Let me show you why this is so. I am walking down the street, eating a sandwich, when I am approached by a hungry man. He wants to share my sandwich. Now if I give him the sandwich, I have done a good deed, and I feel good about it. The hungry man is grateful, and even if he cannot repay me for my kindness, possibly he will try to help someone else when he has the chance. So this is a transaction that benefits the giver as well as the receiver. But see what happens when the government gets involved. The government takes my sandwich from me by force. Consequently, I am a reluctant giver. The government then bestows my sandwich upon the hungry man. Instead of showing me gratitude, however, the man feels entitled to this benefit. In other words, the involvement of the state has utterly stripped the transaction of its moral value, even though the result is exactly the same.
Now let’s keep the same scenario but change the outcome. I am approached by the hungry man, as before, but this time, instead of agreeing to share my sandwich, I refuse to do so. Along comes a third man; he pulls out a gun, points it at my head, and forces me to hand over my sandwich to him, upon which he gives it to the hungry guy. What is the moral quality of the gunman’s action? I think most people would consider him an unscrupulous thug who should be apprehended and punished. Yet when the government does precisely the same thing—forcibly seizing from some to give to others—the liberal insists that the government is acting in a just and moral manner. This is clearly not true.
Finally, I want to challenge the liberal notion that the private sector is motivated by greed, while the public sector is motivated by noble idealism. This is another of those liberal fictions, shamelessly peddled by Franklin Roosevelt and John F. Kennedy, and now routinely promulgated in political science textbooks. I believed it once, but only because I was ignorant. I should have asked, Why should people change their basic nature when they move from the private sector to the public sector? It was not until I worked in the White House, however, that I saw the naïveté of my presumptions.
Allow me to recount a fairly typical meeting at the White House. This one involved drug policy. The folks from the Defense Department declared that the problem was that drugs were being produced in Columbia, and they had a $20 billion program to destroy the crops. The people in the Health and Human Services Department said no, the problem of drugs was a problem of treatment, and they were in the process of developing a $40 billion program for this purpose. The Education Department’s representative was convinced that the real solution to drugs was education, and his team proposed a multi-year initiative to raise the consciousness of America. Listening to these self-serving bureaucrats, I realized that, whatever the merits of their arguments, they were no less motivated by self-interest than those in the private sector. The only difference was that their self-interest was expressed in a different currency. Fundamentally, they were after power instead of money.
“The era of Big Government is over,” Bill Clinton has assured us. Although the welfare state has lost some of its legitimacy, the federal government is still too large and overbearing. We should continue to limit its size, and to keep it focused on what it is supposed to do. When the state exceeds its proper functions, when it moves outside its sphere, it invades the domain of the citizens, depriving us of both freedom and responsibility.
10
When the Rich Get Richer
Dear Chris,
So, you ask, does wanting to get rich make you a bad guy? Of course not. Indeed, I would go further: The rich are in the best position to be the good guys, because only the rich have the resources to really help those who are in need. Still, despite the philanthropic advantages conferred by wealth, I am not at all surprised that your roommate is outraged by your desire to make money. Your roommate apparently believes that rich people are evil because they make money and that the government is good because it takes away some of that money. Not that liberals would put it that way. They would say that the government’s job is to promote equality by redistributing resources from the rich to the poor. In my last letter, I tried to argue that this attempt is wrong-headed; here, let me argue that it is unnecessary. Indeed, I intend to show that technological capitalism—not government—is the true catalyst for equality. You can consider this letter a kind of extended postscript to my previous critique of Big Government.
Whenever a Republican—be it Reagan or George W. Bush—proposes a tax cut, the liberals say, “This tax cut will mostly help the rich.” Of course tax cuts help the rich the most; the rich in this country pay most of the taxes. I wonder how many Americans know that the top 10 percent of income earners in America pay two-thirds of all income taxes. Meanwhile, the bottom 50 percent of income earners pay less than 5 percent of the income taxes. These statistics, which I got from the Internal Revenue Service, are of obvious relevance in determining who is going to benefit most from virtually any proposal to reduce income tax rates.
Thus if the rich guy makes $250,000 and pays $100,000 in taxes, and the (relatively) poor guy makes $40,000 and pays $5,000 in taxes, a 10 percent across-the-board tax cut will cut the rich guy’s taxes by $10,000 and the poor guy’s taxes by $500. This provokes the liberal wail, “But the rich guy is getting twenty times more than the poor guy.” One does not have to be a math major to figure out that it is not even possible to cut the poor guy’s taxes by $10,000 because he pays only $5,000 in the first place. Contrary to liberal demagoguery, proportional tax cuts are just because they benefit citizens in proportion to what they have been paying in taxes.
Liberals usually oppose tax cuts and advocate higher taxes for the rich because they are convinced, as the old liberal mantra has it, that “the rich get richer while the poor get poorer.” But is this really true? For the past half century, and especially for the past two decades, it has not been true in America. In reality, the rich have grown richer, and the poor have also grown richer, but not at the same pace.
