Institutional racism and systemic racism are terms bandied about these days without much clarity. Being 84 years of age, I have seen and lived through what might be called institutional racism or systemic racism. Both operate under the assumption that one race is superior to another. It involves the practice of treating a person or group of people differently based on their race. Negroes, as we proudly called ourselves back then, were denied entry to hotels, restaurants and other establishments all over the nation, including the north. Certain jobs were entirely off-limits to Negroes. What school a child attended was determined by his race. In motion pictures, Negroes were portrayed as being unintelligent, such as the roles played by Stepin Fetchit and Mantan Moreland in the Charlie Chan movies. Fortunately, those aspects of racism are a part of our history. By the way, Fetchit, whose real name was Lincoln Perry, was the first black actor to become a millionaire, and he has a star on the Hollywood Walk of Fame and, in 1976, the Hollywood chapter of the NAACP awarded Perry a Special NAACP Image Award.

Despite the nation’s great achievements in race relations, there remains institutional racism, namely the widespread practice of treating a person or group of people differently based on their race. Most institutional racism is practiced by the nation’s institutions of higher learning. Eric Dreiband, an assistant attorney general in the Civil Rights Division of the Department of Justice, recently wrote that Yale University “grants substantial, and often determinative, preferences based on race.” The four-page letter said, “Yale’s race discrimination imposes undue and unlawful penalties on racially-disfavored applicants, including in particular Asian American and White applicants.”

Yale University is by no means alone in the practice of institutional racism. Last year, Asian students brought a discrimination lawsuit against Harvard University and lost. The judge held that the plaintiffs could not prove that the lower personal ratings assigned to Asian applicants are the result of “animus” or ill-motivated racial hostility towards Asian Americans by Harvard admissions officials. However, no one offered an explanation as to why Asian American applicants were deemed to have, on average, poorer personal qualities than white applicants. An explanation may be that Asian students party less, study more and get higher test scores than white students.

In court filings, Students for Fair Admissions argued that the University of North Carolina’s admissions practices are unconstitutional. Their brief stated: “UNC’s use of race is the opposite of individualized; UNC uses race mechanically to ensure the admission of the vast majority of underrepresented minorities.” Edward Blum, president of Students for Fair Admissions, said in a news release that the court filing “exposes the startling magnitude of the University of North Carolina’s racial preferences.” Blum said that their filing contains statistical evidence that shows that an Asian American male applicant from North Carolina with a 25% chance of getting into UNC would see his acceptance probability increase to about 67% if he were Latino and to more than 90% if he were African American.

In 1996, California voters passed Proposition 209 (also known as the California Civil Rights Initiative) that read: “The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” California legislators voted earlier this summer to put the question to voters to repeal the state’s ban on the use of race as a criterion in the hiring, awarding public contracts and admissions to public universities and restore the practice of institutional racism under the euphemistic title “affirmative action.”

When social justice warriors use the terms “institutional racism” or “systemic racism,” I suspect it means that they cannot identify the actual person or entities engaged in the practice. However, most of what might be called institutional or systemic racism is practiced by the nation’s institutions of higher learning. And it is seen by many, particularly the intellectual elite, as a desirable form of determining who gets what.

Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at http://www.creators.com.

We are infuriated by the injustice and heartbroken for the victims. We are enraged at our elected leaders who either sit by like useless lumps and do nothing to protect their citizens, or actively encourage the mobs. And we are exhausted — exhausted by the ceaselessness of the carnage, and the knowledge that it will not be over tomorrow or the next day or the next. But we are not shocked because this our new normal. And we have Black Lives Matter and its enablers in the media and the Democratic Party largely to thank for that.”

“One need only consider what nearly everyone would be saying, and what the media would be reporting, and how the government would be responding, if a series of Tea Party rallies “gave way” to arson, looting, and wanton destruction. After one episode of Tea Party members and allies beating random pedestrians over the head, stopping traffic at gun point, and lighting vehicles on fire, most people would be prepared to label the whole movement a terroristic enterprise. After the second episode, Tea Party leaders would be rounded up by federal agents. After six years of this? Well, that’s literally unimaginable. It would never happen. It could never happen.”

— Matt Walsh, “The Daily Wire” 8-26-20

They say, “Wear your masks for MY sake. Shut down your business for MY sake.” And they call us narcissists.

They say, “If you’re white, you’re a victimizer. Because of your great-great grandparents. If you’re black, you’re a victim–no matter what.” And they call us racists.

They say, “Unlimited, guaranteed income for sitting home and doing nothing. $75K a year — to start.” And they call capitalism greedy.

They say, “Germs will kill you if you go to the grocery store.” And they “peacefully” protest in groups of thousands, for months on end. And they call us irrational.

They say, “Trump is an agent of the Russians”, even after their own hand-picked investigator finds nothing. And they call us conspiracy theorists.

They say, “Republicans and Trump can’t be trusted with the election.” The same people whose President, Vice President and FBI director spied on Trump’s presidential campaign and transition staff. And they call us shameful.

They say they care about the Constitution while claiming subjectively defined “hate speech” should be censored, and that everyone’s guns should be confiscated. And they call Trump a dictator.

It’s the most massive and toxic demonstration of psychological projection in human history. It’s sick, it’s evil and — if not massively bludgeoned on November 3 — it will be the death of civilization as we know it.

VOTE — like your life depends on it.

Michael J. Hurd

A long read, but a must read.—A/D

I. The collapse of institutional liberalism

For a generation after the fall of the Berlin Wall in 1989, most Americans and Europeans regarded Marxism as an enemy that had been defeated once and for all. But they were wrong. A mere 30 years later, Marxism is back, and making an astonishingly successful bid to seize control of the most important American media companies, universities and schools, major corporations and philanthropic organizations, and even the courts, the government bureaucracy, and some churches. As American cities succumb to rioting, arson, and looting, it appears as though the liberal custodians of many of these institutions—from the New York Times to Princeton University—have despaired of regaining control of them, and are instead adopting a policy of accommodation. That is, they are attempting to appease their Marxist employees by giving in to some of their demands in the hope of not being swept away entirely.

We don’t know what will happen for certain. But based on the experience of recent years, we can venture a pretty good guess. Institutional liberalism lacks the resources to contend with this threat. Liberalism is being expelled from its former strongholds, and the hegemony of liberal ideas, as we have known it since the 1960s, will end. Anti-Marxist liberals are about to find themselves in much the same situation that has characterized conservatives, nationalists, and Christians for some time now: They are about to find themselves in the opposition.

This means that some brave liberals will soon be waging war on the very institutions they so recently controlled. They will try to build up alternative educational and media platforms in the shadow of the prestigious, wealthy, powerful institutions they have lost. Meanwhile, others will continue to work in the mainstream media, universities, tech companies, philanthropies, and government bureaucracy, learning to keep their liberalism to themselves and to let their colleagues believe that they too are Marxists—just as many conservatives learned long ago how to keep their conservatism to themselves and let their colleagues believe they are liberals.

This is the new reality that is emerging. There is blood in the water and the new Marxists will not rest content with their recent victories. In America, they will press their advantage and try to seize the Democratic Party. They will seek to reduce the Republican Party to a weak imitation of their own new ideology, or to ban it outright as a racist organization. And in other democratic countries, they will attempt to imitate their successes in America. No free nation will be spared this trial. So let us not avert our eyes and tell ourselves that this curse isn’t coming for us. Because it is coming for us.

In this essay, I would like to offer some initial remarks about the new Marxist victories in America—about what has happened and what’s likely to happen next.

II. The Marxist framework

Anti-Marxist liberals have labored under numerous disadvantages in the recent struggles to maintain control of liberal organizations. One is that they are often not confident they can use the term “Marxist” in good faith to describe those seeking to overthrow them. This is because their tormentors do not follow the precedent of the Communist Party, the Nazis, and various other political movements that branded themselves using a particular party name and issued an explicit manifesto to define it. Instead, they disorient their opponents by referring to their beliefs with a shifting vocabulary of terms, including “the Left,” “Progressivism,” “Social Justice,” “Anti-Racism,” “Anti-Fascism,” “Black Lives Matter,” “Critical Race Theory,” “Identity Politics,” “Political Correctness,” “Wokeness,” and more. When liberals try to use these terms they often find themselves deplored for not using them correctly, and this itself becomes a weapon in the hands of those who wish to humiliate and ultimately destroy them.

The best way to escape this trap is to recognize the movement presently seeking to overthrow liberalism for what it is: an updated version of Marxism. I do not say this to disparage anyone. I say this because it is true. And because recognizing this truth will help us understand what we are facing.

The new Marxists do not use the technical jargon that was devised by 19th-century Communists. They don’t talk about the bourgeoisie, proletariat, class struggle, alienation of labor, commodity fetishism, and the rest, and in fact they have developed their own jargon tailored to present circumstances in America, Britain, and elsewhere. Nevertheless, their politics are based on Marx’s framework for critiquing liberalism (what Marx calls the “ideology of the bourgeoisie”) and overthrowing it. We can describe Marx’s political framework as follows:

1. Oppressor and oppressed
Marx argues that, as an empirical matter, people invariably form themselves into cohesive groups (he calls them classes), which exploit one another to the extent they are able. A liberal political order is no different in this from any other, and it tends toward two classes, one of which owns and controls pretty much everything (the oppressor); while the other is exploited, and the fruit of its labor appropriated, so that it does not advance and, in fact, remains forever enslaved (the oppressed). In addition, Marx sees the state itself, its laws and its mechanisms of enforcement, as a tool that the oppressor class uses to keep the regime of oppression in place and to assist in carrying out this work.

2. False consciousness
Marx recognizes that the liberal businessmen, politicians, lawyers, and intellectuals who keep this system in place are unaware that they are the oppressors, and that what they think of as progress has only established new conditions of oppression. Indeed, even the working class may not know that they are exploited and oppressed. This is because they all think in terms of liberal categories (e.g., the individual’s right to freely sell his labor) which obscure the systematic oppression that is taking place. This ignorance of the fact that one is an oppressor or oppressed is called the ruling ideology (Engels later coined the phrase false consciousness to describe it), and it is only overcome when one is awakened to what is happening and learns to recognize reality using true categories.

3. Revolutionary reconstitution of society
Marx suggests that, historically, oppressed classes have materially improved their conditions only through a revolutionary reconstitution of society at large—that is, through the destruction of the oppressor class, and of the social norms and ideas that hold the regime of systematic oppression in place. He even specifies that liberals will supply the oppressed with the tools needed to overthrow them. There is a period of “more or less veiled civil war, raging within existing society, up to the point where that war breaks out into open revolution” and the “violent overthrow” of the liberal oppressors. At this point, the oppressed seize control of the state.

4. Total disappearance of class antagonisms
Marx promises that after the oppressed underclass takes control of the state, the exploitation of individuals by other individuals will be “put to an end” and the antagonism between classes of individuals will totally disappear. How this is to be done is not specified.

Marxist political theories have undergone much development and elaboration over nearly two centuries. The story of how “neo-Marxism” emerged after the First World War in the writings of the Frankfurt School and Antonio Gramsci has been frequently told, and academics will have their hands full for many years to come arguing over how much influence was exerted on various successor movements by Michel Foucault, post-modernism, and more. But for present purposes, this level of detail is not necessary, and I will use the term “Marxist” in a broad sense to refer to any political or intellectual movement that is built upon Marx’s general framework as I’ve just described it. This includes the “Progressive” or “Anti-Racism” movement now advancing toward the conquest of liberalism in America and Britain. This movement uses racialist categories such as whites and people of color to describe the oppressors and the oppressed in our day. But it relies entirely on Marx’s general framework for its critique of liberalism and for its plan of action against the liberal political order. It is simply an updated Marxism.

III. The attraction and power of Marxism

Although many liberals and conservatives say that Marxism is “nothing but a great lie,” this isn’t quite right. Liberal societies have repeatedly proved themselves vulnerable to Marxism, and now we are seeing with our own eyes how the greatest liberal institutions in the world are being handed over to Marxists and their allies. If Marxism is nothing but a great lie, why are liberal societies so vulnerable to it? We must understand the enduring attraction and strength of Marxism. And we will never understand it unless we recognize that Marxism captures certain aspects of the truth that are missing from Enlightenment liberalism.

Which aspects of the truth?

Marx’s principal insight is the recognition that the categories liberals use to construct their theory of political reality (liberty, equality, rights, and consent) are insufficient for understanding the political domain. They are insufficient because the liberal picture of the political world leaves out two phenomena that are, according to Marx, absolutely central to human political experience: The fact that people invariably form cohesive classes or groups; and the fact that these classes or groups invariably oppress or exploit one another, with the state itself functioning as an instrument of the oppressor class.

My liberal friends tend to believe that oppression and exploitation exist only in traditional or authoritarian societies, whereas liberal society is free (or almost free) from all that. But this isn’t true. Marx is right to see that every society consists of cohesive classes or groups, and that political life everywhere is primarily about the power relations among different groups. He is also right that at any given time, one group (or a coalition of groups) dominates the state, and that the laws and policies of the state tend to reflect the interests and ideals of this dominant group. Moreover, Marx is right when he says that the dominant group tends to see its own preferred laws and policies as reflecting “reason” or “nature,” and works to disseminate its way of looking at things throughout society, so that various kinds of injustice and oppression tend to be obscured from view.

For example, despite decades of experimentation with vouchers and charter schools, the dominant form of American liberalism remains strongly committed to the public school system. In most places, this is a monopolistic system that requires children of all backgrounds to receive what is, in effect, an atheistic education stripped clean of references to God or the Bible. Although liberals sincerely believe that this policy is justified by the theory of “separation of church and state,” or by the argument that society needs schools that are “for everyone,” the fact is that these theories justify what really is a system aimed at inculcating their own Enlightenment liberalism. Seen from a conservative perspective, this amounts to a quiet persecution of religious families. Similarly, the pornography industry is nothing but a horrific instrument for exploiting poor women, although it is justified by liberal elites on grounds of “free speech” and other freedoms reserved to “consenting adults.” And in the same way, indiscriminate offshoring of manufacturing capacity is considered to be an expression of property rights by liberal elites, who benefit from cheap Chinese labor at the expense of their own working-class neighbors.

No, Marxist political theory is not simply a great lie. By analyzing society in terms of power relations among classes or groups, we can bring to light important political phenomena to which Enlightenment liberal theories—theories that tend to reduce politics to the individual and his or her private liberties—are systematically blind.

This is the principal reason that Marxist ideas are so attractive. In every society, there will always be plenty of people who have reason to feel they’ve been oppressed or exploited. Some of these claims will be worthy of remedy and some less so. But virtually all of them are susceptible to a Marxist interpretation, which shows how they result from systematic oppression by the dominant classes, and justifies responding with outrage and violence. And those who are troubled by such apparent oppression will frequently find themselves at home among the Marxists.

Of course, liberals have not remained unmoved in the face of criticism based on the reality of group power relations. Measures such as the US Civil Rights Act of 1964 explicitly outlawed discriminatory practices against a variety of classes or groups; and subsequent “Affirmative Action” programs sought to strengthen underprivileged classes through quotas, hiring goals, and other methods. But these efforts have not come close to creating a society free from power relations among classes or groups. If anything, the sense that “the system is rigged” in favor of certain classes or groups at the expense of others has only grown more pronounced.

Despite having had more than 150 years to work on it, liberalism still hasn’t found a way to persuasively address the challenge posed by Marx’s thought.

IV. The flaws that make Marxism fatal

We’ve looked at what Marxist political theory gets right and why it’s such a powerful doctrine. But there are also plenty of problems with the Marxist framework, a number of them fatal.

The first of these is that while Marxism proposes an empirical investigation of the power relations among classes or groups, it simply assumes that wherever one discovers a relationship between a more powerful group and a weaker one, that relation will be one of oppressor and oppressed. This makes it seem as if every hierarchical relationship is just another version of the horrific exploitation of black slaves by Virginia plantation owners before the Civil War. But in most cases, hierarchical relationships are not enslavement. Thus, while it is true that kings have normally been more powerful than their subjects, employers more powerful than their employees, and parents more powerful than their children, these have not necessarily been straightforward relations of oppressor and oppressed. Much more common are mixed relationships, in which both the stronger and the weaker receive certain benefits, and in which both can also point to hardships that must be endured in order to maintain it.

The fact that the Marxist framework presupposes a relationship of oppressor and oppressed leads to the second great difficulty, which is the assumption that every society is so exploitative that it must be heading toward the overthrow of the dominant class or group. But if it is possible for weaker groups to benefit from their position, and not just to be oppressed by it, then we have arrived at the possibility of a conservative society: One in which there is a dominant class or loyalty group (or coalition of groups), which seeks to balance the benefits and the burdens of the existing order so as to avoid actual oppression. In such a case, the overthrow and destruction of the dominant group may not be necessary. Indeed, when considering the likely consequences of a revolutionary reconstitution of society—often including not only civil war, but foreign invasion as the political order collapses—most groups in a conservative society may well prefer to preserve the existing order, or to largely preserve it, rather than to endure Marx’s alternative.

This brings us to the third failing of the Marxist framework. This is the notorious absence of a clear view as to what the underclass, having overthrown its oppressors and seized the state, is supposed to do with its newfound power. Marx is emphatic that once they have control of the state, the oppressed classes will be able to end oppression. But these claims appear to be unfounded. After all, we’ve said that the strength of the Marxist framework lies in its willingness to recognize that power relations do exist among classes and groups in every society, and that these can be oppressive and exploitative in every society. And if this is an empirical fact—as indeed it seems to be—then how will the Marxists who have overthrown liberalism be able use the state to obtain the total abolition of class antagonisms? At this point, Marx’s empiricist posture evaporates, and his framework becomes completely utopian.

When liberals and conservatives talk about Marxism being “nothing but a big lie,” this is what they mean. The Marxist goal of seizing the state and using it to eliminate all oppression is an empty promise. Marx did not know how the state could actually bring this about, and neither have any of his followers. In fact, we now have many historical cases in which Marxists have seized the state: In Russia and Eastern Europe, China, North Korea, and Cambodia, Cuba and Venezuela. But nowhere has the Marxists’ attempt at a “revolutionary reconstitution of society” by the state been anything other than a parade of horrors. In every case, the Marxists themselves form a new class or group, using the power of the state to exploit and oppress other classes in the most extreme ways—up to and including repeated recourse to murdering millions of their own people. Yet for all this, utopia never comes and oppression never ends.

Marxist society, like all other societies, consists of classes and groups arranged in a hierarchical order. But the aim of reconstituting society and the assertion that the state is responsible for achieving this feat makes the Marxist state much more aggressive, and more willing to resort to coercion and bloodshed, than the liberal regime it seeks to replace.

V. The dance of liberalism and Marxism

It is often said that liberalism and Marxism are “opposites,” with liberalism committed to freeing the individual from coercion by the state and Marxism endorsing unlimited coercion in pursuit of a reconstituted society. But what if it turned out that liberalism has a tendency to give way and transfer power to Marxists within a few decades? Far from being the opposite of Marxism, liberalism would merely be a gateway to Marxism.

A compelling analysis of the structural similarities between Enlightenment liberalism and Marxism has been published by the Polish political theorist Ryszard Legutko under the title The Demon in Democracy: Totalitarian Temptations in Free Societies (2016). A subsequent book by Christopher Caldwell, The Age of Entitlement (2020), has similarly documented the manner in which the American constitutional revolution of the 1960s, whose purpose was to establish the rule of liberalism, has in fact brought about a swift transition to a “Progressive” politics that is, as I’ve said, a version of Marxism. With these accounts in mind, I’d like to propose a way of understanding the core relationship that binds liberalism and Marxism to one another and makes them something other than “opposites.”

