Warren Buffett’s Empty Words

It’s the time of year when our tax preparers tell us how much we owe the government. Here’s what might be a revelation to any high-income liberal who thinks his or her tax rate is too low — the amount of taxes your CPA tells you that you owe is a minimum not a maximum.

Warren Buffett is President Obama’s favorite tax policy spokesman. It’s not, however, because of Mr. Buffet’s actions. It’s only because of his words. Like a broken record, the President has used Buffett’s words time and again as his primary argument for raising taxes on “millionaires and billionaires” and on “the most fortunate among us.” Obama claims, “That’s not class warfare, that’s just common sense.” In a recent fund raising letter the President asked, “Do you think it is fair that Warren Buffett’s secretary pays a higher tax rate than Warren Buffett? I don’t and neither does Mr. Buffett.”

In an interview with Christiane Amanpour Buffett said, “I think people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it.” In testimony before Congress Mr. Buffett said, “The rich are coddled by Congress as if they were spotted owls or some other endangered species.”

Buffett’s specific indictment of the tax system is that he, a billionaire with an annual income in the millions, pays a lower tax rate (about 17 percent) than the 20 people in his office who pay, according to Buffett, an average rate of 36 percent. (The 36 percent number makes me wonder about his credibility.)

Buffett apparently has not the slightest clue as to how much of a phony he’s proving himself to be and the chasm between his words and deeds. In regard to Buffett’s famous protestations, New Jersey governor Chris Christie recently made the following recommendation:

He should just write a check and just shut up. Really. And just contribute. I’m tired of hearing about it. If he wants to give the government more money, he’s got the ability to write a check. Go ahead and write it.

Governor Christie, of course, has it exactly right.

President Obama claims that he is not against wealth, per se. He says, however, “After some point, you’ve got enough.” Presumably he thinks Buffett is well beyond that point. Consequently, if Buffett paid two or three times the tax he’s now paying, it would be with money he doesn’t really “need.” If Obama’s right, Buffett wouldn’t feel a thing.

If you think you’re not paying sufficient taxes, there’s something you can easily do about it. This is a problem that readily lends itself to individual direct action. Beyond the legal minimum we’re free to determine our own tax brackets. If anyone actually believed that the government’s having more money would benefit society then he might happily pay more taxes.

Have you ever heard of anyone who protests that his tax rate is too low volunteering to pay more? Why not? Is there any clearer example of hypocrisy?

Actions speak louder than words. Judging from their actions, liberals have the same opinion as everyone else — government is the least effective way to get anything done. Even liberals recognize that they as individuals can spend or invest their own money or contribute it to private charities with vastly better results than sending it to Washington, D.C. Have you ever read an obituary that ended with, “In lieu of flowers, please send a contribution to the federal government?”

One easy way to raise your own taxes is by opting out of some of your deductions. How often does that happen?

It would be interesting to know what Warren Buffet would say to the question of why he doesn’t just voluntarily pay more taxes?

Mr. Buffett, why do you want other people to be forced to do something you are unwilling to do voluntarily? Talk is cheap. Put your money where your mouth is. Buffett is apparently unaware that he is making it crystal clear he is a complete phony. If he voluntarily paid more taxes he could quickly go from being a phony to being an inspiration. Show some leadership. Go from having no credibility to having tons of it. Why is it necessary to wait until your fellow millionaires and billionaires are forced to join you?

Buffet could argue that one taxpayer can’t make that much difference. Whether or not that’s true, however, isn’t contingent on what other taxpayers are doing. As Milton Friedman wrote in Free to Choose, “This contention that compulsion would change matters is wrong — even if everyone else did the same, his specific contribution… would still be a drop in the ocean. His individual contribution would still be just as large if he were the only contributor as if he were one of many.”

Of course, for liberals compulsion is a good thing. It’s been said that a liberal doesn’t care what you do so long as it’s compulsory.

