One Final Shoe Drops: Redistributive Justice

Well, we really are living in the Age of the Blogosphere, because some jamoke found an absolute screaming bombshell of a radio interview.  It’s up on Drudge (www.drudgereport.com) and it’s an interview with Obama from Sept. 6 of 2001.  If there were any thoughts that the Joe the Plumber comment on “sharing the wealth” was an unfortunate choice of words in the heat of the moment, it is time to cast those thoughts aside.

Obama is a socialist.  Plain and simple.  He wants to do economic justice via confiscation and redistribution.  He thinks it would be fine if the courts did it, but isn’t sanguine about that route — legislation, in his opinion, is the more reliable route.

It is a legitimate position, a defensible theory of government.  The jury is still out on whether it can produce a just and viable society.  Until recently, it felt like something closer to capitalism was winning the day, but with what’s going on in the financial markets, the argument over the proper “amount of government” has certainly gotten more heated.

It is okay to agree with Obama on this, and ok to vote for him because of it.  But let’s stop pretending he’s something other than a socialist.  That is FLAT OUT what he is.

Advertisements

12 Responses to “One Final Shoe Drops: Redistributive Justice”

  1. Mark Grannis Says:

    That’s quite a find. Some caveats are required, of course. The written subtitles struck me as pretty misleading, and (partly for that reason) I hesitate to draw too strong a conclusion about the excerpts spliced together here. I hope someone posts the full interview.

    Despite those caveats, I think it is clearly the case that Senator Obama favors redistribution of wealth by means of tax policy, public spending, and public control over firms and individuals. One can certainly call that socialism without doing violence to the language.

    However, when the McCain campaign claims that “Obama is a socialist,” they clearly mean to imply, “and McCain is not.” And this seems to me to be false for all honorable intents and purposes. For one thing, if we use a broad definition of socialism so as to catch redistributive economic policies and regulations, then almost everything our current federal government does is socialism. Progressive taxation is redistributive; the medicare drug benefit (like the rest of medicare) is redistributive; the mortgage interest deduction is redistributive. Good heavens, even deficit spending is redistributive, as it tends to put uninflated dollars in the hands of contractors who receive money directly from the government, whereas rising prices reduce the purchasing power of those dollars before they are received by people farther down the economic ladder. So any difference between any two major-party candidates on redistribution of wealth is necessarily a difference of degree rather than of kind.

    More to the point, perhaps, John McCain’s own record makes him an unusually poor candidate to fling this charge around. He has been in Congress for 25 years, and for the last eight of those years he has fully supported the largest increase in federal spending at least since LBJ. He supported the recent Wall Street bailouts, and even suggested buying up individual mortgage loans. One of his signature legislative achievements was to expand, significantly, government control over private political expenditures. This is not a man who thinks a great deal of the rights of private property, which I think is part of the reason he is being thumped so soundly. Even people of modest education know there’s something wrong with Obama’s economic policies, but if they can’t articulate it for themselves the Senator from Arizona is worse than useless.

    I think it is entirely proper to be alarmed at the alacrity with which the federal government is taking ownership stakes in banks and insurance companies, doling out other forms of financial assistance to other favored industries, pumping up the money supply, and in general, attempting to abolish one kind of healthy economic risk after another. Indeed, as readers of this blog know, I’m extremely alarmed. I think it is entirely reasonable to think that we may well be witnessing an important turning point in American history, the point at which we decided collectively that the economic freedom we have enjoyed until now is just too risky and we’d rather give government the power to “protect” us from our freedom to fail. But if that is indeed happening, it is not because Senator Obama is a socialist (in some way that Senator McCain is not), it is because too few of us know or care what the trouble with socialism is.

  2. Timothy Peach Says:

    While forced to concede an entirely academic point to you, Granulous, that is to say, that it is almost impossible to conceive of government of any kind without some form of “redistribution” going on, the clear point here is degree.

    Only those who would abolish taxation and practically all government spending could claim to be “non-redistributionalists”. It is difficult for a rational person to be entirely against redistribution in any form.

    Outside that context, to claim that Obama’s message in that interview is practically indistinguishable from McCain’s views is right up there will those espousing moral equivalence between Hizbollah and Israel… I mean after all, aren’t both of them just trying to protect their people? (Another statement, incidentally, that Obama has been more than ok with in the past.)