Enlightenment liberalism is a rationalist system built on the premise that human beings are, by nature, free and equal. It is further asserted that this truth is “self-evident,” meaning that all of us can recognize it through the exercise of reason alone, without reference to the particular national or religious traditions of our time and place.

But there are difficulties with this system. One of these is that, as it turns out, highly abstract terms such as freedom, equality, and justice cannot be given stable content by means of reason alone. To see this, consider the following problems:

1. If all men are free and equal, how is it that not everyone who wishes to do so may enter the United States and take up residence there?

By reason alone, it can be argued that since all men are free and equal, they should be equally free to take up residence in the United States. This appears straightforward, and any argument to the contrary will have to depend on traditional concepts such as nation, state, territory, border, citizenship, and so on—none of which are self-evident or accessible to reason alone.

2. If all men are free and equal, how is it that not everyone who wants to may register for courses at Princeton University?

By reason alone, it can be argued that if all are free and equal, they should be equally free to register for courses at Princeton on a first come, first served basis. This, too, appears straightforward. Any argument to the contrary will have to depend on traditional concepts such as private property, corporation, freedom of association, education, course of study, merit, and so on. And, again, none of this is self-evident.

3. If all men are free and equal, how can you justify preventing a man who feels he is a woman from competing in a women’s track and field competition in a public school?

By reason alone, it can be said that since all are free and equal, a man who feels he is a woman should be equally free to compete in a women’s track and field competition. Any argument to the contrary will have to depend on traditional concepts of such as man, woman, women’s rights, athletic competition, competition class, fairness, and so on, none of which is accessible to reason alone.

Such examples can be multiplied without end. The truth is that reason alone gets us almost nowhere in settling arguments over what is meant by freedom and equality. So where does the meaning of these terms come from?

I’ve said that every society consists of classes or groups. These stand in various power relations to one another, which find expression in the political, legal, religious, and moral traditions that are handed down by the strongest classes or groups. It is only within the context of these traditions that we come to believe that words like freedom and equality mean one thing and not another, and to develop a “common sense” of how different interests and concerns are to be balanced against one another in actual cases.

But what happens if you dispense with those traditions? This, after all, is what Enlightenment liberalism seeks to do. Enlightenment liberals observe that inherited traditions are always flawed or unjust in certain ways, and for this reason they feel justified in setting inherited tradition aside and appealing directly to abstract principles such as freedom and equality. The trouble is, there is no such thing as a society in which everyone is free and equal in all ways. Even in a liberal society, there will always be countless ways in which a given class or group may be unfree or unequal with respect to the others. And since this is so, Marxists will always be able to say that some or all of these instances of unfreedom and inequality are instances of oppression.

Thus the endless dance of liberalism and Marxism, which goes like this:

1. Liberals declare that henceforth all will be free and equal, emphasizing that reason (not tradition) will determine the content of each individual’s rights.

2. Marxists, exercising reason, point to many genuine instances of unfreedom and inequality in society, decrying them as oppression and demanding new rights.

3. Liberals, embarrassed by the presence of unfreedom and inequality after having declared that all would be free and equal, adopt some of the Marxists’ demands for new rights.

4. Return to #1 above and repeat.

Of course, not all liberals give in to the Marxists’ demands—and certainly not on every occasion. Nevertheless, the dance is real. As a generalized view of what happens over time, this picture is accurate, as we’ve seen throughout the democratic world over the last 70 years. Liberals progressively adopt the critical theories of the Marxists over time, whether the subject is God and religion, man and woman, honor and duty, family, nation, or anything else.

A few observations, then, concerning this dance of liberalism and Marxism:

First, notice that the dance is a byproduct of liberalism. It exists because Enlightenment liberalism sets freedom and equality as the standard by which government is to be judged, and describes the individual’s power of reason alone, independent of tradition, as the instrument by which this judgment is to be obtained. In so doing, liberalism creates Marxists. Like the sorcerer’s apprentice, it constantly calls into being individuals who exercise reason, identify instances of unfreedom and inequality in society, and conclude from this that they (or others) are oppressed and that a revolutionary reconstitution of society is necessary to eliminate the oppression. It is telling that this dynamic is already visible during the French Revolution and in the radical regimes in Pennsylvania and other states during the American Revolution. A proto-Marxism was generated by Enlightenment liberalism even before Marx proposed a formal structure for describing it a few decades later.

Second, the dance only moves in one direction. In a liberal society, Marxist criticism brings many liberals to progressively abandon the conceptions of freedom and equality with which they set out, and to adopt new conceptions proposed by Marxists. But the reverse movement—of Marxists toward liberalism—seems terribly weak in comparison. How can this be? If Enlightenment liberalism is true, and its premises are indeed “self-evident” or a “product of reason,” it should be the case that under conditions of freedom, individuals will exercise reason and reach liberal conclusions. Why, then, do liberal societies produce a rapid movement toward Marxist ideas, and not an ever-greater belief in liberalism?

The key to understanding this dynamic is this: Although liberals believe their views are “self-evident” or the “product of reason,” most of the time they are actually relying on inherited conceptions of what freedom and equality are, and inherited norms of how to apply these concepts to real-world cases. In other words, the conflict between liberalism and its Marxist critics is one between a dominant class or group wishing to conserve its traditions (liberals), and a revolutionary group (Marxists) combining criticial reasoning with a willingness to jettison all inherited constraints to overthrow these traditions. But while Marxists know very well that their aim is to destroy the intellectual and cultural traditions that are holding liberalism in place, their liberal opponents for the most part refuse to engage in the kind of conservatism that would be needed to defend their traditions and strengthen them. Indeed, liberals frequently disparage tradition, telling their children and students that all they need is to reason freely and “draw your own conclusions.”

The result is a radical imbalance between Marxists, who consciously work to bring about a conceptual revolution, and liberals whose insistence on “freedom from inherited tradition” provides little or no defense—and indeed, opens the door for precisely the kinds of arguments and tactics that Marxists use against them. This imbalance means that the dance moves only in one direction, and that liberal ideas tend to collapse before Marxist criticism in a matter of decades.

VI. The Marxist endgame and democracy’s end

Not very long ago, most of us living in free societies knew that Marxism was not compatible with democracy. But with liberal institutions overrun by “Progressives” and “Anti-Racists,” much of what was once obvious about Marxism, and much of what was once obvious about democracy, has been forgotten. It is time to revisit some of these once-obvious truths.

Under democratic government, violent warfare among competing classes and groups is brought to an end and replaced by non-violent rivalry among political parties. This doesn’t mean that power relations among loyalty groups come to an end. It doesn’t mean that injustice and oppression come to an end. It only means that instead of resolving their disagreements through bloodshed, the various groups that make up a given society form themselves into political parties devoted to trying to unseat one another in periodic elections. Under such a system, one party rules for a fixed term, but its rivals know they will get to rule in turn if they can win the next election. It is the possibility of being able to take power and rule the country without widespread killing and destruction that entices all sides to lay down their weapons and take up electoral politics instead.

The most basic thing one needs to know about a democratic regime, then, is this: You need to have at least two legitimate political parties for democracy to work. By a legitimate political party, I mean one that is recognized by its rivals as having a right to rule if it wins an election. For example, a liberal party may grant legitimacy to a conservative party (even though they don’t like them much), and in return this conservative party may grant legitimacy to a liberal party (even though they don’t like them much). Indeed, this is the way most modern democratic nations have been governed.

But legitimacy is one of those traditional political concepts that Marxist criticism is now on the verge of destroying. From the Marxist point of view, our inherited concept of legitimacy is nothing more than an instrument the ruling classes use to perpetuate injustice and oppression. The word legitimacy takes on its true meaning only with reference to the oppressed classes or groups that the Marxist sees as the sole legitimate rulers of the nation. In other words, Marxist political theory confers legitimacy on only one political party—the party of the oppressed, whose aim is the revolutionary reconstitution of society. And this means that the Marxist political framework cannot co-exist with democratic government. Indeed, the entire purpose of democratic government, with its plurality of legitimate parties, is to avoid the violent reconstitution of society that Marxist political theory regards as the only reasonable aim of politics.

Simply put, the Marxist framework and democratic political theory are opposed to one another in principle. A Marxist cannot grant legitimacy to liberal or conservative points of view without giving up the heart of Marxist theory, which is that these points of view are inextricably bound up with systematic injustice and must be overthrown, by violence if necessary. This is why the very idea that a dissenting opinion—one that is not “Progressive” or “Anti-Racist”—could be considered legitimate has disappeared from liberal institutions as Marxists have gained power. At first, liberals capitulated to their Marxist colleagues’ demand that conservative viewpoints be considered illegitimate (because conservatives are “authoritarian” or “fascist”). This was the dynamic that brought about the elimination of conservatives from most of the leading universities and media outlets in America.

But by the summer of 2020, this arrangement had run its course. In the United States, Marxists were now strong enough to demand that liberals fall into line on virtually any issue they considered pressing. In what were recently liberal institutions, a liberal point of view has likewise ceased to be legitimate. This is the meaning of the expulsion of liberal journalists from the New York Times and other news organisations. It is the reason that Woodrow Wilson’s name was removed from buildings at Princeton University, and for similar acts at other universities and schools. These expulsions and renamings are the equivalent of raising a Marxist flag over each university, newspaper, and corporation in turn, as the legitimacy of the old liberalism is revoked.

Until 2016, America sill had two legitimate political parties. But when Donald Trump was elected president, the talk of his being “authoritarian” or “fascist” was used to discredit the traditional liberal point of view, according to which a duly elected president, the candidate chosen by half the public through constitutional procedures, should be accorded legitimacy. Instead a “resistance” was declared, whose purpose was to delegitimize the president, those who worked with him, and those who voted for him.

I know that many liberals believe that this rejection of Trump’s legitimacy was directed only at him, personally. They believe, as a liberal friend wrote to me recently, that when this particular president is removed from office, America will be able to return to normal.

But nothing of the sort is going to happen. The Marxists who have seized control of the means of producing and disseminating ideas in America cannot, without betraying their cause, confer legitimacy on any conservative government. And they cannot grant legitimacy to any form of liberalism that is not supine before them. This means that whatever President Trump’s electoral fortunes, the “resistance” is not going to end. It is just beginning.

With the Marxist conquest of liberal institutions, we have entered a new phase in American history (and, consequently, in the history of all democratic nations). We have entered the phase in which Marxists, having conquered the universities, the media, and major corporations, will seek to apply this model to the conquest of the political arena as a whole.

How will they do this? As in the universities and the media, they will use their presence within liberal institutions to force liberals to break the bonds of mutual legitimacy that bind them to conservatives—and therefore to two-party democracy. They will not demand the delegitimization of just President Trump, but of all conservatives. We’ve already seen this in the efforts to delegitimize the views of Senators Josh Hawley, Tom Cotton, and Tim Scott, as well as the media personality Tucker Carlson and others. Then they will move on to delegitimizing liberals who treat conservative views as legitimate, such as James Bennet, Bari Weiss, and Andrew Sullivan. As was the case in the universities and media, many liberals will accommodate these Marxist tactics in the belief that by delegitimizing conservatives they can appease the Marxists and turn them into strategic allies.

But the Marxists will not be appeased because what they’re after is the conquest of liberalism itself—already happening as they persuade liberals to abandon their traditional two-party conception of political legitimacy, and with it their commitment to a democratic regime. The collapse of the bonds of mutual legitimacy that have tied liberals to conservatives in a democratic system of government will not make the liberals in question Marxists quite yet. But it will make them the supine lackeys of these Marxists, without the power to resist anything that “Progressives” and “Anti-Racists” designate as being important. And it will get them accustomed to the coming one-party regime, in which liberals will have a splendid role to play—if they are willing to give up their liberalism.

I know that many liberals are confused, and that they still suppose there are various alternatives before them. But it isn’t true. At this point, most of the alternatives that existed a few years ago are gone. Liberals will have to choose between two alternatives: either they will submit to the Marxists, and help them bring democracy in America to an end. Or they will assemble a pro-democracy alliance with conservatives. There aren’t any other choices.

Yoram Hazony, President of the Herzl Institute in Jerusalem and author of The Virtue of Nationalism, is chairman of the Edmund Burke Foundation. Follow him on Twitter @yhazony.

COMMENTS

Liberals will have to choose between two alternatives: either they will submit to the Marxists, and help them bring democracy in America to an end. Or they will assemble a pro-democracy alliance with conservatives. There aren’t any other choices.

I observed the behaviour of liberals during the so-called Harper’s Letter. Their feeble effort to push back was a canary in the coalmine.

These useful-idiots – who opened the gates to this demonic ideology – took one trembling step against it and folded like a cheap suit.

They fancied themselves to be as bright as the stars in the night sky and as virtuous as the saints. What fools they are and what evil they have unleashed.

Marxists aren’t like conservatives. They will steal your assets and the loyalty of your children then they’ll stare in your eyes and without blinking they’ll break your neck.

This article presents “liberals” as weak defenses against the Marxist onslaught. They are not.

Provided we understand that “liberal” here refers to the Orwellian bastardization of classical liberalism, the “liberals”, when they are not themselves Marxist, are the people who armed the Marxists. They gave them their tools – moral relativism, subjective truth, critical theory, etc. They handed loaded guns to maniacs out of a badly misguided sense of altruism and are now surprised to find themselves being shot.

They are far from innocent.

Although many liberals and conservatives say that Marxism is “nothing but a great lie,” this isn’t quite right.

There are two types of ideological “success” being conflated here. One is actually working as policy. The other is gaining power. An ideology can have the second kind of success while being devastatingly bad for society.

This is Marxism.

And here again, the “liberals” handed it the tools. Obama’s presidency comes to mind, as virtually any list of his “successes” compiled by his supporters consists almost exclusively of a list of policies he enacted, not a list of positive outcomes generated. The Left has long defined political success as “winning”. Their opponents only learned to do this (in the US) in 2016.

Agreed, this is the best article Quillette has published in a while.

A lot of it boils down to the fact that the disdain for “tradition” that underscores left-wing thinking manifests as a forgetting of all of history’s lessons. Rather than standing on the shoulders of giants, the Leftist gets down on his hands and knees, then thinks himself the first to glance upward.

It is not the elevation of “reason” that causes this problem. Rather, it’s the “garbage in, garbage out” problem that results from applying reason without knowledge.

Nihilism means nothing to me.

This article tries to show that the current movement is “Marxist” by listing what it and classical Marxism have in common.

True, both advocate “a revolutionary reconstitution of society”, but so do other movements, such as fascism, showing that the concept is too vague to say advocating it makes you a Marxist.

They also have in common the idea that class antagonisms will end when this revolution have taken place. This is probably true – if you asked one of the gurus of critical race theory if they want to abolish class privilege as well as white privilege, they’d agree. But for them, race is central. This puts them closer to fascism than Marxism.

It is true that Engels ‘later’ coined the term ‘false consciousness’ to describe people believing things which are not in their interests, but everyone believes this is possible, including the author, who thinks that liberalism has a weakness which enables Marxism.

But the author’s key amalgam is the dichotomy oppressor/oppressed, which Marxism does indeed have in common with Black Lives Matter and the rest of the American left. The difference is that Marx claimed to have discovered an oppression which contains its own negation – the proletariat is driven to overthrow the bourgeoisie, thus abolishing itself. This theory may be completely wrong, but it’s also completely unlike intersectionality, which compiles a list of minorities (plus women) with a grievance, and claims that their complements (eg. straight white men) gain from their oppression. Whereas it’s obvious that Jeff Bezos gains from my mate Dave slaving away in a warehouse, it’s not at all clear to me how Dave benefits from the murder of George Floyd.

Race activists suffer, not from Marxism, but from Marxism envy. They wish that the New York Times’ 1619 Project was true, that the USA was founded on slavery. In fact, the USA was founded on capitalism, which Marx rightly described as ‘progressive’, partly because it abolished slavery. And if America had not imported a single African slave, it would have survived, and avoided a civil war. Sorry guys, but black people, nor any other minority, are no substitute for the proletariat.

The current movement is not a version of Marxism – it is an amalgam of two currents, one of which became disillusioned with the proles and tried to psychoanalyse them, and another which explicitly rejected Marxism as a ‘grand narrative’.

I’d suggest the author tries again, after reading some Marx & Engels.

A great essay which does much to shed light on the relationship between liberalism and Marxism. However, it fails to address a couple of points. First, there is the emotional level and the fact that we do our children a disservice when we lie to them before we send them out in to the world. The principle lie we tell our children is that we allow our teachers to give them a false sense of the role they will play when they go out into the world.

The child-centred approach allows children to ‘discover’ learning for themselves. It gives them an overrated and inflated view of their own powers of reason and casts them as decision-makers in solving society’s problems, as though one could become a doctor or a scientist by simply donning a white coat. It belies the very real commitment to specialism which is required to make a substantial contribution to our cooperative effort, or the couple of hundreds of hours of research that is necessary to make passing observations on any subject, speaking with authority and knowledge.

This is perhaps why they are prone to experiencing Maths-trauma and tend to gravitate towards the humanities over science. Because whilst one can substitute ‘skills’ for knowledge in other domains, both Maths and Science still require a commitment to the memorisation of knowledge in order to get to grips with the next level of the pyramid of knowledge. This is how the mystique of critical theory comes in so handy when they reach university, because it gives them a prepackaged excuse for why they inevitably fail when they go out into the world.

The simple fact is that they have been lied to all their lives. Most organisations don’t want their thoughts, opinions or ideas, they want their labour. This might be acceptable if they had been taught to see service to others as something inherently valuable- to anticipate the pleasure a chef feels when he ends his shift in the bar with a drink, and gets to hear the delight of his customers with his days efforts. But this is not what they have been trained to want or expect.

They want to have impact. They have been taught all their life that there ideas will be valuable and important, when it takes huge amounts of effort to just be able to make a small contribution to someone else’s pet project for incremental improvement. If they have a certain gift with words or possess in inherent charisma, they might possess the requisite abilities to enter journalism or become an influencer, where they get to pass comment on subjects that they know nothing about, acting as cheerleaders for politicians, or leading a group of similarly inclined dimwits, but these sorts of roles really are a zero-sum game, because they rely upon a hugely disproportionate imbalance between commentators and listeners or readers.

Against this backdrop of being lied to their entire life, is it any wonder that they end up feeling disabused and resentful. And its not as though their more able, less ideologically committed teachers knew any better, because most lack experience in the real world and do not realise that their own role is a necessarily protected throwback to a softer Keynesian imagining of society, where full employment required that people make do with less, materially, in return for a measure of employment security for most.

So they tend bar, wait tables or serve coffee as baristas, with some waking up to the knowledge that they will require technically specific knowledge for careers. Many more wallow in the unfairness of the world, mired in student debt from courses with little practical application and stuck in low paying service jobs, having swallowed the oppressor and oppression narrative. They fail to recognise that they have been sold a line from the very beginning, and instead blame entrenched interests for their own lack of impact, when those who have succeeded simply had the luxury of parents who were more brutally honest about their future prospects in the world, and the requirement to acquire huge masses of knowledge to be of any relevance in the world.

We could have taught them to be entrepreneurs, to risk everything repeatedly for the chance to own their own little enterprise somewhere, bringing retail joy to others. Or scientists, doctors, lawyers and engineers. But we didn’t, because we didn’t want to acknowledge the basic truth of the world, instead opting for a second chance at success through vicarious immortality. The system requires inequality, both in terms of income, but far more importantly in terms of our ability to have impact in the world.

At its most basic and material level, inequality is necessary because a huge portion of any society relies upon it for labour. Consider the gardener and the doctor, where the gardener is still part of the native population. There should a substantial gap in the hourly earnings of the doctor and the gardener. Why? Well because the doctor has to invest a substantial part of their twenties getting qualified, often stacking up huge amounts of debt in the process. The gardener can start work at 16, and by 25 if they are smart they will have taken on a couple of lads to supplement their income.

