The freer the society, the more wealth unequal it is. This is basic stuff, and it’s stuff that redounds to the genius of freedom.
A city, state, or country “economy” isn’t some blob, rather it’s just a collection of individuals. When individuals are free to showcase their unique genius without restraint, it’s only logical that wealth inequality will emerge. This is a good thing. Very good. Freedom to excel generally is.
Despite the undeniable societal good that inequality represents, it’s under attack; that, or it’s being run from. Most disappointing is that libertarians are among those running.
In the “The Myth of American Inequality,” a 2022 book written by former Republican senator Phil Gramm with economists Robert Ekelund (who died last month) and John Early, the thesis from the professed free thinkers is that inequality in the U.S. is “not high and not rising.” Gramm told the New York Times that the book is meant to “get the facts straight.” In particular, the book shows that “when including welfare transfers,” U.S. wealth inequality is not nearly as steep as critics contend. Gramm et al’s thesis may be right empirically, but it fails at least twice philosophically.
For one, not explained by critics of inequality is why it’s a pejorative. To disdain inequality is to fairly explicitly disdain individual freedom.
Second, what a strange world we live in when libertarian scholars are going out of their way to disprove an alleged negative (inequality) with a certain negative. Think about it. If we accept the reporting of Gramm, Ekelund and Early as true, then we should say that rising inequality has been arrested by government force whereby those who’ve achieved the most have had the fruits of their productivity taken from them. Libertarians implicitly disdaining freedom while also implicitly cheering force. The world is upside down. And it doesn’t stop there.
While Gramm, trade policy analyst Scott Lincicome (the Times reports Lincicome “largely agreed with Mr. Gramm’s thesis”) and other limited government types run from inequality, traditional conservatives like Sohrab Ahmari, Oren Cass, and Sen. Marco Rubio out-and-out disdain it. So troubled is Ahmari, he recently told the Times that he is “increasingly drawn to the economic policies” of Senators with last names like Warren and Sanders. Which rates further comment.
In commenting, how unfortunate it is that so many in the pundit world equate “money” with wealth. Actually, money is just a ticket. The “wealth” is what the ticket can be exchanged for. And thanks to the wealth unequal, the tickets increasingly exchange for much, much more. Consider the supercomputers that we refer to as “phones,” and that increasingly line the pockets of the richest of the rich and the poorest of the poor around the world. And it’s not just phones.
When the 19th century dawned automobiles were rarer than incredibly rare millionaires. Only for Henry Ford to proclaim that he would “build a car for the great multitude.” Which is what he did. It speaks to a crucial, stubborn truth glossed over by those who think inequality a negative: the rise of wealth inequality is the surest sign of plummeting lifestyle inequality. Translated, the unequal become that way by democratizing access to everything.
Lincicome told the Times that Americans are mostly wrestling with “keeping up with the Joneses.” How he knows this is anyone’s guess. Still, if he’s right then he, his fellow libertarian inequality apologists, along with Ahmari, Rubio Cass, should praise inequality to the skies. That’s because when inequality isn’t going up, you know those with the least are suffering the most.
John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution. This article was originally published by RealClearMarkets and made available via RealClearWire.
