A Way Forward: Restore Confidence

by Sydney Williams Barack Obama has declared “inequality to be […]

Image by © Dreamstime

Image by © Dreamstime

by Sydney Williams

Barack Obama has declared “inequality to be the defining issue of our time.” I don’t disagree that inequality is an issue – over the past several years low income families have slipped further down the scale, middle income families have lost ground, while those at the top have done very well. But inequality exists in every society; to argue it is “the defining issue” is political hyperbole.

Keep in mind, that there is far more equality in democracies than in autocracies, be they right-wing dictatorships or left-wing communist regimes.

What determine civil and fair societies are not differences in wealth, but the ability and ease, based on meritocracy, to move up and down the income/wealth scales.

We face, as we all know, a number of issues: Islamic terrorism; the likelihood Iran will get the bomb; the rise of China and Russia; the decline of America’s relative importance; cronyism; the dismal record of too many of our schools; growing dependency; the size and complexity of government; a lack of civility that stems from a culture of narcissism. But the defining issue of our time – if I were to pick one – is a lack of confidence in the future. We are told that we are responsible for what is wrong in the world; we live for the moment, with no knowledge of the past and little regard for the future; that lack of confidence can be seen in the cynicism of people toward government, institutions, businesses, families and their own futures. Its consequences are manifested in low birth rates and delayed marriages, moral relativism, eroding civility, a lack of conviction regarding America’s role in the world and subpar economic growth.

Great leaders exude optimism. They cause people to perform beyond their expectations. These leaders highlight mutuality’s; they don’t accentuate differences. They do not divide people into culprits and victims. They see strength in diversity. They are unabashed that we have the fortune to live in the greatest democracy the world has ever known.

In the United States, the two greatest leaders of the 20th Century were men from opposite ends of the political spectrum – Franklin Roosevelt and Ronald Reagan. What they had in common was optimism. While I do not believe FDR’s domestic policies helped extract the U.S. from the Great Depression, I do know his fireside chats gave hope to millions. Others will disagree as to the effectiveness of Reagan, but everyone knows that his sunny disposition was a blessing for a country that had been humiliated overseas by the Iranians and, devastated at home by an economy rendered dismal by high inflation and riddled by recessions.

As the most powerful nation on earth, we have a responsibility to ensure peace in the world, but we should do it on our terms. That means we should not subsume our moral convictions. While we should admit mistakes, there is no reason to be ashamed of our successes. No form of government is perfect, but the world is fortunate that it is a democratic America that has risen to the pinnacle. There is no other nation so just or so selfless, and there never has been one. Ask any of the unfortunate souls that lived within the confines of the Soviet sphere for four and a half decades. Over the past 100 years, thousands of young American men and women have given their lives so that millions of people in other lands might live freely. In return, the United States asked for neither economic advantage nor territorial gain. It should fill us with pride, not cause us to cringe in shame. Imagine the world, like George Bailey in It’s a Wonderful Life, if there were no America! Success breeds enemies, but we should take satisfaction in our heritage, not apologize for our actions.

Nevertheless, we must address our slow economy, with its decades-low labor force participation. Keep in mind that more than a million people get added to the labor force every year. The reasons for the economy’s subpar performance are myriad, but would include an aging population; excessive consumer debt when the financial crisis hit; a decline in productivity as measured by growth in GDP per capita; an increase in government’s share of the economic pie; burdensome rules and regulations, and a tax policy that promotes cronyism, encourages consumption and favors debtors over investors.

Some of the steps that could be taken would be to simplify the individual tax code. Regulation and rules should be made easier to comply with. Congress should lower and simplify (or perhaps eliminate) the corporate tax rate. Cronyism is one of the biggest problems we face. Our complex tax laws are a result of successful lobbying efforts on the part of special interests, generally the biggest and wealthiest companies – those able to hire the best lawyers. While the 35% stated federal corporate tax rate is the highest in the developed world, the effective rate is closer to 15%. Why not bring the rate down to 15% and allow no deductions? If the tax were eliminated the need for K Street lobbyists would shrink. The amount of money in politics has reached absurd levels. Federal laws like McCain-Feingold do not work. Remove the incentives and ensure complete transparency in all political gifts, whether given directly to campaigns or through PACs. The best answer would be to implement a simpler tax code, enact fewer and understandable regulations and impose term limits, thereby reducing the value of Congressmen and women to lobbyists. Return financial power and incentives to individuals and businesses.

“You Can’t Go Home Again” was the title of Thomas Wolfe’s 1940 novel, in which his character George Webber realizes that you cannot go home to the “escapes of Time and Memory.” Nor more can we set the clock back sixty years. Government cannot be the engine it was in the 1950s. We cannot afford it. In that earlier decade and the next, highway construction, mass transit, defense and space were government-sponsored catalysts to growth. Today, when interest expenses are included, two-thirds of the federal budget consists of mandatory items, like Social Security, Medicare, Medicaid, food stamps, unemployment insurance, etc. That leaves only a third for discretionary items: defense, infrastructure, salaries, national parks, education and international affairs. The mandatory component has been rising as a percent; it is unlikely that trend will reverse. Going forward we must accept the situation as it is – an acknowledgement that individuals and private businesses, not government, will have to provide the spark for growth. It may require a willingness to give up some state-sponsored comforts – entitlements – that we have come to expect as our due.

In terms of inequality, we need schools that focus on students, not unions that keep bad teachers in classrooms. In terms of culture, we need a return to civility and the acceptance of a universal moral sense. In terms of leaders, we need men and women who bring optimism to their offices – those who will restore confidence that the future should be embraced, not feared.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

Do you like the article?

We are glad you do! Please consider donating if you want to read more articles like this one.


Share this article!
Join our community and stay updated!