How Liberty Helps the Poor

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As a libertarian I want the policies I prefer to actually become the law. But libertarian policies will never be enacted in a democratic society if poor and lower-middIe-class voters stand against libertarian ideals. A significant number of Americans can be classified as the working poor. It is inherently difficult for laws to come into being that oppose their perceived interests.

The solution to this problem is not to rail against the poor. The solution is to convince the working poor that free market capitalism does not oppose working-class interests and that the free market favors the working class just as much as it favors the rich. Libertarians must be able to make a persuasive argument that free-market capitalism benefits the poor, and that it is better for them than socialism or socialistic programs. Here are four kinds of arguments that may be useful.

1. The Efficiency Argument

Socialists like to appeal to poor people by proposing a redistribution of wealth. The idea is that when a pie has been cut into pieces so that some people get big chunks and other people get crumbs, the fair thing is to reslice the pie into equal portions. But that is only one way to increase what people get. If you make the whole pie bigger, everyone’s portion gets bigger – and you don’t have to mess up the pie by re-slicing it. Everyone can understand this metaphor. What it means is that the economy is not a zero-sum game. When new wealth is created, everyone can win, without the inefficiency of social disruption.

Under capitalism the poor can buy products that are both good and cheap, because competition forces market efficiency. The standard of living for poor people in wealthy economies, economies operating by means of the profit motive, is visibly higher than that of poor people in poor economies. Capitalism is the most efficient producer of wealth. A poor person in America benefits from the productivity of the entire free market system, which creates jobs paying wages that comparable workers in third-world countries can only dream of. If poor people in America compare themselves to rich people in America, it seems that they have little, but the comparison that is relevant to the point at issue – capitalism or socialism – is with similar people in non-capitalist societies. Only that comparison reveals what capitalism offers to the working class – a larger and larger economic “pie.”

It is a classic libertarian observation that because consumers are the ones making choices in a free market, the market supplies what people want at the prices they are willing to pay; whereas in a socialist economy the choices are made by bureaucrats who, even if they are saints, will still lack the detailed information about each consumer’s wants that can enable goods and services to be distributed efficiently. True, some rich people splurge on yachts and some poor people splurge on ham sandwiches, but capitalism will get you your ham sandwich more efficiently than socialism.

Socialists like to argue that their policies help poor people whom the efficient market ignores – for example, by providing a minimum wage to make sure that everyone has enough money. But regulations that interfere with the market also interfere with people’s ability to get what they choose at the price they can pay for it. For example, if an employer is not free to offer a lower salary, then he will simply not be able to hire people, or will hire fewer people, whereas with an unregulated salary he would have been able to offer more jobs. This would be true even of a government-owned business. And when the minimum wage for the people who work in the grocery store goes up, the price of food goes up too, and the poor have to pay that price.

2. The Ambition Argument

Under socialism, the rich (if any) and the middle class are taxed according to how productive they are, whereas the poor are given goods and services in proportion to how much they need them. This tends to solidify the classes. The more successful a worker is and the more productive he becomes, the more he will be taxed and the harder it will be for him to rise from one class to the other. An inability to profit from one’s efforts destroys all ties between the work one does and the reward one gets, rendering meaningless the concepts of personal responsibility and deserved rewards. When the fact that socialism diminishes your responsibility for your own life and severs rewards from

achievements becomes clear to people, they often become uneasy about it, in spite of all the free lunches that socialism promises.

It is, of course, unrealistic to think that every poor person can become a millionaire. But a diligent worker can realistically aspire to the middle class, and someone in the lower middle class can realistically aspire to the upper middle class. Capitalism does not have a rigid caste system. The American dream is rags to riches, and capitalism offers that hope to everyone.

3. The Freedom Argument

Socialists like to scare poor people into voting for them by tapping into the fear and misery that poor people feel. They make the argument that if we have less freedom we can have more safety. Poor people are naturally fearful that they will not have enough money to buy things, especially if they lose their jobs. They fear becoming destitute. Socialism promises to give them money taken from the rich, and to give them financial security in the form of jobs they cannot lose.

The libertarian reply is simple: if you give up freedom for the sake of safety, you get neither freedom nor safety. This argument can be made by merely pointing out the practical realities of socialist societies: in theory the poor may own the wealth, but they don’t have a way to voice their will except through the government officials who purport to represent them. There is no other way for the system to work besides the government’s taking control, and when it takes control, it takes control of them as well as everyone else.