The gardener may have to work a few hours to equal even a relatively short amount of the doctor’s labour, but this doesn’t mean the process is unfair or unequal, because their labour intrinsically holds different value. The gardener is happy when he takes his daughter to the doctor and he prescribes pills that cure her sickness, and is happy to get paid for tending the doctors garden. Economic transfers can be used to equalise this basic inequality, but not as much as many liberals would like.

They don’t seem to understand that most restaurants would shut if there wasn’t inequality, that the gardener would be unemployed, or the doctor would need to pave over her lovely garden with concrete to save time from her busy schedule. That there wouldn’t be coffee shops offering high quality coffee, or that cinemas would need to dispense food and drinks from machines, to stay open. They don’t understand all of this because they weren’t adults before the seventies (or the fifties in America).

There is a flaw in capitalism, but it is not one they are psychologically inclined to look for or to deal with. The flaw actually lies in exactly the area they obsess over, but is a fundamentally different problem from the one they imagine. The fact is that people are unequal, often hugely so, despite our urge of some to not want it to be so and despite our best intentions to treat everyone equally under the Law. The flaw in the market is, if we leave it to itself, the competition inherent to the market will leave a significant number of people unable to compete, dispossessed and a burden on our collective resources through taxation.

We need to ask ourselves some fundamental questions about whether it is wiser to select the most able for a job, or the best suited. At the top rungs of society, this is a no-brainer- because the most able candidate will inevitably achieve much better results over time, than the next most able. It’s a simple Law of the Pareto distribution, and one which has been proven time and again in any number of enterprises and institutions. But in the bottom 60% of the talent and ability distribution, this may not be the case.

We need to ask ourselves what is the wisdom in requiring a farrier to sit a written exam, when this necessarily squeezes someone who is perfectly able to do the jobs out of the market, and effectively making it the province of someone too able? The boss in the bar needs to ask himself whether hiring someone who is 10% faster and requires less supervision, is really that a smart a move, if they are likely to get bored after a year, requiring the added expense of training someone new. A more loyal, but initially less able employee might be a better fit, when we understand that the cognitively less able can come to match their more gifted counterparts over time, with less demanding roles.

All of this requires a sea change in corporate ethos, and the way we as a society understand problems. It requires a fundamentally more truthful and realistic understanding of the way we view the world, and the people in it.

It will also require a fundamentally different approach it the way corporate organisation view the moderately talented young. Instead of holding them back and helping them come to a realisation of more modest ambitions, in order to hold them captive to the workforce, we will need to give them skills and knowledge in surplus. We mus then be willing to throw them out of the corporate nest to fly or fall, when they are surplus to requirements- in the hopes that they will be brave enough to start their own ventures, rather than taking the safer approach of finding a new employer. Small businesses can be huge source of labour, after all, and their inherently smaller hierarchies tilt towards greater agency and initiative for subordinate employees.

The pay-off is huge whether you are a Republican or a Democrat. For the Republican, the 10% to 15% of revenue saved by such a societal shift could be used to pay down the deficit, or could be spent on more police and better courts. For the Democrat and liberal the resources saved in this cultural shift could be used to facilitate all sorts of programs which target one of the main sources of inequality- the disparities which occur in early childhood development.

Of course, none of this is likely to happen because pigs might fly before the conservative and liberal makes common cause, and understands to true threat on the form of the ascendant Marxist. We could develop a society that is both intrinsically more humanist in its liberal doctrine, and more persuasive in terms of traditional values. All that is requires is to recognise the fundamental differences which emerge from nature and through nurture, and the huge gulfs in human potential which this causes. We need to understand any hyper-efficient and well-oiled machine needs both big cogs and small ones to make it run.

The American Progressives have been engaged in a ‘long march’ which began a long time before Gramsci coined the fashionable term. (Gramsci himself was not available in English till the 1970s in America.) The Progressive counter revolution against liberalism, it could even be said, was seeded in the Philadelphia convention itself. Hamilton walked away from the convention, because the new constitution was not Progressive enough for his taste. The oscillation between Jeffersonian and Hamiltonian politics continued until the North-South war.

Since then, the Hamiltonians have engineered an absolute hegemony, and the pendulum no longer swings in the Jeffersonian direction. With each suceeding generation, the US have transmogrified from a liberal, federal republic into a fascist, unitarian republic. The ethos of a society does not change overnight. Even today the ghostly semblance of the former liberalism is perceptible. On the whole, however, liberalism is commonly understood to mean a vacuous infinity of tolerance. Homosexual marriage is today the signal achievement of liberalism that is trumpeted abroad—-with pride.

The word, liberalism, may still be in use, but its meaning has been evacuated entirely a long time ago. This is why nothing but feeble whining, and futile hand wringing is all that liberals have to offer by way of counter argument to communism. They have not defended liberalism on principle, for a very long time. I suspect, few liberals today could articulate its principles to my satisfaction, let alone Mr. Jefferson’s. Private property, freedom of association, and equality before the law are three of the fundamental principles jettisoned long ago.

There are secondary principles too, inseparable from the proper execution of the primary, that have been tossed overboard. Sound money being one. For principle has been substituted a buffet of pragmatic compromises restrained by nothing if a majority of votes has been secured. There is now a Byzantine administrative state devouring the substance of these United States with ferocious zeal. We are more taxed, more regulated, more licensed, more permitted, and generally pushed and shoved around than at any time in the history of the European settlement in America. Our money is inflated endlessly to finance the corporate state. In short, we are treated like the indentured serfs we are. This is what the voters asked for, in their customary stupidity.

What exactly is liberal about any of this? That some liberties in the Bill of Rights are still upheld in court? Well, you had better have the money to hire suitable professional counsel, if that is where you hang your liberal hat. No, liberalism is a word. Its substance is no more. Liberty perished long ago.

We have progressives. Plenty of them. The difference between Progressives and Marxists is nothing more than subjective, aesthetic preference. No essential question of principle divides them. They are united on principle. They part company only on questions of when, and how much violence they must use. That is to say, once the monopoly on power is captured, the whining and hand wringing progressives will be the first to be murdered off.

This is what is called liberalism today. Do I exaggerate?

Calling them Marxists is just as silly as them calling us racists.

The article isn’t about calling them Marxists. It’s pointing out that modern progressivism seems to be leading towards Marxism. That a core group of Left wingers already identify as Marxist and that more of the Left is moving in that direction and away from individual liberty.

And no it’s not like them calling the Right racists. Very few members of the Right self identify as racists. Most of the Right is explicitly against racism. The Right is not moving towards racism. There’s no calls from the Right for segregated buses, lunch counters, not allowing blacks to vote, etc. Liberals are using the racist label well outside the common definition of racism. Furthermore, they refuse to admit that many of their policies (affirmative action, mandatory diversity, etc) are explicitly racist. Whereas, the right doesn’t have Marxist policies of any significance. So that’s not a close analogy.

I will agree that often times the Marxist label is used incorrectly, however, it’s very clear that prominent BLM agitators are literally Marxists. The Left is calling for radical change, including the suppression of speech, bypassing the judicial system, expropriation of assets (wealth taxes to fund reparations, universal income, etc). It’s also clear that some percentage of social science professors are literally Marxists. Furthermore, a much greater percentage are allied with the Marxist professors than are with any conservative movement.

The equivalent epithet would be calling the Right capitalists. But of course, the Right isn’t denying that.

Looks like I can scratch one Quillette submission off my list. I’ve been part of the reluctant audience for the Marxist-liberal dance since I witnessed the first performance as a undergraduate in the late 90s. The liberal was always the submissive partner, the Marxist always the dominant one.

Like Hazony, I believe that turning the tide depends on waking liberals up to what’s going on around them. But I’ve become pessimistic. From then until now I’ve tried to persuade liberal friends and acquaintances that they’re being pressed into the service of a illiberal cause, being turned into something they are not. As I’ve pointed out here many times before, however, they don’t get it until they themselves are bitten by the beast. The JBPs, Haidts, and Bret Weinsteins only woke up after they’d become progressive targets.

All the same, one must soldier on.

As a liberal who believes that group hierarchies should not exist and that everyone should be judged as an individual with equal individual rights, why would I ally with conservatives like this author who openly argues that group hierarchies exist, are inevitable, and are desirable?

The fact that they are inevitable pretty much takes the question of desirable off the table; the question then is how to create a society that functions well while acknowledging that there are aspects of human nature that are sometimes good, and sometimes bad.

The difference is that Marx claimed to have discovered an oppression which contains its own negation – the proletariat is driven to overthrow the bourgeoisie, thus abolishing itself. This theory may be completely wrong, but it’s also completely unlike intersectionality, which compiles a list of minorities (plus women) with a grievance, and claims that their complements (eg. straight white men) gain from their oppression.

Marx’ idea is completely wrong, as with most things he said or did. The proletariat doesn’t rise up to overthrow the bourgeoisie. The proletariat seeks to BECOME the bourgeoisie. And they do, continuously.

Marx adherents and followers have always been the disaffected intelligentsia, the idiot worshipers of ‘smarts’ who think that just by having the trappings of a thing, you have the thing. The perpetual college students. The sons who won’t inherit. Trust fund kids.The people deprived the privilege of title.

Intersectionality, critical theory, feminism were all created because Marxists could not, no matter how they tried goad a class war in the US, no matter what riches or freedoms they promised.

So they apply the same rhetoric to race, sex, and ethnicity. If they can’t get class war, they’ll settle for race war.

Because the point isn’t race or class.

The point is getting them the trappings of power, with which, they believe, they can decree leftist utopia.

And they do this over and over. And they fail, over and over.

Because there’s no plan beyond getting their hands on the trappings of power. They truly believe they can decree all they want–because they believe that this is what those in power do now.

The USSR was a maggot-state almost from it’s inception, feeding on the corpse of the Russian Empire and any other states it could consume. Why?

Because the people in charge had absolutely no idea how to make anything they promised real. They have no grasp of economics, of statecraft, of science–of anything.

And they’re no different today.

As one of the few Christians who raise their heads up often on QC, I want to say that the views Hazany expressed fit very much into the feeling and discussions going on for decades in Christian circles (maybe other religions too, but I have not been privy to those). ‘Conservative Christians’ (not far right, I am talking of those wishing to preserve the Judeo-Christian values the US was founded on), have been aware of, and unfortunately not very good at stopping, the slide towards Marxism/Progressivism, THROUGH ‘liberalism’. Or at least what liberal meant 50 years ago to those 60s activists.

The ‘battle’ at the beginning, was in the 60s, then between ‘liberals’ and conservatives’, with the feminists wanting to blow up the system. I never had thought of that as Marxian or Postmodern before recently. They demonized stay-@-home moms (the ‘women’s movement’ specifically never Included them – read about Phyllis Schlafly or watch Mrs. America, the 9 part series on her), added the beginnings of gay rights, ‘reproductive rights’ (wordsmith at work as ‘abortion’ is a pretty rough term), pro-choice’ was even better – who isn’t for ‘choice’? Wait, who isn’t for Black Lives Matter? Of course we are, but we know the words are just a manipulation towards an agenda. Case in point, activists just got arrested for painting on the street ‘unborn black lives matter’… Crazy land…

The 60s also had MLK, which was big social change, yet his cause was rooted/based on Christianity. He said we needed more Christianity to fix the racial problems. Imago dei and all that. Sure some Christians in the south took issue with him, but by and large, Christians ‘got it’ that the racial problem needed to be fixed, and were on board with it socially, as well as theologically. It had substance. A foundation. @Obamawasafool I can hear an ‘amen’ from your non-Christian corner.

Then on to the 70s and the destructive self-actualization mantras of ‘I’m ok, you’re ok’, which implies you are fine how you are, so accept it – not just you, but EVERYONE has to accept it – this flies in the face of Christianity which would nuance that to say ‘I’m not ok, neither are you, but God created us on purpose to be how we are now, but He loves us too much to leave us that way.’ Jordan Peterson also alludes to the psychological and existential need for goals, motivation and improvement, but the social strategies of the last decades have left us empty, as God was removed by the ‘then’ liberals in school and society. Christians tried, but failed in keeping the foundation in tact.

But, as Hazany said, the liberals of old now find themselves side by side with the Christians trying to defend the basic concept of liberalism as it applies to democracy. And many are shocked. The Christians aren’t. I have been fascinated by how much I agree now, versus 30 years ago with ‘typical liberals’ like gay marriage proponents, Berkeley-esque free speechers, etc.

I think the article does much to bring into relief what we are dealing with on the other side of our democracy, and we free thinkers (not too free, you classic liberals, or that might lead to ‘burning the system down’ like the infection in the universities did), need to develop tools (or weapons) to successfully defend our hard fought liberal democracy in the west. If we don’t, I fear my teenage kids will not get a chance at life, compared to me.

Notwithstanding that I also believe God does know what is going on, and I have some comfort in that belief – while still looking ahead to see what looks like to be the next thing to be done to improve the lives of mankind.

Public schools are so ubiquitous and ingrained in American culture that one could easily be forgiven for thinking that we, as a nation, have always had them. However, public schools are a relatively recent invention. Federal funding for public schools is a recent anomaly, dating back to the days of President Jimmy Carter. His successor, President Ronald Reagan, famously tried to dismantle the Department of Education to no avail.

Public schools being an arm of the state are indoctrination centers. This becomes increasingly true as basic skills such as the old “three Rs” of “reading, writing and ‘rithmatic” are jettisoned in favor of climate change, critical race theory and gender ideology – all of which are now part and parcel of a public education in the United States. As if this weren’t troubling enough, public schools are largely funded by property taxes on housing. These taxes, which are paid generally on a bi-annual basis, are confiscated from people whose children do not even attend public schools. What’s more, these taxes require people to effectively pay rent on owned property under penalty of losing their homes.

We do not have to look far for an alternative to the world of public schools. Throughout most of American history, education has been the purview of parents, the church, and other private institutions. The rise of public education in the United States is a story of violence and coercion that is largely hidden from the public record. After reading this, you will never view public schools in the same light ever again.

Table of Contents
Public vs. Private vs. Vouchers: How It All Works
The Pre-History of Public Schools in the United States
Private Schools: A Refuge from Statism
A Brief History of the Department of Education
How Federal Education Funds Are Allocated
How Public Schools Indoctrinate
Freedom of Education: In the United States and Abroad
Public vs. Private vs. Vouchers: How It All Works

Before we get into the meat of the matter, it is worth explaining some things about public education, private education, the voucher system, and how each of these works.

5.7 million students are enrolled in private schools, approximately 10 percent of all students in the K-12 system.
Between the year 1991 and 2015, the proportion of non-religious schools in the United States has grown greatly, from 14.8 percent to 21.8 percent.
Catholic schools are still the leader, but their market share has declined significantly from 53 percent to 38.8 percent.
In 2016, 1.69 million children were homeschooled, making up 3.3 percent of all children of school age.
This is an explosive growth from the year 1990, when only 250,000 children were educated at home.
As of December 2016, there were 14 states with traditional school voucher programs.
Other private market alternatives to school vouchers include tax credits and education savings accounts.
When these are added into the picture, there are 27 states with some kind of educational choice program.
All told, 10 states provide vouchers for children to attend private schools as of 2019. Vouchers are either coupons directly paid to private schools or tax credits that reimburse parents at tax time. President Donald Trump has said that he wants to distribute $20 million in federal education dollars as block grants to states that would take the form of school vouchers.

The Pre-History of Public Schools in the United States
The History of Private Schools: How American Education Became a Political BattlegroundUnsurprisingly, public education in the United States was primarily a regional phenomenon in the earliest days. New England was known as one of the first places with public schools. However, these were not “public” in the sense that we think of public schools today. First of all, the schools were not compulsory. While Massachusetts and other New England states did have compulsory education laws, these did not mandate the use of the public schools nor any other education method for that matter. They only required what was called “proper education,” which in many cases might not have included basic literacy.

In the South, tutors were the most common means of education for the planter class. During the colonial period, it was not uncommon for such upper-crust Southerners to send their children overseas to England and Scotland for their education at a boarding school.

For the most part, where people received formal education, it ended at eighth grade. Secondary education was not commonplace for the majority of Americans until the mid-20th century. According to A Cyclopedia of Education (4 vol. 1911), every state had some kind of publicly funded elementary school education by the year 1870.

Teaching was not a profession most sought out. It was mostly work for single women who lived in the school district. The primary qualification was knowing how to make the most out of the limited tax resources available to the schoolmaster. With the development of two-year normal schools (career academies for unmarried middle-class women), teaching became increasingly professional. There were now specified training academies for teachers. According to Jurgen Herbst in The Once and Future School: Three Hundred and Fifty Years of American Secondary Education, most public school teachers in Northern states had degrees from normal schools by the year 1900.

The important thing to note is that prior to the establishment of compulsory education in the United States, there was greater freedom for parents to determine how best to educate their children than probably anywhere else in history. Teachers were not required to have certificates. Licensing boards did not exist, nor did regulatory bodies.

Even in the early days of public education, there was much more freedom, even for those who attended public schools. The entire curriculum, as well as the person teaching it, were under the control of the local school board, not federal or colonial bureaucrats. Part of this flowed from the Puritan/Calvinist ethic. There was no central authority when it came to determining the meaning of The Bible. Nor was there any central authority for education, for many of the same reasons.

Upon the establishment of the United States, only one American city had a public education system, and it was not a “system” in any sense we would recognize today. First, it was not compulsory. Primary education was largely left to the private “dames schools.” Literacy was required to enter grammar school at the age of seven. What’s more, the trend was toward more private schools. Most people throughout the commonwealth preferred private schools, with the exception of Boston and it’s Boston Latin, which was widely respected as an elite education institution and feeder to Harvard University (which was founded in part with a public grant).

In 1818, Boston began its push to shutter the popular private schools and force the state’s children into compulsory, publicly funded schools. There was too much juvenile delinquency, and this was linked to a lack of compulsory education. A committee appointed a subcommittee (of course) and a survey of the state’s educational system was carried out. Here’s what it found:

The eight public schools in Boston had 2,360 pupils.
The 150 private schools shared over 4,000 pupils between them.
Of children between the ages of four and seven, 283 children did not attend school.
Of children over the age of seven, 243 attended no school.
A couple of extrapolations spring out from this. First of all, over 90 percent of Boston’s children were in some kind of school. What’s more, the private schools offered a much lower student-to-teacher ratio on average than the publicly funded schools. Finally, charity schools existed to cover the needs of pupils whose families could not afford either private or public schools, which, at that time, collected tuition fees in the same manner public universities and college do today.

The solution was not to provide subsidies for the children whose parents could not afford the public and private schools which already existed. Instead, Massachusetts embarked on the radical enterprise of forcing every child into the public school system – every child, that is, other than those who could afford to go to the elite private academies that were de rigueur for the bluebloods of Boston.

Screaming children were literally ripped from the arms of their parents and sent off to public schools. As if this were not horrifying and totalitarian enough, the new public schools of Massachusetts largely disseminated the Unitarian religious philosophy which had ousted Calvinism from Harvard in 1805. Further, they looked to the Prussian school system – centralized, with truant officers, grades and uniform curriculum – as their model for what public education ought to look like.

Thus, in 1852, Massachusetts became the first state to mandate compulsory education of children in primary school. New York became the second state in 1853. By 1918, all American children were required to go to school at least through eighth grade.

Private Schools: A Refuge from Statism
The History of Private Schools: How American Education Became a Political BattlegroundNot everyone sent their children to the new public schools. However, it became increasingly more difficult to open private schools. Where once there were no regulations, now there were a host of regulations designed to make private education of children difficult and public education easy.

