as a process, is vitally important to us. And as between political and economic freedoms, our economic freedom is of far greater importance to us in our daily lives.

This brings us back to America’s socialists. They look to use their political freedom as voters to empower our government to deny us our economic freedom as sellers and buyers. This is an immoral use of political freedom, because it is antithetical to our continuing to be free persons in a free nation.

The very idea that socialism represents freedom is sheer sophistry. To understand why, let’s envision a hypothetical scenario.

Let’s suppose that the people of Iran suddenly were allowed to vote for the leader of their choice, and for whatever form of government they wanted. And let’s suppose that they willingly elected an Imam as supreme leader for life, conferring upon him the power to make all laws as he sees fit, the power to dictate the people’s economic choices, and the power to name his own successor, who’ll wield those powers after he’s gone.

Under this circumstance, would Iran qualify as a bottom-up nation? The answer, of course, is no. For, even though the end result was reached “democratically”—in the narrow sense that the people voted for it—democracy as a process would have been voted out of existence, along with economic freedom. If, come tomorrow, the people were to regret their decision and want their freedom back, it would be too late.

Here in America, the socialists would be making much the same mistake. They would empower the federal government to punish success with even higher tax rates, effectively offsetting the rewards we earned through our excellence. Instead of empowering us to raise overall living standards through improvements in education combined with enhanced economic freedom, socialism would drag us all down.

Getting rid of billionaires through taxing away their wealth may sound like a noble idea. But socialism would punish not only the bad billionaires, who got rich through nefarious means, but also the good billionaires, who got rich by pleasing millions of persons—as though there is no difference between them. That’s because, to the socialists, there is no difference; there are no good billionaires, so they all have to go.

There are two sad ironies here. One is that the extra tax dollars to be plundered from eliminating billionaires would scarcely make a dent in our government’s huge deficits. But the unintended consequences would be disastrous, for we’d be reducing yet more the already depleted incentives for good sellers to keep making their best better.

The other irony is that, as a practical matter, only the good billionaires would be eliminated, not the bad ones. If you look at the history of top-down regimes, you’ll find that they always manage to have some billionaires—just look at China and Russia today. Unlike America, they don’t come close to having statistically predominant middle classes. But they do have their billionaires. And so would America under socialism.

But billionaires aren’t the most important consideration. That honor belongs to the middle class, because it has always shouldered the real burden of growing the economy and generating the wealth that allows us to care for those truly in need. Middle-class prosperity is the true measure of a nation’s economic success. Top-down nations have never achieved it, and never will.

As with my Iran example, the socialists, if elected, would empower our federal government to take way our economic freedom. Socialism then would hasten the decline of our middle class that we’re already experiencing.

The socialists might respond that, unlike the Iranians in my hypothetical, we Americans could still cast ballots in future elections, so we could simply vote out socialism if it failed, right?

Right on paper. Wrong in reality. The problem boils down to ignorance and fear: ignorance as to why socialism kills dreams and ambition and drags down living standards, and fear born of insecurity that changing direction might mean an even worse outcome. How do we know this? From our own history.

Despite what economists may tell you, the Great Depression lasted from 1929 all the way through to the end of World War II, because the progressive policies then in force denied us our economic freedom and kept the federal government the enemy of economic growth. Yet, despite his failure to deliver prosperity, Franklin Roosevelt kept winning presidential elections—he won four times!—while never accepting responsibility for the failures of his policies, as millions of Americans lost their homes and their businesses, and stood in line for handouts of soup and bread. Roosevelt kept blaming the economy of the prior decade, and voters kept buying his excuses.

Does this sound familiar? Today, as then, ignorance and fear are powerful tools for the top-downers. And with their hold on public education, you can bet that they won’t teach our children what the loss of freedom really would cost them. So the ignorance and fear would grow even stronger over time, allowing the socialists to entrench themselves in public office.

We can avoid repeating this awful history. Fortunately, we still have plenty of investors with serious money to invest, if we make it a priority to create a favorable climate that rewards investments by rewarding excellence. But we’re not seeing much investment, because our system is broken. It’s broken because we, the people, have fewer opportunities to form businesses that can earn rewards from pleasing one another as customers.

The socialists think the answer lies in bringing everyone down to a lower common denominator, where excellence and mediocrity will be rewarded the same. This is what they really mean when they speak of “fairness.” This abuse of our language plays so well with our young, naïve college students. And it plays well with older, under-informed voters who have not succeeded as well as they perhaps had hoped, and who want to blame their failure on “the system”—meaning anyone except themselves.

And so the socialists look to increase the numbers of Americans who are without jobs, and who are undereducated and under-informed, and who are dependent on government handouts and subsidies. That’s because these people are more likely to welcome top-down solutions. Once their numbers become great enough, a jealous majority will vote to rein in economic freedom, and our middle class will suffer terribly.

Karl Marx, the father of classic socialism, would love it. It would validate his immoral views, which never envisioned America’s widespread and affluent middle class because government didn’t make it happen—we did. But unlike Marx’s ghost, our children might not like socialism all that much. For, as they see their own hopes and dreams slip away, they’ll be forced to learn the hard way that a Nation of Free People and a Nation of Free Things cannot be the same place.

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