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The Independent Institute
Commentary

The Politics of Envy


Why are so many liberals obsessing about inequality? Why does the president keep talking about rich people as part of his re-election campaign?

Two things to remember about the pundits: (1) the chattering class has to chatter about something and (2) the worst thing for a professional chatterer is to be ignored. One thing to remember about the president: he desperately wants to be re-elected.

Here’s the overall problem: The political left has no solutions to our most pressing problems. Whether the issue is economic growth or runaway entitlement spending or non-performing public schools, left-of-center solutions were tried and found wanting here and abroad during the last century. Further, the only solutions that seem to work today are right-of-center—requiring privatization, individual empowerment and free markets.

For Barack Obama the problem is even worse. If the election is about the economy or government regulation of the economy, or whether bigger government or smaller government is the solution to what ails the economy, the president is almost certain to lose.

So what to do? Make up a problem whose only solution appears to be higher taxes and bigger government. That’s where inequality comes in. It’s a way to change the subject. It’s a way to find a scapegoat to blame (explicitly or implicitly) for the problems at hand. It’s a way to distract attention away from the fact that the president is not solving our problems (and even making them worse!) toward people who are not generally loved. It’s also a way to justify a more active role for government.

There is nothing new about any of this. The tactic of finding a scapegoat to blame for our problems and using the argument to justify more government power is as old as politics itself.

During the Great Depression, people were in misery everywhere and political leaders had no idea what to do about it. In Germany, Hitler made a scapegoat of the Jews and blamed them for Germany’s economic problems. In the United States, racist politicians in the South and Midwest blamed economic bad times on blacks, other minorities and immigrants. At the national level, Franklin Roosevelt did the same thing with the wealthy. In fact, his administration launched an attack on 60 wealthy families—calling them “plutocrats” and blaming them for prolonging the Depression and preventing economic recovery.

Granted, Roosevelt didn’t put wealthy individuals in concentration camps. He didn’t burn crosses on anyone’s front lawn. But he definitely violated the civil liberties of our most successful citizens and their families, and he skillfully used the politics of division and envy to distract voters from real problems and real solutions. As Amity Shlaes reports in The Forgotten Man, Roosevelt got the IRS to delve into their tax returns; he got the Justice Department to pursue criminal investigations and prosecutions—even when there was no obvious crime; and he got the Securities and Exchange Commission to publish the salaries of utility executives in order to publicly shame them.

Roosevelt had tax commissioner Guy Helvering give out the names of 67 “large wealthy taxpayers (Pierre du Pont included), who by taking assets out of their personal boxes and transferring them to incorporated pocketbooks have avoided paying their full share of taxes.” He referred to the wealthy as “princes of property,” even though he was wealthy himself. His Interior Secretary, Harold Ickes, railed about an “irreconcilable conflict” that “must be fought—until plutocracy or democracy, until America’s 60 families or America’s 120,000,000 people—win.”

Barack Obama has obviously learned from that experience. High gasoline prices are a political problem? Blame the oil companies. Families are hurting? Blame the rich. People are not successful finding a job? Blame the most successful 1%.

What is surprising about the current era is the willingness of respectable economists to become pawns in this scheme. On “Morning Joe,” Harvard economist Jeffrey Sachs complains about rich people “sucking up all the income.” Paul Krugman frequently implies that the gains of the rich have come at the expense of the non-rich. But no economist has actually come out and said that the top 1% are the cause of our failure to recover from the Great Recession.

Until now. In yesterday’s New York Times column Paul Krugman finally goes over the top. Resurrecting the Roosevelt term “plutocracy,” he blames the failure of economic recovery on the country’s billionaires. “Money buys power,” he writes, “and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties [guess which one?], in the process destroying any prospect for cooperation.”

There’s more:

And the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should be doing impossible.

You have to wonder, who does Krugman think is attending those $35,000-a-person dinners to support the president’s re-election campaign? Is he really unaware that Obama receives far more funding than any Republican from Hollywood, Silicon Valley and Wall Street? Does he really not know that almost all of the largest foundations have fallen into the hands of liberals? Or that worthless heirs are hugely in the Obama camp?

Go figure.


John C. Goodman is a Senior Fellow at the Independent Institute and author of the award-winning and widely acclaimed Institute book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.”


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PRICELESS: Curing the Healthcare Crisis
To cure the ailments of American healthcare we must get rid of the perverse incentives that raise costs, reduce quality, and make care hard to access. We must allow a free-market price system to emerge, so that the laws of supply and demand will work to the benefit of patients and providers alike.