In some instances liberals do believe in the effectiveness of individual, voluntary action. I’ve had conversations with Prius owners who admit that whether or not they drive a hybrid will make not the slightest difference in regard to climate change. They will say things such as, “Well, we can’t just do nothing,” or, “We have to start somewhere.” They say it’s important to set an example. Of course, the Prius’s distinctive shape assures that everyone will recognize that they’re setting an example and helps spread the guilt contagion.

Conservatives have no reason to feel conflicted about paying the absolute minimum tax required. Conservatives think almost everyone’s taxes are too high including millionaires’ and billionaires’. There’s no conflict between their policy views and their personal behavior. They have no reason to feel guilty. They think the government already gets too much of our money and does more harm than good with what it already has. On April 15, when I send my checks to the IRS and the California Franchise Tax Board, you can bet I will be sending the legal minimums. And my conscience will be clear.

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◼ Warren Buffett’s Empty Words

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Wag the Coed

The world is spinning out of control and the spin rate is accelerating.











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◼ Wag the Coed March 7, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

A Day to Remember

February 7 may have been the defining date for the Republican nominating battle. Rick Santorum went 3 for 3 in Colorado, Minnesota, and Missouri. In the latter two he didn’t just beat Mitt Romney, he whomped him. If Santorum goes on to secure the nomination, February 7 will be seen as the date he reached critical mass. If you’re a conservative the results were encouraging for a number of reasons.

Particularly enjoyable was the comeuppance of conventional wisdom, which took several body blows. For months the pundits have been arrogantly pronouncing the ultimate outcome of a process that would involve numerous twists and turns. The self-appointed experts just knew that Romney’s money, organization, and endorsements would assure his ultimate victory. That may still be true in the end, but so far the pundits’ predictive model has some serious flaws. Last week’s results stunned and surprised the “experts.”

Romney has been banking on two main themes: inevitability and electability. He’s essentially said, “I should be the nominee because everyone knows I’m going to be the nominee.”

The inevitability and electability claims now look like very fragile foundations on which to base a campaign. For them to work you cannot afford to lose more than one or two primaries. On February 7 Romney didn’t just lose, he got trounced. To this point he has lost 5 out of 8 primaries. He drew to an inside straight, which is not smart. He made a bad bet. February 7 pulled the rug out from under claims of inevitability and electability.

Among the candidates the word “baggage” is usually associated with Newt Gingrich. It is Mitt Romney, however, who has the heaviest single piece of baggage: Romneycare.

For Republican voters Obamacare is as much of a core issue as the economy. (The two are, of course, closely linked.) Romney’s creation of Romneycare as well as his ongoing decision to defend it could prove to be his fatal flaw. It may well be a liability too great to be overcome by any amount of money, organization, or endorsements.

Another major element of Romney’s sales pitch has been “electability.” That now appears to have been a serious strategic blunder. That emphasis makes sense if your primary opponents are Gingrich or Ron Paul. It’s not nearly as persuasive if your main opponent is Rick Santorum. As I write this, Santorum is leading Romney in three of five national polls. In the Public Policy Polling poll Santorum leads Romney 38 percent to 23 percent.

The February 7 results were a clear demonstration of the limitations of money, endorsements, and organization. Romney has an overwhelming superiority in those factors. The results last week demonstrated that core principles and ideology are more powerful than money.

I can’t speak for all conservatives, but I think many of us see 2012 as a golden opportunity to put a true conservative in the White House for the first time since Ronald Reagan. We’re frustrated that we may squander that opportunity. Nominating Mitt Romney would do just that. We would vote for Romney over Obama in a heartbeat. Sometimes you have to settle. This is not one of those times.

Making sure that Barak Obama is one and done is job one in 2012. If that takes nominating a moderate, we should nominate a moderate. However, if we can defeat Obama and elect a conservative, that is what we want to do and it is something we can do.

Romney is doing his best to convince voters that he is, in fact, a conservative. It’s a little late for that now. At this point his only option is to proclaim that he is conservative. Unfortunately for him, he has already proven that he is not a conservative by his actions. A conservative would never have supported government-mandated health insurance. There’s nothing truer than “actions speak louder than words.” As someone once said, “Your behavior speaks so loud I can’t hear what you say.” For many conservatives Romney’s assets are insignificant and his liabilities are deal killers.

