Saturday, September 05, 2020

1889 Institute: Checking Government-Granted Privilege


Checking Government-Granted Privilege
By Byron Schlomach

Among young people, socialism is as popular as capitalism. Our social fabric is increasingly frayed, and conservative populists are no happier than young socialists about our nation’s general state of affairs. This is not due to Trump Derangement Syndrome, but to a vague sense that increasingly, the economic “game” is loaded in favor of a few over the many. Unfortunately, in many respects this is true.

History and experience has taught that income inequality caused by market forces is a strength. The fact that one can get fabulously wealthy by producing goods and services others find useful is a powerful spur to innovation and hard work. It’s an incentive that has lifted billions out of poverty within the last 30 years. But now, after years of constant drumbeat by socialists, income inequality appears to present an existential threat to the United States.


It would be different if income inequality were solely due to market forces. Americans have always accepted income inequality when getting rich meant you’d had the proverbial “big idea” or had exceptional talent and worked hard. It’s likely you will find only a handful of people who resent the fortunes of Steve Wosniak and the late Steve Jobs, who started Apple in a garage. Nobody decried the riches of Kobe Bryant, whose highly-valued skills were only suited for entertainment.

The problem with income inequality in the U.S. today is that much of it is caused by special privileges granted to a few by government policy. Zoning and other land-use regulations, rich pensions for government employees, and various labor regulations, have made it difficult for younger generations, who have to pay the bills, to become prosperous. Combine that with special grants to the already-rich, like Hollywood film subsidies and special tax incentives for which only big corporations can apply, and it’s easy to see why there is so much resentment.

This is not the sort of privilege many are getting on their knees to apologize for. The privilege our government leaders need to check is artificially created by policymakers at all levels of government, whether due to naiveté or less wholesome reasons. These policies that benefit a few at the expense of the many include occupational licensing and programs that supposedly help the poor, but make some richer, like Medicaid.

It seems too coincidental that our cultural unrest, with conservative populism on the one hand, and socialism gaining popularity among the young on the other, are peaking following epic financial bailouts of banks and other financial entities a decade ago. That event allowed billionaires who should have gone bankrupt to continue enjoying lifestyles they never really earned. The problem with our social unrest today is not really inequality of income; it is inequality before the law, and privilege unjustly granted by government.


Byron Schlomach, 1889 Institute Director. He can be contacted at bschlomach@1889institute.org.

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