Fiscal Conservatism is Social Justice

Back in the 1980’s I listened to a speech by Art Laffer, who at the time was still a USC professor of economics, and was considering a run at one of California’s U.S. Senate seats. He said something that needs to be said more today, in reference to the running argument between liberals and conservatives over the role of government – he said “we both want the same thing.” Liberals and conservatives both want increased prosperity, and both want social justice. While a cynic might dispute this assertion, most of us probably agree. Well-intentioned people on both sides of the political divide want the same positive outcomes, they only disagree on how to get there.

The problem for fiscal conservatives today to convince voters they really mean this (notwithstanding the fact that few of them have the courage of their convictions, as the Bush II administration amply demonstrated) is mainly because it’s a harder rhetorical argument to express. After all, isn’t the role of government to redistribute wealth? And therefore, of all things, shouldn’t this redistribution be designed to help the less fortunate? The communist extreme, “from each according to their ability, to each according to their needs” is a much easier rhetorical argument to make.  It is virtuous to suggest that government should help people in need, and it is easy to assail anyone who argues against further empowering government to perform this role.

One would think the complete collapse of communism in Russia and China would provide a more enduring lesson to Americans as to the end-point of expanding government power and undermining private property rights, regardless of the rationale, but memories are short. It is necessary to reexamine the many reasons why limited government is a more potent enabler of social justice, ultimately, than expanded government. Consider this quote from Adam Smith:

“Virtue is more to be feared than vice, because its excesses are not subject to the regulation of conscience.”

This observation by Adam Smith is something the great undecided center in the American electorate would do well to ponder, because it speaks to the tone that informs much of the big government initiatives today – a tone that seems impelled by conscience, but in fact may be minimally inhibited by conscience. A tone of righteousness, a tone of sanctity. A tone that demands sacrifice, i.e., redistribution of wealth, for the sake of the less fortunate, the underprivileged, and of course, the endangered planet. A tone to be feared, because it knows no excess, knows no restraint, purports to embody conscience, rather than be regulated by it. Before opposing the politics of the left, know that they must be opposed on the grounds of conscience, on the basis of “wanting the same things.” And even if you consistently strive to establish that common ground, the left still has a rhetorical advantage because their policies are so easy to cloak in virtue. Does this advantage make the left the magnet for the sinners, the opportunists, those with no virtue – their ability to prevail politically merely because they can more easily tar and feather the right with the unjustified but easily applied stigma of having no altruism, no empathy? Ponder this need to redefine the perceived premises of left and right, before descending into the details of the debate. We all want the same things. Everyone should know this, but they don’t.

The failure of the federal government to properly regulate mortgage lenders and investment bankers, in that order, has given new and unwarranted credence to the argument that the free market is to blame for today’s economic challenges. But no genuine fiscal conservative would ever suggest that home loans should have been issued to people who can’t afford to pay them, or that commercial banks should have been permitted to use home mortgages as collateral for derivatives. There were laws in place to prevent these practices, and under Clinton and Bush II, these laws were repealed or ignored. The result was an explosion of unsustainable debt that fueled an era of unsustainable economic growth. The solution is to rebuild the economy, not reinvent it, and to appropriately re-regulate or deregulate the economy, not empower the government to expropriate the economy.

There are a lot of angles from which to examine the advantages of fiscal conservatism, complicated by the fact that fiscal conservatives aren’t extreme libertarians. There is a role for government to play, and the irony the fiscal conservatives face in today’s debate is that failures of government are the reason the left has claimed a mandate to expand government even further. Fiscal conservatives can’t reflexively preach the doctrine of lowering taxes and spending and deregulating, and be done with it. Like libertarians, they absolutely must set their course by that ideological pole star, but unlike libertarians, they have to fight in the weeds and thickets of legislation.

The policy debate is subtle: We need to repeal the disastrous health “reform” legislation that was just crammed down our throats, before more doctor’s hospitals are closed or canceled and other unintended catastrophes ensue, but we need health reform nonetheless.  While the current version of financial reform legislation urgently needs to be scrapped – its provision to tax every wire transfer could destroy the dollar as the transaction currency of choice in the world – we still need financial reform. For example, we need to repeal Sarbanes-Oxley, but reinstate key provisions of Glass-Stiegel. The fights are endless. We need to abandon the nonsense of carbon “cap & trade,” but the government needs to retain a role in helping us to collectively address genuine environmental challenges. Fiscal conservatives need to have an alternative agenda that refines and optimizes government, at the same time as they man the barricades to fight runaway government expansion.