Let me explain. In 1980, when Reagan was elected, America was a much more egalitarian society. According to the Census Bureau, if one earned $55,000 that year, one was in the top 5 percent of earners in the United States. That sounds amazing, but it’s true. Now, taking inflation into account, $55,000 in 1980 equals something like $75,000 today. But today if you want to be in the top 5 percent of income earners, you have to make $155,000.
What this means is that lots of people who used to be in the middle class, or the lower middle class, have moved up. In moving up, they have increased the economic distance between themselves and the rest of the population. So, inequality is greater. But the exclusive liberal focus on inequality misses the larger picture, which shows that more and more people are moving into the ranks of the affluent classes.
Consider another example: millionaires. In 1980, according to the Federal Reserve Board and other government sources, there were roughly 600,000 American families with a net worth exceeding $1 million. By 1990, this number exceeded a million. Today, approximately 5 million families—made up of between 15 million and 20 million people—are worth in excess of $1 million. Indeed, the population of millionaires has swelled so much that the business magazines have redefined “rich”: You now need to make a million dollars a year to qualify.
The most impressive aspect about this wealth is that it is self-created. Historically, wealth has been acquired mainly through birth or inheritance. People became rich, as the saying goes, by “choosing their parents carefully.” Today in America this is not so. Most people on the Forbes 400 rich list didn’t get there because they have rich parents; they made their own money. The authors of the best-seller The Millionaire Next Door estimate that 80 percent of American millionaires are entirely self-made.
My point, Chris, is that America has greatly expanded opportunity and, by doing so, has created the first mass affluent class in world history. Previously, the great economic achievement of the West was to create a middle class: to take people who were poor and give them basic comforts. The term middle class implies that you have adequate food and clothi
ng and shelter, and you can afford to take an annual vacation, but you don’t have wealth. This is what has changed. America has extended the privileges of affluence, traditionally restricted to the very few, to a sizable segment of its population.
The myopic liberal focus on inequality creates the false impression that the mass affluent class is a bad thing, while in fact it represents a spectacular achievement.
But what about the ordinary guy? As an immigrant to the United States, I am amazed by how well the ordinary citizen lives in this country. A half century ago, the average home size in America was 1,100 square feet; now it has doubled to around 2,200 square feet. We live in a nation where construction workers walk into coffee shops and pay $4 for a nonfat latte. Maids in America drive pretty nice cars. Take a trip on an airplane, and you are likely to find yourself sitting next to an electrician taking his third wife to St. Kitts. I have a friend in India who has been trying to move to the United States for years, but he can’t seem to get a visa. Finally, I asked him, “Why are you so eager to come to America?” He replied, “Because I really want to move to a country where the poor people are fat.”
I continue to be surprised by the rapid rate at which technology spreads from the affluent class to the general population. We have seen this with VCRs, with computers, with cell phones. During the 1980s, cell phones were mainly used by yuppies driving expensive cars. They were a status symbol whose social prestige derived from their relative scarcity. Today, cell phones are ubiquitous at every socioeconomic level and their status value is down to nil.
The liberal realist (admittedly a thinly populated group) may admit all this, and yet insist that technological capitalism creates scandalous levels of inequality. In the short term, this is sometimes so. In the long term, however, technological capitalism is a powerful vehicle for promoting equality. This is not widely recognized, so permit me to explain.
A hundred years ago, the rich man drove a car and the poor man walked. That was a big difference. Today, the rich man drives a new Porsche and the poor man drives a second-hand Honda Civic. That is not such a big difference. A century ago, rich families avoided the cold weather by going to Florida for the winter. Meanwhile, poor families braved the elements. Today, most families, whatever their economic status, enjoy central heating; but the poor have benefited more from this invention because it has alleviated a situation from which they previously had no escape.
Perhaps the best illustration of the egalitarian effects of techno-capitalism can be shown by life expectancy statistics. In 1900, the life expectancy in America was roughly fifty years. Rich people lived to the age of sixty, while poor people on average died at the age of forty-five. There was a fifteen-year gap in life expectancy between the rich and the poor. Today, life expectancy in America has climbed to seventy-eight years. The rich guy lives to the age of eighty, while the poor guy drops at the age of seventy-six. This is still a gap—four years—but it is vastly smaller than the fifteen-year gap of a century ago. And what has closed the gap? Advances in medicine, in nutrition, in crop yields, and so on.
My conclusion? Technological capitalism has done more to raise the general standard of living, and to equalize the circumstances of rich and poor, than all the government and philanthropic programs put together. This fact severely undermines the liberal view that aggressive government redistribution is needed to prevent growing and enduring inequality.
11
How Affirmative Action Hurts Blacks
Dear Chris,
I understand that you were burned in effigy by the Afro-American society for writing a column in the campus paper criticizing affirmative action! You lucky guy! Remember that the people who reacted so strongly have serious doubts that they belong at your university. By raising the issue publicly you have aroused black shame, which camouflages itself as black indignation.
How should you respond to this? Write another column! The activists’ slogans and angry e-mails should be enough to get you started. I have been reading through the e-mails, which you forwarded to me, and some of the issues they raise call for a serious response. I have written this letter to help address some of these issues. I have gone beyond the activists’ complaints, however, and framed the discussion in a question-and-answer format.