An extreme example of this is when German-language schools were shuttered in the propaganda lead up to the United States’ entry into the First World War. At this time, Germans were the largest minority in the United States. What’s more, German was used as a lingua franca for members of both the Jewish and Austro-Hungarian diaspora living in the United States. Thus, many in the United States took part in public and private German-language schools.

In a real-life example of what a nationalization of education in the United States would look like, all of the German language schools were shuttered, state by state. This targeted not just German-language schools, but also German literature, German citizens’ associations and even the instruction of German in schools. In 1916, the number of students studying German was 25 percent. Five years later in 1921, a scant one percent of all schools taught German at all.

Many of the German-language schools were independent of the public school systems. At the outbreak of World War I, they were painted as a sort of Third Column for the German Empire. When they were shut down, they did not recover and an entire way of life went away with them – the rich German culture, which had existed in the United States since colonial times.

There is a more recent example of the government shutting down schools. After integration, there were a number of so-called “segregation academies” set up by parents who did not care for the quality of the newly integrated schools. Their existence was invalidated through both statute and court rulings, culminating in Runyon v. McCrary (1976), the Supreme Court decision mandating that private schools could not discriminate on the basis of race. Previously, activists had used the courts to remove the tax exempt status of schools using such criteria for admission.

None of this requires a moral defense of the positive value of segregation. It is simply to point out that, much like the shuttering of German language schools and so-called “segregation academies,” the shuttering of private schools will likely come with a heavy dollop of political witch hunt attached to it. View how the media began pillorying Second Lady Karen Pence as somehow bigoted and backward for teaching art at a private Christian school – quickly pivoting to targeting Covington Catholic’s students for the crime of smirking while white.

A movement against private schools and homeschooling in the United States will likely be coordinated by the government along with the corporate media, which acts as a sort of de facto official propaganda service.

A Brief History of the Department of Education
The History of Private Schools: How American Education Became a Political BattlegroundThe state’s mechanism for school takeovers is already in place – the Department of Education (DoE), created in a fairly transparent quid pro quo between then Democratic Vice Presidential nominee Walter Mondale and the National Education Association (NEA), the largest labor union in the United States. This was the first endorsement it had ever given for a presidential candidate, support that they renewed in 1980, when Carter ran for re-election against anti-DoE candidate and future President Ronald Reagan.

One of Ronald Reagan’s most public and high-profile failures was his inability to destroy the DoE. There was very little enthusiasm for the creation of the Department of Education. However, there was virtually none – other than Reagan and his Secretary of Education appointee Terrel H. Bell – whose sole mission was to dismantle the Department and replace it with something more like the National Science Foundation.

Roughly 35 years later, the budget for the entire Department of Education stood at $70.7 billion in 2016. This did not include an additional $75 billion in pre-K education over the course of 10 years.

This is mostly spent on pushing a far-left agenda. The Mises Institute has thoroughly documented the 35 years of leftist bias at the DoE. Much of the civics curriculum is dedicated to a denunciation of America’s Founding Fathers, and a focus on slavery, racism and colonialism. The United States Constitution is not a core part of the curriculum. Great works of American literature are routinely barred in the public schools, including The Adventures of Huckleberry Finn, Moby Dick, and The Great Gatsby.

It’s worth briefly noting that the National Education Association is the largest union in the country and wields an enormous amount of power when it comes to education policy in the United States. After all, they got a cabinet-level department created. They have been effectively able to prevent merit pay for teachers – credentials count more than performance when calculating pay. In many states, union membership is effectively mandatory, in as much as teachers are bound by collective bargaining agreements.

Between 2004 and 2016, political donations by teachers unions grew from $4.3 million to $32 million. 94 percent of all contributions, going back to 1990, went to Democrats.

How Federal Education Funds Are Allocated
As one might expect, the entire process for allocating funds to schools is Byzantine and difficult to understand. All told, states and local schools aren’t really relying on federal funds to get kids educated – most of the money for public schools comes from pernicious property taxes, whereby the government effectively requires you to pay rent on property that you already own. Approximately 10 percent of state education budgets come from the federal government.

Funds aren’t allocated in any systematic way. They’re allocated on the basis of State Education Agencies (SEAs) filing what are basically grant requests from the federal government, based on anticipated “needs.” Some income formulas are used in this process, but they do not represent the whole of how funds are allocated. The SEAs allocate their funds largely on the basis of income, to what are called Local Education Agencies (LEAs). These agencies then allocate funds using no less than four different formulas based on income and census reports.

The final result is that money is allocated for schools in a manner that favors the least well performing. This is very much in keeping with the radical, left-wing, redistributionist agenda of the teachers unions. In the American public education system, there is simply no mechanism in place that encourages excellence. There is only a system which rewards mediocrity – the ability to pass a standardized test that, it’s assumed, “everyone,” from the smallest town in rural Mississippi to the ritziest neighborhood in Manhattan, ought to be able to pass at the same rates.

Some states allocate need based on a “per-pupil cost.” Perhaps somewhat unsurprisingly, the highest figure can be found in our nation’s capital: the District of Columbia gets $19,000 a head for its public school students. Some businesses exist to help school districts navigate this difficult process to get the biggest share of federal funds possible.

This is now the prerequisite to getting into college – passing the standardized test. It’s worth noting that the largest expenditure of federal funds on education is the Pell Grant, which has devalued a college education significantly while driving soaring tuition fees.

How Public Schools Indoctrinate
Beyond all their other problems, public schools are also a mechanism for indoctrinating children in far-left, anti-Christian and anti-American ideologies. While it’s often clear how this works in higher education, with its coterie of Marxist professors, it is less clear how it works in primary and secondary education. Indeed, many parents who are otherwise skeptical about the role of the government in their lives might not know that even the humble public elementary school is where the far-left indoctrination begins.

There is no shortage of extreme examples of this. For instance, four states currently require “LGBT history” to be taught. You can easily find curricula for teaching transgender ideology in elementary schools online. Elementary schools have likewise begun teaching young children about “white privilege” ideology. While all of these examples are extreme, they are worthy of note. California, because of its size, often determines what is taught in classrooms all across the nation, because textbooks must sell there. What’s more, what is taught in public schools in San Francisco and New York today will almost certainly be taught in your town in just a few short years thanks to the sheer “demand” (if we can even call it that) created by the captive public school markets in these areas.

However, there is a more important issue of the role that public schools play in indoctrinating children more generally than any one specific and extreme example. It is necessary to pull back a bit from the individual examples of our children being indoctrinated in values hostile to our own and be critical of the role that public schools play in indoctrinating children more generally.

First, we should talk about what we mean by “indoctrination.” This does not simply mean “teaching children things we do not like.” We mean imparting ideological information as knowledge without any regard for critical thinking skills. It is the latter part of this that is the most important: That critical thinking skills are not taught, but an agenda. The lack of thought is key: Young people are given a world view by another rather than working it out through their own reason using available facts.

The alternative to this is not introducing conservative or libertarian texts. This will only deepen the public education system’s role as a propaganda outlet and will mean more political football with public schools. What’s more, there is no reason to believe – that is, there is no evidence – that public schools can be anything more than indoctrination centers for the prevailing ideology of the time. No less an authority than John Stuart Mill opposed state education on these grounds.

We should note that it is not necessary to prove that all or even most teachers are actively pursuing a certain agenda. We must only note that the left-wing agenda has powerful proponents within the teachers union and the Department of Education.

We must also stress that the problem is one much greater than simply your children or another’s being indoctrinated with a hostile ideology. The problem is a social one that leads to entire generations not only vehemently opposed to Christianity, America and freedom, but also entirely bereft of the critical thinking and formal logic skills necessary to “think” their way out of the box.

To see the real-world consequences of this for society at large, one need only turn on the news. We are reaping the results of ideological indoctrination sown for the better part of the last 50 years.

Freedom of Education: In the United States and Abroad
The History of Private Schools: How American Education Became a Political BattlegroundThe United States enjoys a great degree of freedom of education when compared to other countries. This is particularly true in Continental Europe, where homeschooling is either extremely difficult, highly regulated, or completely verboten. In many cases, where private schools flourish and homeschooling is allowed, there are public resources available for those who choose to educate their children outside of the state-sponsored school system.

While this might seem like another government handout, the reality is quite a bit more nuanced. Tax victims – which is the proper name for what is commonly labeled the more misleading “taxpayer” – have a prior claim on the resources extorted from them through the method of so-called “property taxes.” That they would make some effort to reclaim this money, which is extorted specifically for the purpose of statist indoctrination, is not untoward, nor is it any extortion on their part. As long as public schools exist and property taxes are used to pay for them, those who pay such taxes have a right to access the funds, even if it is through tertiary channels such as vouchers and grants.

Indeed, the usual suspects (teachers unions and educational authoritarians) oppose vouchers for private schools and homeschooling. Such programs, while they might take the form of a government grant or subsidy, break up the state school monopoly and contribute to a larger educational marketplace. As they are earmarked specifically for private market schools (or exiting the market entirely through homeschooling), they are, in fact, a superior form of educational freedom to charter schools, which simply provide a greater choice of schools under state fiat.

The United Nations is, unsurprisingly, not a supporter of either private schools or homeschooling. The rights of parents to educate their own children, whether at home or in a private education institution, is limited by the United Nations Convention on the Rights of the Child. Law professor David M. Smolin has written on this subject. The rationale is that children have a “right” to education, one that can only be provided by an allegedly impartial state. Their parents, goes the argument, could potentially interfere in the education of their own children.

Fortunately, the United States is not a signatory of the United Nations Convention on the Rights of the Child.

And it is, of course, worth noting that homeschoolers typically exceed their government school counterparts in virtually all respects. In fourth and eighth grade reading and math, Catholic schools significantly outperformed public schools for both proficient and advanced students. A Cato Institute report stated that private schools out-performed public schools with regard to graduation rates, college matriculation, future income and parent satisfaction. This is not surprising, as homeschooled children and privately educated children exist in a bona fide marketplace of ideas. The publicly funded government schools show barely any divergence in terms of what they teach. This is increasingly true thanks to programs like “No Child Left Behind” and Common Core, both of which mandate a very narrow set of ideas and concepts to be taught in public schools.

Whether or not to educate one’s children in the government school monopoly is a choice every family must make. But, as with any important decision, parents should take into account the totality of the facts. The history of public education in the United States is one of coercion, extortion, and indoctrination.

Beyond such ideological objections to the government school monopoly, private schools tend to be safer, less violent, and better performing than their government alternatives. After all, who is going to choose to spend money on a school where their children are subject to violence, poor education standards, and constant grooming for the police state in the form of what are now ubiquitous active shooter drills. As the Cato Institute points out, there are 30 years of consistent evidence that private schools, beyond simply providing a better learning environment through safety and greater alignment with parent values, also provide a higher quality of education.

Even though not every family can afford a private education, private schools and homeschooling should be considered as a serious alternative. Evaluate the cost and benefits of homeschooling from the perspective of a loss of income. Find private grants and scholarships, in addition to the vouchers you might be eligible for. The point is to think flexibly about it and see if this is indeed an option for your family.

Even where the cost is great, the tradeoff for removing your child from the government school monopoly might be well worth it.

Written by
Sam Jacobs

The most noteworthy thing about the Democratic convention last week was their failure to mention ANYTHING about the rioting and looting in cities run exclusively by their party. It’s the mentality of dictators. They refuse to speak of failures of their policies. President Trump speaks openly of Democratic failures. He gets called a “racist”. It’s what tyrants do. They blame and condemn anyone who criticizes them. And once they have enough power, they imprison and murder anyone who criticizes them. Just ask the people of Hong Kong, who now fully live under China’s one-party dictatorship.

With our own version of the Chinese Communists, the Democrats, ALL the signs are there. Voting for President Trump is your only option. If you fail to get out and vote, and instead wait for the perfect candidate eventually to emerge, you will soon find the dictators are in charge, or perhaps worse, a civil war has broken out beyond American cities. President Trump and Republicans need a landslide. A blowout. Nothing less will push back America’s totalitarian leftists. They will still never give up. The battle for freedom is never over. VOTE. As if your life depends on it.

Michael J. Hurd

Marx assumes tacitly that the social condition of a class uniquely determines its interests and that there can be no doubt what kind of policy best serves these interests. The class does not have to choose between various policies. The historical situation enjoins upon it a definite policy. There is no alternative. It follows that the class does not act, since acting implies choosing among various possible ways of procedure. The material productive forces act through the medium of the class members.

But Marx, Engels, and all other Marxians ignored this fundamental dogma of their creed as soon as they stepped beyond the borders of epistemology and began commenting upon historical and political issues. Then they not only charged the nonproletarian classes with hostility to the proletarians but criticized their policies as not conducive to promoting the true interests of their own classes.

The most important of Marx’s political pamphlets is the Address on the Civil War in France (1871). It furiously attacks the French government which, backed by the immense majority of the nation, was intent upon quelling the rebellion of the Paris Commune. It recklessly calumniates all the leading members of that government, calling them swindlers, forgers, and embezzlers. Jules Favre, it charges, was “living in concubinage with the wife of a dipsomaniac,” and General de Gallifet profited from the alleged prostitution of his wife. In short, the pamphlet set the pattern for the defamation tactics of the socialist press, which the Marxians indignantly chastised as one of the worst excrescences of capitalism when the tabloid press adopted it.

Yet all these slanderous lies, however reprehensible, may be interpreted as partisan stratagems in the implacable war against bourgeois civilization. They are at least not incompatible with Marxian epistemological principles. But it is another thing to question the expediency of the bourgeois policy from the standpoint of the class interests of the bourgeoisie.

The Address maintains that the policy of the French bourgeoisie has unmasked the essential teachings of its own ideology, the only purpose of which is “to delay the class struggle”; henceforth it will no longer be possible for the class rule of the bourgeoisie “to hide in a nationalist uniform.” Henceforth there will no longer be any question of peace or armistice between the workers and their exploiters. The battle will be resumed again and again and there can be no doubt about the final victory of the workingmen.1

It must be noted that these observations were made with regard to a situation in which the majority of the French people had only to choose between unconditional surrender to a small minority of revolutionaries or fighting them. Neither Marx nor anybody else had ever expected that the majority of a nation would yield without resistance to armed aggression on the part of a minority.

Still more important is the fact that Marx in these observations ascribes to the policies adopted by the French bourgeoisie a decisive influence upon the course of events. In this he contradicts all his other writings. In the Communist Manifesto he had announced the implacable and relentless class struggle without any regard to the defense tactics the bourgeois may resort to. He had deduced the inevitability of this struggle from the class situation of the exploiters and that of the exploited. There is no room in the Marxian system for the assumption that the policies adopted by the bourgeoisie could in any way affect the emergence of the class struggle and its outcome.

If it is true that one class, the French bourgeoisie of 1871, was in a position to choose between alternative policies and, through its decision, to influence the course of events, the same must be true also of other classes in other historical situations. Then all the dogmas of Marxian materialism are exploded. Then it is not true that the class situation teaches a class what its genuine class interests are and what kind of policy best serves these interests. It is not true that only such ideas as are conducive to the real interests of a class meet with approval on the part of those who direct the policies of the class. It may happen that different ideas direct those policies and thus get an influence upon the course of events. But then it is not true that what counts in history are only interests, and that ideas are merely an ideological superstructure, uniquely determined by these interests.

It becomes imperative to scrutinize ideas in order to sift those which are really beneficial to the interests of the class concerned from those which are not. It becomes necessary to discuss conflicting ideas with the methods of logical reasoning. The makeshift by means of which Marx wanted to outlaw such dispassionate weighing of the pros and cons of definite ideas breaks down. The way toward an examination of the merits and demerits of socialism, which Marx wanted to prohibit as “unscientific,” is reopened.

Another important address of Marx was his paper of 1865, Value, Price and Profit. In this document Marx criticizes the traditional policies of the labor unions. They should abandon their “conservative motto, A fair day’s wages for a fair day’s work! and ought to inscribe on their banner the revolutionary watchword, Abolition of the wages system!”2 This is obviously a controversy about which kind of policy best serves the class interests of the workers.

Marx in this case deviates from his usual procedure of branding all his proletarian opponents traitors. He implicitly admits that there can prevail dissent even among honest and sincere champions of the class interests of the workers and that such differences must be settled by debating the issue. Perhaps on second thought he himself discovered that the way he had dealt with the problem involved was incompatible with all his dogmas, for he did not have printed this paper which he had read on June 26, 1865, in the General Council of the International Workingmen’s Association. It was first published in 1898 by one of his daughters.

But the theme we are scrutinizing is not Marx’s failure to cling consistently to his own doctrine and his lapses into ways of thinking incompatible with it. We have to examine the tenability of the Marxian doctrine and must therefore turn to the peculiar connotation the term “interests” has in the context of this doctrine.

Every individual, and for that matter every group of individuals, aims in acting at the substitution of a state of affairs that suits him better for a state of affairs that he considers less satisfactory. Without any regard to the qualification of these two states of affairs from any other point of view, we may say in this sense that he pursues his own interests. But the question of what is more desirable and what is less is decided by the acting individual. It is the outcome of choosing among various possible solutions. It is a judgment of value. It is determined by the individual’s ideas about the effects these various states may have upon his own well-being. But it ultimately depends upon the value he attaches to these anticipated effects.

If we keep this in mind, it is not sensible to declare that ideas are a product of interests. Ideas tell a man what his interests are. At a later date, looking upon his past actions, the individual may form the opinion that he has erred and that another mode of acting would have served his own interests better. But this does not mean that at the critical instant in which he acted he did not act according to his interests. He acted according to what he, at that time, considered would serve his interests best.

If an unaffected observer looks upon another man’s action, he may think, “This fellow errs; what he does will not serve what he considers to be his interest; another way of acting would be more suitable for attaining the ends he aims at.” In this sense a historian can say today or a judicious contemporary could say in 1939, “In invading Poland, Hitler and the Nazis made a mistake; the invasion harmed what they considered to be their interests.”

Such criticism is sensible so long as it deals only with the means and not with the ultimate ends of an action. The choice of ultimate ends is a judgment of value solely dependent on the judging individual’s valuation. All that another man can say about it is, “I would have made a different choice.” If a Roman had said to a Christian doomed to be lacerated by wild beasts in the circus, “You will best serve your interests by bowing down and worshiping the statue of our divine Emperor,” the Christian would have answered, “My prime interest is to comply with the precepts of my creed.”

But Marxism, as a philosophy of history claiming to know the ends which men are bound to aim at, employs the term “interests” with a different connotation. The interests it refers to are not those chosen by men on the ground of judgments of value. They are the ends the material productive forces are aiming at. These forces aim at the establishment of socialism. They use the proletarians as a means for the realization of this end.

The superhuman material productive forces pursue their own interests, independently of the will of mortal men. The proletarian class is merely a tool in their hands. The actions of the class are not its own actions but those which the material productive forces perform in using the class as an instrument without a will of its own. The class interests to which Marx refers are in fact the interests of the material productive forces, which want to be freed from “the fetters upon their development.”

Interests of this kind, of course, do not depend upon the ideas of ordinary men. They are determined exclusively by the ideas of the man Marx, who generated both the phantom of the material productive forces and the anthropomorphic image of their interests.

In the world of reality, life, and human action there is no such thing as interests independent of ideas, preceding them temporally and logically. What a man considers his interest is the result of his ideas.

If there is any sense in the proposition that the interests of the proletarians would be best served by socialism, it is this: the ends which the individual proletarians are aiming at will be best achieved by socialism. Such a proposition requires proof. It is vain to substitute for such a proof the recourse to an arbitrarily contrived system of philosophy of history.

All this could never occur to Marx because he was engrossed by the idea that human interests are uniquely and entirely determined by the biological nature of the human body. Man, as he saw it, is exclusively interested in the procurement of the largest quantity of tangible goods. There is no qualitative, only a quantitative, problem in the supply of goods and services. Wants do not depend on ideas but solely on physiological conditions. Blinded by this preconception, Marx ignored the fact that one of the problems of production is to decide what kind of goods are to be produced.

