Need Help Critiquing the Leftist Economic Narrative

I think I've seen enough arguments presented by the Left to understand their basic talking points on the economic situation in America. It goes something like this:

-We used to have larger middle class in America where there was less of an income disparity between the lowest and highest on the scale.
-The social safety nets, progressive tax rates and organized labor movements that originated in the early half of the 1900's were largely responsible for the strength of the middle class through much of the century.
- The tax cuts and deregulation that began in the 1980's have worked to concentrate wealth further into the hands of the few, and it's destroying the middle class and creating a more polarized world of a very wealthy few and masses of poor people
- The most recent market crash is largely due to the failure of the government to regulate derrivatives markets. Free market ideologues (like Greenspan, his role in central banking notwithstanding) resisted these regulatory efforts citing faith in the self-regulatory powers of markets (firms wanting to maintain/increase profitability will not be likely to take excessive risk). The crash proves that "blind faith" in markets can't be trusted.
- The way to reverse course and save the middle class is to increase taxes on the wealthy, expand the social safety net, increase regulations and temporarilly perform Keynesian stimulus measures.

What is the best narrative, if any, to counter this argument in terms that don't require a detailed "first princples" explaination of Objectivism? The above points are taken as gospel by many and it can be frustrating to have an open discussion with people who hold this view, but I still think it's important to have sound arguments available for people who are on the fence.

Post 1

Wednesday, October 5, 2011 - 8:39pm

Well, what we've created is a bailout society in which people do not have to bear the consequences of their own indiscretion and irresponsibility. We bail out the poor; we bailout the banks; we bail out the insurance companies; we bail out the auto manufacturers, and so on. In doing so, we've created a moral hazard in which people are motivated to take excessive risks, because they know that the government will come to their aid if they fail.

Furthermore, the entire housing crisis was initiated by the government's demands that the banks lower their lending standards, so that poor people could acquire a greater stake in home ownership. The banks were pressured into making bad loans by the government's policies, which led to other kinds of irresponsible financial incentives. Now people are blaming the banks and the financial sector for the fact that people are losing their homes to foreclosure. They're blaming the rich, Wall Street and capitalism.

The fact that we don't have a private banking system with all the checks and balances that that would imply is completely overlooked. The fact that if you hold people responsible for their actions and don't bail them out, they will become far more prudent and careful in how they manage and lend their money is completely ignored. Why? Because the premise is that we are our brother's keeper -- that we can't just let people fail -- that we have to bail them out, because not to do so would be heartless and inhumane.

The crisis we are now experiencing is a moral crisis brought on by a bankrupt morality -- the morality of altruism and entitlements. But this fact is never ever recognized or acknowledged by the critics of capitalism, who persist in blaming greed and the profit motive for the problems they are currently experiencing.

Post 2

Thursday, October 6, 2011 - 12:03am

I agree with Bill's post. Here is another approach:

The middle class is created by prosperity that arises from a free economy. The time of the largest middle class was before the economy started carrying heavy debt, high taxes, and a large regulatory burden.

The large welfare programs have the effect of making poverty built in place. Free enterprise allows upward mobility - far more of the poor move up into the middle class.

Crony capitalism has the same kind of stultifying effect on the high income groups - they get wired in place through special regulations, special privileges, bail outs and subsidies.

Small businesses don't get those exemptions, subsidies, privileges, and bail outs - and this is where the middle class has its greatest strength - all the many, many small businesses.

Big government that engages in crony capitalism (from the right or the left) and that engages in welfarism will lock many people into poverty while strangling the middle class and feeding those crony millionares and special interests at the top of the income range.

The argument that social safety nets, progressive tax rates and labor unions built the middle class depend entirely on the economic fallacy that you can take money away from producers and give it to those who aren't producers and end up with a gain. Marxist twaddle.

Progressives blame others for "polarizing" politics, and then in the next sentence fire up class warfare, demonize the rich, treat business as evil, and encourage the poor to adopt victimhood as a life-style.