Prediction is a hazardous occupation. Just who Republicans will nominate is still uncertain. Nevertheless, the February 7 results were the biggest step yet in reducing that uncertainty.

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◼ A Day to Remember February 15, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

The Republicans’ Wasted Angst

Republicans need to chillax. Especially within the Republican establishment, some apparently are having anxiety attacks about how the primaries are unfolding.

Here’s what the panic prone seem to be overlooking — if the election were held tomorrow, Charley Sheen would beat Barack Obama. Heck, you could even say John McCain would beat him. The point is this: the election in November will be almost exclusively about Obama. The relative importance of Obama versus fill-in-the-blank will be in the neighborhood of 95 to 5. This election will be overwhelmingly a vote against rather than a vote for. The deciding question on the majority of voters’ minds will be, “Which of these two guys is not Barack Obama.” There will be tens of millions of “one-issue voters” and the one issue will be Mr. Obama.

In the 2008 election Obama had virtually every imaginable factor in his favor. The mainstream media gave him a free ride, as they will again in November. There was no due diligence, no vetting. Even with every imaginable advantage, 47 percent of the electorate voted against him. It’s reasonable to assume that virtually none of those who voted against him then will vote for him this time.

Now consider the 53 percent who voted for him. That 53 percent comprised a number of sub-populations — young people, minorities, Jews, labor union members, progressives, independents, for example. Now on an almost daily basis we see polls showing how he is hemorrhaging support from one or another of these groups. In a wide variety of ways he has managed to alienate many of his supporters.

There are, of course, Democrats and liberals who would never vote for any Republican. Nevertheless, some will simply opt not to vote at all. On the other hand, those who voted against Obama in 2008 are now more highly motivated to vote than they were then.

Obama’s greatest asset in 2008 was his unknown-ness. That asset has now disappeared. In 2008 his blank résumé miraculously transformed into a blank canvas that voters used to envision their heartfelt fantasies. Obama is now a known quantity and a known quality. Getting elected by concealing who you are is not a strategy that can be recycled.

The number of people he has angered or at least disappointed is immense. Even his supporters are angry at him. The difference between the hope and the results is huge. People who were mildly against him are now fervently so. The high unemployment rate only partially reflects the pain and anxiety in the population. Thousands of businesses have failed, and thousands of others are hanging on by their finger tips. Many of those people voted for him last time and will have a tough time doing so again.

The Obama White House and reelection team are trying to show a brave face. The Republican primaries are their primary basis for optimism. They and their mainstream media support team think the Republicans are self-destructing, and many Republicans seem to agree.

Fortunately for Republicans, in this election an ideal candidate is not a prerequisite for victory. As is always the case, everything is relative.

It is now obvious that Obama cannot run on his record. His State of the Union address almost totally avoided any mention of his accomplishments other than killing Bin Laden.

Obama’s only real hope is that the economy turns around between now and November. That, of course, is a real possibly. Our economy has enormous inherent strength and resilience. No recession has lasted forever.

If the economy does turn around it will be in spite of, not because of, Obama. Nevertheless, a recovery would change the mood of the country. Some voters will give credit to Obama. Many voters, however, are so strongly opposed to Obama that nothing between now and November could swing their vote in his favor. If the economy does not recover significantly, Obama is toast, no matter who the Republican nominee turns out to be.

It’s never smart to be overconfident or to make assumptions, but it’s also not smart to be defeatist when there are so many valid reasons for being optimistic. You’ll have a lot more fun watching events between now and November if you maintain an optimistic outlook.

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◼ The Republicans’ Wasted Angst January 27, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Now Playing: The Sustainability Con

Although the issue of “sustainability” has been around a while, recently it has grown in popularity and influence. The way it’s happening follows an all too familiar pattern.

There are several common ingredients in how the left enlarges its control over our lives. The first is the selection of some aspect of reality — global warming, carbon footprints, population growth, inequality, diversity, for example. The second element involves designating the selected aspect of reality as a crisis. The third step is to explain that the only way to avoid Armageddon is by reducing everyone’s freedom and by giving more centralized power and control to those who understand the magnitude of the crisis. The rest of us are told that our freedoms are a luxury we simply can no longer afford.