With animals and with primitive men on the verge of starvation, it is certainly true that nothing counts but the quantity of edible things they can secure. There is no need to point out that conditions are entirely different for men, even for those in the earliest stages of civilization. Civilized man is faced with the problem of choosing among the satisfactions of various needs and among various modes of satisfying the same need. His interests are diversified and are determined by the ideas that influence his choosing. One does not serve the interests of a man who wants a new coat by giving him a pair of shoes or those of a man who wants to hear a Beethoven symphony by giving him admission to a boxing match. It is ideas that are responsible for the fact that the interests of people are disparate.

Incidentally, it may be mentioned that this misconstruing of human wants and interests prevented Marx and other socialists from comprehending the distinction between freedom and slavery, between the condition of a man who himself decides how to spend his income and that of a man whom a paternal authority supplies with those things which, as the authority thinks, he needs. In the market economy the consumers choose and thereby determine the quantity and the quality of the goods produced. Under socialism the authority takes care of these matters. In the eyes of Marx and the Marxians there is no substantial difference between these two methods of want satisfaction; it is of no consequence who chooses, the “paltry” individual for himself or the authority for all its subjects. They fail to realize that the authority does not give its wards what they want to get but what, according to the opinion of the authority, they ought to get. If a man who wants to get the Bible gets the Koran instead, he is no longer free.

But even if, for the sake of argument, we were to admit that there is uncertainty neither concerning the kind of goods people are asking for nor concerning the most expedient technological methods of producing them, there remains the conflict between interests in the short run and those in the long run. Here again the decision depends on ideas. It is judgments of value that determine the amount of time preference attached to the value of present goods as against that of future goods. Should one consume or accumulate capital? And how far should capital depletion or accumulation go?

Instead of dealing with all these problems, Marx contented himself with the dogma that socialism will be an earthly paradise in which everybody will get all he needs. Of course, if one starts from this dogma, one can quietly declare that the interests of everybody, whatever they may be, will be best served under socialism. In the land of Cockaigne people will no longer need any ideas, will no longer have to resort to any judgments of value, will no longer think and act. They will only open their mouths to let the roast pigeons fly in.

In the world of reality, the conditions of which are the only object of the scientific search for truth, ideas determine what people consider to be their interests. There is no such thing as interests that could be independent of ideas. It is ideas that determine what people consider as their interests. Free men do not act in accordance with their interests. They act in accordance with what they believe furthers their interests.

Author:
Ludwig von Mises

Ludwig von Mises was the acknowledged leader of the Austrian school of economic thought, a prodigious originator in economic theory, and a prolific author. Mises’s writings and lectures encompassed economic theory, history, epistemology, government, and political philosophy. His contributions to economic theory include important clarifications on the quantity theory of money, the theory of the trade cycle, the integration of monetary theory with economic theory in general, and a demonstration that socialism must fail because it cannot solve the problem of economic calculation. Mises was the first scholar to recognize that economics is part of a larger science in human action, a science that he called praxeology.

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Depression, anxiety and anger management get a lot of press, but what about bitterness? Things seem to be looking up for the bitter among us: The American Psychiatric Association (APA) has considered classifying bitterness as a mental disorder. A statistic reported at a meeting of the APA was that around 2% of the population suffers from chronic bitterness. That’s potentially 120 million sour and angry people!

Bitterness is resentment combined with anger. A bitter person feels entitled to something he or she didn’t get; maybe something specific, or perhaps something as vague as “happiness.” This feeling is “so common and so deeply destructive,” writes Shari Roan in the Los Angeles Times, “that some psychiatrists are urging that it be identified as a mental illness under the name ‘post-traumatic embitterment disorder.’ The disorder is modeled after post-traumatic stress disorder,” she continues, “because it too is a response to a trauma that endures. People with PTSD are left fearful and anxious. Embittered people are left seething with revenge.”

Bitterness is more than just anger. It validates the sense that, “I KNEW it would be this way!” Without realizing it, bitter people can bring problems upon themselves. They start out expecting trouble or disappointment, and end up cultivating a view that everyone is somehow against them. When trouble does occur, they make it more important than it needs to be.

A person who expects everything to go badly attributes little importance to the things that actually go well. This is called a self-fulfilling prophecy, where, often without being aware of it, one creates a terrible reality by assuming that reality is terrible.

The best way to overcome bitterness is to make a strong commitment to placing reality above feelings. By rising above raw emotions, one can discover the possible errors in them and view reality more accurately. Part of that is a commitment to NOT being a victim. Imagine going through life feeling the way a victim of an actual assault might feel, when in fact you’re a victim of your own distorted emotions. Bitterness is the inevitable result.

Combat that feeling by changing the way you see yourself in relation to the world. For example, “She makes me so angry” becomes, “I get really angry at her behavior. I can respond by telling her, if I choose.”

Self-fulfilling prophecies are fueled by chronic bitterness and vice-versa. To escape that vicious cycle, a resentful person must commit to thinking differently. I can hear you thinking that that’s “easier said than done,” and you’re probably right. But good mental health requires that reality take precedence over emotions when the two conflict. (Actually, I love it when people complain, “easier said than done!” It means they know we’re on to something.)

Bitterness can also be related to emotional problems such as depression. Start with the feeling that it’s not possible to exert control over one’s life, and then pile anger on top of that. The psyche then attempts to reassert itself through the anger. But, without any attempt to correct the original problem, that original feeling of hopelessness becomes bitterness.

And what about disappointment? Some people conclude from one or two major disappointments that all of life will be disappointing. On the surface, this might seem understandable, but is it rational? What do past unsatisfactory experiences have to do with people you now know, or people you haven’t even met? The only connection is in the bitter person’s mind.

Psychological health requires NOT thinking like a victim. “Look what they did to me!” can become, “I let them take advantage of me,” and “What kind of people do I want to surround myself with?” Victims feel like they have no choices, when in fact there are always choices. We have the power to confidently exercise those choices while recognizing we won’t always make the correct ones. It’s a healthy alternative to playing the victim, and it can help cure bitterness permanently.

Michael J. Hurd

NOTE: This essay is very long, but very, very good. It is divided into six sections, in case the reader wants to break it up accordingly.–A/D

Many political leaders and pundits consider wealth inequality to be a major economic and social problem. They complain about a shift of wealth to the top at everyone else’s expense and about plutocrats dominating policymaking in Washington.

Is wealth inequality the crisis that some people believe? This study examines six aspects of wealth inequality and discusses the evidence for the claims being made.

Section 1 describes how wealth inequality has risen in recent years but by less than is often asserted in the media. Indeed, wealth inequality has changed surprisingly little given the large economic changes in recent decades from technology and globalization. Furthermore, most estimates overstate wealth inequality because they do not include the effects of social programs.

Section 2 argues that wealth inequality data tell us nothing about levels of poverty or prosperity and thus are not useful for guiding public policy. Wealth inequality may reflect innovation in a growing economy that is raising overall living standards, or it may reflect cronyism that causes economic damage.

Section 3 examines the sources of wealth for the richest Americans. Most of today’s wealthy are business people who built their fortunes by adding to economic growth, and some have created major innovations that benefit all of us. The share of the wealthy who inherited their fortunes has sharply declined in recent decades.

Section 4 looks at cronyism, which refers to insiders and businesses securing narrow tax, spending, and regulatory advantages. Cronyism is one cause of wealth inequality, and it has likely increased over time as the government has grown.

Section 5 explains how the growing welfare state has increased wealth inequality. Government programs for retirement, healthcare, and other benefits have reduced the incentives and the ability of nonwealthy households to accumulate savings and thus have increased wealth inequality.

Section 6 examines whether wealth inequality undermines democracy, which is a frequent claim of the political left. Research shows that wealthy people do not have homogeneous views on policy and do not have an outsized ability to get their goals enacted in Washington.

In sum, wealth inequality has increased modestly but mainly because of general economic growth and entrepreneurs creating innovations that are broadly beneficial. Nonetheless, policymakers should aim to reduce inequality by ending cronyist programs and reducing barriers to wealth‐​building by moderate‐​income households.

1. Wealth Inequality Has Increased Modestly
Exploring Income and Wealth Inequality
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A Washington Post editorial lamented the “ever‐​higher concentration of national wealth at the top.”1 Similarly, New York Times columnist Paul Krugman expressed concern that “we are once again living in an era of extraordinary wealth concentrated in the hands of a few people … And this concentration of wealth is growing.”2

Sen. Bernie Sanders (D-VT) claimed that “in the last four decades, there has been a massive shift of wealth from the middle class to the top one percent.”3 Sen. Elizabeth Warren (D-MA) said that her wealth tax proposal “will help address runaway wealth concentration.”4

Fears about runaway wealth concentration were fueled by economist Thomas Piketty’s 2014 book, Capital in the Twenty‐​First Century.5 The book claimed that deep economic forces were allowing the rich to amass a rising share of overall wealth at the expense of workers.

Piketty’s narrative has been influential in politics, but his theories and data have not stood up to scrutiny by other economists. Martin Feldstein found that Piketty’s “thesis rests on a false theory of how wealth evolves in a market economy, a flawed interpretation of U.S. income‐​tax data, and a misunderstanding of the current nature of household wealth.”6 Alan Auerbach and Kevin Hassett found flaws in “the facts, logic, and policy conclusions in Piketty’s book.”7 Richard Sutch called Piketty’s historical data on U.S. wealth “unreliable” and “manufactured,” with some of it “heavily manipulated.”8

Examining the wealth data in Piketty’s book, columnists for the Financial Times found “errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different time periods and inconsistent uses of source data.”9 The Cato Institute published a collection of critiques of Piketty’s theories and data in 2017.10

One of Piketty’s main claims in his book was that wealth concentration is rising because returns on capital in the economy are outpacing economic growth (a hypothesis expressed as r > g). But University of Chicago scholars found that more than four‐​fifths of academic economists they surveyed disagreed with that contention.11 Another of Piketty’s claims was that as capital accumulates, capital income will become a growing share of all income, thus exacerbating inequality. However, excluding housing, the net capital share of U.S. income has actually fallen slightly since the 1950s.12

Subsequent to his book, Piketty teamed with economists Emmanuel Saez and Gabriel Zucman (referred to here as PSZ) to create a World Inequality Database (WID.world), which presents income and wealth data for numerous countries.13 For the United States, the WID data show that the share of wealth held by the richest 1 percent has soared since the 1970s. These data have been the primary source of fears about rising inequality and are frequently cited by politicians and reporters.

Few countries have collected reliable wealth data over time, so PSZ use rough estimates to create the data on their WID website. In a 2018 study, economist James K. Galbraith reviewed the WID data and found it “sparse, inconsistent, and unreliable” and “not very consistent with other reputable sources.” Piketty and colleagues have used assumptions in creating their data that are “beyond heroic,” concluded Galbraith.14 Nonetheless, the WID data are frequently cited, probably because they show the sharpest rise in wealth inequality of any wealth data.

The WID data series are constructed based on income tax return data. But tax returns are an incomplete source of income data, and they do not include any wealth data. Thus, the PSZ approach of using income tax data to measure inequality over time is only a rough estimation for numerous reasons:

Tax returns include only 60 percent of national income.15 The distribution of the other 40 percent of income across income groups must be estimated. PSZ use the capital income (a flow) reported on tax returns to estimate wealth (a stock).
Family structures have changed over time. Marriage rates among tax filers fell from 67 percent in 1960 to 39 percent in 2015.16 That change has created large and differential effects on high‐ and low‐​income tax returns.
Tax laws have changed over time, altering the income reported on returns. For example, the growth of 401(k) contributions and employer‐​provided health benefits has greatly reduced the amount of income included on returns. Since these income sources are relatively more important to middle‐​income individuals than high‐​income individuals, top income shares will be biased.17
Marginal tax rate cuts in the 1980s reduced incentives to avoid and evade taxes by high‐​earners.18 Thus, part of the reported increase in taxable incomes at the top end after those reforms did not reflect an actual increase in incomes.19
Tax‐​law changes have shifted business income from corporate to individual returns over time. The share of overall U.S. business income reported on individual returns rose from 21 percent in 1980 to more than half today.20 That shift has inflated the income reported on individual tax returns particularly at the top end.
A substantial amount of income goes unreported on tax returns, including small business income. Distribution estimates are sensitive to assumptions about who earned the missing income.21
Scholars use estimates to adjust for these and other shortcomings of tax return data. But different adjustments can lead to sharply different results. For example, widely cited data by PSZ show that the top 1 percent’s share of U.S. income increased from 10 percent to 15.6 percent between 1960 and 2015.22 That estimate is after taxes and government benefits.

However, a 2018 study by economists Gerald Auten and David Splinter found very different results, as shown in Figure 1.23 As with PSZ, they started with tax return data, but they produced more precise estimates. They found that the top 1 percent income share increased only slightly, from 7.9 percent in 1960 to 8.5 percent in 2015. They concluded that “changes in the top one percent shares over the last half century are likely to have been relatively modest.24

Let’s turn to top wealth shares. Numerous data sources are used to estimate wealth shares, including income tax returns, estate tax returns, and a Federal Reserve household survey. Figure 2 shows different estimates of the share of all U.S. wealth held by the top 1 percent.

One method of estimating wealth shares uses capital income reported on tax returns (such as interest and dividends) to estimate stocks of assets based on assumed rates of return.25 These estimates are heavily dependent on the chosen rates, such that small differences in assumptions create large differences in estimated top 1 percent wealth shares.26

PSZ use this method for wealth estimates on the WID site. They estimate that the top 1 percent share of U.S. wealth has risen sharply since the 1970s, as shown in Figure 2.27 This sharp rise is widely cited in the media.

However, a 2019 study by Matthew Smith, Owen Zidar, and Eric Zwick (SZZ) found that PSZ overstate the increase in top wealth shares because of their faulty assumptions about the rates of return used to estimate assets.28 Using better assumptions, SZZ found that the 1 percent wealth share rose only half as much as PSZ claimed.29 From 1980 to 2014, PSZ found that the top 1 percent share rose from 22.5 to 38.6 percent, but SZZ found that it increased from 21.2 percent to just 28.7 percent.30

A second method uses data from the Survey of Consumer Finances (SCF), produced by the Federal Reserve Board since 1989.31 In 2019, a team of Federal Reserve economists published “distributional financial accounts” based on data from the SCF and the Financial Accounts of the United States.32 These estimates show a similar pattern as the SZZ data—the top 1 percent share is lower and has risen less in recent years than the PSZ data suggested, as shown in Figure 2.

Before 1989, the Federal Reserve completed household finance surveys in 1962 and 1983.33 That data show that the top 1 percent share changed little over that period, edging up from 32 percent in 1962 to 34 percent in 1983. Those shares were higher than the 30 percent share found in the first modern SCF in 1989. Economist Edward Wolff used Federal Reserve data to create his own estimates of the top 1 percent wealth share.34 He found that the share was fairly flat from 1962 to 2010 but then rose after that.

A third method for estimating wealth shares relies on estate tax returns. Using these data, Wojciech Kopczuk and Saez estimated that the top 1 percent share of U.S. wealth was essentially flat from the 1930s all the way through to 2000.35

In sum, the widely cited wealth data created by PSZ are off base. A 2014 study by Kopczuk concluded that “estimates of the distribution of wealth based on the Survey of Consumer Finance and the estate tax method show little or no rise in the share of total wealth held by the top 1 percent of in [sic] the last 30 years, while the capitalization [PSZ] approach finds a substantial rise.”36 Similarly, a 2016 Federal Reserve study found that “the top share estimates derived in this paper show much lower and less rapidly increasing top shares than the widely cited values from the Saez and Zucman (2016) and Piketty and Saez (2003) studies.”37

The 2019 estimates by the Federal Reserve and SZZ show lower figures for the top 1 percent share and a slower rise than the PSZ data. U.S. wealth inequality has risen, but given the huge changes in technology and globalization that have transformed our economy, some changes over the decades are not surprising.

What about the future? Warren Buffett claimed that wealth inequality “has widened and will continue to widen unless something is done about it.”38 That is not clear at all. Buffett is echoing Piketty, but the mechanisms that Piketty claimed in his book would lead to higher inequality (relating to capital dominating labor) are speculative and not supported by most economists.

Numerous factors may move wealth inequality either up or down in the future. For one thing, there is a “race between the stock market and the housing market.”39 Middle‐​income households gain relative to top groups when housing prices are rising quickly, but top groups do better when the stock market is rising quickly. In recent years, equity prices have risen faster, which has boosted the top 1 percent share, but markets may change direction down the road.40

Another dynamic is the normal functioning of life‐​cycle finances. Most young people start their careers with little wealth but build a nest egg by their 60s. The SCF data for 2016 show that the mean family net worth for ages 35–44 was $289,000 while the mean for ages 55–64 was $1,167,000.41 As U.S. demographics change over time, so may measures of wealth inequality.

Yet another dynamic regards debt incurred for higher education. A growing share of families—currently 22 percent—owe education‐​related debt.42 That debt is now the largest part of household debt aside from mortgages, and it substantially reduces net wealth for affected families in the SCF data.43 However, the education investment funded by debt helps people build human capital, which is an asset. But the SCF does not include human capital, so it understates the true wealth of young people who invest in education. The upshot is that the rise in education debt has skewed measured wealth inequality.

Human capital is not the only portion of wealth left out of inequality estimates. Some wealth estimates, including the SCF, exclude defined benefit pension plans, which are owned broadly by the middle class. If defined benefit plans were included in the SCF data, it would reduce the top 1 percent share by 5 percentage points.44

Finally, wealth inequality statistics do not include the “wealth” that individuals hold in Social Security. Social Security is not legally owned wealth, but to individuals, the future benefits are like an asset that is available to fund future consumption. That is also true of other social programs, such as Medicare. Including the effects of Social Security and other social programs would substantially reduce measured wealth inequality, as Section 5 discusses.

To summarize, the estimates from Piketty and colleagues on the WID website showing sharply rising wealth inequality since the 1970s appear to be incorrect. Also, Piketty’s projection of sharply rising wealth inequality in the future is based on flawed theories. The top 1 percent wealth share has risen in recent years, but the change has not been large over the past half century given the large structural changes in the U.S. economy. Finally, published data on wealth inequality leaves out human capital and social programs such as Social Security, which has exaggerated estimates of inequality.

All that said, wealth statistics such as the top 1 percent share have little relevance to the standards of living of U.S. households. While many politicians and pundits seem obsessed with wealth inequality, the following sections argue that such measurements do not reveal anything about the levels of poverty or prosperity of Americans.

2. Poverty Matters, Not Inequality
Measures of wealth inequality do not tell us anything about the well‐​being of the poor, which is a more important focus for public policy than inequality. Poverty may fall as wealth inequality rises, such as when entrepreneurs build fortunes by generating economic growth. Or poverty may rise as wealth inequality rises, such as when crony capitalists gain preferences that distort the economy and reduce growth.

Poverty and inequality are different things, but they are often conflated in political discussions. High poverty levels, which are clearly undesirable, are often caused by bad policies, such as a lack of open markets and equal treatment. Wealth inequality is different—it cannot be judged good or bad by itself because it may reflect either a growing economy that is lifting all boats or a shrinking economy caused by corruption.

Martin Feldstein was right that “inequality is not a problem in need of remedy.” Instead, he noted that economists start with the “Pareto principle that a change is good if it makes someone better off without making anyone else worse off.”45 An example is an entrepreneur who builds her wealth by making product innovations that reduce prices for consumers.

