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Most Americans still believe that their country
offers more opportunities for economic success and advancement than any other
country on earth. They are convinced that American society is basically free
and meritorious which judges everyone according to his individual ability and
rewards him for his accomplishments.
This view undoubtedly reflects the early history of
the country when few economic laws and regulations encumbered economic
activity and many European immigrants managed to rise from rags to riches. It
envisions genuine economic freedom in which the most productive and creative
members of society climb to positions of affluence and eminence. But does it
actually describe economic and social conditions today or does it merely echo
old notions and convictions?
Unequal ability, whether innate or acquired, tends
to lead to great differences in personal income and social position in every
kind of economic system and social order. In a market order, men and women
who render valuable services to consumers are rewarded accordingly; others
with lesser ability and diligence who render mediocre services earn and
receive less. Consumers are the judges who determine and allocate the
rewards. They select the producers who serve them best and therefore rise on
the ladder of wealth and position. But they may also demote producers or
their heirs who no longer serve them satisfactorily.
Ours is an age of persistent political supervision
and intervention that encompass nearly every aspect of economic life. Countless
economic laws and regulations and onerous taxation muffle the calls and
orders of consumers but magnify the wishes of legislators and regulators. A
dense thicket of statutory obstacles renders it ever more difficult to climb
the ladder of success by way of market service but facilitates success on the
route of political connection. Few poor people have political connection
which would allow them to find their way through the thicket, and few budding
entrepreneurs have the means to confront a bureaucracy set on maintaining the
status quo. It takes a large legal staff of Wal*Mart
or Sears Roebuck to challenge the economic edict of a local regulator; it may
take many years of wrangling and many thousands of dollars in legal expense
to obtain a license for business expansion. Strapped beginners need not
apply.
Academic analyses now show that it is increasingly
difficult to rise from rags to riches. Some studies reveal, for instance,
that fewer and fewer families in the bottom fifth of the population (as
ranked by income and social status) can make it up the ladder. Nearly 70
percent remain either at the same level or even do worse than their
forebears; similarly, many in the second-poorest fifth stay put in their
class. While all such studies readily agree on growing social immobility,
they may differ on the causes of such a development. Some may hint at a
business plutocracy which is said to exercise its influence on public
affairs. Others yet believe that the education system as it developed in
recent decades is increasingly stratified by social classes. Poor children
attend poor schools while the students from the richest socio-economic class
attend the country's top colleges. They are at Harvard, Princeton,
Yale, and Duke.
This writer is inclined to fault the new economic
order known by various labels such as the New Deal, the Great Society, and
other Democratic and Republican Deals. They signaled
the sway of popular notions of social conflict and the beginning of social
legislation. Guided by a motley of economic
ideologies that originated in the Old World,
some members of the political elite readily adopted various versions of the
exploitation doctrine according to which government needs to protect labor from the greed and power of capitalists. Others
embraced the notions of Historicism and Institutionalism according to which
production now is exceeding necessities. Ruthless exploiters use the property
rights, seizing the surplus and living in leisure. Self-interest clashes with
the common good, and money-making motives prevail
over service intention and design. Both doctrines meant to reduce the
inequality of incomes and levels of living; both actually buttressed the
thicket and increased social immobility.
Despite the rising barriers of economic regulations
and taxation, innate ability and will power still may attain individual
success and advancement by way of higher education. With the help of much
state and federal aid, talented young men and women of limited means may find
their way through college and graduate school and enter the professions. There
are multibillion-dollar federal grants to elementary and secondary education
of students with special needs. There are financial assistance and guaranteed
student loan programs, direct support for students in health-related research
and studies, and federal aid for developing institutions such as Howard University
and Gallaudet College. All state governments spend a
lion's share of their tax revenue on higher education.
It cannot be surprising that some talented youths
manage to advance from poor beginnings to well-to-do professions. Naturally,
most of them are forever beholden to all manifestations of the welfare state
and amenable to government largess. Ignorant and incurious in matters of
industry, trade, and commerce, they are ever suspicious of the motives and
actions of businessmen. The old welfare states of Europe, such as France, Germany
and Italy,
are well anchored in the professions that are fed and fostered by government.
When compared with those welfare states, this
country still may offer more opportunities for economic success and
advancement; but the underbrush of laws and regulations gradually is reducing
those opportunities.
Dr Hans F. Sennholz
www.sennholz.com
Dr. Sennholz is President
of The Foundation for Economic Education, Irvington-on-Hudson, New York and a
consultant, author and lecturer of Austrian Economics.
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