    What Obama is advocating, in that interview, is about a sand wedge away from the reparations position of Jesse Jackson and Al Sharpton. It’s the sort of chat that Louis Farrukhan listens to and says to his team, “Don’t worry about campaign centrism. This guy has our backs.”

    I’ll repeat it — he advocates a defensible approach in this interview, and with Joe the Plumber. I myself can make the case for reparations if pressed.

    All I am pointing out here is that this is who this guy is. There has been a concerted effort by the MSM to keep the light off that brute fact until the polls close on November 4. This is because they know it’s a deal killer.

    I have a lot more respect for folks who are going to the polls and pulling the lever for the real Obama than the ones who are backing the fictional one created and sustained by the Obama campaign and the media this past year.

  3. David Fitzgerald Says:

    I don’t know Tim. Obama himself has been pretty clear on his economic priorities and I don’t think anyone should be surprised by what he will do.

    We know:

    1. He is going to raise taxes on those with AGI over 250K
    2. He is going to seriously explore eliminating payroll tax caps for the same bracket.
    3. He is going to severly limit the ability of mortgage servicers to foreclose on primary residences.
    4. He is planning significant public expenditures for health care, energy, infrastructure and education; and
    5. he is going to provide significant public assistance to those behind on their mortgages.

    That’s a pretty heavy redistributive platform and anybody that pulls the lever for Obama and is surprised by it is a fool.

    Whether or not this makes Obama a “socialist” seems to me a bit beside the point. Clearly, he is arguing that economic policies which allow individuals to freely deploy capital in an unrestricted manner have failed. As this is the essential element in the Laffer-Reagan supply side calculus, an Obama presidency will be a radical departure from the ecomonic principles we have lived under for a generation. I don’t think he himself or the “MSM” has in any way hidden this fact, although he has cloaked it in populist rhetoric. McCain, Fox News and the WSJ Editorial page are certainly doing all they can to let voters know that a vote for Obama means a vote for this radical departure. This campaign has presented the people with a clear choice, they know what they are getting and they have no cause to complain when they get it.

    I leave you with one final thought. I pitied Alan Greenspan the other day before Congress. Here’s a guy who, in his 80s now has to confront the fact that the basic assumption of his career, that people behave rationally and in their self interest, has been blown apart. It was as if the whole Augustinian tradition of Western thought had passed this guy by.

  4. Timothy Peach Says:

    That’s sort of fair, David, but two things:

    First, on Greenspan. His total failure isn’t a failure of capitalism. He gave capitalism a truckload of amphetamines and expected no one to take them. Without that idiot constantly hitting the nitro button, this economy nevers spins out of control. He wasn’t wrong philosophically, I guess, but he WAS an IDIOT. Perversely easy money and the refusal to permit even the shallowest recession EVER isn’t capitalism. It’s “one way socialism”.

    On Obama — does any honest person pretend MSM coverage has been balanced? Front page stories on Palin’s wardrobe and we have to rely on Internet nerds to come up with real and relevant radio interviews?

    Most ordinary folks voting for Obama actually believe they’re going to get a tax cut in the natural sense, because Obama says it, and no one questions it in the media. You know what they’re going to get? First, a reversal of the Bush tax cuts, putting everyone in higher tax land, and then perhaps a cut from there which will likely simply steepen the redistribution curve even further. Into European territory, very likely. No or negative taxes on the widening bottom (sorry Granulous about the stealth insult), higher everywhere else.

    If you’re making 60k in Ohio, and you end up paying more taxes but less than you would have if nothing were done after letting the Bush tax cuts expire, would you call that a “tax cut”?

  5. David Fitzgerald Says:

    Tim, I think your points are related. If the guy who will be working for Joe the Plumber votes for Obama next week, it won’t be because he thinks his federal tax bill will have a $500 delta. Working people are not now, and have never been, “capitalists” in any meaningful sense. To the extent they have voted Republican on economic grounds at all in the last 25 years, I believe it is because they have bougt into the “rising tide lifts all boats” narrative and they have seen tangible increases in their quality of life.

