The Undeserving Rich?
Is Elizabeth Bruenig right that the rich are the real welfare queens?
In a recent article in the Washington Post, Elizabeth Bruenig argues that, contrary to GOP aims, it shouldn’t be the poor that society requires to work for government largesse, but the lazy rich. After laying out her case, she concludes:
In other words, the well-to-do already do what workfare advocates seem so nervous about: rake in money they haven’t earned through market labor and thrive off the government’s largesse. Perhaps that itself is unfair — so why duplicate it on the other end of the economy? Put simply, it seems ludicrous at best and sadistic at most to start one’s fairness policing from the bottom up. If we mean to transform our economy into one in which people earn precisely what they work for and no more, and receive nothing from the government lest their work ethic wither, it would be best to start from the top down, where nobody runs any risk of starvation or homelessness if they lose their benefits.
In fact, none of us live entirely on what we earn. We rely on the infrastructure, knowledge and technology developed by those who have come before us, and those contemporaneous with us. Instead of trying to mince each person’s life’s work into careful calculations of contribution and merit, it seems more sensible to pursue a fairer economy overall: one that directs its excesses not to the already rich, but to those who have the greatest need; one that recognizes in its distributive structure that every person is immeasurably valuable, deserving of life and dignity.
Bruenig is right that the rich reap incredible benefits from the way our society is structured: a mixed economy of free-market capitalism with robust government regulation, progressive federal taxation, and countless loopholes in both systems, which can often be exploited by high-paid lawyers and accountants on behalf of the rich. She’s also right that none of us live entirely on what we earn: there is no such thing as a self-made man or woman, not in a society and an economy as complex as ours. We are interdependent creatures, and in our global economic era, that has never been more true.
Bruenig is also right, if one uses a certain (Marxist) framing, that “the government shells out huge sums of money to the rich every year through tax breaks and subsidies” and she is right that “households that earn between $100,000 and $200,000 receive roughly 50 percent of the benefits of college tuition-and-fee tax deductions.”
It is not in Mrs. Bruenig’s facts that I find any fault, nor in her concern for the welfare of the poor. Where I differ from Bruenig is in her framing and assumptions — the things she claims (even implicitly) but does not argue. There are several issues here, each of which should be unpacked in turn.
First, who does the “pursuing” and “directing” in our economy?
Bruenig argues that “it seems more sensible to pursue a fairer economy overall: one that directs its excesses not to the already rich, but to those who have the greatest need; one that recognizes in its distributive structure” the value and dignity of every person. This is, at first glance, a laudable ethical vision. Who would argue against an economy that is “fairer” and recognizes human dignity?
But there’s a hidden issue here. For anything like what Bruenig suggests to come to pass, someone must do the “pursuing” and “directing.”
Someone must determine the “distributive structure” of our economy. And, since many resist redistribution to others deemed by people in power to be deserving of those resources, those in charge of the pursuing, directing, and distributing must have have power to enforce that distribution—to punish those who resist and to take, by force if necessary, resources deemed necessary to be distributed to others. This is necessarily a potentially (and oftentimes actually) violent system.
Notice that Bruenig doesn’t specify who would be doing this pursuing, directing, and distributing in the quote above. My guess is that, in her vision of a fairer economy, it would be some combination of powerful government bodies, as it is now. That is, through the miracle of democracy, the majority would enact their will against the wealthy minority by means of government officials, agents, institutions, and armed enforcers. If it comes to it, the government will send armed men to your house to imprison you in order to pursue, direct, and distribute the resources you have gained (perhaps immorally) to those more deserving of them.
Most of us have accepted some version of this bargain. If you make money, it will be taxed at a certain rate, and if you resist this redistribution, you will ultimately be the recipient of government-sponsored violence (the confiscation of your resources and the rescinding of your liberty).
As a non-libertarian, I agree that some form of this is necessary to have the kind of modern state most of us want. It’s nice to know that, if disaster strikes, there is some kind of system we all can rely on to mitigate the effects (disability insurance, welfare, etc.). We should not forget, however, that violence is inherent in any economic system, and ours is no exception. It is a checked-and-balanced, buffered form of violence, but it helps constitute our economic system and way of life.
This is important to remember, because words like “direct” and “distribute” tend to gloss over the realities of exactly how powerful governments allocate resources in a society. To summarize: In our society, it is the government that wields the tremendous power of determining who deserves to be given things or have things taken away from them, and then enacting that economic redistribution, using violence if necessary.
Second, how did we get so much wealth?
Many wealthy individuals and families made their money from natural resources or labor coerced from others. There is plenty of blood money out there in any economy, and ours is no exception. Because there’s “ill gotten gain” in our system, it could be argued — as Bruenig implies in her column — that those who hold resources stolen from others or squeezed from their labor have no real claim to those resources. Their wealth should be distributed to others who need it more.
