Joseph S. Fulda
Joseph Fulda is a freelance writer living in New York City. He is the author of Eight Steps Towards Libertarianism.
Paul Krugman in "Losing Our Country" (New York Times, June 10, 2005) poignantly reminds us that in bygone days "working families could expect steadily rising living standards and a reasonable degree of economic security." Today, he writes:
. . . year-to-year fluctuations in the incomes of working families are far larger than they were a generation ago. All it takes is a bit of bad luck in employment or health to plunge a family that seems solidly middle-class into poverty.
Meanwhile, he points out, "The wealthy have done very well indeed."
I do not wish to dispute any of these facts, for to do so would be to minimize the pain of middle America. But whereas Krugman takes a pass on "Why is this happening?" I want to say a few words on just that question. In an essay in Two Cheers for Capitalism, a book by lrving Kristol dating to the 1970s, the author remarked that there were three principal causes of world hunger: China, the U.S.S.R., and India. These socialist regimes took out much of the world's arable land from production and kept effectively idle most of the world's population. Today, this is no longer true. Today, the United States is no longer assured as captive a market in a large part of the world, nor are its workers free from competition from the majority of the Earth's inhabitants. As China, the former Soviet Union, Eastern Europe, and India are becoming freer and freer (with the notable exception of Russia herself) -- admittedly with plenty of growing room -- American workers and American products face some real competition from most of the world's population -- previously in such a state of bondage as to pose no competitive threat. Put another way, Krugman's "rise in inequality" masks the much more global trend toward equality. People in India, China, Eastern Europe, and parts of the former Soviet Union can now at least aspire toward entry into the middle class, once an impossible dream. What the United States must do is not complain that the world is freer and therefore far more competitive, but make itself more competitive by arresting its progressive slippage on the indices of economic freedom. Barring these once-impoverished (and still-impoverished) nations from competing with us would be bad for American consumers and bad for the world at large. Rather than begrudging others their livelihood, we must seek to become more competitive ourselves if we are to remain comfortable.
As for the high compensation of the top people in all areas of life here at home, one can say that while the ordinary worker now has much more competition, the very best are still typically American. Dick Grasso, for example, about whose successful efforts to reopen the NYSE in just six days after September 11, 2001, one commentator remarked:
. . . the vile terrorist enemy has failed utterly in its effort to cripple the U.S., and the American model of free-market capitalism is alive and well. This is America's bull market, but surely Dick Grasso deserves credit as one of its key drivers.
Had the stock exchange remained closed for two or three months, had anyone else been in charge, the ensuing panic and drain on U.S. confidence might well have led to more foreign misadventures, more incursions on Americans' civil liberties with no real increase in security, and the like. A hundred million dollars is a very small price to pay for the confidence of the nation. And by what reasoning would these funds have otherwise been distributed to the middle class? Most Americans at the very top of the income pyramid have sorely earned their compensation, if less dramatically than Richard Grasso. Their good fortune does not come at the expense of those less fortunate. Rather, as we have indicated, those less fortunate are facing pressure from those still more unfortunate. *
"Government is instituted for the common good; for the protection, safety, prosperity, and happiness of the people; and not for profit, honor, or private interest of any one man, family, or class of men." --John Adams