Four in 10 Americans now consider some kind of socialism “a good thing for the country as a whole” — an 18 percent increase since 1942, according to Gallup. But, in an excerpt from his new book, “The Case Against Socialism,” out now, SEN. RAND PAUL explains why this embrace of economic equality would make life worse for us all
The commentator Selwyn Duke makes an important point that socialists ignore: “The richest men hail primarily from nations providing economic freedom whereas the poorest live disproportionately in socialist countries.”
“Equality tells us nothing about quality,” Duke continues. “You can have equality in poverty, equality in misery, or equality in incompetence, ignorance or stupidity.”
Yet, socialists like Bernie Sanders still use equality as their measuring stick and Scandinavia as their model. “Why can’t we be like Sweden?” they protest. “That’s the socialism America needs.”
Economist and writer Walter Williams points out that it’s important to know what choices you give up if you want the equality of Swedish socialized medicine. Williams tells the story of a patient with multiple sclerosis, which is an incurable disease that sometimes spirals downward. New medicines are becoming available, but they are expensive. Williams tells of how a Gothenburg, Sweden, multiple sclerosis patient’s prescription for a new drug was denied because the drug was significantly more expensive than the older medicine. Not only was the patient denied government-insurance payment for the drug, but he was also prevented from buying the drug himself. The Swedish equality police argued that “it would set a bad precedent and lead to unequal access to medicine.”
One might ask: Do high-ranking Swedish officials get the same denials?
Socialists say they want equality, but if you ask what people really want, they’ll answer that what is important is the quality of their own standard of life.
Even if socialists admit that our standard of living is improving, they typically fail to understand why. For the socialist, economic progress is some quirk of history perhaps related to technology, but they deny that the voluntary exchanges of capitalism have anything to do with it. Williams, however, points out the undeniable correlation between capitalism and wealth.
Quoting Williams, Duke writes, “if you rank ‘countries according to whether they are closer to being a free-market economy or whether they’re closer to having a socialist or planned economy’ and based on ‘per capita income,’ you will find a general ‘pattern whereby those having a larger measure of economic freedom find their citizens enjoying a higher standard of living.’ ”
Economist Thomas Sowell makes the point as well: “None of the Marxist regimes around the world has ever had as high a standard of living for working people as there is in many capitalist countries” dominated by the free market.
Yet many think public policy should try to ameliorate income inequality. Reports of a handful of people owning nearly half the world’s wealth incite calls to disallow such accumulation of wealth.
In an article for The Washington Times, Dalibor Rohac illustrates how an obsession with income inequality can lead to ludicrous conclusions. He writes, “Liberal pundits are alarmed that income inequality in the United States is higher than in Pakistan or Ethiopia.” Which invites the question: Would anyone then choose to leave the United States and move to Pakistan or Ethiopia? Churchill famously explained the false allure of equality under socialism: “The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”
Every election we hear Hollywood celebrities, most with barely a high-school diploma, threaten to leave America if Republicans win. They scold us from their Beverly Hills mansions and private jets. They lecture us through their Juvederm-plumped lips. Perhaps we should send them travel brochures on income equality in Pakistan and Ethiopia. Citizens in those countries enjoy much greater income equality, albeit less access to fine dining and Prada sunglasses.
Since people have unequal talents, the only way you get equal outcomes is to treat them differently. This should be anathema.
- Sen. Rand Paul in “The Case Against Socialism”
These liberal actors can’t separate themselves from the fiction of the big screen. If they could, they would look at the facts and argue for policies that actually help the poor. Rohac makes this point clearly: “If one cares about the welfare of the poorest and the most vulnerable, income inequality is not a useful measure. Measures of inequality tell us nothing about the living conditions of the poor, their health and their access to economic opportunity.”
The mistake is believing that income inequality has anything to do with economic well-being. Harvard scientist Steven Pinker elaborates on this point: “the starting point for understanding inequality in the context of human progress is to recognize that income inequality is not a fundamental [measurement] of well-being. It is not like health, prosperity, knowledge, safety, peace and the other areas of progress.”
To make his point, Pinker tells a Soviet-era joke.
Igor and Boris are dirt-poor peasants, barely scratching enough crops from their small plots of land to feed their families. The only difference between them is that Boris owns a scrawny goat. One day a fairy appears to Igor and grants him a wish. Igor says, “I wish that Boris’ goat should die.”
Instead of wishing for greater wealth for himself, Igor, like today’s equality zealots, would prefer to have equal misery.