Under capitalism your boss can fire you, but if you do your job well you probably won’t be fired, your hard work will be rewarded with a decent salary or a promotion, and you continue to enjoy political freedom and rights as a citizen. Under socialism, instead of a job provided by a boss competing with other bosses, you have a job under the control of a government official. This is not freedom, and it is not safety either.

A system of economic redistribution takes wealth from the rich and gives it, in the first and sometimes the final instance, to government officials. The poor will be as poor under socialism as they are under capitalism, or poorer, but they will have lost their freedom in exchange for promises of safety. The failed “experiment” of the USSR proves this. You don’t have to be rich to like freedom; and libertarianism, which is basically the love of freedom, is as relevant to the poor as it is to the rich.

4. The Workers’ Rights Argument

Socialists argue that you need to be rich in order to enjoy individual rights or economic freedoms, such as the right to choose where you work or what you spend your money on. They also argue that workers can’t make meaningful economic choices because of their unequal bargaining power. The libertarian reply is twofold. First, social freedoms such as free speech and freedom of religion are inseparable from economic freedom. A government with unrestricted power over the economy will waste no time in accumulating as many other powers as possible. There is no rational principle that distinguishes one kind of freedom from another.

Second, a worker’s choices are in reality not limited to one employer’s take-it-or-leave-it offer. Turning down one employer’s offer of a certain wage doesn’t mean starving to death. There are thousands of employers, and a worker in a capitalist society has the unconstrained ability to choose whichever employer he prefers out of all who may be willing to hire him. If no employer will give him the terms he wants, he is free to seek a loan from one of the hundreds of banks in existence and start his own business, or to learn a trade that will make him more valuable to employers. Everyone has the option of getting an education and learning some trade to put him in a better bargaining position.

To say that some people lack the intelligence necessary to do so is both patronizing and untrue. The qualities necessary to accomplish such a feat are discipline and the willingness to make tough choices. Neither of these qualities is a magical ability that some people are born with and some are not. In no industry is there a monopoly such that a worker must choose to accept one specific set of terms or starve. Even if there were, the worker would be free to start a company to compete with the monopoly, on at least one of its product lines – assuming, of course, that there was a free market. Lean start-up companies often compete very efficiently with bloated would-be monopolists.

It is misleading to say that working-class people cannot appreciate the right to choose a job or the right to use money. A worker who earns his money has earned the right to spend it on something he wants, and to enjoy any product or service that the other hardworking citizens of a capitalist country will sell to him. The worker’s enjoyment from spending money is not an illusion, even if he has comparatively less money than an upper-class person. The fact that rich people own yachts does not make a ham sandwich taste any less delicious.

Any libertarian candidate who runs for office on a platform of helping the rich and ignoring the poor will lose. But after all, libertarians are not in the business of using government to help any class of people. Their concern is with preventing government from hurting anyone’s legitimate interests. It may seem counterintuitive to think that low-income people can be persuaded that economic freedom is in their best interest, but it only seems counterintuitive because of the pervasive influence of socialist propaganda. Fortunately, this propaganda has the weight of American history against it. Generations of low-income people arrived at Ellis Island and looked up at the Statue of Liberty, and they did not come here because they wanted to be exploited; they came because they wanted the American dream, the dream that hard work can earn you a decent wage and a good life. That dream, in the vast majority of cases, became reality. America has been called the land of opportunity, and it is capitalist society in which economic opportunities appear to people who make simple, honest, persevering efforts.

In spite of all the obstacles that may stand in the way of working-class people trying to support themselves and their families, it remains possible to say that the American dream is still alive and that economic freedom still has a place in the American way of life. Socialists tell workers that capitalists exploit the workers and steal their wealth. The libertarian reply is that capitalists create wealth, make the economy function, and thereby benefit workers, who are always free to make use of capitalism for their own dreams and ambitions.

There is no reason why libertarians should not be proselytizing to the poor as well as the rich. We cannot promise to provide free lunches to the poor – because, indeed, there is no such thing as a free lunch – but we can promise to give everyone an unfettered opportunity to earn lunch money.

Almost everyone on the political scene maintains that a political philosophy designed for America as a whole should be beneficial for all Americans, not just one class or special interest group. And free-market capitalism is the one economic system that truly benefits everyone. If a libertarian platform were able to draw support from high-income, middle-income, and low-income voters, if we were able to say persuasively that freedom benefits all Americans, then there would be virtually no limit to the realization of libertarian political goals.

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