Dinesh D'Souza - America: Imagine a World without Her (20 page)

Progressive criticism of the Jackson thesis has focused on challenging his assumption that America has historically offered new land waiting to be discovered. The progressive view, as we know, is that America was already a fully occupied country and therefore “settlement” is another name for “theft.” We have examined this argument in previous chapters. Now we consider whether capitalism, innovation, and free trade, the new forms of wealth creation that drive the American and the global economy, are also forms of theft. If they are, then the great mass of wealth now in America’s
possession is illegitimate, and should be placed at the disposal of progressive redistribution, both on a domestic and global scale.

In 1965, Barack Obama Sr. published an article in the
East Africa Journal
in which he considered the possibility of 100 percent tax rates.
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It’s worth asking, how can a sane person propose taxing people at 100 percent? In the 1980s, the economist Arthur Laffer pointed out that if the government imposes a 100 percent tax rate, it is likely to get just as much revenue as if it imposed a zero percent tax rate. If tax rates are zero percent, obviously the government gets no revenue. But Laffer noted that at 100 percent tax rates, no one has an incentive to work. Why work at all if you have to turn it all in? Consequently, no one produces anything and here too the government gets no revenue.

Why then would an intelligent person propose 100 percent tax rates? There is one scenario in which such rates make sense. Imagine if you came to my house and stole all my possessions. In that case, what’s the proper tax rate for you? Well, 100 percent—because the possessions are not yours. Where theft is involved, no one cares what the effect of returning stolen goods may be on one’s incentive to work. The stuff doesn’t belong to you, so you had better give it back, and if you refuse, then the government has every right to take it back. The anti-colonial view is that capitalist wealth is stolen goods, and hence Barack Obama Sr. has no compunction about proposing that state power be used to confiscate it.

All of this may seem quite remote from President Obama, yet consider again what Obama said on the 2012 campaign trail:

Look, if you’ve been successful, you didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are
a whole bunch of hardworking people out there. If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
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A similar theme was articulated by Senator Elizabeth Warren, darling of the progressives. “There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for, you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for.”
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What are Obama and Warren really saying here? Clearly they are not saying that entrepreneurs should go back and find their old teachers and give them a nice bonus. Rather, they are trying to create nihilism about the source of wealth—to detach effort from reward. In a way, their argument that we aren’t entirely responsible for our own success seems indisputable. All success has preconditions—to build a house, we have to be allowed to get a permit to build a house—and also infrastructure—we cannot build houses without roads, police to protect us, schools to educate us, and so on. In this sense, it’s uncontroversial that our success is only partly due to our own efforts.

But this, while true, hardly says much because the public roads are available to everybody. Apparently entrepreneurs make better
use of the public roads than everyone else. The teacher that taught the successful entrepreneur in school also taught other students. Did they learn less than the entrepreneur did? Did they not put their lessons to a good use? Well, that would imply that the entrepreneur made better use of what he learned and deserves the rewards of that. Now of course entrepreneurs couldn’t operate without some government infrastructure. They depend on essential government services like defense and fire-fighting. But again, all citizens benefit from those services, which is why we have a government in the first place. So why should entrepreneurs incur additional obligations to the government simply by virtue of having a successful enterprise? The government didn’t build that; they did.

In any other context, Obama’s and Warren’s statements would seem nutty. Imagine if I told my daughter, who is now a freshman in college, “You didn’t earn your SAT scores.” Asked to explain, I point out that she used the public roads to go to her SAT test. Or that she could not have taken the test had she not received childhood vaccinations that prevented her from getting typhoid. Indeed I could go further. She could not have done what she did if she had been an orphan in a Third World country. Nor could she have produced good SAT scores had there been no oxygen in the earth’s atmosphere, or had the sun not been eight light minutes away from the earth, giving humans the necessary warmth to live. Now if I said all this, she would think I had lost my mind. While there are obvious preconditions for achievement, it does not follow that the achievement is unearned. So from this point of view, Obama’s and Warren’s statements seem like pure stupidity.

Yet when intelligent people say something stupid, that doesn’t make them stupid. Rather, they are actually trying to convey a different point. Here’s what Obama and Warren really mean. They mean that capitalist wealth—all of it—belongs to the community.
No one specifically earned that wealth, and no one has an exclusive right to it. Wealth is produced collectively, and therefore everyone is collectively entitled to it. The problem, from this point of view, is that before the wealth can be widely claimed and evenly distributed, greedy entrepreneurs rush in and grab it. These selfish people think the surplus belongs to them. But it’s not theirs, and the government has every right to seize it and distribute it however it wants. The government is not taking what’s yours; it is taking what never belonged to you in the first place. Thus there is a close similarity between the ideology of the two Obamas, father and son. In fact, they both subscribe to the same creed.

The premise of the progressive argument is that wealth and profits in today’s economy are being appropriated by greedy, selfish people who are taking more than their “fair share.” This is a new type of attack on capitalism. In the twentieth century there was a lively debate between capitalism and socialism in terms of which system was more effective in creating wealth. Capitalism won that debate. Yet although capitalism won the economic debate, it never won the moral debate. Today’s critique of capitalism, led by Obama, is not about how well it works; it’s about how capitalists are the bad guys. In order to answer Obama, we have to consider the motives of capitalism. We also have to examine more closely what it is that entrepreneurs and workers actually do, and whether they deserve the money they make.