Pinker argues that “the confusion of inequality with poverty comes straight out of the lump fallacy — the mindset in which wealth is a finite resource, like an antelope carcass, which has to be divvied up in zero-sum fashion, so that if some people end up with more, others must have less . . . wealth is not like that: Since the Industrial Revolution, it has expanded exponentially. That means that when the rich get richer, the poor can get richer, too.”
Pinker points out that “total wealth today is vastly greater than it was in 1910, so if the poorer half own the same proportion, they are far richer, not ‘as poor.’ ”
As Rea Hederman and David Azerrad write at the Heritage Foundation, “Free-market economics is not about dividing up a dwindling pie but expanding the pie to serve everyone. Those who succeed do not do so at the expense of others.”
When policy is directed toward eliminating income inequality, the unintended consequence is to lessen the incentives that drive the wealth creation that has lifted millions of people out of poverty over the past few centuries. Hederman and Azerrad explain that “the left’s new American dream is first and foremost about all that the federal government must do to create opportunity and ensure that incomes are distributed more equitably. Individual effort takes a back seat to government spending and cradle-to-grave entitlements.”
Despite the left’s obsession with income inequality, Hederman and Azerrad argue: “Income disparities have not caused a decline in upward mobility. Standards of living have increased for everyone — as have incomes — and mobility, however one measures it, remains robust. Simply put, how much the top 1 percent of the population earns has no bearing on whether the bottom 20 percent can move up.”
The great Austrian economist and writer Ludwig von Mises explained that the incentive of unequal returns is absolutely a necessary component of a successful economic system. Mises writes: “only because inequality of wealth is possible in our social order, only because it stimulates everyone to produce as much as he can and at the lowest cost, does mankind today have at its disposal the total annual wealth now available for consumption.” If government destroys this incentive, it also destroys productivity and economic growth. On average, individuals are poorer when the incentive of “income inequality” is eliminated. Andy Puzder, the former CEO of Carl’s Jr. and Hardee’s, describes well socialism’s inherent focus on greed.
“If you’re in a capitalist economy, the only way you can succeed is by meeting the needs of other people,” he said in a recent interview. “Socialism, on the other hand, focuses you inward. You’re focused on what you can get.”
The technology revolution in the United States has also shown that the best outcomes for creating super wealth are often not the traditional paths to success. Who would have thought quitting college and tinkering in his garage would result in Bill Gates becoming the richest man in the world?
And Gates’ success has inspired many more inventors to pursue their dreams. In America, the son of a car salesman and a teacher can invent a new virtual technology in his parents’ garage and make millions. Palmer Luckey, a friend of mine, comes from a conservative, middle-class family. He was homeschooled. He spent one year at California State University, Long Beach but dropped out to work on his idea for a virtual-reality headset. This invention became Oculus Rift, which was ultimately purchased by Facebook for $2 billion in 2014. Palmer’s route to unfathomable success was possible only by having a society with equal opportunity but not equality of outcome.
The economist and philosopher Friedrich Hayek argues that “from the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position and that the only way to place them in an equal position would be to treat them differently.”
His argument deserves restating. Since people have different and unequal talents, the only way you get equal outcomes is to treat them differently. In other words, to have an unequal application of the law. This should be anathema to both liberals and conservatives.
Bernie Sanders and other crusaders for equality admit that they can’t get rid of all inequality, but at the least we should eliminate the extremes of income inequality. Socialists rarely speak of who it is that will have their wealth taken. They shy away from naming names. After all, Michelle and Barack Obama are 1-percenters who live in an enormous mansion and travel the world on luxury vacations. I certainly don’t have a problem with that. They have made millions on book deals and speeches and can afford to celebrate their achievements. But I wonder if Rep. Alexandria Ocasio-Cortez does? How does Bernie feel about Michelle Obama’s much-praised $4,000 Balenciaga boots? While Bernie and AOC might find the extravagant footwear of 1-percenters “unequal,” I support the right of the rich to shine in glittery boots! After all, they are helping to support a luxury-goods industry that employs creative people who craft fine materials into beautiful designs. If we didn’t have rich people to buy such luxury items, those talents would be lost. Do today’s socialists want a world without Balenciaga or Tom Ford?
The socialists argue that they’ll leave just enough merit pay to incentivize the entrepreneurs. No harm, no foul. Perhaps, but I’m guessing that no one really knows how much incentive must remain to encourage the great breakthroughs of history. Shouldn’t we at least worry that if enough “income inequality” is destroyed, perhaps the next Steve Jobs chooses to devote his time to surfing instead of entrepreneurship?
“The Case Against Socialism” by Rand Paul. Copyright © 2019 by Randal Howard Paul. Published by Broadside Books, an imprint of HarperCollins Publishers. Excerpted by permission.