"Free people are not equal, and equal people are not free."
I wish I could remember who first said that. It ought to rank as one of the great truths of all time, and one that is fraught with profound meaning.
Equality before the law--that is, being judged innocent or guilty based on whether or not you committed the crime, not on what color, sex or creed you represent--is a noble ideal and not at issue here. The "equalness" to which the statement above refers pertains to economic income or material wealth.
Put another way, then, the statement might read, "Free people will earn different incomes. In order for people to have the same income, they cannot be free."
The quest for economic equality becomes an issue every time the Michigan legislature discusses changes in tax law. Some of the opponents of ending the state's inheritance and intangibles taxes, for example, expressed a subtle but overriding desire to punish the successful. Fortunately, reason and evidence prevailed over envy, and those counterproductive taxes were put on the road to extinction.
Economic equality in a free society is neither obtainable nor desirable. Free people are different people, so it should not come as a surprise that they earn different incomes. Our talents and abilities are not identical. We don't all work as hard. And even if we all were magically made equal in wealth tonight, we'd be unequal in the morning because some of us would spend it and some of us would save it.
To produce even a rough measure of economic equality, governments must issue these orders and back them up with firing squads and prisons: "Don't excel or work harder than anyone else, don't come up with any new ideas, don't take any risks, and don't do anything differently from what you did yesterday." In other words, don't be human.
The fact that free people are not equal in economic terms is actually a cause for rejoicing. Economic inequality, when it derives from the voluntary interaction of creative individuals and not from political power, testifies to the fact that people are being themselves, each putting his uniqueness to work in ways that are fulfilling to himself and of value to others. As the French would say in a different context, Vive la difference!
People obsessed with economic equality, or "egalitarianism," do strange things. They become envious of others. They divide society into two piles: villains and victims. They spend far more time dragging someone else down than they do pulling themselves up. They're not fun to be around. And if they make it to public office, they can do real harm. Then they not only call the cops, they are the cops.
Examples of injurious laws motivated by egalitarian sentiments are legion. A classic case was the 1990 hike in federal excise taxes on boats, aircraft and jewelry. Its sponsors in Congress presumed that only rich people buy boats, aircraft and jewelry. Taxing those objects would teach the rich a lesson, help narrow the gap between the proverbial "haves" and "have-nots," and raise a projected $31 million in new revenues for the Treasury in 1991.
What really happened was much different. A subsequent study from the Joint Economic Committee of Congress showed that the rich did not line up by the flock to be sheared. Total revenue from the new taxes in 1991 was less than $17 million. Especially hard-hit were workers in the boating industry, where a total of 7,600 jobs were wiped out. In the aircraft industry, 1,470 people were pink-slipped. In jewelry manufacturing, 330 joined the jobless ranks just so members of Congress could salve their egalitarian consciences.
Those lost jobs, the study revealed, prompted a more than $24 million outlay for unemployment benefits. That's right--less than $17 million came in, more than $24 million went out, for a net loss to the deficit-ridden Treasury of almost $8 million. To advance the cause of economic equality by punishing some, Congress succeeded in nothing more than making almost all of us a little bit poorer.
Even if economic inequality were an ailment, punishing effort and success would be no cure. Laws that aim to redistribute wealth prompt the smart or politically well-connected "haves" to seek refuge in havens here or abroad, while the politically powerless "have-nots" bear the full brunt of economic decline. A more successful approach would be to erase the mass of intrusive government that assures that the "have-nots" are also the "can-nots."
This economic equality thing is not compassion. When it's just an idea, it's bunk. When it finds it's way into public policy, it's quackery writ large.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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