Even given this argument, you would have to be an absolute statist to claim there ought to be no such thing as privately held property. But that underlies the claim that the wealthy’s resources are necessarily of such a nature that they “rake in money they haven’t earned through market labor and thrive off the government’s largesse.” This is a claim, in other words, that implicitly relies on a Marxist frame of economic interpretation that the only legitimate resources one can claim as one’s own, if any, are those one has earned through direct personal labor.
This means that saving, investing, and making a profit from those savings and investments are illegitimate means of amassing resources. But most of us would probably dispute that. This dispute is in part practical, as it can be fairly easily established that some of the most important causes of our extraordinary wealth as a society have come about because of the earning, saving, investing, and non-labor creation our system entails.
It is logically problematic to argue for a distribution of resources predicated on the illegitimacy of the means from which those resources in large part sprang. It’s like trying to cut the roots of a tree out from under you while you are sitting on a branch of that tree. It doesn’t make a whole lot of sense. Furthermore, as I have written before,
It stands as a testament to the astounding historical success of the economic arrangement (mixed-economy capitalism) of the United States and nations like it that our poor would be considered incredibly economically secure, even wealthy, in almost every other era and many areas of the world today. This, as Jagdish Bhagwati has argued, is the legacy of globalizing capitalism.
If labor is the only legitimate source of earnings, then the resources that constitute the largesse (of anyone, including the government) or the excess to be enjoyed in our society — much of which came from non-labor economic activity — were produced illegitimately. This doesn’t only mean that they should be confiscated and distributed to those who earn based only on market labor, but that, if only legitimate market labor earnings were allowed in our society, we might expect far fewer resources to distribute as we see fit.
Within this framing, to be clear: Any resources that you gain not through market labor are less legitimate or even illegitimate, including resources gained through the activities (saving, investing, creating) that have helped produce the massive societal wealth Bruenig wants the government to fairly (re)distribute.
Third, whose resources are these anyway?
This recalls the argument from above that the wealthy are thriving “off the government’s largesse.” This is particularly creative framing, given that a large majority of the government’s money comes from other sources, namely businesses and individuals, through taxation. Therefore, Bruenig’s argument is essentially that any money that the government allows you to keep (does not take from you through taxation, using violence if necessary) is “largesse,” unless perhaps it is money earned through market labor participation.
Fundamentally, this means that the state comes before all else, that it precedes and is prior to any individual, family, business, or organization. If you get to keep more of the money you earn or the property you buy or the interest on your savings, it is government largesse. In other words, Brueing’s frame assumes that all resources belong to (or are at least distributed by) the society at large, most likely the government, and if you are allowed to keep anything, it is only because of the generosity of the powers that be. This is close to the idea that there is no such thing as private property, as it assumes that what you appear to own or produce is not actually yours, because keeping it is a result of government “largesse.”
To illustrate the point, consider the case of a married couple who have worked for wages for many years to save up enough to put a down payment on a house. They sacrificed for years, saved money, and paid taxes on their wages. They are finally able to buy a house, and, over the several years that they occupy, maintain, and possibly improve the condition of the house through their own labor, they are the beneficiaries of an increase in the house’s value.
After they have raised their children and paid off their mortgage, they wish to downsize and put that money into a private retirement account to gain interest (in addition to the gains they made through the appreciation of the real estate). As a result, when they retire, they have an amount of money double that of what they paid for the house.
Because this is not a government old-age program, like Medicare or Social Security (which Bruenig seems to be in favor of), and because the old couple have gained resources through asset appreciation and interest on savings and investment, the half of their money that comes from their wise financial planning would seem to be less legitimate, under Bruenig’s standard, than the money they earned through selling their labor.
Therefore, whatever portion of the non-labor resources the government allows the older couple to keep is a generous gift — “largesse” on behalf of the government, or at least society at large. This strains credulity. The idea that government or society somehow holds a prior claim on any resources not earned directly through wages would be foreign to anyone not living in an absolutely statist society.
This points to a critical implication of Bruenig’s presuppositions and framing: money the government collects from some people to give to others is equivalent to money the government decides not to collect in the first place through “tax breaks and subsidies.”
Now, Bruenig and I agree that the government is far too often involved in subsidizing rich individuals or large businesses for various targeted political and social reasons, but we disagree that allowing people or businesses to keep their own money constitutes generosity or largesse. In sum: Unless you adhere to a very stringent form of Marxist economic and social theory, it is bizarre to think about resources as somehow originating with the government — or, more ambiguously, society at large — whose generosity is displayed in allowing anyone to keep any non-labor wealth they have acquired.
