Sunday, November 20, 2011

Some Principles of Equality

Thinking about the Occupy Wall Street protests and their class warfare message, I have been moved to set down what I think are some basic points about the politics of equality in a capitalist democracy:

1) The interests of the very rich and interests of other people often diverge. The current rules of the global marketplace, allowing free movements of unlimited amounts of capital, were set up mainly by the very rich and their minions, and they need to be rethought with the interests of the majority in mind. It is simply not true that what is good for billionaires is always good for the rest of us.

2) Likewise, the interests of corporations and the interests of consumers and workers often diverge. Corporations are constantly looking for ways to maximize their own profits at other people's expense, for example through patenting the obvious and trying to charge others for using their ideas, and governments should always consider the broader public interest in writing regulations, assigning copyrights, and so on.

3) Money managers cannot be trusted. The 2008 meltdown ought to have slain the notion that Wall Street "experts" know best how to run their own businesses. The interests of the traders are in short-term profits, and left to their own devices they will take gigantic risks in the pursuit of that goal. When enough money is involved, they risk not only their own firms but our whole economy. Therefore, stringent regulation of financial markets is essential.

4) Taxation falls mainly on the people who pay it. One of the arguments long deployed by the rich and their friends is that taxing the rich limits capital formation and therefore hurts the whole economy. Right now, there is too much free capital in the world, not too little, so this argument is specious. Taxing the rich takes money from the rich, and if it spent in ways that benefit the majority, that makes the world more equal.

5) There is nothing particularly fair about the way our economy assigns rewards. Salaries and investment returns -- at the top, I mean -- have more to do with insider connections and luck than hard work. I see nothing wrong with the notion that those who rise to the top in this system should pay a disproportionate share of the cost of running it.

6) Capitalism does not automatically create anything that could reasonably be called "fairness," still less the sort of world most of us would want to live in. Instead it creates vast imbalances that can only be corrected through political action.

7) This argument for government action has to be balanced against the sad facts that bureaucracy is the bane of our age, that regulation is a very clumsy instrument and often backfires, and that the actions of the government are subject to manipulation by insiders just as the markets are. It also must be balanced against the glory of freedom, and the understanding that rules are a pain in the ass.

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