Another common element of the process is defining the crisis as ambiguously as possible. Ordinarily, a desirable characteristic of a definition is that it draws a bright line between what is included and what isn’t. Clarity, however, is contrary to the objectives of the crusaders — in regard to defining the problem, the slipperier the better. For example, climate change (or climate disruption) beats global warming. Global warming is too quantifiable in comparison to climate change. No one is quite sure what “climate change” is or isn’t or how it can be measured. Sustainability is even more ambiguous than climate change and thus has more sustainability as a ruse.

Ideally the designated crisis is as expansive and open-ended as possible. A vague, loosely defined crisis provides politicians and bureaucrats with what amounts to a blank check or a no-limit credit card, a credit card where someone else gets sent the bill. A problem having no clear definition is a problem without borders.

At Arizona State University you can get a B.S., M.S., or Ph.D. in sustainability. ASU has an entire “School of Sustainability.” The school’s website offers several answers to the question, “What is sustainability?” Here are four of the answers they offer:

“Sustainability is a concept with as much transformative potential as justice, liberty, and equality.” Michael Crow President Arizona State University

“Sustainability is larger than one person, one company, or one country. Its scope, scale and importance demand unprecedented and swift solutions to environmental protection and other complex problems.” Julie Ann Wrigley President Julie Ann Wrigley Foundation

“Sustainability is living in harmony with our social and natural environment, based on a sense of justice and equity.” Sander van der Leeuw Dean School of Sustainability

“Sustainability is a process that engages every discipline to provide dynamic solutions to complex problems.” Brian McCollow Student School of Sustainability

Are you clear now on what sustainability means and why a “School of Sustainability” is of paramount importance?

Academic papers on the topic of sustainability often include such concepts as “intergenerational equity” and “inter-temporal welfare.” The left somehow manages to insert its obsession with inequality into every imaginable issue. Inequality is not only a problem at a point in time, but also between time periods.

The Environmental Protection Agency recently spent $700,000 on a study entitled Sustainability and the U.S. EPA. The abstract of the report states:

Recognizing the importance of sustainability in its work, the U.S. EPA has been working to create programs and applications in a variety of areas to better incorporate sustainability into decision-making at the agency.… This framework provides recommendations for a sustainability approach that both incorporates and goes beyond an approach based on assessing and managing the risks posed by pollutants that have largely shaped environmental policy since the 1980s.… EPA should also articulate its vision for sustainability and develop a set of sustainability principles that would underlie all agency policies and programs.

Obviously the EPA sees sustainability as a golden opportunity in its quest for more power, control, and funding. The EPA’s new lease on life is going to diminish everyone else’s lives.

What is sustainability, really? It is actually an old concept that has once again been warmed over for the umpteenth time. Sustainability is simply the latest incarnation of Malthusianism. Writing in 1798, Thomas Malthus warned that England’s population growth was going to outstrip its available endowment of resources such as agricultural land and coal. The specter that Malthus described was summarized as population increases geometrically, food increases arithmetically. Based on that logic, starvation and suffering were seen as inevitable. Malthus, in other words, was saying that England’s economic growth was not sustainable. It was that profoundly pessimistic theory that resulted in economics being described as “the dismal science.” England, of course, has gone on to experience over 200 years of historically unprecedented economic growth.

As John Maynard Keynes later observed, “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” Although Malthus certainly ought to be defunct, his diagnosis of the world continues to have broad appeal.

Obviously, Malthus’s predictions did not come to pass. Why not? Malthus’s error, in a nutshell, was failing to appreciate the impact of an increasing stock of knowledge and the resulting technological revolution. The sustainability crusade is wrong for essentially the same reasons Malthus was wrong.

