Give Us Liberty
The economic consequences of government.
Jun 18, 2012, Vol. 17, No. 38 • By MATTHEW CONTINETTI
Will Smith was about to be surprised.
It was mid-May, and the actor was appearing on French television to promote his latest blockbuster. The host wanted to hear the Fresh Prince’s thoughts not only on Men in Black III but also on American tax rates. “I have no issue with paying taxes and whatever needs to be done for my country to grow,” Smith said. “So I will pay anything that I need to pay to keep my country growing.”
Even the 75 percent top rate proposed by the newly elected French president François Hollande, the host asked? Smith’s movie-star grin contorted in disgust: “Seventy-five?” he said. “Yeah, that’s different.” He looked from side to side, perhaps wondering if President Obama was lurking off-camera to punish him for such apostasy. “That’s different. Yeah, 75. Well, you know, God bless America.”
Will Smith reacted viscerally because a top tax rate of 75 percent offended his sense of justice. It might be right, in his view, for the government to take 30 or 40 percent of a rich person’s earnings, but taking 75 percent would not be right at all. It would be wrong. Unjust.
One of the virtues of Arthur Brooks’s new book on the morality of free enterprise is that it supplies empirical support for Smith’s intuitive reaction. The Road to Freedom is personal and idiosyncratic, filled with autobiographical asides, references to the author’s wife and children, corny jokes, and the occasional pop culture allusion. But it also has a serious intent. Brooks attempts to prove, scientifically, the “moral legitimacy of free enterprise” by testing whether the system “enables people to flourish,” whether it is fair, and how it “treats the least fortunate in society.” He argues that free enterprise passes all three tests, and he makes a good case.
Consider human flourishing. Ex--panding on arguments he made in The Battle (2010), Brooks says that high tax rates are wrong not only because they damage the economy, but also because they violate the principle of earned success. You are more likely to be happy, he observes, when you create “value with your life or in the lives of others,” and the happiness of the people ought to be the goal of any society that aspires to morality. Brooks cites social science research to conclude that money might not make us happy, but it does serve an important purpose: Dollars and cents are an “index of success—an imperfect one at that—not success itself.” We require such an index because it is the only way to “keep score,” to know how we are doing at the game of life, to measure the link between effort and reward.
There is of course the danger of assigning too much value to money—the danger of materialism—but at the end of the day the incomes we earn suffice as one measure of the value we create in our lives and in the lives of others. When government takes too large a chunk of those incomes, it interferes in the scorekeeping process, breaks the link between effort and reward, and undermines earned success. An unlimited government inculcates the very opposite of earned success, what Brooks calls “learned helplessness” or dependence. This is “a state in which, if rewards and punishments are not tied to merit, people simply give up and stop trying to succeed.” When we cease to be self-reliant and rely instead on unearned rewards from others, we develop an entitlement mentality that erodes our character and bankrupts our polity.
Why does government obstruct earned success? Brooks’s answer is that too many of us misunderstand fairness. Nancy Pelosi and Barack Obama, for example, think in terms of “redistributive fairness.” They are offended by the fact that some individuals have larger pieces of cherry pie than others. They want to divide the pie equally so that every individual receives an equal slice. They are champions of the bureaucratic or administrative state, which serves as the pie-cutter, redistributing income across society so that everyone receives his fair share.
But Pelosi and Obama do not have a monopoly on fairness. Brooks proposes a second definition: “Meritocratic fairness,” in which “fairness means matching reward to merit” and “forced equality is inherently unfair.” A Tea Party activist earned his income or property fair and square, without breaking any laws or infringing on another’s rights, and therefore has a right to use it as he sees fit. That might mean he wants to invest his surplus income in the stock market, or save it in a bank account, or buy bars of gold. Whatever he does, Nancy Pelosi cannot claim that income is the government’s by right. The activist earned it. It is his.