At the heart of the leftist agenda remains Marx’s maxim, “from each according to their ability, to each according to their needs,” but a fiscal conservative might invert that famous phrase, and adhere instead to this principle: “From each according to their needs, to each according to their ability.” In this capitalist-inspired version of political economy, a person works because they need things. And their work is valued according to their ability to create a good that is voluntarily purchased in the market. Consider this quote from one of Ayn Rand’s characters in Atlas Shrugged, a hard-nosed banker who might be the model citizen in an economy committed to sustainable growth: “Charity, hell! We’re helping producers… We’re giving loans, not alms. We’re supporting ability, not need.”

Rand’s vision of a country descending into communism, its economy imploding in the process, is not a far-fetched concept, even if her preferred version of an optimally-sized government might not include some of the amenities that even most fiscal conservatives accept. Because if need becomes the criteria to redistribute wealth through government coercion, instead of ability as the criteria to redistribute wealth through voluntary commercial exchanges, the incentives to produce and to work are critically undermined. This fact, even more than the intrinsic (and related) difficulty governments have in operating nearly as efficiently as profit-motivated competitive private enterprises, is the reason fiscal conservatism enables social justice. Because a rising tide lifts all boats. You can’t have a successful, growing economy if you remove the competitive incentives to people to work, and if your economy implodes, the only outcome of equality you realize is one of equal impoverishment and misery.

The other related core concern of the left is a resentment of private wealth. But preserving a legal and tax environment that protects private wealth is essential to preserving the healthy human incentive to work hard and earn money. George Gilder, who understood the need to mix sociology with economics in order to properly assess what policies work or fail in governance, in his towering work “Wealth and Poverty,” had this to say about wealth:

“The rich remain the chief source of discretionary capital in the economy…only the entrepreneur can win the large possible payoff that renders the risk worthwhile, individuals with cash comprise the wild card – the mutagenic germ – in capitalism, and it is relatively risky investments that ultimately both reseed the economy and unseat the rich… it is discretionary capital that finances most of what is original and idiosyncratic in our culture and economy, that launches the apparently hopeless cause in business and politics, that supports the unusual invention, art, or private school, that founds the institutions of the future. Yet it is this kind of spending that is considered waste or recklessness by the mathematical economist and denounced as plutocratic by the leftist politician.”

There are countless examples of why fiscal recklessness in the name of social justice are in reality the creators of social injustice. The destruction of entire generations through welfare, which took away incentives to work, get educated, or keep the family intact. The destruction of competitive American manufacturing, and the attendant loss of jobs, in order to honor financially unsustainable labor union contracts. The inability to maintain public sector infrastructure, and the proposals to enact even higher taxes, in order to honor ridiculously unsustainable public sector union contracts. The failure to develop cheap conventional sources of energy and water under the pretext of saving the environment – with the hidden agenda being a consolidation of power in non-competitive utilities and public sector entities – with the primary victims being the poorest strata of society, for whom the essentials of energy and water are most costly. The scourge of affirmative action, which has undermined the professional credibility of anyone belonging to a protected status group, and reduced their incentive to prove themselves against an immutable standard.

Fiscal conservatives need to present alternative legislation, and they need to repeatedly provide examples of why excessive government control in the economy is hurting the poor more than it helps the poor. But equally important, they must articulate the positive value of the private sector, the free market, the tough-love of a capitalist meritocracy that can – properly regulated but not over-regulated – provide equal incentives, equal opportunities, spectacular success and virtuous profits to anyone willing to work hard. They need to remind voters that most of the innovations and most of the creative wonders we enjoy and appreciate were through deployment of private wealth. For all these reasons, fiscal conservatives must assert without reservations the fundamental truth that will bring them victory and save this nation, that fiscal conservatism is social justice.

Be Sociable, Share!

1 comment to Fiscal Conservatism is Social Justice

  • George Antrobus

    Your essay reminds me of this great quote from CS Lewis:

    “Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their consciences.” —C.S. Lewis