    Essentially, Americans have heretofor made a bargain that we are all better off if those with investable capital are free to deploy that capital in any manner they choose. That bargain requires a whole lot of trust in institutions like the Federal Reserve, the banks, insurance companies, the SEC and a belief, articulated by Greenspan, that these actors will act in accordance with rational self interest.

    The current financial crisis has rocked that trust and that belief to their core. Clearly, those who should know better took unacceptabel risks and,a s a nation, we are demonstrably poorer. That unfettered model of free capital deployment has proven unworkable, at least in teh form it has taken in the US in the last decade. I don’t know if I would call that a failure of capitalism, I might call it a failure of Reaganism though.

    If people vote for Obama they are going to do so because they think its time to put some real restraint on the deployers of capital. Undoubtedly, that decision involves significant risk because it is ceding a tremendous amount of power to politicians and, without a doubt, limiting our economic freedom.

    I’m not sure, and I’m not sure its important, whether or not an economy where the federal government makes heavy handed capital decisions in finance, infrastructure, energy and health care can be called “capitalist.” But I do agree with you that if Obama wins we are making a choice as a nation to move away from unfettered Laferism. Only time will tell if that will make us better off.

    BTW, Europe ain’t so bad, really.

  6. Timothy Peach Says:

    I would live in France if it were practical. I love the language, and could probably get conversational within a year. My wife would probably go for it as well.

    But they make you have affairs over there. And you have to drink strong coffee after lunchtime. Between those two things, I would literally never get any sleep.

    I can’t live without sleep, man.

  7. Mark Grannis Says:

    Fitz, I think your explanation of what caused our financial crisis is unhelpful — a word I choose carefully because I am unwilling to say that your explanation is wrong. There is a sense in which the crisis was caused by individuals who took unacceptable risks, but those individuals were responding to the profit motive that makes capitalism work, and they were doing more or less what individuals in capitalist systems have always done. If the money they lost had been only their own — or their own plus the money that others unwisely invested with them — then I think we would say not that capitalism failed, but that it worked; that it disciplined those who chose badly.

    The problem, as I see it, is that these very normal people were gambling with public money, in a couple of different ways. Some of them were using public money in the sense that they (and many others) believed the Treasury or the Fed would step in and cover any losses they incurred — a belief the Executive and Legislative branches later validated. Others were using public money in the sense that the Fed’s monetary policies subsidized borrowing. As we’ve discussed before, below-market interest rates cause people to invest in schemes they would reject if it cost more to borrow, causing all kinds of malinvestment and other distortions in the economy at large. Imprudently high levels of speculative securities trading would be one such distortion; imprudently low levels of cash reserves in banks would be another; imprudently high numbers of top college graduates becoming investment bankers would be a third. These effects are quite far-reaching, and if they go on for a generation or more, the end of the party is bound to be painful.

    If I am right, then blaming this collapse primarily on Wall Street big shots is a little like blaming the Civil War on the guys who fired on Fort Sumter. In both cases, the causal forces at work are much larger than it is reasonable to blame on particular human agents. That doesn’t mean greedy investment bankers are entirely without blame; they had choices to make, just like individual soldiers who fought for the Confederacy. But I think it does mean that it is (as I said above) unhelpful to focus on the role of the individuals when that role was swamped in importance by other factors. The actions of government policy makers, first in inflating the money supply and then in relieving investors of the consequences of their choices, strike me as incalculably more important. We can’t say capitalism failed here if we weren’t letting it work.

  8. David Fitzgerald Says:

    Mark, I think you have made Obama’s point rather nicely. He has argued, as you have, that government policy is far from neutral with respect to the type of capitalism we have. The question is which horse does the government back? Lately, the government has been allowing a large amount of capital to remain in private hands and to reduce to a bear minimum the amount of regulation governing how that capital is deployed. Obama is arguing (in this he has joined by many of our allies who have looked with a bit of consternation on the “American” model of capitalism) that the government needs to “redistribute” (a loaded word) capital and reexamine how it is regulated.

    I freely admit that this idea gives me the heeby-jeebies, particularly when I consider that the likes of Harry Reid and Nancy Pelosi will be charged with shepherding the legislation that accomplishes the redistribution. However, our current policy has driven us into a ditch and I have no confidence at all that the Republicans have a grasp of how to get us out.