Consider Brian Acton and Jan Koum, who created WhatsApp, which provides a free phone service for 1.5 billion users globally. Acton and Koum have built combined fortunes of $15 billion. Their success may or may not have widened wealth inequality, but their product has created huge value for consumers by reducing communication costs. America’s economic history is replete with similar stories. Walmart has generated savings for many millions of consumers while making the Walton family rich. Jason Furman, the former chair of President Barack Obama’s Council of Economic Advisers, was right to praise the company as a “progressive success story” for its role in reducing prices.46

Feldstein argued that the real problem we should focus on “is not inequality but poverty.”47 Recent economic data reveal how these two indicators are quite different. U.S. wealth inequality has edged up in recent years, but the poverty rate has declined. Meanwhile, wages are up and unemployment is low. Federal Reserve Board data found that the top 1 percent wealth share increased slightly between 2013 and 2016, but the wealth of the median household jumped 16 percent over that period, with particularly strong gains by less‐​educated households.48 Clearly, recent gains by the top 1 percent have not come at the expense of other Americans.

We see similar patterns in other growing economies. After China began adopting market reforms in the 1970s, its economy boomed and hundreds of millions of people lifted themselves out of poverty. China’s gross domestic product (GDP) per capita in constant U.S. dollars was more than 10 times higher in 2018 than it was in 1990.49 The share of the Chinese population in severe poverty—measured by the World Bank as income of less than $3.20 per day—fell from 47 percent in 1990 to just 1 percent today.50 Yet the rise in general prosperity may have coincided with increased wealth inequality in China—the top 10 percent wealth share is estimated to have jumped from 41 percent in 1980 to 67 percent today.51

One can see why wealth inequality is a useless measure by examining Gini coefficients across countries. The coefficients are calculated from distributions of income or wealth in populations and indicate the level of inequality in a single number from 0 to 100, with higher numbers indicating higher inequality.52 Wealth inequality is estimated to be high in the United States with a Gini coefficient of 85.53 On the other hand, many poor countries have much lower Gini coefficients, such as Ethiopia (61), Mynamar (58), and Pakistan (65).54 Wealthy countries such as the United States offer more opportunities and higher living standards than these poor countries, yet those countries have “better” Gini coefficients.

The United Nations produces a Human Development Index that meas­ures income, life expectancy, and education levels in over 180 countries.55 A scatterplot of countries in this index and their wealth Gini coefficients shows a modestly positive relationship between the two variables—countries with higher wealth inequality tend to have higher human development. The Gini coefficients for many countries are probably not very accurate, but nonetheless the data do not support the idea that wealth inequality is bad for general prosperity defined in this way.

In some countries, high wealth inequality likely results from corruption. Russia, Kazakhstan, and Ukraine, for example, have wealth Gini coefficients of 88, 95, and 96, respectively, and experts believe many of the richest individuals in those countries gained their wealth from political connections.56 One expert noted that among Russia’s wealthiest individuals, “most have made their money by controlling companies in the natural‐​resources sector—like gas giant Gazprom, oil companies, or metals firms—and use their political connections with the Kremlin to maintain their fortunes.”57

Wealth inequality by itself provides no guidance on public policy issues because many factors can cause it. And even if it were a useful measure, claims by progressives that there is a global inequality crisis are off base. A Credit Suisse study found that the share of global household wealth owned by the top 1 percent of households worldwide was roughly unchanged between 2000 and 2018.58

The more important development in the world economy in recent years is the dramatic fall in poverty. Many lower‐​income nations have embraced markets and enjoyed broad‐​based growth and social progress:

People living in “extreme poverty” as defined by the World Bank fell from 42 percent of the world’s population in 1981 to just 10 percent in 2015.59
The share of the world’s population that is undernourished fell from 19 percent in 1991 to 11 percent in 2017.60
The illiterate share of the world’s population fell from 30 percent in 1980 to 14 percent in 2015.61
Africa’s average life expectancy increased from 53 years in 2000 to 62 years in 2015.62
Many poorer countries are starting to catch up to the living standards in developed nations as they accumulate wealth. The Credit Suisse study found that lower‐​income countries accounted for 10 percent of global wealth in 2000 but 25 percent by 2018, with China and India leading the way.63

It is good news that poor countries are pulling themselves up and enjoying rising prosperity. Yet commentators on the political left seem more concerned that some countries with broadly rising incomes have experienced increases in wealth inequality. This seems like “spiteful egalitarianism,” as Feldstein called it.64 That is, a knee‐​jerk dislike of the wealthy even when their wealth stems from productive activities that benefit the overall economy.

Many progressives seem to view the economy as a zero‐​sum game. Senator Sanders complained that “in the last four decades, there has been a massive shift of wealth from the middle class to the top one percent.”65 And Dan Riffle, adviser to Rep. Alexandria Ocasio‐​Cortez (D-NY), complained that “the bigger Jeff Bezos’s and Bill Gates’s slices of the pie are, the smaller everybody else’s slices of the pie are going to be.”66

That is not true. Innovators such as Bezos and Gates make the pie larger, as have many wealthy Americans, as Section 3 discusses. Market economies are positive sum, not negative sum. The billions of market transactions that take place every day are voluntary and thus mutually beneficial—buyers and sellers each gain value. Entrepreneurs who become wealthy have essentially found ways to generate more transactions. Whatever aggregate statistics—such as wealth distributions—might show, policymakers should remember that the core of market economies is a bottom‐​up process of value creation.

That does not mean that all wealth is justly obtained. Critics on the left are correct that some businesses and wealthy people get ahead by breaking laws and exploiting government preferences. If Bezos or Gates had instead gained their wealth by means of narrow regulatory advantages, their wealth would represent a negative for the economy. Section 4 addresses such crony capitalism. But first we examine the positive‐​sum wealth generation at the core of market economies.

3. Most Top Wealth Is Self‐​Made
Do the wealthy mainly inherit their fortunes or build them through entrepreneurial activities? Some commentators imply the former, but the evidence shows that most of America’s wealthiest people have self‐​made fortunes.

Former U.S. labor secretary Robert Reich claimed in January 2019 that “even as the ranks of the working poor continue to grow, America is creating a new aristocracy of the non‐​working super rich with enormous influence over our economy and politics.”67 And New York Times columnist Krugman claimed, “We seem to be heading toward a society dominated by vast, often inherited fortunes.”68

These comments echo a theme in Piketty’s book, which is that economic forces are boosting the power of capital over labor and inherited wealth over self‐​made wealth. Piketty argued, “It is almost inevitable that inherited wealth will dominate wealth amassed from a lifetime’s labor by a wide margin.”69 Piketty refers in his book to the wealthy as “rentiers” to evoke the image of an idle class of overlords.

Piketty projected that accumulated wealth or capital will increase compared to the size of the economy in coming decades. In turn, he said capital income will become a growing share of overall income as the labor share falls. Since the wealthy receive a large share of capital income, that would boost high‐​end fortunes and make wealth ownership more concentrated.

However, Piketty’s story is inconsistent with actual U.S. trends. Capital’s share of income has risen since the 1970s but not because of larger accumulations by the wealthy. Rather, Matthew Rognlie found that the rising capital share has been entirely due to the housing portion of capital, which is broadly distributed across income groups.70 Aside from housing, the net capital share of income has fallen slightly since the 1950s.71

Another flaw in Piketty’s narrative regards his assumption that if capital accumulates rapidly, the rate of return to capital would nonetheless remain high, thus boosting the capital income share. But most economists would expect the rate of return to fall in that scenario, thus moderating any increase in capital income.72 Indeed, Rognlie found that “a rising capital‐​to‐​GDP ratio is most likely to result in a fall in capital’s share of income, since the net rate of return on capital will fall by an even larger proportion than the capital‐​to‐​GDP ratio rises.”73

Rognlie concluded that “capital income is not growing unboundedly at the expense of labor, and further accumulation of capital in fact most likely means a fall in capital’s share of total income—refuting one of the main theories of economist Thomas Piketty’s popular book Capital in the 21st Century.”74 The fears expressed by Piketty, Krugman, Reich, and others about a growing domination of capital over labor are off base.

The related fears about capital ownership becoming dominated by inherited wealth are also misguided. Inherited wealth represents a declining share of high‐​end fortunes. Most of America’s wealthiest people today are entrepreneurs and business people who built their own fortunes.75 There is dynamism and turnover among the richest Americans rather than a static group of people with growing piles of wealth.

Forbes has published an annual list of the 400 Americans with the highest net worth since 1982.76 By our count, just 21 from 1982 were still on the list in 2019.77 Where have the others gone? Numerous people have died and their wealth divided among heirs. The wealth of many others has stagnated or declined because of income taxes, consumption, charitable giving, and poor investment choices.

Robert Arnott and coauthors examined the Forbes lists and found that of the 400 individuals on the 1982 list, just 69 individuals or their descendants remained on the 2014 list.78 They found that the wealth of those 69 people had grown far more slowly than if they had simply invested passively in stocks and bonds in 1982 and let their holdings grow. They conclude that “dynastic wealth accumulation is simply a myth.”79

Piketty claims the opposite. He argues that the wealthy multiply their money rapidly: “One of the most striking lessons of the Forbes rankings is that, past a certain threshold, all large fortunes, whether inherited or entrepreneurial in origin, grow at extremely high rates.” And he adds that “the largest fortunes grew much more rapidly than average wealth. This is the new fact that the Forbes rankings help us bring to light.”80

Piketty’s claims are false. He seems to have only looked at the winners on the Forbes list and did not account for people who lost wealth and dropped off the list. As one example, the world’s richest man on Forbes global list in 1987 was Yoshiaki Tsutsumi, who was worth $20 billion. His fortune plunged to just $1.2 billion in 2006, and then he dropped off the list.81

William McBride looked at changes in wealth for the 400 individuals on the 1987 Forbes U.S. list through to the 2014 list.82 He calculated the growth in wealth for the 73 people who stayed on the list, and he estimated the growth for those who dropped off by assuming that the drop‐​offs had barely missed the wealth threshold for the 2014 list. With that assumption, he found that the average annual real wealth growth rate over 26 years for the people on the 1987 list was at most a meager 2.4 percent. (By contrast, the average annual real return on U.S. stocks over the decades has been about 7 percent.)83

McBride found that people on the Forbes lists who had inherited their wealth grew their fortunes more slowly than those with self‐​made wealth. Active entrepreneurs often generate new wealth, but individuals on the lists who had inherited did not earn outsized returns—instead, their wealth was eaten away over time, as noted, by taxes, consumption, philanthropy, and sometimes bad investment choices.

As many older fortunes decline, new fortunes are being made by entrepreneurs. Among those on the Forbes 2018 list, 43 percent were new in the prior 10 years. Many of the new billionaires have impressive achievements in building companies:

Jensen Huang cofounded graphics chipmaker Nvidia, which has revenues of $10 billion.
Shahid Khan built automotive parts maker Flex‐​N‐​Gate, which has revenues of $8 billion.
Judy Faulkner founded medical records software firm Epic Systems, which has revenues of about $3 billion and supports the records of 230 million patients.
Acton and Koum cofounded WhatsApp, which provides free phone service globally for 1.5 billion users, as noted.
Reinhold Schmieding founded Arthrex, a surgical tools company that has developed many new products and has revenues of more than $2 billion.
Robert Pera founded wireless equipment maker Ubiquiti Networks, which specializes in bringing low‐​cost internet access to rural areas.
Thai Lee built business IT provider SHI International, which has revenues of $9 billion. Like Huang, Khan, and Koum, Lee is an immigrant to the United States.
Steven Kaplan and Joshua Rauh found that the share of the Forbes 400 who are self‐​made rose from 40 percent in 1982 to 69 percent by 2011.84 Forbes staff writer Luisa Kroll measured a similar increase and noted, “the number of Forbes 400 members who have forged their own path, using entrepreneurial capitalism as a means to attain a vast fortune, has increased dramatically.”85

The Forbes list of global billionaires shows a similar pattern. Self‐​made wealth is displacing inherited wealth in most countries, and that pattern is particularly pronounced in the United States. A Peterson Institute for International Economics study examined the Forbes global lists and found that “among advanced countries, the share of self‐​made billionaires has been expanding most rapidly in the United States.”86

Other analyses of the wealthy show similar patterns. On a Bloomberg’s list of the 100 wealthiest Americans in 2013, 73 are self‐​made and 27 have inherited wealth. A substantial share of wealthy individuals had humble origins. On the Bloomberg list, 18 had no college degree.87 On the Forbes 400 list, 20 percent grew up poor. Rags‐​to‐​riches stories are not uncommon.

Wealth‐​X has created a database of the world’s richest people. On its list of 2,604 billionaires, 56 percent are self‐​made, 31 percent are partly self‐​made, and 13 percent have purely inherited wealth.88 On its broader list of people with more than $30 million in net wealth, 68 percent are self‐​made, 24 percent are partly self‐​made, and just 8 percent inherited all of their wealth.89

Other studies confirm the importance of self‐​made wealth in today’s economy:

BMO Private Bank found that 67 percent of Americans with $1 million or more in investible assets are self‐​made.90
U.S. Trust found that 70 percent of individuals with investable assets of more than $3 million grew up in middle‐ or lower‐​income households.91
Wolff and Maury Gittleman found that just 15 percent of the top 1 percent’s wealth was inherited in 2007, down from 23 percent in 1989.92
Lena Edlund and Kopczuk found that the importance of inherited wealth at the top in the United States has been declining since the 1970s based on an analysis of estate tax returns.93
Tino Sanandaji found that “self‐​employed business owners account for an astonishing 70 percent of the wealth of the top 0.1 percent” in 2010.94
Economists at the Federal Reserve Bank of Chicago found that one‐​third of all household wealth in the United States is owned by self‐​employed people who actively manage their businesses.95
In sum, the wealthiest Americans are not idle rentiers, as some critics suggest. Rather, as Kopczuk found, “those in the top 1 percent of the U.S. income and wealth distribution have less reliance on capital income and inherited wealth, and more reliance on income related to labor, than several decades ago.”96

Far from being idle, many of the wealthiest people in our society create new products, generate competition in markets, and drive down consumer prices. Their innovations have been diffused across the economy and benefited many millions of people. Most Americans understand this. A 2019 poll found that 69 percent of the public agrees that billionaires “earned their wealth by creating value for others like inventing new technologies or starting businesses that improve lives.”97

In the process of building companies, many entrepreneurs have become wealthy. But are their rewards excessive compared to the value they created?

William Nordhaus explored that question by estimating a model of U.S. business profits and productivity growth over a five‐​decade period. He concluded that “only a miniscule fraction of the social returns from technological advances over the 1948–2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.”98 He found that businesses received only about 2 percent of the surplus benefits from their innovations, with the rest accruing to consumers.

In sum, ownership of the largest fortunes in the United States is continually changing. The relative importance of inherited wealth has been declining for decades. Inherited wealth is being replaced by new wealth created by entrepreneurs introducing new products and building fortunes while adding overall value to the economy.

4. Cronyism Increases Wealth Inequality
In market economies, the level of wealth inequality reflects many factors, including differences in individual knowledge, effort, luck, and savings behavior. Some individuals with unique talents are able to build large fortunes. Most of the wealthiest Americans today are self‐​made entrepreneurs and business people, as discussed.

However, governments also play a role in shaping wealth distributions through taxes, spending, and regulations. Many government activities redistribute resources from the rich to the poor, but some do the opposite. A number of broad‐​based and popular programs undermine the ability of moderate‐​income Americans to build wealth, as Section 5 discusses.

This section explores an unpopular way that governments increase wealth inequality—cronyism, which generally means gaining narrow government benefits through lobbying or connections. The word “cronyism” is similar in meaning to crony capitalism, corruption, corporate welfare, and rent‐​seeking. It usually entails businesses gaining benefits at the expense of consumers or taxpayers.99

Former presidential candidate Beto O’Rourke said that we have “an economy that is rigged to corporations and to the very wealthiest.”100 That overstates the problem, but it is a commonly held view. Most income in America is generated in competitive markets, and most people admire individuals who gain wealth through talent and effort. In a 2019 poll, the great majority of the Americans surveyed think that there is “nothing wrong with a person trying to make as much money as they honestly can.”101 The key word is “honestly.” As economist Greg Mankiw noted, “The high incomes that generate anger are those that come from manipulating the system.”102

More than two centuries ago, Adam Smith recognized that businesses often gained privileges from the government that undermined the public interest. He warned:

The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow‐​citizens.

The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.103
Smith is right that it is unjust when the government helps businesses “raise their profits” by imposing “an absurd tax” or burden on the public. Such crony policies likely raise wealth inequality. Smith described in the 18th century how trade barriers create monopoly power for producers and harm consumers, and that is still a major problem today.104

Governments are much larger now than in Smith’s time, and they manipulate the economy in more ways. There is no hard definition of cronyism, but Table 1 suggests various types of tax, spending, and regulatory schemes in the United States that fit the bill. Some of the categories overlap. The general problem summarized in the table is that some businesses pursue their goals by harnessing government power to favor their interests over the interests of taxpayers, consumers, and other businesses.

To what extent might such cronyism exacerbate wealth inequality? There are no overall estimates of the costs of cronyism or its effects on inequality, but we can put figures on some items.

Federal farm subsidies cost taxpayers more than $20 billion a year, and the benefits are skewed toward the wealthy.105 The average income of farm households is 40 percent higher than the average of all U.S. households, and 60 percent of farm subsidies go to the largest 10 percent of farm businesses. Even some billionaire landowners receive farm subsidies.106

Federal sugar regulations and trade barriers increase sugar costs for U.S. consumers by up to $4 billion a year.107 U.S. sugar producers gain wealth because the sugar protections give them monopoly power. The Fanjul family of Florida, for example, has built a net worth of about $8 billion in the sugar industry partly off the backs of U.S. consumers who face artificially high prices. To protect their interests, the Fanjuls have maintained close political ties to presidents and members of Congress.108

State occupational licensing reduces job opportunities while raising consumer prices. Licensure boards are often dominated by existing providers who seek to exclude new entrants—classic cronyism. About one‐​quarter of Americans work in occupations that require licenses. These rules raise incomes in protected professions but increase costs to U.S. households by about $1,000 annually on average, which is a heavy burden on low‐​income families in particular.109

Yale University law professor Jonathan Macey describes these sorts of policies as “wholesale” cronyism.110 In addition, he says there is “retail” cronyism, which involves particular individuals and businesses using connections to unethically gain excess benefits from programs.

Government contracting is rife with retail cronyism. In the recent “Fat Leonard” scandal, for example, Leonard Glenn Francis cozied up to U.S. Navy leaders in the Pacific to win hundreds of millions of dollars in lucrative deals to resupply Navy ships.111 He made large profits by overpricing contracts and submitting fraudulent invoices. Francis had numerous moles inside the Navy steering government contracts his way. He wined and dined Navy officers, providing them with gifts, prostitutes, and other favors to get their help and protection. The scandal exposed “a staggering degree of corruption within the Navy,” concluded a Washington Post investigation.112

The Solyndra scandal was also classic cronyism.113 The Department of Energy (DOE) gave solar panel maker Solyndra a $535 million loan guarantee in 2009. Solyndra was a spendthrift company and its products were uncompetitive. It went bankrupt and closed its doors in 2011 with taxpayers footing the bill for the failed loan.

Why did the DOE give Solyndra a big loan guarantee? Solyndra’s largest investor had ties to billionaire George Kaiser, who was also a major fundraiser for President Barack Obama. The New York Times found that Solyndra “spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House.”114 Similarly, the Washington Post found that the “main players in the Solyndra saga were interconnected in many ways, as investors enjoyed access to the White House and the Energy Department.”115

President Obama visited Solyndra and at a press conference called the firm an “engine of economic growth.”116 At the time, a Solyndra board member wrote to George Kaiser, “The DOE really thinks politically before it thinks economically.”117 The White House pressured the DOE to approve the subsidy, and that appeared to tip the scales.118

As the federal government has grown larger, both wholesale and retail corruption have likely increased, thus contributing to wealth inequality. The larger that subsidies, procurement, and other government spending are, the more likely people will abuse the system and live high on the hog at taxpayer expense.