A CLOSE RELATIVE OF SUSTAINABLE is “renewable.” An obsession with renewability has resulted in many of our silliest and costliest public policies — subsidies and mandates for ethanol, windmills, and solar panels, for example. A reflex response has been ingrained in public policy that renewable is always and everywhere better than non-renewable. Buzzwords like renewable and sustainable act essentially like thought-stoppers.

When in the history of civilization have we actually exhausted or totally depleted any significant resource? The answer is never. What makes us believe we will in the future? Somehow we buy into the notion that something that has never happened in history is going to doom us in the near future. It is another reflection of the inflated self-importance and myopia of the current generation.

The Stone Age did not end because of a stone shortage. It ended because an expanding supply of knowledge created superior alternatives to stones. That dynamic represents a central theme in the history of civilization. Iron ore was around before and during the Stone Age, but the information needed to make it useful did not exist at the time. Petroleum was not even a resource until we knew how to access it and refine it. We also invented new ways to use it, especially for transportation purposes. Sand was not a resource until we learned how to turn it into glass and concrete. As the late Julian Simon observed, “Resources in their raw form are useful and valuable only when found, understood, gathered together and harnessed for human needs. The basic ingredient in the process, along with the raw elements, is human knowledge.”

In the 19th century lanterns were the main source of illumination and whale oil was the main fuel for lanterns. If that had continued we might have driven some whale species to extinction. Why didn’t that happen? (It certainly wasn’t because Greenpeace was harassing whaling vessels.) We invented ways to convert coal to kerosene and later, petroleum to kerosene. Kerosene was about a tenth as costly as whale oil and smelled better. Then lanterns as a light source were made obsolete by Edison’s invention of the incandescent light bulb.

Copper is an important resource with many uses. It could be categorized as a finite, non-renewable, exhaustible resource. How big a problem is that? To answer that question, consider the numerous ways we have developed superior alternatives for many of the traditional uses of copper. For example, copper wires were once the only alternative for long-distance communication — namely, telephones and telegraph. Now most communication is sent, not through wires, but through the air (cell phone towers and satellites, for example). A single satellite does the job of hundreds of tons of copper. What information is still sent through wires is likely to be done not with copper but rather with fiber-optics (glass). Glass is made with sand or, more specifically, silica. Is sand a non-renewable resource? What’s the likelihood we will ever use it all up?

Whether a particular resource is or is not renewable or sustainable is often not what matters. The most important consideration to bear in mind is this: if there are good or even superior substitutes for a resource, its non-renewability is essentially irrelevant and inconsequential.

Another reason we shouldn’t worry so much is that all resources are not equally valuable or important. Information is the resource that is far and away the most important in terms of generating human welfare. The foremost reason our current generation is so much better off than previous generations is our access to a greater stock of information and knowledge. We truly are living in the Information Age. In a sense all previous ages have been defined by the amount of information available at the time.

Information is the polar opposite of a non-sustainable resource. Information has the almost magical property of being able to spontaneously generate and expand exponentially. Information gives us the power to create resources and to increase the effectiveness and efficiency of all other resources. The resource that is the most powerful and valuable in regard to human welfare is also the resource that has the most fortuitous characteristics. How lucky could we get?

Coming generations of humans are as likely to be as creative and inventive as the past ones have been. Again to quote Julian Simon, “The ultimate resource is people — skilled, spirited, and hopeful people who will exert their wills and imaginations for their own benefit, and so, inevitably, for the benefit of us all.” A necessary ingredient for exercising our wills and imaginations is, of course, a large degree of freedom.

Rather than stressing about hallucinatory anxieties and imaginary problems that are unlikely to ever become real problems, we ought to be celebrating how blessed we are. And we especially should not be giving up our freedoms on the basis of the disproven theories of “some defunct economist.”

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◼ Now Playing: The Sustainability Con January 18, 2012,

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Progressive Rudeness

Life is full of interesting and educational experiences. My latest resulted from being a guest on Thom Hartmann’s radio show. I was invited on the show because of a recent American Spectator column I wrote entitled “Inequality in Perspective.” In an email, Hartmann’s producer relayed that he “found it to be very interesting and provocative.” Hartmann describes himself as “America’s number one progressive host.”

