The Washington Post Sunday Outlook section had an article from the President of American Enterprise Institute, Arthur Brooks, making the conservative case for why wealthy people shouldn't be taxed very much, and why it was so nasty for President Obama to make arguments about fairness in his criticisms of the Ryan budget, which radically lowers taxes for the richest 10 percent of Americans while raising taxes on everyone else, ends the guarantee of health care and nursing home care for seniors and those with disabilities, forces the average senior citizen to pay more than $6,000 in out-of-pocket medical expenses, and cuts money for food stamps, health care for children, Pell Grants, and education funding by at least a third.
Brooks' argument boils down to the idea that if you are rich, it is probably because you earned the money by working harder and being smarter than most other people, and that this kind of merit doesn't deserve higher taxes; that in fact we should reward merit. He goes on to say the kind of redistribution us lefties support "for the sake of fairness, it weakens free enterprise, lowers opportunity and impoverishes us in many ways."
It is an interesting, if very familiar (conservatives in America have been making it for about 230 years), argument, and it is important to discuss because it goes to the heart of what conservatives in this country believe. Brooks does a good job of including some nuance in his argument, acknowledging for example that luck might have something to do with becoming wealthy, and that government had some modest role to play in a modern society, but essentially, he is very open about what conservatives believe: if you are wealthy, it is almost always because you deserve to be; if you are poor or working class, that is probably what you deserve as well.
I want to first make the case why the argument itself is wrong, and then move to a broader discussion of how this basic argument exposes how modern conservatism has gone so deeply off the rails.
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The meritocracy argument is most flawed in its basic conception: as Joan Williams points out in another WP Outlook article, only 18 percent of the income of the wealthy comes from actual work, and class mobility in this country is actually quite a bit lower than in other industrialized nations. Much of the wealth in this country is inherited, and even a great many people who go on to make money on their own do it because of the great schools, great connections, and early investments their wealthy parents were able to provide them. Beyond that, though, is the ugly but undeniable fact that a great deal of the wealth earned in 21st Century America's economy comes not from inventing great new gadgets, or having the gumption to build and sell products many people want to buy, but is derived from speculative financial trades done by insiders: finance is now about 40 percent of our economy, and six banks control assets equal to 64 percent of our GDP. Some of the other big sources of wealth in our country come from big oil companies who get heavily subsidized by the government; military and other kinds of government contractors taking advantage of sweetheart deals and no-bid contracts; health insurance giants with near-monopolies in many of the states they do business in; and agribusiness giants heavily subsidized by the government. This is not meritocracy: it is crony capitalism, special interests making money off the rest of us. In fact, rather than contributing to society, these people and companies are leeching off it. To say they shouldn't have to pay a reasonable share of taxes because of their merit, hard work, and entrepreneurial spirit is a pretty outrageous argument.
But even for those outstanding companies and businesspeople making their money in a way that really does contribute to society, they also do owe something back. The technology companies and engineers making great new products we all like, the manufacturers and construction companies building things that add to our country's infrastructure and economic health, the solar and wind power companies and the retrofitters and recyclers helping us create wealth and a greener society, the hard working small businesspeople who make every community in America a better place to live: these kinds of businesses are admirable, and they help our economy grow. But they get a great many things from the public sector, and have a responsibility to contribute a reasonable share back into it. Public roads and bridges get their goods to market; public schools give them educated employees; police and firefighters make the communities they operate in safer and more secure; government oversight keeps their competitors from cheating and stealing, making the marketplace more fair. Many businesspeople got student loans from the government, or start-up money from the SBA, or benefit from the internet that was created by government research. They don't have to worry as much about their parents and grandparents because of Social Security and Medicare, and their workers are more productive because their disabled children are getting some help from government. To whom much is given, much is required, and these successful Americans have been given a great deal by their country, and they do owe something back.
Here's what conservatives don't want to acknowledge: the point of progressive taxation isn't redistribution of wealth, it is simply that we should all pay our fair share of taxes for this country we need to nourish, for all the things government needs to do to make a decent and secure society, and we should pay more if we can afford to. That is what progressives mean by fairness. It is a pretty basic concept, but selfishness and greed sometimes do make it hard to understand.
Which leads me to my broader point about the nature of modern conservatism: The strident and angry complaints, repeated endlessly, about Obama's fairness argument against a budget like Ryan's show how completely devoid of balance Republican politicians and the conservative movement are. Expressing shock and outrage that Democrats would complain about the end of Medicare and Medicaid's historic guarantees of coverage, and the decimation of programs like food stamps and Pell Grants, in order to fund tax breaks for the top 10 percent — because remember, this budget doesn't actually do that much to reduce the deficit — is more than a little disingenuous. Because they don't want to have an honest debate over whether programs like Medicare, Medicaid, and Pell Grants should actually exist, they fall back on the same arguments against progressive taxation they have been using since time immemorial: we want class warfare, redistributionism, blah, blah, blah.
Conservatives have always believed in the free market and small government, and they have always opposed progressive taxation, but these policy arguments have become a kind of fundamentalist religion. The free market is always right, government is always wrong, and any tax on anyone wealthy is always socialism. If there was any intellectual honesty here at all, they would just admit what their budget does — end Medicare and Medicaid, radically slash all money for student loans, etc. — rather than going away the country saying they are trying to "strengthen and preserve" these programs. These are big issues, and we should have the argument.