    You and Ron Paul (and maybe 2 others) have argued that limited government requires that the government not back any horse at all. True economic freedom requires an absolute commitment to allowing economic costs and rewards to fall where they may. One of the troubles with this argument is that it ignores the fact that Elvis has already left the arena. It is akin to Clarence Thomas’ constitutional jurisprudence. Thomas argues that the entire New Deal is unconstitutional, however, he acknowledges it is now too late to unring that bell. Perhaps that’s not intellectually satisfying but it does acknowledge practical realities.

  9. Mark Grannis Says:

    Dave, if I have made Obama’s point on the failures of capitalism, then I’ve been clumsy. Your observation that it is impractical to insist on complete government neutrality is true enough, but I do think there is an important and very practical distinction between stopping the interventions and insisting that they be reversed or “neutralized.” We may not be able to unring any bells, but we don’t have to keep swinging on the rope.

    The fact that most government actions in the economic sphere create winners and losers is not fatal to free enterprise because we can take the rules as we find them and adjust our actions accordingly. Progressive taxation is a perfect example — harmless on economic grounds, and entirely justifiable on social grounds. But changing the rules while the game is in progress so as to prevent people who chose badly from reaping the natural consequences of choices they already made is another thing entirely. And such dynamic, day-to-day interventions are typically aimed not at social goals like a flatter income distribution or a broader level of home ownership, but rather at strictly economic goals like higher rates of GDP growth. When government gives in to the conceit that it can maximize total economic output better than the market can, expect calamity. We have centuries of experience on this. And though we sometimes forget it, that is no reason to abandon it entirely, any more than the fact that I have occasionally drunk to excess means that I should make it a habit.

    Tim’s post is about redistribution of income, and we have strayed a bit to the various cascading bailouts and the aggressively interventionist conceit that underlies them. My original claim was that there is no significant difference between McCain and Obama on redistribution, and I think that is also true with respect to the bailouts.

  10. David Fitzgerald Says:

    Two quick points:

    1. I believe that Obama is arguing that the current rules (a) benefit the few at the expense of the many and (b) have not even been very effective at safeguarding the gains of the few. I think a broad social goal is precisely what he is advocating, to whit, a flatter distribution of national income. In his view, and the last 8 years have borne this out, growth has not been the problem. The problem is economic inequality fostered not by any inherent worth or smarts of the ever shrinking capital class, but due simply to a tax and regulatory scheme where the haves get more and the have nots (or the have a bit) at best tread water.

    2. Unless you take the view espoused yesterday in the WSJ by the former judge with the mustache who is now the legal analysts on Fox News that the Constitution requires libertarian capitalism, isn’t the point of elections to change the rules in the middle of the game, otherwise how could the game evolve. While Burke and Hamilton would have been horrified by this, its a concept at the heart of Jeffersonian democracy.

  11. Timothy Peach Says:

    Americans have every right to vote us into socialism. I just want it to say that on the ballot: Obama, Socialist Party.

    My mom is horrified by an Obama presidency. When I explained to her about the redistribution thing coming out, she said, “I don’t care about that. I’m ok with that. It’s the infanticide thing we have to stop.”

    Catholics are generally pro-life Socialists. In fact, one could loosely describe Christ that way. I have my own strong Socialist tendencies. My interest in the “redistributive justice” thing is that it might help keep an infanticide supporter out of the White House. (The way my career is going, I’ll probably be eligible for an Obama “tax cut” in the near future.)

    I would like to take particular exception to Granulous’ comment on temperance. I have made drinking to excess a habit. Not only is it practical, it’s practically medicinal.

  12. David Fitzgerald Says:

    Let’s compromise, the ballot will say Obama, SDP.

    Your view of Jesus reminded me of a quote from James M. Curley, scoundrel, Irish-Catholic (oxymoron?) mayor of Boston while running against a Unitarian.

    “My opponent is a Unitarian. Do you know what a Unitarian is? A Unitarian is someone who believes that Our Lord and Savior Jesus Christ was a funny little man with a beard who ran around in his underclothes.”

    Of course no offense at all meant by me to any Unitarians who may be reading. Tim’s analogy just called this quote to mind.


Comments are closed.

%d bloggers like this: