A Ride on the Escalator

By | October 5, 2004
4 Comments

I had a lively debate with my 15-year-old daughter this morning while driving her to the orthodontist. Initially, we were on the subject of the presidential race. She expressed a certain disdain for both candidates, complaining that Bush is “such a Republican” and Kerry “such a Democrat.” As a registered Independent, I can sympathize with that reaction (even if I wasn’t sure exactly what she meant.)

When I asked her to clarify what it was about President Bush that made him “such a Republican,” she complained about his tax cuts for the rich and reliance on “trickle down” economics to help out those in need. In response, I opined that tax cuts are a good idea for everyone, rich and poor alike, because they free up money for spending and investing — which in turn creates jobs. I explained that the image that her Democrat friends have of rich people filling their basements with gold coins and swimming around in them like Uncle Scrooge McDuck is pretty inaccurate. Their money goes into purchases, which support manufacuring and service jobs, or investments, which support business growth in general, or straight into the bank, which lends it to would be home- or business owners.

In the end, she conceded that maybe it’s no better or worse to tax the rich than it is to tax anyone else. (Which I considered to be a major concession from a young liberal. She was adamant that the rich shouldn’t be punished for being successful, and she seemed distinctly uncomfortable with any explicit redistributionist ideas.) However, in the end, she argued that I had to “admit that Bush’s trickle-down policies weren’t working.”

Of course, I could admit no such thing. Unfortunately, we arrived at the orthodontist’s office at exactly this point in the debate, so I am forced to offer up my concluding arguments here. So, Hannah, if you’re reading this — no tax could ever create economic opportunity (that is, jobs) as quickly and efficiently as the market can on its own.

I have argued that economic growth appears to go hand in hand with technological growth. In America, a poor family of today is at least as well off as a middle class family of 30 years ago. No one is seriously arguing that this change has anything to do with taxing the rich or with government programs. Robin Hood himself, given legions of Merry Men to steal from the rich and give to the poor 24/7 for the past 30 years, would not have been able to achieve such a result.

We’re better off today than we were 30 years ago because there is more wealth to go around. Where did it come from? Certainly not from the government. It came from increases in production and in productivity. As a group, we produce more now than we did then. So now we have more, too.

Those who picture the economy as a pie to be shared, who think that a bigger piece for some necessarily represents a smaller piece for others, have got it exactly wrong. Arnold Kling explains as follows:

The often-used phrase “distribution of income” suggests the metaphor of a pie. I believe that a more accurate metaphor would be an escalator. The pie metaphor treats income as static, thereby ignoring one of the most important facts about the standard of living, which is its rise over time.

If you want to address the real challenges of poverty in this country, use the metaphor of an escalator. Target government intervention at people who are unable to get onto the escalator, due to impediments that may be medical, behavioral, or social. But don’t try to “fix” the escalator by carving it up like a pie.

Maybe it’s his fixation with the pie vs. the escalator image that makes Kerry “such a Democrat.” I’m not sure; we never got that far in our discussion. One thing is certain: neither candidate really “gets” the escalator idea. (Although I would venture to say that President Bush comes a lot closer to it.)

We are likely a generation or two away from politicians who will seriously grapple with the kinds of fundamental changes that are taking place today, and that are coming ever faster. Most of the domestic issues that are on the table this year are firmly grounded in the increasingly irrelevant 20th century. Much, though not all, of the debate surrounding the War on Terrorism is really a clash of ideas and strategies that originated in World War II or in Viet Nam vs. the Bush Doctrine, which started taking shape after September 11, 2001.

It seems strange, doesn’t it, that the progressive, futuristic arguments should come from the middle-aged Dad, while the tired and archaic views are spouted by the teenager. I think this has to do in part with the company she keeps (public school teachers and the like.) But there may be more to it than that. I am, after all, “such a Speculist.”

  • https://www.blog.speculist.com Stephen Gordon

    Phil:

    People tend to become more conservative over the course of their lives. The fact that your daughter is uncomfortable with redistribution is enough for now.

    Speaking of the company your daughter keeps, don’t forget Taranto’s “Roe Effect.”

    http://www.opinionjournal.com/best/?id=110004780

    People her age are becoming more conservative.

    Another analogy I like is “a rising tide lifts all ships.” The fact that Bill Gates towers over me with his aircraft carrier doesn’t take away from the fact that my little canoe is being lifted quite nicely by the recovering tide.

    Of course I’m going to use the opportunity of the high tide to attach some outriggers to my canoe and add a tall mast and a sail. By doing this I might attract the attention of redistributionists, but that’s a chance I’m willing to take for a taller boat.

  • http://beyondwords.typepad.com/beyond_words Kathy

    I think Democrats confuse the fact that some of the rich and powerful use their money and power to exploit the poor– or they become indifferent to the needs of the poor– with the fact that being rich and successful is not immoral. I have the freedom and opportunity to do whatever it takes to be successful, and I bear moral responsibility for my decisions as they affect other people. But the liberal “morality” is such a quagmire that it sucks people into a pit of false notions of equity and entitlement. As a conservative, I believe the government’s role is to help people who have impediments and avoid creating obstacles.

    I think your progressive, futuristic views are a product of your maturity and experience, lifelong study of reason, and engaging intellect.

    Your daughter might catch up in about 25 years.

  • http://posdef.net Virginia Warren

    I think it should be noted that, in the presence of runaway deficit spending, the Bush tax cut is a complete fraud. The taxes have simply been deferred from you to your children and grandchildren.

  • https://www.blog.speculist.com Phil Bowermaster

    Virginia —

    You have a point. Tax cuts absolutely should be accompanied with spending cuts. It is scandalous that the Republicans control Congress and the White House and yet engage in domestic spending (I think spending on the war is a different matter) that would make a drunken sailor blush. I’m hoping that some real Republicans will show up after the Presidential election and insist that this change. Currently they’re all too worried about seeing their man get re-elected to rock the boat, and rightly so I guess. Kerry certainly won’t do anything to cut spending.

    As for the “children and grandhcildren” thing, that’s what I kept hearing during the Reagan years. The deficits were insurmountable; they would never go away. In fact, with the kind of growth I described above along with — and this is very important — a little fiscal restraint, they were gone within a decade. It could happen again, but we need to cut spending soon.