The interview got off to a bad start. After reading a couple of lines from my article Hartmann asked, “You don’t really believe that do you?” I responded that I never write anything I don’t believe. (I can’t imagine why I would.)

It was Hartmann’s idea to have me on his show. I was, in other words, his guest. We’ve never met. What is the point of starting a conversation with an insult? It violates basic rules of common courtesy. Before allowing me to say a word Hartmann resorted to personal attack and essentially accused me of being dishonest and insincere. Assuming that someone would say or write what they don’t believe says more about him than me.

For the interview that lasted about ten minutes I doubt that I was given more than two minutes to talk. Most of the time was spent with Hartmann reading statistics from articles correlating human happiness with income equality.

In her email inviting me to be a guest on the show, Hartmann’s producer wrote, “In the interest of full disclosure, our politics lean left, however, we promise a polite, respectful and above all a fair discussion of the issues only.” Their disclosure might have been full, but it was not particularly honest. Saying their politics “lean left” is a bit of an understatement. I think it would be more accurate to say they toppled into the left abyss long ago. Hartmann apparently makes promises with no intention of keeping them.

Based on how the interview was conducted, Hartmann was not the least bit interested in anything I might have to say. Frankly, I am still somewhat confused as to why he wanted me on his show. He could have taken issue with what I wrote in my article without having me on the phone.

One thing I will give Hartmann credit for — he is completely up-front about how high he wants tax rates to go. He says he wants the top federal income tax rate to be at least 70 percent. Very few Democrats will ever actually admit what their wishes really are in that regard. For purposes of public consumption, they usually say they only want rates on “millionaires and billionaires” to go up “a tiny bit.” (Repeal the Bush tax cuts, for example.) Robert Reich is the only other prominent liberal I have seen admit he wants rates to go to 70 percent.

Hartmann argues that virtually everything was much better in the 1950s when the top rate was 70 percent. Furthermore, he seems convinced that it was, in fact, those high rates that created an earthly paradise. I did get the opportunity to say, because of all the tax shelters and loopholes then, hardly anyone actually paid that rate on very much of their income.

My brief conservation with Hartmann convinced me more than ever of something I said in my “Inequality in Perspective” article — for many liberals economic equality is the Holy Grail, and the sine qua non.

At my age I am long past being naïve. I am never the least bit surprised by the insulting and disrespectful ways liberals relate to conservatives. Liberalism is intellectually bankrupt. It cannot be defended using logic and evidence. Personal attack and insults are all they’ve got.

Conservative talk shows are vastly more popular than liberal talk shows. There are many explanations why, but I’m convinced an important one is simply the difference in politeness and respect shown to callers and guests. Very few people enjoy listening to someone being rude and insulting. Irrelevant personal attack is not particularly interesting. Liberal talk show hosts seem to be tone deaf and are incapable of hearing how they sound to most people, not just conservatives. I’m not advising them to change. In fact, I hope they keep it up. I’ll probably continue to accept invitations to be on their shows. In a perverse sort of way, it’s kind of fun.

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◼ Progressive Rudeness December 20, 2011

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Inequality in Perspective

Mother Jones contributor Kevin Drum says that “The heart and soul of liberalism is economic egalitarianism.” From what I’ve observed Drum has it right. Merriam Webster’s defines egalitarianism as “a social philosophy advocating the removal of inequalities among people.” The Occupy Wall Street’s 99 percent mantra is fundamentally about economic inequality. On the class warfare battlefield, the classes are defined according to wealth and income. Inequality was the underlying theme of President Obama’s much-discussed Osawatomie speech.

What is it about equality that makes it the foremost policy objective of liberals? Why do they apparently have the belief that equality is synonymous with justice and fairness?

There are a number of problems with making equality a policy objective. Foremost perhaps is it’s a whole lot more complicated than its proponents might believe. Liberals seem never to take the effort to analyze or diagnose the sources of what they see as problems. Their concern rarely penetrates the surface. Those who are the most upset about inequality never seem to reflect on why there is economic inequality in the first place or what other societal goals we would have to sacrifice in order to achieve it.