Many successful entrepreneurs seem to have internalized the progressive critique of capitalism, which has put them on the defensive. Years ago, Ted Turner was asked a probing question on John Stossel’s TV show. Noting that Turner had pledged to give a billion dollars to the United Nations, Stossel asked him: Why give to such a dubious cause? Why not invest in your own businesses? This way, you could create jobs, and generate products, and arguably benefit
far more people. Turner became so agitated that he ran off the set. Stossel pursued him. Finally Turner erupted, “I am simply trying to give back to the community.”
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And this is a standard justification for philanthropy. “I am giving back to the community.” Yet whenever I hear this, I think to myself, “How much have you taken from the community?” The implication is that profits are illegitimate, and some of that loot now must be returned through a kind of obligatory philanthropy. Entrepreneurs like Turner seem to be pleading guilty to the charge of theft. At the very least, they seem unwilling or unable to make a moral defense of the system that enables their prosperity.

The moral conundrum of capitalism is, in one sense, a twenty-first-century phenomenon, but in another, it goes back to the very origins of capitalism.

The classic defense of capitalism was made in 1776 by Adam Smith in
The Wealth of Nations
. In that book, surprisingly enough, Smith takes a dim view of businessmen. He says they seldom meet in private except to fix prices. Moreover, Smith seems to
agree
that capitalism is based on selfishness. Smith writes, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities but of their advantages.”
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Smith’s argument is based on a paradox: individual selfishness can be channeled to the collective benefit of society. How is this possible? A half-century before Smith, Bernard Mandeville offered an even more flamboyant version of Smith’s thesis. In a long poem titled
The Fable of the Bees
, Mandeville insisted that “private prices” produce “public benefits.” Virtue, said Mandeville, is simply the province of “poor silly country people.” Mandeville actually praised vices such as greed, selfishness, pride, and envy. Without them, he suggested,
the engines of commerce would grind to a halt. Vice is what makes possible modern civilization.
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Smith repudiated Mandeville, and in place of Mandeville’s terms “greed” and “selfishness,” Smith used a more precise term: self-interest. For Smith, self-interest is not good, but neither is it bad. What’s significant about self-interest, however, is that it works. Self-interest, mobilized in the right way, produces mass prosperity. But not by itself. Here is where Smith introduced his famous concept of the “invisible hand.” Individuals may be thoroughly self-interested, but through the “invisible hand” of competition, they are motivated to improve quality and drive down prices and thus to promote the material welfare of the community. Smith notes that by activating self-interest through the mechanism of competition, the entrepreneur promotes the prosperity of society “more effectually than when he really intends to promote it.”
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Imperceptibly but surely, private self-interest promotes the public interest. Economist Gary Becker, a Nobel laureate, has termed this one of the most important ideas of the past two and a half centuries. Smith’s defense of free markets, however, seems incomplete. While Smith vindicates capitalism—the system—he does not seem to vindicate capitalists—the people.

Greed and self-interest, Smith recognized, do not arise out of capitalism. They arise out of human nature. Capitalism, Smith writes, arises out the human “propensity to truck, barter and exchange.” Workers, no less than employers and investors, are motivated by greed and self-interest. These are universal tendencies. Karl Marx famously disputed this, insisting that greed and self-interest were the products of societies that had private property. Marx held that in a communist society there would be no private property and therefore neither greed nor self-interest. In such a society, Marx rhapsodized, people would be motivated to work not for their own good but for the public good. Marx probably recognized how foolish
this sounded, so he offered a vision in which the work itself would be light and sporadic. In his imagined society, people could do physical labor in the morning, fish in the afternoon, and do criticism in the evening.
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Sounds like the life of a professor of romance languages at an elite American university! Even so, we recognize today that Marx’s communism doesn’t work. At best, it is a utopia, a “city in speech.” No actual society can function that way. Actual societies must be built on human nature as it is, not as we wish it to be.

None of this is to suggest that Communism never works. There is a place where Communism works beautifully—in the family. The family, after all, is based on the Communist principle, “From each according to his ability, to each according to his need.”
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Right away we see that the charge that people work only for themselves—for their own greed and self-interest—needs to be modified. Most people work to support their families. In some cases, this is an extended family that includes older parents or other relatives. Why does Communism work in the family? Because there is a tight knot of affection that binds the community together, so that the interests of one are virtually identical with the interests of others. This bond is much harder to achieve in larger communities because our affections grow thinner as we move in concentric circles from the family to relatives to a local neighborhood to a wider community of countrymen. Patriotic though we may be, it’s hard to feel about people we don’t know as we do about people who are close to us.

Greed and self-interest may be features of human nature, but shouldn’t an economic system that encourages these vices be morally condemned? To answer this question we must look closely at the motives of capitalism and also at what entrepreneurs actually do. Here we contend with a variety of contradictory positions. The philosopher Ayn Rand, for instance, published a book called
The Virtue of Selfishness
. Rand’s position was: of course capitalism is based on
selfishness, and that’s wonderful, because selfishness is wonderful. “The attack on selfishness,” Rand wrote, “is an attack on man’s self-esteem.” Of course Rand was being provocative. She too meant self-interest more than selfishness. Why then use the word “selfishness”? Rand’s answer: “For the reason that you are afraid of it.” Rand’s advice: be not afraid. Her goal was to insist that it is ethical for people to do what’s good for themselves.
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In a sense, Rand took the familiar charge against entrepreneurs—you people are greedy, selfish bastards—and pleaded guilty. What’s wrong, she asked, with looking out for Number One? I admire Rand’s pugnacity, but ultimately I think her attempt to overturn two thousand years of Western morality is quixotic. Contrary to Gordon Gekko, greed is not good. As for self-interest, it may not be a vice but neither is it a virtue. We can understand a fellow who cares mainly or exclusively about himself or herself, but we cannot on those grounds admire such a person.