What is affirmative action? Affirmative action was originally defended as a means to assure the genuine equality of opportunity. Its advocates usually presented it as a special effort to recruit more minority applicants. The presumption was that affirmative action would be a form of outreach, that minority applicants would be held to the same standard as nonminority applicants, and that the program would be temporary. How differently things have turned out. In practice, affirmative action means adopting racial preferences. It means giving preference in university admissions, job hiring, promotions, and government contracts to less qualified black and Hispanic applicants over more qualified white and Asian American candidates. Many advocates of affirmative action say that preferences should end only when prejudice and discrimination come to an end; in short, they want such programs to continue forever.
Don’t women also benefit from affirmative action? In many cases, yes. Many colleges have eliminated preferences for women in admissions because women are now the majority on most campuses, even on campuses that used to be all male. But women still benefit from gender preferences in jobs, promotions, and government contracts. Some defenders of affirmative action like to point out that “white women as a group benefit most from preferential policies.” If this is true, it is an excellent reason to get rid of affirmative action. These policies were originally aimed at benefiting one group only: African Americans. Blacks were held to have suffered unique and special hardships: slavery, state-sponsored segregation, Jim Crow, lynching, and so on. The earliest affirmative action measures were restricted to blacks. But then other groups—women, Hispanics, and so on—came along and insisted, “We are victims of discrimination, too.” And at first the black leaders were incredulous. “No way,” they said, “Were you folks ever enslaved? Lynched? Forced to drink out of separate water fountains?” But then a second camp within the civil rights movement spoke up. Their point was that, as a minority, blacks would be forever dependent on white goodwill to maintain affirmative action preferences. “But if we include Hispanics, who are nearly 10 percent, and women, who are 50 percent of the population, we can keep these programs going for as long as we want.” This second group prevailed, and ultimately other groups were allowed onto the bandwagon, not because they had a moral case, but to strengthen the political coalition to maintain these preferences indefinitely.
Don’t affirmative action policies fight discrimination? No. Consider two virtually identical scenarios. A white guy and a black guy apply for a position. The black guy is better qualified; the white guy gets the position. That’s racial discrimination. Here is the second scenario. A white guy and a black guy apply for a position. The white guy is better qualified; the black guy gets the position. That’s affirmative action. Now, in what sense is the second result a remedy for the first? It is not. All I see are two instances of racial discrimination.
Isn’t discrimination a problem in college admissions? No. I do not deny that discrimination by universities is an historical reality. It used to be a problem. But not any longer. Where are the bigots in the admissions offices who are keeping blacks and Hispanics out? Such bigotry is not even alleged. Let me go further, Chris: There is no evidence to show that black or Hispanic students who have been preferentially admitted over the past few decades have been victims of discrimination. Moreover, there is no evidence to show that white or Asian American students who have been turned away—despite having stronger grades, test scores, and extracurricular talents—have discriminated against anyone.
What about charges that the standardized tests are racially biased? This charge is completely false. Consider the math section of the test. A typical question goes like this: “If a train can go 90 miles in an hour, how far can
it go in 40 minutes?” No one can argue with a straight face that equations are racially biased, or that algebra is rigged against Hispanics. Yet the same gap in performance between racial groups that we see on the verbal section of the test is also present on the math section. Numerous studies have confirmed that the test accurately measures differences in academic skills.
Do these standardized tests predict college performance? Yes. Tests are in the business of prediction. No test can predict future performance with complete accuracy. Standardized tests, however, have repeatedly been shown to be the best predictors of college performance. The reason is pretty obvious when you consider the alternative criteria used by admissions officers. Recommendations are essentially meaningless. “Not since Jesus Christ has there been a person who has shown such potential to change the course of history as young Wilbur.” Grades depend entirely on where you went to high school. Most high school teachers grade on a curve. So a 3.8 grade average from a mediocre school may not mean as much as a 3.4 grade average from a really good school. The great benefit of a standardized test is that everyone takes the same test, therefore it is possible to compare students’ performances on one scale.
Don’t colleges give preference to athletes and alumni children? Yes, but athletic ability is a talent. It is part of the broad package of abilities that colleges can and should consider in admitting students. Virtually no institutions admit applicants on academic merit alone. If you are a champion violinist, if you have studied yoga in the Himalayas, if you do community service—these things count in your favor. So why should admissions officers not take into consideration your talents as a good quarterback or an outstanding lacrosse player? Alumni preferences are much harder to justify. They are basically a fundraising mechanism: The alumni are a major source of funding, and one way that colleges maintain their continuing allegiance is by admitting their children and grandchildren. When this issue came up in a recent debate, I said to my opponent, “I agree with you that alumni preferences are unfair. So why don’t we join together in condemning both alumni preferences and racial preferences?” At this suggestion, he became very nervous and refused my invitation. I realized that he wasn’t really against alumni preferences; his point was that since nepotism is already in place, why not allow minority applicants to benefit from it? In a rapid turnaround, our civil rights leaders have gone from attacking nepotism and embracing merit, which was the Martin Luther King approach, to embracing nepotism and attacking merit, which is the Jesse Jackson approach.
Letters to a Young Conservative Page 7
