Inequality: The Points Lindsey is Missing

by Thomas Knapp

I haven’t read Brink Lindsey’s new book, Human Capitalism: How Economic Growth Has Made Us Smarter — and More Unequal, yet. But I’m following his exegeses thereof over at Bleeding Heart Libertarians, and I think I see some worthwhile points to argue in his post on the book’s “inconvenient implications” for libertarians:

Inequality matters,” writes Lindsey. “Libertarians typically feel like they’re on the defensive when the subject of inequality comes up, and they tend to react by minimizing its importance. Growth and opportunity are what we should care about, not equal outcomes. Indeed, inequality is a corollary of freedom: people with different abilities and preferences will naturally diverge in terms of socioeconomic achievement. … But if you’re any kind of contractarian, and I am, you recognize that a society’s policies and institutions should be judged on how well they work for everybody. So if one group in society is thriving while the rest lack vital opportunities or are failing to take advantage of those that are available, it makes sense to sit up, take notice, and look carefully at whether current policies and institutions need to be altered.”

My first problem with this as a libertarian is not that I oppose “equality” and prefer growth and opportunity.

Rather it is — or at least stems from the fact — that I am not a “[social] contractarian.” As I mentioned in a comment over at Gene Callahan’s blog, I consider the notion of a “social contract” to be a political class weapon, on par in terms of innovation and destruction with the introduction of gunpowder, chemical weapons or the atom bomb, rather than as a treaty that ends Hobbes’s alleged “war of all against all.”

The poison pill in “equality of outcome” schemes pursuant to “social contract” is that they do a lot more to entrench and protect the status quo than they do to actually remedy injustices. They do the latter only temporarily, arbitrarily and capriciously. They are undertaken for the express purpose of simmering down discontent so as to prop up the wobbly (not Wobbly!) states which such discontent might topple.

The obvious example is the American civil rights movement as it manifested in the 1950s and 1960s. The resulting changes, from the Voting Rights Act to desegregation to “affirmative action,” were not implemented because they were right. They were implemented because that movement credibly threatened the continuation in power of the existing political class. So the political class vomited up a mess of pottage and enough people accepted it in lieu of their birthright to keep the establishment rolling along and on the rails.

My second problem is with Lindsey’s premise, to wit “people with different abilities and preferences will naturally diverge in terms of socioeconomic achievement.” The Center for a Stateless Society’s Kevin Carson has argued — to my mind compellingly — the opposite, in “Inequality as a Revolt Against Nature.”

The “social contract,” as embodied by the state, is inherently anti-equality. Its raison d’etre is to effect a continuous redistribution of wealth — an imposed inequality of outcome — “upward” from the productive class to the political class, and absent that imposed redistribution we would see a natural convergence, not a divergence, of socioeconomic achievement.

If “bleeding heart libertarians” really value equality, they have to give up the state to get it. Policy tweaks will never address the problem. The existence of “policy” — of political government — is the problem.

3 responses to “Inequality: The Points Lindsey is Missing

  1. The Federal establishment did not fear the Civil Rights movement (and give in to them out of fear) – the Federal establishment backed the Civil Rights movement.

    The leading universities (and the mass media) supported it from the first. The “Brown” case of 1954 was backed by all nine Supreme Court Judges. Even though its view of the 14th Amendment could be contested (the 19th century evidence and legal precidents were conflicting over the meaning of the 14th Amendment), and some of the “evidence” used was both nonrelevant “black girls in segregated schools choose to play with white dolls” (so what?) and misleading (black girls in nonsegregated schools also tended to play with white dolls).

    The Federal government had pushed military desegregation into effect in the late 1940s. and even before this the Pentagon was famously the first public building in Virginia not to have segregated toilets (actually this weird from of segregation was quite brief in the Federal government – it was introduced by Woodrow Wilson, a racial nut, and started to fall apart 30 years later).

    At State government – such States as New York were outlawing “discrimination” in housing as early as the late 1940s. And the Federal government followed suit in 1964 – this is an important step because it goes beyond a reasonable interpretation the 14th Amendment (which is about government – not private property).

    Riots and fear?

    This mainly came after the 1964 Act (not before it) – when the Civil Rights movement started to be threatened by other forces. The people behind the riots of the 1960s were not interested in the Voting Rights Act (or any Civil Rights stuff). Of course this is a gray area – as the Civil Rights movement was a very broad alliance (and contained people who were associated with the radical left – people who, really, could not care less about Civil Rights, indeed wanted to destroy any chance of peaceful intergration).

    Even at State level in the South support for “Jim Crow” was not really strongest among the “establishment” (the Bourbons and so on had never been that interested in it) Jim Crow was a lower class white movement (led by “Crackers” or “white trash”) – even in the 1960s the leading Governors who backed it were wild spending populists like Wallace in Alabama and Lestor Maddox in Georgia (supported by a man called James “Jimmy” Earl Carter although he ditched the policy when he was elected Governor in 1970).

  2. Leaving aside race (apart from to remind people that the KKK was a strongly “Progressive” movement politically – haters of “big business” and so on). And turning attention to economic equality.

    Like (I think) yourself I see no fundemental virtue in economic equality as such, but if people are interested in it……

    One of the primary sources of extreme economic inequality is monetary expansion – “cheap money”,the “low interest rate policy” and so.

    This is not a new discovery – Richard Cantillion was writing about this back in the 1700s, a loose money “boom” leads to a “bust”, but the situation (after the dust has settled) is not restored to what it had been. Some people benefit (even after the boom-bust is over) and some people lose.

    And the people who benefit tend to be rich and the people who are hurt tend to be poor. And it is not even a “zero sum game” it is a negative sum game, as the people who are hurt by “easy money” “low interest rate boom” are hurt more (in the end) than the people who are benfitted gain.

    Ironically an “easy money”, “low interest rate” policy of monetary expansion (credit bubble building) is justified by the line that it “helps the poor” – the exact opposite of the real long term consequences of the policy.

    It is no accident that the nations with a long history of extreme monetary inflationism (for example so many nations in Latin America) are also places of extreme economic inequality.

    So if people want less extreme income inequality over time – the best thing they can do is to get rid of the Federal Reserve (and the Bank of England and…..) and have investment financed by real savings – not credit money bubbles.

  3. This article reminded me of that quote by Bastiat

    “Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.
    We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain. “