Strengthening Constitutional Self-Government

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Letters From an Ohio Farmer

Equality and Opportunity

December 13, 2011

To My French Friend:

Yes, Jean-Luc, I did read the President’s recent speech.  And I did notice that he referred to the same statistics from the Congressional Budget Office that I did in my last letter to you.  But did you notice the sleight of hand?  The President said that “over the last few decades, the average income of the top 1 percent has gone up by more than 250 percent,” as the report indeed notes.  But then the President said “over the last decade, the incomes of most Americans have actually fallen by about 6 percent.”  In other words, the President used two different standards to compare income (income over several decades and income over one decade) and presented them as if they were the same.

As I noted in my letter to you, what the budget office found was that over the last few decades, the income of the poorest Americans increased by 18 percent and American households experienced an average increase of 62 percent in their wealth.   As for the time period that the President refers to, a Federal Reserve study found that the poorest Americans actually lost less in the recent recession than did the wealthiest and that income in the United States has actually become more equal over the past few years.  This should not surprise us.  If you owned a house, you lost a lot when the housing market collapsed.   If you didn’t own a home, you lost much less.

I will leave it to more subtle continental minds like yours to figure out how such manipulation can be a basis for bringing us together, a major theme of the President’s speech, or how condemning morally those who disagree with you, as the President also did, contributes to that end.  For my part, I would rather consider a point that the President and I agree on, the importance of opportunity.   This consideration allows me as well to address your concern that what once made America great may be slipping away.

I did indeed consult the World Bank report you mentioned.  And it does indeed show that in the last four years we have fallen among countries in the ranking of ease of starting a business from third to thirteenth.  I was also surprised to confirm, as you noted, that the report shows that the tax burden on businesses in the United States, while lower than it is in France, is higher than it is in the United Kingdom, Uruguay, and even Romania, among other countries.

This is important because, as the report points out, as taxes go up, the number of new businesses go down because it becomes too costly to start a business.  Not only does that make it hard for entrepreneurs (a fine French word!) like you to start businesses; it makes it harder for those out of work to find jobs, because no one is creating them.

But there is more at stake than just new businesses and jobs, as important as those are.  What we are talking about—opportunity—is at the heart of our republican governments and way of life.  What good does it do to declare all created equal, if all do not have the opportunity to earn their daily bread and improve themselves through their own effort?  Without opportunity, our principles would have no practical effect.

The President is right, therefore, to say that creating opportunity is critical to the success of our republican experiment.  How then do we create opportunity?

The President wants to tax and then have the government spend on education, infrastructure, and research.  He wants more laws and regulations to prevent those he calls greedy from taking advantage of the rest of us.  Such increases in the power of government will create opportunities, he insists in his speech.  All of this is necessary, he tells us, because the old way does not work.  His proof, it seems, is his claim that while a few got richer, most got poorer.

But as we have seen, he can make this claim only because he manipulated the statistics.  In fact, without the new taxing and laws and regulations that the President wants, American households got richer over the last few decades—on average 62 percent richer.  Moreover, the American economy that produced this wealth was not built on the Federal government’s spending on education, infrastructure, and research.  The Federal government historically has had little to do with education, and most infrastructure and research has been funded by the private sector.

Through your frustrated efforts to start a business in a country with higher taxes and more regulations than America (and more unemployment!), I am sure, my friend, that you appreciate what will be the result of the President’s plans.  We are already starting to see their bad effects.  The increased regulation already imposed on the financial industry has contributed to less financial support for new companies, the companies that create the most jobs.

Why does the President not see this?  I cannot say for sure.  But he does seem more interested in making sure that no one has too much than in making sure that everyone has a chance to get more.  This means the President wants to limit opportunity to create more equality of outcome.  In doing so, he will only make more poverty for all. And by limiting opportunity, he will enfeeble our republican way of life.

If I lack the skills of entrepreneurs like you, Jean-Luc, I share their hope and optimism, believing that my fellow citizens will not go where their President is trying to lead them.

Ohio Farmer