Progressives don't understand the generation of wealth which is what free enterprise does (which they also don't understand). They think that wealth is static - a pie that has to be divided.

The banking industry is one the most heavily regulated areas in the country. They have been deprived of free market influences for a long time. The very price of money - interest rates - is, at the big bank level, set by the fed.

It was the regulations that caused the market crisis. HUD, CRA, Land use restrictions, Fannie, Freddie, and the Fed. Remember that not a single one of those derivatives would have been a bad investment if it hadn't been for HUD forcing lenders to make sub-prime quotas to meet the Community Reinvestment Act, Fannie and Freddie with their government backing (socialized losses and privatized profits) buying bad loans to package, and the fed to feed the bubble with fiat money and artificially low interest rates.

When government provides bail-outs there is no risk - that isn't free enterprise. Anyone that says it was blind faith in free markets that caused the crash is blind to the absence of the "free" part of the markets.

Progressives act as if they are working on sound political/economic principles. But those principles are the ones Marx and Keynes promulgated and they don't work. They have been disproved - they are wrong (you can't make wealth by taking money from producers and giving it to those who just consume or waste). Also you don't increase wealth by increasing regulations (restrictions on actions the businesses that would otherwise take to create more wealth).

Wealth is the tide that raises all boats. Confiscation and regulation is the tide going out. History stands behind the efficacy of free enterprise lifting much of the world out of poverty.

But this argument will never be won on economic points, or history, because it isn't the real reason for the progressives actions or beliefs. They want control. They see themselves as ideological elites and they won't ever give up on centralized control. They will ultimately insist on reducing rights till their control is absolute. Wealth redistribution, scare tactics on "emergencies", so called social justice... these are just strawmen arguments and if you were able to knock one down so badly that it couldn't get back up, they would change arguments.

This will have to won on moral principles. They don't have the right to take my money or yours. Point out the flaws in their economic/political/historical stories, but then hit hard with the moral argument.

Post 3

Thursday, October 6, 2011 - 6:07am

We used to have larger middle class in America where there was less of an�income disparity between the lowest and highest on the scale.

Some of this is due to low-wage�immigrants. See the statistics illustration here. Also, most such claims are based on simply pre-tax�income. Using after-tax income and adjusting for unreported income, public and private charity, and so forth�lessens the disparity. Of course, getting the statistics to recognize the additional items�is much harder than simply looking�at the IRS's pre-tax income statistics.

(Edited by Merlin Jetton on 10/06, 7:07am)

Post 4

Thursday, October 6, 2011 - 10:47am

Also, on the question of income inequality, why is equality of income a standard of economic value or of social justice? Which would you rather have -- a society in which everyone is equally poor or one in which everyone is unequally rich? And if the latter, then income equality is not a standard of economic value. A proper standard of economic value is how well off people are in objective terms, not how well off they are relative to their neighbors. This whole focus on income equality is a legacy of communism and of socialist egalitarianism. Yet, it persists even in economics in a focus on such things as the Lorenz curve.

See in this connection my article, "The Justice of Inequality."

http://rebirthofreason.com/Articles/Dwyer/The_Justice_of_Inequality.shtml

Post 5

Thursday, October 6, 2011 - 4:33pm

Pete,

I've found that there is one HUGE pitfall I have to avoid when arguing with lefties. I have to avoid, at all costs, sounding like a righty. Lefties are used to being attacked by righties. They know all of the arguments and all of the counterarguments. They are comfortable with them. When you point out the ways in which socialist ideas just won't work, they hear exactly the same things that righties tell them all of the time. Their eyes glaze over, they assume you are a corporatist / fascist nazi who wants to make rich people richer at the expense of the "working man" and their minds slam shut against anything else you have to say.