The kind of equality liberals focus on is economic equality. Why do they fixate on that one dimension? There are, of course, several explanations. Liberals see income leveling as a cash cow. The government needs money, wealthy people have money, ergo, go get ’em!

Other reasons include the fact that liberals believe that money can buy happiness. It also demonstrates how much they are ruled by envy.

Liberals believe that wealth causes poverty. Whether or not they realize it, they are Marxists. Marxism is an ideology based on the belief that owners unfairly expropriate wealth that should be going to labor. Marx would be proud of the Occupy Wall Street protesters. Marx’s “labor theory of value” is not so much a theory as a lame attempt to sell the exploitation myth.

A well-known quote from The Communist Manifesto by Marx and Engels is “The history of all hitherto existing society is the history of class struggle.” That is a gross distortion of history, but it is a perfect synopsis of the bedrock philosophy of liberalism. The left perceives the world as a battle between the oppressed and the oppressors.

The equality crusaders rely on what could be called a “quantity theory of good and evil.” The enemy has been quantitatively defined, rather than the usual qualitative approach. It consists of ranking the population from top to bottom as measured by income or wealth. The degree of evil corresponds to the percentiles. Those in the hundredth percentile, the so-called “one percent,” are especially evil. The quantitative method excuses them from actually having to think about the flesh and blood individuals in the one percent. It provides an easy way for simple-minded people to know who to hate.

This way of defining villainy makes it a renewable resource for class warriors. If the current population of the top one percent got fed up and moved to Australia, there would be a brand new top one percent to demonize.

If equality is a prerequisite for happiness, we will never be happy. Even if it were possible to achieve economic equality, numerous other kinds of inequality would still exist — beauty, IQ, athletic ability, health (physical and mental), creativity, and talent, to name just a few.

Obviously, equality is unattainable. Making it a precondition for happiness is an extremely bad idea. It makes as much sense as saying you can’t be happy unless the planet stops rotating — “I simply must have daylight 24 hours a day!” Liberals would have a much higher likelihood of being happy if they accepted inequality as a fact of life rather than something to be battled against. If we can’t have fairness and justice without equality, then we will never have fairness and justice. As is the case with the rest of liberalism, equality is a utopian fantasy.

For the sake of argument, let’s grant that less inequality would be a good thing. As is true of all objectives, more equality can only be achieved at a cost in terms of other objectives. If we insist on cutting the economic pie into equally sized pieces, we will end up with a smaller pie since it would eliminate any economic incentive to produce.

Most people who earn high incomes have made significant sacrifices to do so. They typically have stayed in school longer than most people, studied harder, worked longer hours, and taken more risks. Do we not feel they ought to be rewarded for these sacrifices? Isn’t being rewarded for such behaviors itself an important aspect of fairness? There is simply no way to distribute income that is “fair” in every way.

The left’s obsession with equality is the primary reason they despise the market. A market economy generates unequal wealth and incomes. That bothers them so much they are willing to forego all the advantages of a market economy.

In regard to many of life’s most important dimensions we are, in fact, equal. Most important is the fact that “death is the great equalizer.” Sooner or later we all die. No one, no matter how wealthy, lives forever. Rich or poor, if you eat too much you’re probably going to gain weight. If you act like a jerk you will have no real friends. In many ways, life treats us all the same. The same basic rules apply to us all.

Both liberals and conservatives care about equality. They differ, however, in regard to what they mean by equality. Conservatives want equality of opportunity, liberals want equality of outcomes.

In his book Free to Choose Milton Friedman wrote, “A society that puts equality — in the sense of outcome — ahead of freedom will end up with neither equality nor freedom…. On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.”

Cuba is one of the left’s favorite countries. Almost everyone in Cuba receives the same income: $15 a month. Grinding poverty in a country in spite of their amazing natural and human resources, but at least they have economic equality! (And, of course, “free” health care.) Cuba is a case study illustrating the real cost of making economic egalitarianism “the heart and soul of liberalism.”

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◼ Inequality in Perspective December 9, 2011

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.