Is Economic Equality Worth the Loss of Prosperity?

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As our nation remakes itself into a European social democracy, bidding farewell to American Exceptionalism, we hear constant calls for "sacrifice." Have you wondered exactly what it is that we've been asked to give up?

The radical idea that all men should be equal before the law, each free to pursue happiness using his own means, created a nation of innovators that transformed the world. American culture had little tolerance for hereditary privilege, instead celebrating the self-made man accepting unequal outcomes as the price society pays to motivate entrepreneurial risk. Our founding social contract gave almost everyone a shot at riches but guaranteed outcomes for none. The system lasted 200 years because the same market that rewarded innovation eventually spread its fruits to even life's laggards. In the historical blink of an eye material luxuries became necessities became basic human "rights."

Has there ever been a more rapid increase in living standards than that delivered by this unprecedented revolution in liberty? Millions flocked to our shores escaping political policies we now rush to embrace. They - we - lifted ourselves from poverty to prosperity in as quickly as a single generation.

As predicted by those founders most skeptical of unbridled democracy, it could not last.

In response to the occasional economic reversals that are part and parcel of the freedom-to-fail, our government ratcheted up a safety net that became a cushion that threatens to become a smothering blanket. Will it snuff out the fires of innovation as it attempts to spread heat from the dying embers of what we once were?

In other words, are you prepared to give up material progress in return for economic equality?

Examples abound of countries that have made this tradeoff. They can be wonderful places to visit, though one wouldn't want to start a business there. Which is why their best and their brightest usually came here. Or at least they used to.

Do you believe Congress can legislate equality of outcomes without destroying our unique heritage of innovation? By what magic do you hope to escape the accumulated consequences of these decisions?

How do you track innovation that never happened? America's coming descent will go unmeasured, making it difficult to sound the alarm. What agency will catalogue the businesses that were never started, the products that were never launched, the immigrants who choose to go elsewhere, and the brilliant foreign students who returned home after being educated here?

The populist press lauds the "success" of multi-billion dollar Congressional giveaways designed to stimulate consumers to buy cars from government-run zombie companies. Who counts the new companies that could have been created with that money had it been left in the hands of the people who earned it?

Political entrepreneurs outnumber market entrepreneurs in the Energy and Cleantech sectors, both described as linchpins of our future economy. The percentage of preposterous business plans being funded exceeds the worst excesses of the era. mistakes were eventually corrected at the expense of foolish investors. But green success is not measured in profits earned but in grants and subsidies obtained. Does it matter that the fundamental economics of many of these companies destroy rather than create wealth? Who cares, haven't we been told that wealth is wicked? How can a business be sustainable if it consistently generates less economic value than it consumes? Cultural leaders assure us that true value cannot be measured in dollars. If public money backs these pseudo-businesses, who pays the price when they fail? You know the answer to that one.

Many are clamoring to vote our physicians into lives of public servitude. What clause in the Constitution gives Congress the power to do that? Who will catalogue the young people who choose not to go into medicine or the established doctors who retire early in disgust? What statistic will track surgical techniques that are never developed because some surgeon-to-be decided that there was no payoff for the grueling years of training?

Everyone knows that most jobs are created by small businesses. So why does it make economic sense to strangle them with mandates, clobber them with taxes, and then hand the money over to giant corporations whose main expertise is in using campaign donations to purchase favors? As we count the jobs "saved" at dinosaur companies spared the market's judgment by the bailout of the month, who will measure the small business payrolls that never expand because they've been forced to foot the bill?

Pundits and politicians tell us that equality is ours for the asking. Who will remind us to be careful what we wish for?

Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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