To avoid this pitfall, I have been experimenting with a different approach, inspired by Ayn Rand herself. When I argue with a lefty, I start out by attacking the right! If there is one group that lefties REALLY hate, it's the Robber Barons. So, I start off talking about how everything was just great before THEY came along, suborned government to their will, and gained unfair advantages in the marketplace which gave them great power and monopolies. Now, you know that what I just described is the process by which the Robber Barons subverted pure capitalism, and that a return to pure capitalism would solve the problem. It's best not to say that to your lefty friend just yet though. As soon as he hears "return to pure capitalism", his ears will slam shut and his head will explode. That can be messy. Instead, just get him nodding his head, agreeing with you, and opening his mind to you while you talk about the tyranny of the Robber Barons as though it's something he already knows all about. Gradually work in the fact that government intervention in the economy, on behalf of the evil Robber Barons, stifled competition and hurt the little guy. Since there was no competition between employers, they could offer very low wages and poor working conditions to potential employees who had no other viable options. Then talk about how the government, at the behest of the Robber Barons, was essentially stealing money and power from the "working man" and giving it to the giant corporations. Of course, this all violates the principle that "stealing from one person to give to another is bad." He might start to get a little suspicious at this point. However, as long as you continue to expound upon that solid, unchanging principle, based on the fundamental reality of human existence, that stealing from the little guy to support the big guy is "bad" then he will most likely continue to go along with you, probably even defend you against other people who may be chiming in from the Right. Of course, as an objectivist you know that when you describe "A principle that limits our freedom to take money from one person and give it to another" you are really just describing "Property Rights." You might even be able to get away with using the term "property rights" so long as he still thinks you're only talking about the property rights of the "working man" and not of the "evil corporate Robber Baron bastard."

It's important to note that you haven't lied to him, nor have you abandoned your own Objectivist Principles. You have simply explained how YOUR principles are the same as HIS principles. You have established that you are not the "right wing capitalist pig" enemy that he despises and mistrusts.

Now you can begin the delicate process of explaining that the excesses of the Robber Barons were destroying liberty (the condition where all rights are preserved) in The U.S.A. In fact, even though their actions and policies actually had the short term effect of great growth of industrial power in the United States, that growth came only at a greater cost to society as a whole through loss of liberty and in the longer term had catastrophic effects on the economy. Progressive policies sought to redress those wrongs by creating laws that favored the "common man" over the "rich fat cat." He will probably still be nodding along, maybe even slapping you on the back and calling you "comrade." However, it is at this point that you start to explain to him all of the ways that his socialist policies are the exact same evil as the fascist policies of the Robber Barons, just applied in the opposite "direction." You explain that the Progressive policies of Woodrow Wilson and the later "New Deal" policies had the short term effect of propping up the middle class, but only at the expense of liberty for society as a whole. It is at this point that you remind him that if the principle of "stealing money is bad" is true, then it must be true for EVERYBODY (at this point I usually have to explain to him exactly what a "principle" is, how you arrive at one, and why it's impossible for valid principles to contradict). You don't want to support the corporate fat cat over the working man; you want to treat everyone fairly. I'm sure you know the rest of the argument from here. Just be sure to always couch it in terms of "We don't want to be like those evil Robber Barons."

You will still have a tough road to go. Nobody likes to have their core beliefs and values completely ripped out from under them. However, at least you will have the advantage of getting him to give your ideas a fair hearing rather than just shutting you out as soon as he hears the words "capitalism" or "property rights." If you are lucky, he will come away with a few new, reasoned thoughts. It's highly unlikely that he'll fall down weeping at your feet and concede that he's always been wrong, so wrong. If he says you've changed his mind about one or two things, but he wouldn't go to the "extreme" of eliminating "ALL" compulsory taxes, then you've won a great victory. Don't ruin it by trying to "force" him to the logical conclusion that ALL taxes are evil. Just plant those seeds in his head. Let him understand that YOU think all taxes are evil, maybe even touch on the fact that principles are ALWAYS true within their context. If stealing is always bad, then stealing can't also be sometimes ok. Try not to get roped into a conversation about how we will have any roads or FDA if we don't have taxes. Patiently explain that our laws must be based on principles and we must agree on the principles before we can hope to agree on the laws (a very brief discussion of Ethics and Politics and the fact that they are actually well-defined branches of philosophy will probably leave him overawed with your scholarly knowledge - using the word "epistemology" will probably make him faint). Then let it go. If he has any rationality at all, he will work it out on his own eventually. It has taken me a year or two to completely convert from a traditional right wing conservative belief system to an Objectivist one, and I consider myself to be much more of a realist than most people - certainly more so than most liberals. It will take your friend some time as well.