At the same time, the experts who know how to manipulate the government have prospered. Six of the 10 highest‐​income counties in the nation are now suburbs of Washington, DC.119 That wealth is partly driven by highly paid federal government workers but also by the many high‐​paid lobbyists and federal contractors who live in the DC region.120

Today, the federal government funds about 2,300 different subsidy programs, more than twice as many as in the 1980s.121 The number of pages of accumulated federal regulations has increased from 55,000 in 1970 to 127,000 in 1990, to 165,000 in 2010, and to 185,000 today.122 The growing volume of programs and regulations provide many ways that lobbyists can twist the rules and gain unfair advantage over consumers and other businesses. Some share of lobbying stems from businesses protesting misguided regulations that in themselves create unfair restrictions, such as various barriers to competitive entry.

People may believe that regulations fix failures in the economy and improve our standard of living. Some do, but many regulations serve narrow private ends and do not improve economic or social outcomes. Economist George Stigler’s celebrated essay “The Theory of Economic Regulation” in 1971 argued that “as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.”123 By “acquired,” he meant that businesses are able to influence the design of regulations so that they benefit industry incumbents and undermine the broad public interest.

This idea has become known as “regulatory capture.” At the time of Stigler’s writing, heavy regulations on trucking, railroads, and airlines protected businesses from competition and raised prices. The regulatory agency for the railroads was the Interstate Commerce Commission, which Milton Friedman said “started out as an agency to protect the public from exploitation by the railroads” but ended up as “an agency to protect railroads from competition by trucks and other means of transport.”124 Similarly, the Civil Aeronautics Board “managed and enforced a cartel among air carriers” to the detriment of the general public between 1940 and 1978, noted economist James Miller.125

Bipartisan deregulatory efforts in the 1970s and 1980s increased competition in transportation and drove down prices, thus benefiting consumers and likely reducing wealth inequality. Unfortunately, many self‐​serving regulations remain in other industries, although the overall harm done by anti‐​competitive or crony regulations is difficult to quantify.

A number of studies have compared corruption across countries, so we can get an idea of the relative extent of the U.S. cronyism problem. The United States ranks as the 22nd least corrupt country of 180 countries on Transparency International’s “corruption perceptions index.”126 This index draws from various surveys and expert views on government bribery, misuse of funds, financial disclosure rules, and other measures of clean administration.

The United States ranks 25th least corrupt of 213 countries on the World Bank’s “control of corruption” index.127 And the United States ranks 20th of 126 countries on the World Justice Project’s “Rule of Law” index, which includes measures such as the use of public office for private gain and the number of government officials sanctioned for misconduct.128 Overall, these indexes show that the United States is one of the less corrupt countries but that there is room for improvement.

It is widely recognized that corruption undermines economic growth. Experts agree that rampant corruption in countries such as Russia damages those countries’ economies. The average GDP per capita in the bottom half (most corrupt) of the Transparency International countries in 2017 was $9,300, while the GDP per capita in the top half was $34,400.129 A scatterplot of these corruption ratings and GDP per capita shows a strong relationship across countries.

If the United States took steps to reduce corruption or cronyism, it would likely boost overall income levels by reducing economic distortions. But given that we are one of the less corrupt countries, it seems unlikely that corruption or cronyism is a major driver of U.S. income levels or wealth inequality.

Economists Sutirtha Bagchi and Jan Švejnar investigated the cross‐​country relationship between corruption and the type of wealth held by billionaires.130 Using the Forbes list, they separated the billionaires who made their wealth from political connections from those who did not. Let’s call those bad and good billionaires, respectively. Across countries other than the United States, 17 percent of billionaires were bad and 83 percent were good. In the United States, just 1 percent were bad and 99 percent were good.131 Thus, American billionaires overwhelmingly earned their wealth in productive and noncorrupt ways, according to this metric.

Bagchi and Švejnar found that countries with high shares of bad billionaires rank poorly on indexes of corruption—countries such as Malaysia, Indonesia, Thailand, Colombia, and Mexico. By contrast, countries with few politically connected billionaires rank well on corruption indexes—countries such as Britain, Singapore, Sweden, Switzerland, and the United States. The findings indicate that corruption is not related to the amount of top‐​end wealth generally but rather to how people at the top made their wealth. Countries should focus on equal treatment and uniform laws so that people gravitate toward productive ways of generating wealth and not unproductive cronyist ways.

Bagchi and Švejnar also compared country shares of good and bad billionaires to economic growth and found that countries with large numbers of bad billionaires experienced weaker economic growth. That result is not surprising because cronyism often entails regulations and subsidies that restrict competition and misdirect investment.

The Economist created its own cross‐​country “crony capitalism index.”132 It uses the Forbes list to estimate billionaire wealth in each country obtained from sectors said to be prone to crony capitalism.133 Each billionaire is classified as either crony or not based on the industry they are most active in. The magazine compared its cronyism measure to economic performance and found that billionaire wealth in crony sectors as a share of GDP is about three times higher in low‐​income countries than in high‐​income countries. Again, cronyism appears to undermine economic performance.

As with the Bagchi and Švejnar analysis, the United States scored quite well on The Economist’s index. In 2016, it had crony billionaire wealth of 1.8 percent of GDP, which was the seventh least corrupt of 22 countries. In the United States, billionaire wealth earned in crony sectors is only about one‐​sixth as large as billionaire wealth earned in non‐​crony sectors.

The Economist argues, “Over two decades, crony fortunes leapt relative to global GDP and as a share of total billionaire wealth.”134 If true, that may help explain changes in wealth distribution in some countries that have high levels of cronyism, such as Russia. It is less relevant in countries that have lower levels of corruption, such as the United States.

With all this in mind, the mistake made by politicians such as Senators Sanders and Warren is to imply that most fortunes owned by America’s wealthy are ill‐​gotten. They tend to conflate wealth in general with cronyist wealth. Sanders lambastes all wealth inequality as “obscene” in his speeches.135 Both Sanders and Warren would impose their wealth taxes on every wealthy individual, including entrepreneurs who create innovations that benefit the poor.

Most wealth at the top in the United States is earned in open and competitive industries, not through cronyism. It is true that the government intervenes in many U.S. industries, but most of the profiles on the Forbes list of the wealthiest Americans indicate people who have created value that benefits the general public.

Nonetheless, cronyism is an important problem, which probably does increase wealth inequality to an extent. Surveys show that Americans are concerned about cronyism. According to a recent poll, 67 percent of voters surveyed said they believe that big businesses and government regulators often work together to create rules that are harmful and unfair to consumers.136

So how do we address the problem? Table 1 indicates the types of cronyism that we should target for reform. Our goal should be to allow open competition in every industry so that entrepreneurs can challenge established businesses on a level playing field. Adam Smith stressed the benefits of competition:

All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.137
The public should press policymakers to eliminate the subsidies, regulations, and tax preferences that fuel cronyism. If the government reduced its interventions in the economy, there would be fewer levers for special interests to pull. Interventions often begin with good intentions, but businesses twist and exploit policies to gain unfair advantage. As Adam Smith noted, we should give “most suspicious attention” to intervention schemes that businesses promote.

Cronyism distorts the economy and likely increases wealth inequality. It erodes confidence in government and is rejected by the general public. The problem the nation faces is not wealth inequality per se. Rather, the problem is government policies that protect and subsidize favored businesses and unjustly aid the wealthy.

5. Government Undermines Wealth‐​Building
Federal and state governments run many social programs that support lower‐ and middle‐​income households. One cost of these programs is that they undermine the incentives and the means for people to accumulate personal savings. Effectively, they displace or “crowd out” wealth‐​building by households, particularly those with moderate incomes.

As government programs for retirement, healthcare, unemployment, and other items have expanded over the decades, there has been less need for people to save for those expenses themselves. At the same time, people are less able to save because higher taxes are required to pay for the programs. This has undermined wealth accumulation by the nonrich and thus increased wealth inequality.

The government creates other hurdles to wealth‐​building. A number of social programs have asset tests, which discourage savings by disallowing benefits if household assets rise above set amounts. Also, numerous government policies raise costs for people with moderate incomes, which reduces earnings available for savings.

Therefore, wealth inequality statistics do not just reflect the workings of markets but also the negative effects of government policies on private savings. Politicians complain about wealth inequality, but their own policies are partly responsible.

Displacement of Personal Savings
The largest federal program, Social Security, is a prominent example of crowding out. The program is a tax‐​funded benefit program, not a savings plan. Many Americans rely on Social Security for most or all of their retirement income. The program discourages workers from saving for their own retirement, and it reduces their ability to do so with its heavy 12.4 percent tax on wages up to a dollar cap.

In pioneering studies in the 1970s, Martin Feldstein explored how Social Security displaced private savings.138 He found that every dollar increase in benefits reduced private savings by about 50 cents.139 Studies since then have generally confirmed the substantial displacement effect, although the magnitudes of the estimated effects have varied.140

Social Security represents a much larger share of retirement resources for the non‐​rich than the rich, and the program’s benefits cannot be inherited. The result is that the program’s crowding‐​out effect increases wealth inequality. Jagadeesh Gokhale and Laurence Kotlikoff modeled a simulated population to estimate that Social Security raises the Gini coefficient on wealth by one‐​fifth and increases the share of wealth held by the top 10 percent by more than one‐​quarter.141 This occurs because Social Security leaves the non‐​rich with “proportionately less to save, less reason to save, and a larger share of their old‐​age resources in a nonbequeathable form than the lifetime rich. In doing so, Social Security denies the children of the poor the opportunity to receive inheritances.”142

The fact that Social Security increases wealth inequality may surprise people because the program is thought to be a progressive achievement. While the program may reduce income inequality, it raises wealth inequality. Other social programs create similar effects. Medicare provides large resources to retirees and thus also reduces incentives to save for retirement. Unemployment insurance, welfare, education aid, and other programs reduce incentives for people to save for midlife expenses. In general, when the government provides income and other social benefits to people, savings incentives are reduced. Higher government aid results in lower private wealth.

Barış Kaymak and Markus Poschke built a model of the U.S. economy to estimate the causes of changing wealth inequality in recent decades. They found that the main factor raising wealth inequality has been technological change that has increased wage dispersion. But they also found that the expansion of Social Security and Medicare has had a large effect:

By subsidizing income and healthcare expenditures for the elderly, these programs curb incentives to save for retirement, a major source of wealth accumulation over the life‐​cycle. Furthermore, since both programs are redistributive by design, they have a stronger effect on the savings of low‐ and middle‐​income groups. By contrast, those at the top of the income distribution have little to gain from these programs. We argue that the redistributive nature of transfer payments was instrumental in curbing wealth accumulation for income groups outside the top 10% and, consequently, amplified wealth concentration in the U.S.143
Kaymak and Poschke found that the expansion of Social Security and Medicare caused about one‐​quarter of the rise of the top 1 percent share of wealth in recent decades.144 Social Security and Medicare spending increased from 3.5 percent of GDP in 1970 to 8.3 percent by 2018.145

Those are the two largest federal social programs, but other programs have likely added to this wealth inequality effect. Total federal and state social spending as a share of GDP more than doubled from 6.8 percent in 1970 to 14.3 percent by 2018.146 That large increase was over the period that Thomas Piketty and some other economists claim that there was a large increase in wealth inequality. Section 1 argues that the increase has been modest, but however large, a substantial share stemmed not from market forces but from expansion in government social benefits.

Generations of Americans have grown up assuming that the government will take care of them when they are sick, unemployed, and retired. They have responded by putting aside less of their earnings for their own future expenses. Financing social programs requires not just the federal payroll tax but also a large share of other federal and state taxes. American families are less able to save because of higher taxes, and they have a reduced incentive to do so because of the expectation of receiving government benefits.

Further evidence for the displacement effect of the welfare state comes from cross‐​country studies. In an early study comparing national levels of Social Security benefits to private savings, Feldstein found that higher benefits had a “powerful effect” in reducing private savings.147

More recently, a 2015 study by Pirmin Fessler and Martin Schürz for the European Central Bank used a large survey database across European countries to explore the relationship between the level of social spending and wealth distribution. Their statistical results showed that “the degree of welfare state spending across countries is negatively correlated with household net wealth.”148 They explained:

The substitution effect of welfare state expenditures with regard to private wealth holdings is significant along the full net wealth distribution, but is relatively lower at higher levels of net wealth. Given an increase in welfare state expenditure, the percentage decrease in net wealth of poorer households is relatively stronger than for households in the upper part of the wealth distribution. This finding implies that given an increase of welfare state expenditure, wealth inequality measured by standard relative inequality measures, such as the Gini coefficient, will increase.149
Based on Fessler and Schürz’s data, countries such as Germany and the Netherlands have relatively high social spending and relatively low private wealth holdings by less well‐​off households. But other countries such as Luxembourg and Spain have relatively low social spending and relatively high private wealth holdings by less well‐​off households.150 Consistent with those findings, a 2018 Organisation for Economic Co‐​operation and Development study shows relatively higher wealth inequality in Denmark, Germany, and the Netherlands and relatively lower wealth inequality in Luxembourg and Spain.151

The Gini coefficient for wealth is similar in the United States (85), Denmark (84), Norway (79), and Sweden (87), which people usually think of as egalitarian nations.152 Credit Suisse’s Global Wealth Databook 2014 explained:

Strong social security programs—good public pensions, free higher education or generous student loans, unemployment and health insurance—can greatly reduce the need for personal financial assets, as Domeij and Klein (2002) found for public pensions in Sweden. Public housing programs can do the same for real assets. This is one explanation for the high level of wealth inequality we identify in Denmark, Norway and Sweden: the top groups continue to accumulate for business and investment purposes, while the middle and lower classes have a less pressing need for personal saving than in many other countries.153
Another way to think about the effect of social programs on wealth is to estimate the present value of future promised government benefits as if it were real wealth. A 2019 study by John Sabelhaus and Alice Henriques Volz calculated Social Security “wealth” for U.S. households compared to the wealth held in private defined benefit and defined contribution retirement plans.154 It found that Social Security wealth is twice as large as the combined wealth in private retirement plans and is heavily skewed toward lower‐​income households.155 For the least‐​wealthy one‐​quarter of U.S. households, Social Security wealth is five times larger than private retirement plan wealth, whereas for the most‐​wealthy one‐​quarter of households, Social Security wealth is less than half as large as private retirement wealth.

Social Security and other entitlement programs loom large in household finances for the nonwealthy and thus likely displace a large amount of private wealth. As a result, all the widely cited statistics about wealth distribution—including Gini coefficients and top 1 percent shares—substantially overstate wealth inequality because they exclude Social Security. In a 2016 analysis, Sabelhaus, Henriques Volz, and Sebastian Devlin‐​Foltz concluded, “Claims to future Social Security benefits are a key component of retirement wealth, and thus failure to include Social Security leads to a biased assessment of the overall distribution of retirement wealth.”156

That is true of Medicare benefits as well. Future Social Security and Medicare benefits represent “wealth” typically worth hundreds of thousands of dollars to individuals. A 2018 Urban Institute study found, for example, that an average‐​income single man retiring at age 65 in 2020 could expect to receive $318,000 in Social Security benefits and $229,000 in Medicare benefits in present value terms.157 Those are large figures compared to the amount of financial assets the average person holds. Laurence Kotlikoff notes that if claims to future Social Security, Medicare, and Medicaid benefits were included in wealth estimates, we “might find declining wealth inequality in recent decades.”158

To individuals, Social Security and other entitlements seem like wealth, but they only represent promises of future benefits, and those benefits are in jeopardy because these unfunded programs are driving huge and rising government deficits and debt. As currently structured, Social Security will only be able to pay a fraction of promised benefits down the road. The Cato Institute has long argued that the United States should move to a retirement system based on private savings accounts, as numerous other countries have done.159 Traditional benefits would be phased out over time as younger workers built up savings in private accounts with a portion of their earnings that currently go to federal payroll taxes.

Other social programs could be transitioned to a savings basis as well. Feldstein modeled how the United States could move toward a savings‐​based Medicare system.160 The nation of Chile has a savings‐​based unemployment insurance system that is integrated with its savings‐​based Social Security system.161 Such savings accounts would be inheritable, unlike the benefits from current social programs. They would also be more secure because they would not depend on political promises of a massively indebted government.

If the United States transitioned to savings‐​based social programs, it would dramatically reduce measured wealth inequality as the non‐​rich built up financial assets. A sad irony in public policy debates is that the politicians—such as Senators Sanders and Warren—who complain the loudest about wealth inequality also oppose moving toward the savings‐​based social programs that would reduce measured wealth inequality.

Asset Tests
Government social programs do not just displace private savings by changing incentives to save; some programs actively deter private saving. Numerous means‐​tested welfare programs impose both income and asset tests, the latter of which cut off benefits if a measure of personal assets rises above statutory thresholds.162 Asset tests are in place for Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, Medicaid, Supplemental Security Income, and other programs.163 Both federal and state governments play a role in setting these rules, and there is substantial variability between the states.

The purpose of asset tests is to limit program costs and to target benefits to the people most in need. Asset tests help to prevent abuse by people gaining benefits who do not really need them. However, a harmful side effect is that asset tests help to trap people in poverty by discouraging a culture of personal saving. If assets rise above capped levels, the tests act as a 100 percent tax rate on additional wealth accumulation. The caps are sometimes as low as $3,000, although there has been a loosening of rules in many states in recent years.

A number of economic studies have documented the negative effects of asset tests.164 The important point with respect to wealth inequality is that asset tests are one mechanism by which governments, not markets, skew economic outcomes to intensify wealth inequality.

Government‐​Created Costs
Social programs are not the only government policies that can widen wealth inequality. Federal, state, and local governments raise living costs for moderate‐​income households, which reduces funds available for savings. Housing, food, transportation, apparel, and footwear together account for 59 percent of spending by the average household in the bottom 20 percent, or quintile, of the income distribution, and government policies raise prices in those sectors.165

Consider housing, which accounts for 25 percent of total expenditures for the average household in the poorest quintile.166 Land‐​use and zoning regulations that constrain housing supply raise housing costs in many cities. Ed Glaeser, Joseph Gyourko, and Raven Saks estimated that such regulations push up condominium prices by 53 percent in San Francisco, 50 percent in Manhattan, 34 percent in Los Angeles, 22 percent in Washington, DC, and 19 percent in Boston.167 High housing costs reduce the funds that individuals would have available to save.

Housing‐​supply restraints may also increase wealth inequality between existing homeowners and others and between homeowners in different regions. A concern of Piketty’s was that as capital accumulates, capital income would become a growing share of all income, thus exacerbating inequality. But Matthew Rognlie disaggregated capital income for the United States and found that only returns to housing have been contributing to rising inequality in recent decades.168 French economists found similar results.169

Economists David Albouy and Mike Zabek conclude that U.S. housing price inequality has risen to pre–World War I levels, driven by the rising value of land and by a growing relative price gap between inner cities and metro areas.170 Rising house price inequality also causes a rising wealth gap between homeowners and renters.

Restrictive land‐​use and zoning rules may worsen wealth inequalities in other ways. The rules tend to be the tightest in economically prosperous areas with good opportunities for high‐​wage jobs. The laws also tend to be the most restrictive on forms of housing demanded by first‐​time homebuyers, who typically have less accumulated wealth. Economist Lawrence Summers concluded that “an easing of land‐​use restrictions that cause the real estate of the rich in major metropolitan areas to keep rising in value” could help address concerns about rising wealth inequality.171

Poorer households spend a higher share of their incomes not just on housing but also on food, clothing and footwear, transportation, and childcare. Ryan Bourne found that government regulatory and trade policies in these areas can cost low‐​income households anywhere from $830 to $3,500 per year through higher prices.172 Government housing and transportation policies can also reduce mobility toward better‐​paying jobs.

