In the comments of my recent post “On Atheist Janitors“, I was accused of being naive for my belief in the possibility of a truly just and prosperous state:
I wasn’t even going to address Ebon’s utopian comments on how we should ensure a minimum income for everyone on a full time job sufficient to travel for leisure and all. Clearly Ebon’s not an economist, but a dreamer. I guess that’s his own variety of opium. Heaven not in heaven, but here on Earth… I ask you, is that any less of a pipe-dream than a celestial heaven?
In this post, I’d like to offer an extended defense of why I believe this is possible. But first, I must address an all-too-common fallacy: the school of thought which holds that economics is a zero-sum game and that some must lose for others to win. According to this way of thinking, if the poor are badly off, then the only way to help them is to take money away from the rich and give it to them.
This way of thinking is not unique to one side of the political spectrum. Wealth redistribution leading to enforced equality is the sine qua non of communism, but ironically, this belief is also held by many right-wing, libertarian-conservative schools of thought, who likewise believe that the only way to aid the poor is to punish the rich. Of course, unlike communists, they see this as a bad thing.
Both the communists and the libertarians are in error about this. As I wrote in the third part of my series “Why I Am Not a Libertarian“, the great insight of capitalism is that wealth is not a constant but can be created. When it comes to basic questions of social justice, there is no reason why some must lose for others to win. On the contrary, by harnessing market forces to create greater overall wealth, we can all succeed.
That said, all proposed means of attaining this end are not created equal. We should be suspicious of economic theories which claim that we can best promote societal prosperity by lavishly rewarding the rich and trusting that their gains will eventually trickle down to the lower socioeconomic classes. If nothing else, we should be skeptical of such theories because they so obviously align with the short-term interests of the wealthy people who propose them.Nevertheless, it is true that a rising tide lifts all boats. Even if vast disparities in income persist, it is undeniable that the overall level of prosperity of our society has substantially increased over the past hundred years, and it is similarly undeniable that many of these benefits have been enjoyed by average people and not just by the elite. In terms of life expectancy, of productivity, of innovation, our capitalist society is far richer in real terms than many past societies – including communist states, where poverty, deprivation, waste, misallocation, and hoarding seem to be the rule and not the exception. Marx and other communists thought that history would vindicate them, but instead, the opposite has happened.
So, how do we bring about prosperity for all? One important step, as I mentioned previously, is to commit to creating a social safety net that ensures universal access to basic goods like health care and education. That way, natural differences in talent and ability have the best chance to manifest and are less likely to be stifled by accidents of circumstance, and people are encouraged to take risks and become entrepreneurs since they know failure will not mean total disaster. Another is to require that all full-time jobs pay a living wage. People mired in poverty, working but unable to advance, are a net drain on society and are far more likely to turn to crime and other societal ills. By contrast, people able to support themselves have incentive to cooperate and to pay back into society, creating further opportunities for economic growth. (Fears that this policy will harm the economy usually turn out to be overblown.)
In this respect, I’m in agreement with organizations like the Hope Street Group (H/T Peter Levine). Markets are not a panacea to solve all problems, but when properly guided, they can be a potent force for good. We are so familiar with poverty and inequity that they sometimes seem to be intrinsic parts of the natural order. But human civilization has already reshaped the world in countless ways, changing or eradicating things that once seemed universal and inescapable. Why can we not use our ingenuity to solve this one as well?