It would be difficult to find a better example of moral obtuseness than the mindset that leftists/liberals/progressives/socialists have toward wealth and poverty. (I’ll use the term “liberals” for the rest of this essay.)
Liberals constantly lament the plight of the poor in American society today. But wait a minute: Wasn’t poverty what the welfare state was supposed to address?
The federal income tax was enacted in 1913, along with the Federal Reserve. Those two programs would ultimately become the engine by which the federal government would seize people’s income, either directly through taxation or indirectly through inflationary debasement of the currency, and give it to the poor.
Beginning with Franklin Roosevelt’s New Deal in the 1930s and continuing through Lyndon Johnson’s Great Society and his war on poverty, we’ve had the welfare state for around 90 years. Through such socialist programs as progressive income taxation, the Federal Reserve, Social Security, Medicare, Medicaid, farm subsidies, education grants, public housing, food stamps, welfare, corporate bailouts, and the like, for almost a century the federal government has used its taxation and inflation powers to take massive amounts of money from taxpayers and given it to others.
What has this socialist experiment accomplished? Judging by the laments that we hear from liberals about the plight of the poor in America, it has been nothing but a dismal failure. The welfare state and the war on poverty not only did not end poverty, they actually have left the poor worse off.
Of course, this doesn’t surprise us libertarians because unlike liberals, we understand what it is that causes people’s standard of living to rise. We don’t ask what the causes of poverty are, as liberals do. We understand that poverty is the natural state of mankind. We ask the question that liberals do not know to ask: What are the causes of wealth in a society?
Liberals look around American society and they see wealthy people. They also see poor people. Their answer to the poverty? It’s very simple and simplistic. They say: The answer to the poverty is simply to use the government to take from those who have money and give it to those who need it more.
But there is one great big problem with this socialist concept, one that liberals are loathe to acknowledge. As the government begins taxing the rich to give to the poor, there is less money to do the same the following year and then every year after that. Gradually the amount of money to be taken and given dissipates to nothing. Given the shrunken pie, everyone is now poor.
Envy, covetousness, and socialism
That is precisely what happened in Cuba, which liberals portray as a socialist paradise. At first, Cuban officials had a field day because there was lots of wealth to confiscate from the rich and give to the poor. Over time, however, the fun came to an end because there were no more rich people to take money from. Everyone became poor.
Ironically and perversely, that state of affairs makes many liberals happy because now everyone is “equal.” There are no longer rich people around to “exploit” the poor. Now, everyone is equal in the sense that everyone is equally poor.
Ultimately, the liberal mindset devolves into one that is totally consumed by envy and covetousness. Liberals just detest the idea that some people have more than others. They want the government to make everyone equal by taking money from those who have it and giving it to those who, they say, need it more.
Some liberals now wish to go further than just plunder and redistribute. They want to put a cap on the amount of wealth people are permitted to accumulate. Don’t believe me? Take a look at this article in the New York Times entitled “Is It Time to Limit Personal Wealth?” by Christine Emba, a Times columnist who focuses on “ideas and society.” She has concluded that “every billionaire is a policy failure.” She calls her philosophy “limitarianism” because it would limit the amount of wealth people could accumulate.
Savings, capital, and our American heritage
Emba’s idea would not have gone over well in 1880 America. At that time, there was no income tax, IRS, Federal Reserve, Social Security, Medicare, Medicaid, farm subsidies, education grants, public housing, welfare, foreign aid, immigration controls, national-security state, foreign military bases, foreign interventionism, and other aspects of what we know as the welfare-warfare state. The federal government lacked the power to take money from people who had it and give it to poor.
From 1880-1910, the standard of living of poor people and most everyone else in America skyrocketed. People were going from rags to riches in one or two generations. Millions of penniless immigrants were flooding into America to participate in this unbelievable economic miracle, one that was based not on political looting but instead on savings and the accumulation of productive capital.
Nineteenth-century Americans discovered the secret for ending poverty: Prohibit government from adopting measures to end poverty. Too bad later generations of Americans permitted envy and covetousness to get the better of them. Too bad they led America in the direction of socialism and the welfare-warfare state.