Browsing the blog archives for July, 2012.

Society’s Debt to the Individual

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I received an email from someone who disagreed with my recent post, One’s Debt to Society. I encouraged the writer to post it on the blog but he declined, stating that he only wanted to correct the error in my thinking. I will respect his request for anonymity and just call him Al.

Al scoffed at the notion (see One’s Debt to Society) that corporate success is not dependent on government support. He points out that corporations hire workers educated by government schools, ship products on government roads, and even sell their products to recipients of government aid. As he put it, “the degree of corporate dependence on government is scandalous…progressives see the corporation’s dependence on government as obvious…we question the intellectual capacity of conservatives who don’t understand [this].”

Al is partially correct, but has slipped into a deeper truth. Let’s take his claims one at a time:

1. “Corporations hire workers educated by government schools.” Unfortunately, this is true. Taxpayers spend an average of about $150,000 per student to provide 12 years of the public school regimen. Would these students be better prepared for the workforce if their parents could spend these funds on private schools of their choice? The notion of vouchers is more complicated than I want to address here, but suffice to say that the evidence is strong. Consider drop-out rates, mediocre test scores, and Constitutional illiteracy, and very few Americans would choose the public school option if they weren’t already financed through their taxes.

2. “Corporations ship products on government roads.” True, Al, but you forget that Americans pay about 50 cents per gallon in gas taxes; truck drivers pay about 55 cents for diesel. Ostensibly these taxes are supposed to pay for the maintenance of our roads and bridges. In general, I have no problem with the gas tax if the funds it generates are used as the sole source of highway construction and maintenance. In this way, individuals pay for roads in proportion to their usage. Of course, corporations don’t really pay taxes in the long run, but simply transfer them to consumers in the form of higher prices. Businesses don’t succeed because governments pave roads. Governments pave roads because consumers demand products and services businesses provide.

3. “Corporations sell products to recipients of government aid.” Al didn’t use the word welfare but I well. Again, he is correct here, but he misses the greater point that welfare for some Americans is financed by the productivity of others. If this bothers anyone on the left, they why don’t they propose a drastic reduction in “government aid” programs?

Al is weaving several truths and half-truths into a flawed narrative, and missing the big picture. Al referred to corporations 13 times in his email and never referred to taxpayers, but referenced government 17 times as if it creates its own wealth. While government (through taxpayers) should play a limited Constitutional role, Al cites the burgeoning welfare and government control of education as support for his claim. He fails to acknowledge that progressives (and moderates)–not strict conservatives and libertarians–are largely responsible for these programs. Put another way, progressives have created some degree of business dependence on government through the tax code, regulations, welfare, and the like. Businesses have no choice but to adjust their behavior to meet the government demands, at which time they are told to be grateful because of this dependence. Of course, some businesses actively pursue dependence on government, a topic I addressed in earlier posts on crony capitalism. Al seems to view crony capitalists as progressive business owners who have learned to work with government. I see them as corrupt.

I have heard Al’s line of reasoning from others in the past. To Al and others on the left, if you really think it’s scandalous that corporations profit from government, then why not help us dismantle the programs that create the dependency? The truth is that progressives want to increase individual and business dependence on government, not decrease it. Society is indebted to individual achievement and initiative, not the other way around.

BTW, Al, please feel free to post your responses on the blog. Some of the readers might not agree with you, but they are eager to counter your best arguments.

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One’s Debt to Society

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“They know they didn’t — look, if you’ve been successful, you didn’t get there on your own.  You didn’t get there on your own.  I’m always struck by people who think, well, it must be because I was just so smart.  There are a lot of smart people out there.  It must be because I worked harder than everybody else.  Let me tell you something — there are a whole bunch of hardworking people out there. If you were successful, somebody along the line gave you some help.  There was a great teacher somewhere in your life.  Somebody helped to create this unbelievable American system that we have that allowed you to thrive.  Somebody invested in roads and bridges.  If you’ve got a business — you didn’t build that.  Somebody else made that happen.  The Internet didn’t get invented on its own.  Government research created the Internet so that all the companies could make money off the Internet.”

