In a recent conversation about the U.S. presidential election, a well-educated, high-earning professional told me that he had been rooting for Bernie Sanders for president—because in his view, the income gap between the rich and the poor had grown unacceptably large, and a Sanders administration would work to narrow such inequity. Such a view of government as the ‘redistributor’ of wealth and eraser of inequity is rather typical among citizens of modern welfare states. But it is also hazardous and detrimental to human well-being.
Most governments in mixed economies have embraced the ‘redistributor’ role and work keenly to narrow the wealth gap. But the governments don’t stop at that; they also see themselves as our protectors against business that allegedly in its ‘greedy’ profit-seeking is responsible for many ills, from poverty to ‘catastrophic, man-made’ climate change. Such government ‘protection’ and intrusion in the lives of individuals and in business is also hazardous and detrimental to human well-being.
Consider Alberta, my home province, for an example. In its first year in power, our new socialist government increased the corporate tax rate by 20% (and the income taxes by 20-50% for “high” income earners with annual incomes of $125,000 or more). The government also announced approximately a 50% increase to the minimum wage to $15 per hour and touts it as a cure to end poverty. As a crusader against climate change, the Alberta government has introduced carbon taxes and emissions caps—despite the fact that the entire Canadian greenhouse gas (GHG) emissions from oil and gas production, refineries and pipelines is merely 0.5 percent of total global GHG emissions.
While the Alberta government has been increasing and introducing new taxes and regulations, premier Rachel Notley has repeatedly stated that her government wants to encourage and attract investment to Alberta (see Kevin Libin’s excellent column in the Financial Post here). In other words, she wants more milk cows in the province, with the plan of gradually strangling them to death while hoping them to provide more milk. Such a contradiction aligns with Notley’s socialist ideology but will be ruinous not just to Alberta businesses but to human flourishing here and elsewhere.
Human flourishing has two requirements: the use of reason to discover how to survive and be happy, and freedom to pursue survival and happiness without interference from others, including the government.
Contrary to the socialist welfare statists’ argument, the proper role of government is not to ‘redistribute’ wealth to erase inequity or to ‘protect’ us from business but to protect our freedom. This means protecting our rights to life, liberty, property and the pursuit of happiness against those who violate our rights by initiating fraud or force. These rights extend to business firms—collaborative endeavors among individuals.
Also contrary to the socialist welfare statists’ argument, we do not need government “protection” from business. Business plays a crucial role in human flourishing by producing and trading the material values our survival and well-being depends on: affordable and reliable energy, food, medicine, health care services, housing, cars, airplanes, smart phones, insurance coverage, financial advice, and so on. Creating material values requires thinking—the use of reason, which freedom, not government regulation, makes possible.
As I pointed out to my conversation partner and Bernie Sanders fan, the more such values are produced, the better off we are, including the people at the low end of the income distribution. Therefore, productivity and its rewards should be encouraged. Inequity in income and wealth merely reflects differences in people’s productivity and doesn’t harm but enhances human flourishing.
The only protection we need is against initiation of physical force or fraud by anyone, including those who try to operate their businesses through such methods. Should a company try to violate our rights, say, by damaging our property, jeopardizing our health or lives, or defrauding us, it is the government’s role—its only role—to protect those rights.
Attracting and encouraging investment for production and trade of material values is only possible in an environment where people are free to use reason and individual rights are protected by government.
Increasing taxes and regulations, no matter how much the government leaders pretend otherwise, have an opposite effect: they chase investment and production away and reduce human well-being, as the anti-business Alberta government’s reckless conduct has already shown.
If we want to promote human flourishing and avoid human suffering, it is crucial that we challenge the ideal of government ‘redistribution’ of wealth and regulation of the economy and advocate reason, freedom and individual rights instead.