In sum, numerous government policies—often well-meaning—have the effect of raising wealth inequality. Reductions to social spending, taxes, regulations, and trade barriers would reduce costs and increase incentives for families to build wealth. When it comes to government, less is often more for American families.

6. Inequality Does Not Erode Democracy
A popular idea on the political left is that wealth inequality undermines democracy. New York Times columnist Krugman asked, “Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?”173 And Senator Warren exhorted: “You’ve got things that are broken in your life; I’ll tell you exactly why. It’s because giant corporations, billionaires have seized our government.”174

A former lead economist at the World Bank, Branko Milanović, claimed:

In every political system, even a democracy, the rich tend to hold more political power. The danger is that this political power will be used to promote policies that further cement the economic power of the rich. The higher the inequality, the more likely we are to move away from democracy toward plutocracy.175
The designers of Senator Warren’s wealth tax plan—economists Saez and Zucman—favor higher taxes on the rich to resist a supposed “oligarchic drift that, if left unaddressed, will continue undermining the social compact and risk killing democracy.”176 Similarly, Vanessa Williamson of the Brookings Institution argues that “the purpose of high tax rates on the rich is the reduction of vast fortunes that give a handful of people a level of power incompatible with democracy.”177

Are such fears justified? No, for numerous reasons. The political views of the wealthy are not homogeneous, and on many issues, they track the views of the rest of the population. When the preferences of the wealthy are different, they are often not followed by policymakers, who ultimately need votes, not money. Finally, the empirical evidence is complex, but it appears that money does not buy elections, and wealthy self‐​funded candidates often do poorly.

The Preferences of the Wealthy
Do the wealthy have different policy preferences than the rest of us? If they do not have different policy preferences, then even if they had large political clout, it would not affect policy outcomes.

The breakdown of policy views of broad lower‐, middle‐, and higher‐​income groups are quite similar. Alexander Branham, Stuart Soroka, and Christopher Wlezien note that empirical research generally shows that “preferences across economic groups, especially the middle and rich, do not differ much in many policy areas. In these instances, it does not matter whether public policy is more responsive to one group—policy will end up in the same place.”178 In their 2017 analysis of 1,779 poll questions on policy, they found, “in nearly 90 percent of cases, majorities of the middle and rich are in agreement.”179 On 80 percent of questions, majorities of all three income groups agreed, albeit with differing degrees of enthusiasm.

Political scientist Martin Gilens notes that “the affluent are no more (or less) likely to be of one mind on the proposed policy changes in my dataset than are Americans within low and middle incomes.”180 Pew Research found that individuals with family incomes above $150,000 are equally likely to identify as Republican or Democrat (33 percent to 32 percent).181

Within every income group there is, of course, a broad range of policy views. Jonah Goldberg noted the diversity among billionaires: “George Soros, Tom Steyer, and other liberal billionaires are in a hammer‐​and‐​tongs political battle with Sheldon Adelson, Charles and David Koch, and other conservative or libertarian billionaires.”182 Similarly, the top 10 wealthiest members of Congress are five Democrats and five Republicans. There is little class solidarity among the wealthy.

We used Roll Call’s “Wealth of Congress” database to compare support for social programs in roll call votes from 2009 through 2018 with the net worth of House and Senate members.183 In Figure 3, each dot is a member of Congress. Support for redistribution is modeled by examining how members of Congress voted in roll calls on subjects containing the following terms: Medicare, Medicaid, Social Security, Welfare, Entitlement, CHIP, or SNAP. The figure and a simple regression reveal that there is a correlation between politicians’ wealth and their support of social programs among Democrats, but there is no correlation among Republicans.184

The figure shows that party label is a much more important factor than wealth in explaining the votes. Democrats are much more supportive of social programs and clustered at the top of the chart, while Republicans are clustered at the bottom. The key determinant of their voting records on these issues is party affiliation, not wealth.

Clearly then, being wealthy does not by itself determine one’s political preferences. However, subcomponents of the wealthy may lean in particular political directions. A recent study looking at campaign contributions estimated that 57 percent of S&P 500 chief executives are Republicans and only 19 percent Democrats.185 Also, Gilens’s work on the preferences of the top 10 percent of income earners found some differences in political preferences compared to the rest of the population.186 The top 10 percent have somewhat stronger opposition to taxes and business regulation. They also tend to be less protectionist on trade policy; less conservative on religious and moral issues; and more supportive of foreign aid, top income and capital gains tax cuts, gas tax increases, and restraint in Social Security and Medicare spending.

Evidence on the views of the extremely wealthy is scarcer. But a survey by Benjamin Page, Larry Bartels, and Jason Seawright of 104 wealthy individuals in Chicago in 2011 found differences in political preferences from the rest of the population for those with a net worth of $40 million or more.187 This group was more likely than others to think excessive government spending and budget deficits were the most important economic problem the country faced. They were also more likely to want to cut Social Security, healthcare, food stamps, and homeland security spending than the rest of the public and less likely than the broader public to support a federal jobs guarantee and more redistribution.

However, even this elite group supported progressive taxation at about current rates. They also wanted a progressive Social Security system but were split on whether high earners should pay more to fund it. On regulation, they favored intervention in areas where scandals have occurred but considered small businesses to be overregulated. There are some differences within this top group—professionals generally had more liberal views than business owners, managers, and investors.

Do the Rich Have Disproportionate Political Power?
On many issues where the wealthy do have different preferences than the rest of us, it does not appear that they get their way in policy. Data show that the wealthy are very concerned about federal budget deficits, yet today’s deficits are massive, and neither party seems interested in tackling the problem. Donald Trump won the presidency promising trade protectionism, unreformed entitlement programs, reducing immigration, and putting conservative judges into courts. None of those positions are particularly popular among the very wealthy.

However, Trump does support deregulation and tax cuts, which the wealthy have a relative preference for. But interestingly, not one CEO in the Fortune 100 had donated to Trump’s election campaign by September 2016. His victory did not stem from influence by the wealthy but more from grassroots opposition to wealthy coastal elites. The rich have less direct influence on electoral outcomes or policy platforms than is commonly believed.188

Some scholars disagree with that view. Using a data set primarily covering 1981–2002, Gilens analyzed the relative influence of high earners in situations when opinions between income groups differed.189 He concluded that the federal government is responsive to the public’s preferences, but it is more strongly responsive to the preferences of the most affluent. He focused on issues with an average preference gap in survey data of at least 10 percentage points between the rich and the rest and concluded:

When less‐​well‐​off Americans hold preferences that diverge from those of the affluent, policy responsiveness to the well‐​off remains strong but responsiveness to lower‐​income groups all but disappears.190
However, Gilens’s methodology is problematic.191 He admits there are exceptions to his conclusions, and we think those exceptions are large. On Social Security, Medicare, education, and public works spending, for example, policy outcomes appear more responsive to the preferences of the poor and middle class than the rich. Those policy areas account for about half of all federal spending.192 Adding in defense spending, which research suggests the super‐​wealthy also favor cutting, brings that share to more than 60 percent. Thus, for most of the federal budget, the reform approach relatively favored by the wealthy is generally not followed.

Gilens’ study exaggerates the influence of the rich for another reason. By looking at differences in the relative strength of support for policies, “a federal policy enacted with the support of 80 percent of the wealthy and 70 percent of the middle and lower class would count as evidence of the upper class’s greater political clout.”193 But that would be a policy that is strongly supported by all income groups.

In their 2017 study, Branham, Soroka, and Wlezien looked at policy outcomes just on those issues where majorities of the middle class and rich disagree.194 In these situations, the rich got their way 53 percent of the time versus 47 percent of the time for the middle class. That is a fairly small difference, though one that increases slightly in favor of the rich when there are stronger differences in opinion. In other words, when the majority of the rich favors a policy and a majority of the middle class opposes it, the policy is adopted 37 percent of the time, compared to 26 percent of the time when the rich oppose and the middle favor. Over the 22‐​year period examined by the authors, that means the rich got their way 11 more times than the middle class, equivalent to just one bill every two years. This indicates that the rich’s views may be favored in federal policy outcomes, but the size of the effect is small.

Finally, a statistical study by Eric Brunner, Stephen Ross, and Ebonya Washington found that the views of the rich were not favored in legislation. They created a unique data set based on 77 times from 1991 to 2008 that California state legislators voted on the same proposal as the public voted on in a referendum. They compiled information on the ballot votes by neighborhood income levels and found:

Contrary to popular view, we do not find that less income means less representation. Analyzing the voting behavior of state legislators on 77 proposals on which both the legislature and the public cast ballots, we find first that the opinions of higher and lower income voters within a district are highly correlated on these issues and thus it is impossible to represent the views of one group and not also represent the views of the other.

What differences there are in representation do not result in lower income voters’ consistent disadvantage. While Republican legislators more frequently vote congruently with the view of their highest income constituents, Democrats are more likely to vote the view of their lowest income constituents… . What is clear is that our findings on representation by income group have more to do with party than with income.195
Does Rising Wealth Inequality Undermine Democracy?
There is little evidence that wealth inequality undermines democracy today, but is there reason to worry about the future? Pessimists such as Milanović see us drifting toward plutocracy if wealth inequality rises and the wealthy take greater control of politics.

The wealthy have always been involved in politics, but politicians ultimately need votes, not money, and billionaires represent few votes. Consider that wealth inequality was higher across many Western countries in the 19th century and early 20th century to the extent we can measure it, but that was precisely when many nations were widening the voting franchise under pressure from the general public.

People, including rich people, vote based on many factors, not just their economic self‐​interest.196 Voters make choices based on ideological beliefs, personalities of politicians, and the stances of their favored parties, which stand on a bundle of electoral promises. Special interests influence politics, but that usually comes from organized groups representing substantial numbers of voters, such as industries and unions.

Little evidence exists that rising wealth inequality leads to political outcomes less representative of ordinary peoples’ preferences. Gilens’ work purports to show that the wealthy’s influence on policy outcomes has been rising since the 1960s, coinciding with rising inequality that has made campaign contributions from the rich more important.

However, Gilens’ results suggest that a party’s degree of political control is a far more important determinant of responsiveness than income levels. When a U.S. political party has a strong majority and political gridlock is low, policy outcomes are only weakly related even to the rich’s preferences and unrelated to the least well‐​off. Parties instead deliver on their activists’ preferences. Unsurprisingly, it is when elections are close or control of government uncertain that politicians appear to respond more closely to the public’s preferences.

Liberals worry that political contributions from the wealthy may buy politicians’ votes, but substantial evidence rejects that idea. In the final term of members of Congress, we might expect voting patterns to change as members have less need to attract donations. But economists Stephen Bronars and John Lott found no change in politicians’ recorded voting patterns in politicians’ final term.197 This supports the idea that donors donate to members they agree with, rather than donating in expectation of changing member votes.

Summarizing recent academic research, economist Thomas Stratmann found it showed that “campaign contributions have not had much of an effect on legislative voting behavior.”198 Similarly, a study by Stephen Ansolabehere, John M. de Figueiredo, and James M. Snyder Jr. examined 40 statistical studies on whether campaign contributions affected voting in Congress. They found, “contributions show relatively few effects on voting behavior. In three out of four instances, campaign contributions had no statistically significant effects on legislation or had the ‘wrong’ sign.”199 In their own statistical analysis, they found:

Overall, our findings parallel that of the broader literature. As regressions like these make clear, the evidence that campaign contributions lead to a substantial influence on votes is rather thin. Legislators’ votes depend almost entirely on their own beliefs and the preferences of their voters and their party. Contributions explain a miniscule fraction of the variation in voting behavior in the U.S. Congress. Members of Congress care foremost about winning reelection. They must attend to the constituency that elects them, voters in a district or state, and the constituency that nominates them, the party.200
Liberals also worry that wealthy people are more likely to favor cuts to social programs and that if wealthy people gain more political power, the welfare state would be cut. Yet, as wealth inequality has risen modestly since the 1980s, federal social spending has grown substantially, not shrunk. Total federal and state social spending as a share of GDP has risen from 9.6 percent in 1980 to 14.3 percent by 2018.201

Across countries there is no correlation between the wealth share of the top 1 percent and social spending as a percentage of GDP. This is clear in Figure 4 and confirmed by a simple regression analysis.202 Note that “social spending” is a broad measure created by the Organisation for Economic Co‐​operation and Development and includes “cash benefits, direct in‐​kind provision of goods and services, and tax breaks with social purposes.”203

Another worry is that money “buys” elections and that since the wealthy have lots of it, they have inordinate ability to move elections. Money is an important campaign resource, but it certainly does not guarantee outcomes.204 Donald Trump won the White House in 2016 even though his official campaign raised and spent just over half that of Hillary Clinton’s campaign.205 In the 2008 GOP primary, wealthy Mitt Romney spent more than twice as much as John McCain—much of it his own money—but McCain won the contest.206

The 2012 congressional elections are a prime example of the impotence of money when election winds are blowing the other way. The public swung to the Democrats that year, and GOP lobby groups spent huge amounts of money to dismal results. Karl Rove’s American Crossroads spent $104 million backing and opposing candidates and was successful in very few of the races it targeted.207 GOP‐​oriented lobby groups—such as the National Rifle Association and U.S. Chamber of Commerce—also did poorly.208

The Washington Post summarized the role of money in the 2012 election:

A clutch of billionaires and privately held corporations fueled more than $1 billion in spending by super PACs and nonprofits, unleashing a wave of attack ads unrivaled in U.S. history. Yet Republican groups, which dominated their opponents, failed to achieve their two overarching goals: unseating President Obama and returning the Senate to GOP control.

… Even in the House, which remains comfortably in Republican hands, GOP money groups struck out repeatedly in individual races they targeted … In 24 of the most competitive House contests, Democratic candidates and their allies were outspent in the final months but pulled out victories anyway.

… Wealthy donors were so central to Romney’s campaign that a swarm of private luxury jets caused a traffic jam at Boston’s airport Tuesday just before the nominee’s election‐​night party.

But conservative super PACs and secretive nonprofit groups—which spent up to $10 million a day on the presidential race alone—couldn’t move the needle far enough to prevail in almost any of the major races they targeted.

… Indeed, if election investments are like the stock market, a lot of billionaires just lost their shirts. American Crossroads, co‐​founded by GOP political guru Karl Rove, and Restore Our Future, which focused on supporting Romney in the presidential race, together spent more than $450 million, with little to show for it in the end. The groups relied on six‐ and seven‐​figure checks from energy executives, hedge‐​fund managers and other wealthy donors eager to oust Obama and congressional Democrats.209
Studies appear to show that even though money raised correlates with electoral outcomes, it is not the causal factor. Large amounts of campaign money do not buy elections, rather what usually happens is that highly electable candidates have an easier time raising money.210 Note that self‐​financed wealthy candidates tend to do relatively poorly at elections.211

Some liberals think that today’s level of wealth inequality is by itself evidence of the wealthy capturing the democratic process. They cannot see any other reason why policy­makers have not voted for higher taxes on the rich or more generous social programs than we already have. They seem to surmise that the rich must have lobbied to distort the public debate.

Instead, polling shows that many voters do not agree with more redistributionist policies or that they give it low priority. Two percent or less of the public say “the gap between rich and poor” is the “most important issue” facing the country.212 Even those who express concern disagree about what to do about it. Using surveys back to 1966, Graham Wright found that when concern for inequality rises, support for redistributive policies does not follow suit.213 Voters may not trust the government to effectively address the issue, or they blame government for creating the inequality. Polls also show that the public dislikes certain leveling policies, such as estate taxes on the wealthy.214 Many people seem to have views about what is “fair” that are unrelated to their level of income or wealth.

In sum, there is no clear evidence that wealth inequality undermines democracy in the United States. The wealthy do not have homogeneous political views, and where their views as a group do diverge from others, their preferences do not dominate legislative outcomes. The wealthy help fund campaigns and lobby groups, but the role of money in politics is complex. Studies and anecdotal evidence indicate that it is not easy to buy elections or votes in Congress.

Despite the anti‐​wealth rhetoric on the presidential campaign trail today, most Americans admire honest top earners and do not believe they are ruining democracy. A 2019 Cato‐​YouGov poll found that 62 percent of Americans surveyed do not believe that “billionaires are a threat to democracy” and 69 percent agree that billionaires “earned their wealth by creating value for others.”215

Nonetheless, the poll found that there is a large partisan divide over many issues regarding the wealthy. Political liberals tend to believe that political connections and luck are key factors in the success of the wealthy, while conservatives tend to think that hard work is more important.216 Some of the reforms we have suggested in this study—such as cutting cronyist subsidies and removing barriers to middle‐​class wealth-building—would help respond to liberal concerns but without undermining economic growth and incentives for wealth creation.

Citation
Edwards, Chris, and Ryan Bourne. “Exploring Wealth Inequality.” Policy Analysis No. 881, Cato Institute, Washington, DC, November 5, 2019. https://​doi​.org/​1​0​.​3​6​0​0​9​/​P​A.881.

Years ago, it was hard to be a racist. You had to be fitted for and spend money on a white gown and don a pointy hat. You celebrated racism by getting some burlap, wrapping it around a cross, setting it ablaze and dancing around it carrying torches. Sometimes, as did Lester Maddox, you had to buy axe handles for yourself and your supporters to wield to forcibly turn away black customers from your restaurant. Or, as in the case of Theophilus “Bull” Connor, you had to learn to direct fire hoses and vicious police attack dogs against civil rights demonstrators.

Younger racists, along with their parents, had to memorize poems for whenever a black student showed up for admission to their high school or college. For example, “Two, four, six, eight, we don’t want to integrate!” Of course, there were a host of racial slurs and epithets that could be hurled, with impunity, at any black person in your presence. In earlier times, you didn’t have to be sophisticated, but it took a bit of work, to be a racist.

Today, all that has changed. To be a racist today takes little effort. For example, one can sit back in his easy chair and declare that he’s for across-the-board tax cuts. That makes you a racist. If you don’t believe me, think back to 1994 when the Republican-led Congress pushed for a tax-cut measure. Former U.S. House of Representatives member Charles Rangel, D-N.Y., denouncing the Republicans’ plan before a Manhattan audience as a form of modern-day racism said: “It’s not ‘spic’ or ‘n——-’ anymore. (Instead,) they say, ‘Let’s cut taxes.’ ” A few months later, he compared the GOP’s “Contract with America” to measures in Nazi Germany saying, “Hitler wasn’t even talking about doing these things.”

Perhaps the easiest way to be labeled a racist is to suggest that a wall be built on our border with Mexico to keep people from Mexico and points south from entering our nation illegally. Also, a slam-dunk charge of racism is to say that the standard practice of separating children from parents is Nazi-like. But imagine you are stopped with your child in the car and charged with a DUI in any of our 50 states. You’re going to be arrested and your child taken to protective child services. The identical practice on our southern border becomes racism.

As veteran journalist Brit Hume said about the uproar over President Trump’s latest bomb-throwing: “Trump’s ‘go back’ comments were nativist, xenophobic, counterfactual and politically stupid. But they simply do not meet the standard definition of racist, a word so recklessly flung around these days that its actual meaning is being lost.”

The president cleaned up his remarks a few days later saying: “These are people that hate our country. If you’re not happy in the U.S., if you’re complaining all the time, very simply, you can leave.” By the way, leaving isn’t Trump’s idea. Many leftists pledged to flee America altogether if Trump were elected president.

The bottom line is that when leftists have no other winning argument, they falsely accuse others of racism. Republicans cower at the charge and often give the leftists what they want. Black Americans who are octogenarians, or nearly so, need to explain what true racism is, not to correct white liberals but to inform young black people.