Indeed, this excerpt from Obama’s recent rant in Roanoke was more than political fodder; it was an outline of his personal and economic philosophy. His core argument here—one adopted straight from Marx—is that success and prosperity are achieved on the backs of society, past and present. The extent to which this is true creates the moral authority to redistribute wealth in the way that companies distribute dividends to their shareholders. If one’s wealth isn’t earned, then one doesn’t really have a right to keep it. Of course, this is an easy sell to many who don’t see themselves in the successful category, as it grants them moral access to the fruits of their neighbor’s productivity.

But there are two glaring logical flaws here. First, the President is asserting that each of us is born with an unsolicited “loan” whose repayment schedule is aligned with his or her productive ability. Such a claim is illegitimate because it does not bestow upon the individual the right to accept to decline the loan. Like it or not, he or she is forever owned by the collective.

It’s true that some of us are born with “advantages” that others might not have, but this is the result of a productive and free society, not a loan to our kids. We build schools and pave roads because we want to enjoy a better world ourselves and pass along something better to the next generation. Put another way, the inheritance we enjoy as Americans is due in part to the quasi-capitalist system that has created it, and in part to the gift—not the loan—we received from our parents and others.

Second, let’s assume for the sake of argument that Obama is correct and that business success is owed to government. Where does he think government amassed the resources necessary to “invent the Internet,” hire the great teachers, or build the roads? Government merely extracts wealth from the private sector and spends it. It creates nothing. If you’re born with a debt then it’s to the private sector, not government.

But we cannot reject Obama’s claim completely. The US has drifted to a mixed economy of capitalism, socialism and fascism. The crony capitalism we see today is an outgrowth of this amalgamation. Here’s the irony. By definition, those who have profited on the backs of government and society are the crony capitalists. We should root out the corruption that has unfairly benefitted firms like GE and GM, not hold them up as evidence that “business needs government.” Obama has this backwards.

The blessings of our country can be attributed to individual and business successes independent of government. When individuals have the freedom to create, compete, and retain the lion’s share of any profits earned in the process, they work harder, smarter, and more productively. They build cars, invent computers, and discover new treatments for dreaded diseases. Obama is fundamentally changing this system by creating a system where individual and business prosperity depends on government regulation, planning, or “investment.” It’s no wonder that our economy has grinded to a halt.

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More on Obamacare

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My last post–The Supreme Court on Obamacare–generated an interesting three-way conversation involving Aliza, GB77 and Arthur W. Allow me to follow-up, but pardon me if I get too philosophical…I still hold to my original contention; Obamacare is really about wealth redistribution. But there are two deeper questions that must be answered.

Is one born with a “right to healthcare” regardless of one’s ability to pay for it? Most in favor of an Obamacare or a single-payer approach (in the long run these are one and the same) answer in the affirmative, which leads to a second question. Why? Most who answer yes to the previous question invoke a moral argument here. It just seems wrong that some people suffer with a physical ailment because they don’t have insurance or enough money to purchase treatment while others own big-screen TVs and take vacations. In a moral society, it seems like the rich should be able to pay “a little more” to provide healthcare for everyone. If you buy this line of reasoning, then you have two major quandaries.

First, why should the most productive in society be charged with paying for the healthcare needs of everyone else? Perhaps we should confiscate their wealth simply because they have it and we can. But even if you accept this gross violation of property rights, shouldn’t those in need to coverage be required to contribute all that they can before others in society are required to contribute? For example, what would be wrong with a law that prohibited anyone receiving government assistance for healthcare (or anything else, for that matter) from owning a smartphone, an air conditioner, or a car worth more than $2500? Should they be permitted to take a vacation or purchase cable TV while others are paying for their healthcare? If this sounds crass to you, then why are you more comfortable with requiring that someone else pay the bill instead?

Second, why should the rich only have to pay for other Americans without healthcare? Shouldn’t the child from Guatemala or the elderly lady from Thailand be entitled to the same level of care? It’s not their fault that they were born in another country. Needless to say, even massive taxation in the U.S.–across the upper, middle, and even working classes–would not be sufficient to provide everyone in the developing world with anything close to what we have come to expect as quality medical care.

My point here is simple. Healthcare requires tough choices, and simply demanding coverage for everyone because the idea sounds good ignores this reality. In the end, the only moral position is that individuals should be free to live their lives as they wish, but also limited to the healthcare they are willing and able to pay for. A caring society like ours always chips in with charity, but that should be left to the private sector. Wealth redistribution to pay for healthcare is theft and immoral by definition.

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