Post 6

Friday, October 7, 2011 - 10:28am

PMH,

You wrote,

I have been experimenting with a different approach, inspired by Ayn Rand herself. When I argue with a lefty, I start out by attacking the right! If there is one group that lefties REALLY hate, it's the Robber Barons. So, I start off talking about how everything was just great before THEY came along, suborned government to their will, and gained unfair advantages in the marketplace which gave them great power and monopolies.

You want to be careful here to distinguish between those businessmen who were commonly regarded as robber barons, but who earned their wealth in legitimate competition, and those who gained it through government subsidies, grants, special privileges and tariffs. See in this connection The Myth of the Robber Barons by Burton W. Folsom, Jr. See also Rand's essay, "Notes on the History of American Free Enterprise" in Capitalism: The Unknown Ideal, in which she points out that "the actions blamed on businessmen were caused, necessitated and made possible only by government interference into business. As she says, "The evils, popularly ascribed to big industrialists, were not the result of an unregulated industry, but of government power over industry. The villain in the picture was not the businessman, but the legislator, not Free Enterprise, but government controls."

Now, you know that what I just described is the process by which the Robber Barons subverted pure capitalism, and that a return to pure capitalism would solve the problem. It's best not to say that to your lefty friend just yet though. As soon as he hears "return to pure capitalism", his ears will slam shut and his head will explode.

You might stress the phrase "laissez-faire" capitalism in contradistinction to "crony capitalism," which is what we have now.

Gradually work in the fact that government intervention in the economy, on behalf of the evil Robber Barons, stifled competition and hurt the little guy. Since there was no competition between employers, they could offer very low wages and poor working conditions to potential employees who had no other viable options.

This too is a myth. With the rare exception of monopsony (the existence of only one employer in a particular community), there was always competition among employers for employees. This is born out by the fact that wages were nearly always rising under non-union capitalism. (See in this connection, Morgan O. Reynolds Power and Privilege: Labor Unions in America., p. 26)

Then talk about how the government, at the behest of the Robber Barons, was essentially stealing money and power from the "working man" and giving it to the giant corporations.

Really -- in the early days of capitalism? I wasn't aware of this. How exactly did the government do this? -- steal money and power from the working man?

Of course, this all violates the principle that "stealing from one person to give to another is bad." He might start to get a little suspicious at this point. However, as long as you continue to expound upon that solid, unchanging principle, based on the fundamental reality of human existence, that stealing from the little guy to support the big guy is "bad" then he will most likely continue to go along with you, probably even defend you against other people who may be chiming in from the Right.

I think this is the wrong approach. You're evidently trying to trick him into agreeing with you. The principle is not simply that it's wrong to steal from "the big guy" and give "to the little guy"; it's that stealing is wrong on principle regardless of who the victim is, whether it's the rich or the poor. I don't think your leftist opponent will agree that stealing is wrong on principle, because he doesn't share your premises.

Of course, as an objectivist you know that when you describe "A principle that limits our freedom to take money from one person and give it to another" you are really just describing "Property Rights." You might even be able to get away with using the term "property rights" so long as he still thinks you're only talking about the property rights of the "working man" and not of the "evil corporate Robber Baron bastard."

You see, that's my point. He's not going to agree with you on the broad principle of property rights, because he doesn't believe in it.

It's important to note that you haven't lied to him, nor have you abandoned your own Objectivist Principles. You have simply explained how YOUR principles are the same as HIS principles.

But they're not, and you're evidently trying to trick him into thinking they are.

