In Part One I agreed with Sen. Bernie Sanders (D-VA) that income inequality was a problem but disagreed with him for not differentiating the moral from the immoral causes. In Part Two I shared how free moral consumer choices made Taylor Swift wealthy and how each transaction left her customers better off than they were before the exchange making each transaction a “win-win”. In Part Three I shared how our behavior with regard to education, marriage, saving and investing impact income and wealth inequality.
Up to this point all the causes of income inequality discussed have been the result of free moral choices and for this reason a free society will experience some measure of income inequality as a result. Inequality arising from a free moral choice can never be addressed by government without becoming unjust and immoral in the process. A gap will exist as long as we retain our humanity and possess different skills and talents.
Famous Proponents of Income Redistribution
For a brief history of those who disagree and addressed the income gap with income redistribution as a part of their political agenda see Lenin’s overthrow of Kerensky in 1917, Hitler’s attack on the Jews in 1938, Mao’s Chinese Revolution in 1949 and Castro’s Cuban Revolution in 1959. While I don’t dare throw the Senator from Vermont or Keely Mullen in with this group, I do believe the behavior of the aforementioned is the logical extension of the values of Sanders and Mullen. Their values cannot exist unless they first destroy the idea that all men have intrinsic value by virtue of their being made in the image of their Creator and having natural rights.
There are however areas of income inequality that exist that must be addressed if we truly care about our neighbor and the poor. This type of income inequality is created by well-meaning legislators from both parties. That’s right, both, including my Congressman’s recent vote on the Ex-Im Bank .
Prosperous nations are those who most consistently uphold rule of law and property rights (Heritage Index of Economic Freedom). History shows that the more closely a nation adheres to these principles the more opportunity and upward mobility will exist. In these markets the role of government is strictly limited to defending the freedom of their citizens to associate and trade without government intervention. In such a society, government’s role is limited to defending property rights, contracts and protecting the consumer from fraud.
Just Remove the Rocks
In such an environment the natural gifting and creativity of individuals is released to pursue their own self-interest. Taxes are low. Obstacles to trade are minimized. Creativity and invention flourish. We don’t need to teach grass to grow, we just need to remove the rocks. According to Adam Smith, when these ideas are upheld the market is guided by an invisible hand and personal decisions end up improving society better than if we had tried to do so on purpose. Prices reflect the true value of goods and provide market signals that peacefully and efficiently direct individuals and scarce resources to where individuals value them most. When government intervenes these pricing signals no longer work properly. Imagine entering a traffic intersection when the signal is green when it should be red. Understand this and one begins to appreciate how artificial prices created the “housing boom” and destroyed the wealth and retirement of millions of Americans.
It is for this reason all plans for social organization will fail regardless of how well they are carried out because they violate basic laws of human interaction.
Violations to basic freedoms, rocks keeping the grass from growing include minimum wage laws, subsidies, a progressive income tax, bank bailouts (corporate welfare), licensing laws (Friedman), quantitative easing (money printing which decreases purchasing power), special laws for union labor, federal control of banking and interest rates, federal funding of education and government intervention in health care. All of these are violations of the role of government in a just society. Each is a violation of rule of law and property rights. Remove unjust regulation and we not only increase opportunity for the poor but we decrease lawsuits and unclog our courts.
Next: Part Five: Where Do We Go From Here?
Eric Andersen is a member of the Central Committee of the San Diego County Republican Party and is the Co-Founder of the Republican Liberty Caucus of San Diego County and im2moro.com. He is a former Rock Church Citizen of the Year.