Fourth, is something good simply because the government does it, rather than individuals, businesses, or smaller organizations?
Bruenig writes:
In 2016, for instance, Social Security kept 26.1 million people out of poverty to the tune of $911.4 billion paid out in disability and old-age pensions; during that same year, federal tax subsidies for the pensions of the more affluent totaled $179.9 billion . Faricy observes that the same pattern holds in health care and education: While the government spent some $200 billion on Medicaid that year, it also spent $120 billion subsidizing employer-based health insurance.
Bruenig approves of Social Security and Medicaid, but seems less fond of government incentives or tax breaks for private pensions or insurance. But even if the means are different, the ends are the same: to stave off economic insecurity in old age and procure medical services when illness or injury come calling. Never mind that the people receiving “tax breaks” for paying into retirement accounts or paying for private insurance also often pay into the systems that support the less affluent. It seems that the very fact the government is not in control of the private options for health care and retirement it incentivizes are an affront to Bruenig, or at least not as optimal as government programs.
The implication is strong: If the government takes money from some people to give to others to “keep them out of poverty” and ensure a better chance at good health, this is a good thing. If the government allows people to keep more of their own money to try to do similar things, this is not as good.
Fifth, does Bruenig’s assumed motive for advocates of “workfare” even make sense?
Bruenig argues:
It seems ludicrous at best and sadistic at most to start one’s fairness policing from the bottom up. If we mean to transform our economy into one in which people earn precisely what they work for and no more, and receive nothing from the government lest their work ethic wither, it would be best to start from the top down, where nobody runs any risk of starvation or homelessness if they lose their benefits.
Few, if any advocates of welfare reform or fiscal conservatism support these policy priorities toward the end that “people earn precisely what they work for and no more.” And most would not argue that people ought to “receive nothing from the government lest their work ethic wither.”
Some conservatives might believe that “work requirements are about making sure that people who receive federal aid aren’t lazy loafers living off the dole,” but most that I know believe that large government entitlement programs not tied to work in some way, for those who are able, actually sap that precious commodity Bruenig is so fond of: human dignity. These programs can lock people into cycles of dependence, can dis-incentivize work, can make it seemingly impossible to move to a place where they could find decent work, and can place an unfair burden on many non-wealthy people who do work (it is not only the wealthy who pay taxes, for the time being at least).
For example, over the past few decades, Peter Cove has helped hundreds of thousands of Americans find work, and he has argued for the dignity of work over the entrapment of government wealth transfers. A few years ago, Cove wrote about his experience in the City Journal:
Nearly half a century ago, I dropped out of graduate school and enlisted as a foot soldier in America’s War on Poverty. Today, I’m still on the front lines, working to move people out of dependency and into employment. But with an important difference: I’ve become fed up with the useless policies that I once supported, and I’m trying to change the strategy of our bogged-down army.
We know for certain that income transfers, the preferred tactic of generations of liberals, have utterly failed to end poverty. My firsthand experience with welfare clients has shown me why: being on the dole encourages dependency. Working at a real job, by contrast, is the surest way for a person to climb out of poverty. Accordingly, the surest way for the government to fight poverty is to eliminate cash assistance almost entirely and offer jobs instead.
Cove, and many others like him, are more concerned with the cycles of dependency created by welfare, rather than ensuring that people get only what they work for, or that “welfare queens” are given their just desserts. The conservative opposition to “the dole” may be framed in terms of punishing the lazy by some, but for many who want to help those in poverty escape it if possible, like Cove, that’s not the motivation for welfare reform. In essence, Bruenig is arguing against a motivation that many, perhaps most, advocates of “workfare” do not have or profess.
In conclusion
Most people do not consider wage labor the only legitimate way to build a life, economically speaking. People, especially the poor, benefit from the savings, investment, innovation, creation, and risk-taking of others, in a myriad of ways.
Materially speaking, our poor are, in large part, better off than the kings and queens of centuries ago because of the incentives provided by our system to earn resources in ways besides labor.
Most people don’t assume that society, in the practical form of government, has a legitimate claim on most or all of the resources of individuals and businesses in such a way as to label the resources people are allowed to keep as “government largesse.” In fact, many people are suspicious of the ability of government to wield the kind of power necessary to distribute wealth in this way. And many others doubt that the motivations of those seeking such power are pure — exclusively directed toward the end of making our society more just and dignified.
Finally, many people, myself included, are not convinced that all the programs implemented by the federal government are particularly effective in making our society fairer and more conducive to the flourishing of human dignity. Thus, though Bruenig’s ethical vision of human dignity for all and a fairer economic system for the poor may be laudable, her framing of these particular economic realities has some flaws, and the policy recommendations that logically follow may not be the best way to achieve those laudable goals.