Now you can begin the delicate process of explaining that the excesses of the Robber Barons were destroying liberty (the condition where all rights are preserved) in The U.S.A. In fact, even though their actions and policies actually had the short term effect of great growth of industrial power in the United States, that growth came only at a greater cost to society as a whole through loss of liberty and in the longer term had catastrophic effects on the economy.

I don't think you can say that the "great growth of industrial power in the United States" was due to government enforced monopolies; in the absence of the government's intervention, it is likely that the growth of industrial power would have been even greater. Government granted monopolies more likely retarded that growth.

Progressive policies sought to redress those wrongs by creating laws that favored the "common man" over the "rich fat cat." He will probably still be nodding along, maybe even slapping you on the back and calling you "comrade." However, it is at this point that you start to explain to him all of the ways that his socialist policies are the exact same evil as the fascist policies of the Robber Barons, just applied in the opposite "direction." You explain that the Progressive policies of Woodrow Wilson and the later "New Deal" policies had the short term effect of propping up the middle class, but only at the expense of liberty for society as a whole.

I don't know what you mean by "propping up the middle class." Wouldn't the "middle class" have been better off without the New Deal policies?

At any rate, I don't think this approach will work, and I don't think that died-in-the wool leftists are likely to be "converted." Your time is much better spent appealing to people who are not already committed leftists or statists.

Post 7

Friday, October 7, 2011 - 11:06am

PMH,

I couldn't agree more with what Bill just said. First, you really won't convince the committed left. Time spent trying to trick, or overpower with reason, or persuade with appeals to fairness, or... anything else, will be mostly a waste, whereas the same time and effort delivered to those who are open to hearing a new idea will be rewarding. It is hard to walk through a closed door.

Even an up-front, honest, head to head debate with a committed progressive will benefit him by treating his positions as if they were as worthy of consideration - as if tyranny might be equal to freedom. It would only make sense if the debate was done in front of an audience of those still open to persuasion - for their benefit. And that is a major shift in motivation and leads to a major shift in style - you are offering clarity to those third parties, and providing new facts, and better understanding. People will pick up on that and contrast it with trickery, empty rhetoric, and hidden agendas coming from an opponent.

Just as in economics we seek to engage in trade - an exchange where both benefit - we should direct our efforts to providing our principles to those who find themselves delighted with the new understandings they gain. This framework puts you both on the same side, moving towards common goals, encourages greater openness, can lead to greater trust. The other approach goes the other direction and puts you in the uncomfortable position of siding with deceit as a tool.

Post 8

Friday, October 7, 2011 - 1:05pm

Tell him that in this political context, you're an advocate of free association, not forced association. Then, ask _him_ to justify _his_ advocacy of forced association in _this_ political context.

If/when they appeal to 'love your neighbor' arguments as justification for forced association, ask if in a free nation, when neighbors love each other, if we should ask each other as peers living in freedom, or if we should tell each other as emperor wannabees?

Because in fact, 'love your neighbor' is not even possible at the point of a gun, so dragging it into political arguments in support of forced association is a non-starter.

Lefties are convinced of the moral superiority of their religious arguments(based, for one example, on Scott Nearing's "Social Religion" from 1906)...in favor of forced association, at the point of a gun.

And yet charity, compassion, benevolence...none of that is even possible under a paradigm of forced association, at the point of the gun. What is possible at the point of a gun are economies that look for all the world like giant middle fingers raised at each other.

Seen anything like those recently? How is the point-of-a-gun model working out for those it is supposedly aimed at helping? After 80 years of New Deal and 50 years of Great Society, the jury is more or less in: FAIL.

Notice the glaring nonsense of Buffet's lament: what in the world is possibly keeping _him_ from spending _his_ billions anyway _he_ sees fit? Write out a check, send it to the Treasury. There is an established address for this. But...not enough for him; he has a pressing desire-- but no argument -- that he should be able to to access the guns of government and point them at others and have them involuntarily join _him_ under _his_ paradigm of forced association, dedicated to the task of implementing _his_ worldview for _him_; assuaging _his_ guilt, treating _his_ aged wealth derived neurosis. As if _he_ was really anointed emperor by some process. A political process? Not even. I think he's senile.

Just like everywhere else this slow march to Hell has been tried, it is usually somewhere near this point in the FAIL that the tribalists lose all pretense at politics and impatiently wax violent; the point of pointing real guns at real people to force them to implement our worldview for us is that eventually we are going to pull the trigger, else why do it?

Piekoff's "Ominous Parallels" ended way too optimistically when he wrote it a few decades ago; today, I wonder if he'd have the same optimistic 'probably not here' conclusion?

Post 9

Saturday, October 8, 2011 - 8:20am

In fact, even though their actions and policies actually had the short term effect of great growth of industrial power in the United States, that growth came only at a greater cost to society as a whole through loss of liberty and in the longer term had catastrophic effects on the economy. Progressive policies sought to redress those wrongs by creating laws that favored the "common man" over the "rich fat cat." He will probably still be nodding along, maybe even slapping you on the back and calling you "comrade." However, it is at this point that you start to explain to him all of the ways that his socialist policies are the exact same evil as the fascist policies of the Robber Barons, just applied in the opposite "direction."

Basically, you would be explaining that the ...

Progressive policies sought to redress those wrongs by creating laws that favored the "common man" over the "rich fat cat."

... is nothing more than an expedient and cut-throat reaction to public sentiment. Think of a heroin pusher. He knows that if folks try heroin, then they will have a strong tendency or sentiment to keep coming back. In what looks like a display of 'pure-hearted altruism', he offers the folks passing him by a free heroin dose. But it never was about helping others, it was about taking advantage of their sentiments -- expedient, cut-throat, and predatory. It is their sentiments he is taking advantage of and, in doing so, not respecting them as individuals. The same is true of FDR & Co.

Ed

(Edited by Ed Thompson on 10/08, 8:21am)

Post 10

Saturday, October 8, 2011 - 9:55pm

Geez...what a terrible approach, PMH. You should really listen to this http://www.aynrand.org/site/PageServer?pagename=reg_ar_robber_barons

Post 11

Wednesday, October 12, 2011 - 5:46am

Fred I agree with your statement of what Piekoff would write today if he witnessed the state of the united states today.
Economic turmoil coupled with everyone pointing their fingers at the very people that make the country great as being scapegoat for everything that is wrong.

Homeland security...might as well call it what it is..one step closer to ss thugs.

It isn't too late though reason still has a voice, the existance of this website is evidence of that.

Post 12

Wednesday, October 12, 2011 - 12:55pm

Maybe slightly off-topic but I couldn't help thinking about an argument I had with my friends sister (a die-hard "intellectual" far leftist) about economic politics.

During an especially heated argument we had, she kept trying to appeal to my sense of solidarity with the poor and down trodden. I personally view this as a non sequitur as I regard my having or not having feelings of solidarity towards someone I don't know to be of no interest to, let say, the act of paying tax. However, she thought she could score some cheap points against me with the others that were listening, and make me out as a cold hearted fool. I just calmly asked her: "Do you then believe that it is possible, by use of force, to instill compulsory feelings of solidarity?"

She had no answer and have not tried to have an argument with me ever since. I have used that question several times since, to much the same effect every time, when they try to motivate their position by appealing to emotions.

Post 13

Wednesday, October 12, 2011 - 1:21pm

Carl, Good point. Cheers.

Post 14

Wednesday, October 12, 2011 - 4:09pm

Technically, "Solidarity" is a term used in Marxist rhetoric as a peer pressure type of argument, and a generalization where collectivism is the 'standard.'

Most people who use the term don't grasp the actual meaning or the lack of logic involved.

I'd just say, "I always feel sympathy for those who are stuck in poverty for no fault of their own, but as a group, I feel more affinity with those who are producers, inventors, employers, teachers, and workers. To me, the important thing is to achieve solidarity with the system that does the best job of letting the poor improve their lot in life. Free markets do the best job of lifting people out of poverty."

Post 15

Monday, October 31, 2011 - 6:03pm