How to win the fight for free enterprise.
Frontpage Interview’s guest today is Arthur Brooks, president of the American Enterprise Institute for Public Policy Research and a celebrated conservative author, economist, and media personality. He was formerly the Louis A. Bantle Professor of Business and Government Policy at Syracuse University. He is author of the new book, The Road to Freedom: How to Win the Fight for Free Enterprise.
FP: Arthur Brooks, welcome to Frontpage Interview.
Let’s begin with you telling us what inspired you to write this book.
Brooks: For years, the free enterprise movement has done an incredible job making the material case for free enterprise and explaining how economic freedom makes people better off. By the end of the Cold War, we had pretty much won that argument. Most mainstream liberals now publicly eschew “socialism,” and concede that the market economy is the best way to produce material prosperity in the aggregate.
But where the left has where—and where free enterprise advocates have failed to respond—is on the moral side of the ledger. Sure, the left says, free enterprise makes us better off, but at a huge cost to our society and our values.
This argument is incorrect, but it’s effective because we almost never show up to debate it. I wrote this book to explain why I believe free enterprise is not just an economic alternative, but a moral imperative.
FP: Share with us your moral defense of the free enterprise; why is being free moral?
Brooks: In a nutshell, it’s this: Free enterprise is the only system that allows us to earn our own success, is fundamentally fair, and meaningfully helps the poor. Let’s go through these one at a time.
First, free enterprise allows us to earn our success. This doesn’t mean just making money—it mean defining our success however we wish to measure it and going out and achieving success. This is what the Founders meant when they talked about the right to pursue happiness. Material goods may make us physically comfortable, but above the poverty level they don’t improve life satisfaction. This means that governments can’t make us happy. Only we can make ourselves happy, and only free enterprise lets us do it our own way.
Second, free enterprise is fair. If you believe that hard work and creativity should be rewarded, you believe in meritocratic fairness—not the redistributive “fairness” some politicians are offering today. All available data show that Americans basically believe that our country is a meritocracy and that meritocratic fairness is true fairness. Many on the left like to talk about fairness in terms of outcomes, suggesting that it’s somehow unfair that some people have more money than others. That’s a shallow, materialistic argument, and more importantly, it doesn’t match up with Americans’ understanding of fairness.
Third, free enterprise helps those in need. As Senator Marco Rubio of Florida has remarked, “the free enterprise system has lifted more people out of poverty than all the government anti-poverty programs combined.” The evidence shows that the senator is correct. But beyond that, the free enterprise empowers individuals to make a difference in their lives and the lives of those around them. And this means helping the poor in a meaningful sense, not just giving them handouts.
FP: Your thoughts on higher taxes and on the belief that redistribution is moral?
Brooks: When I was a college professor, many of my economics students complained that it’s “not fair” that the rich have so much more than the poor. So I cooked up a scheme to show them they were thinking about it the wrong way.
Halfway through the course, I could see big differences between students who were working hard and those who weren’t – call it grade inequality. So I made a modest proposal: take a quarter of the points earned by the top half and pass them on to the lower half. Everyone thought this was idiotic – even the students at the bottom. And they understood the broader point: Beyond providing for essential services and a minimum safety net, redistributing income just to get more equality is not fair--it's completely unfair.
Redistributing wealth is no different. If income were handed out arbitrarily, it might be fair to pool and redistribute it. But it’s not, no more than grades are handed out at random.
Our society isn’t a perfect opportunity society, but to the extent it’s not, we should fix the real detriments to mobility: schools designed for adults and not kids, cronyism that privileges the well-connected over innovators, and a tax and regulatory system that prevents entrepreneurs from creating jobs. Redistribution doesn’t solve these problems. If anything, it makes them worse. There’s nothing moral about that.
FP: Tell us a bit about how “earned success” brings people happiness and fulfillment while “learned helplessness” leaves unhappiness and un-fulfillment.
Brooks: The data on entrepreneurs are instructive here. Entrepreneurs make less money and work longer hours on average than people who work for employers. They make almost twenty percent less money than government managers, just to take one example. But they’re much happier than almost any other profession. Why? Because they are creating something and becoming successful in the process. They’re in charge of their own lives. And that’s where true happiness comes from.
Reams of data show empirically what your mother probably told you: Money doesn’t buy happiness. But earning success, however you denominate it, does. What this means in practice is that, all else equal, someone earning a modest income that she feels she has truly earned is going to be much happier than a billionaire heiress who hasn’t earned her own success.
Learned helplessness is just the opposite of earned success: it’s what happens when our rewards and punishment aren’t tied to effort and merit. When people don’t feel that their efforts are likely to results in success, they give up and become passive. And they become terribly unhappy in the process.
FP: Why do you think the Left has captured the moral high-ground in the context of the issues you discuss and in our culture in general?
Brooks: Free enterprise advocates don’t have the moral high ground because we haven’t consistently made a moral argument. We haven’t fought back against the claims that all we care about is rich people and making money, even though we all know it’s completely wrong. We have ourselves to blame.
Take the word “fairness.” President Obama used some version of that word fourteen times in his speech in Osawatomie, Kansas last year. He’s been calling for a so-called “Buffett rule” to “makes sure everybody pays their fair share.” And he claims only his policies will ensure “everyone engages in fair play and everybody gets a fair shot and everybody does their fair share.”
As I said earlier, he’s talking about redistributive fairness. We need to talk about merit-based fairness; it’s the version that most Americans agree with, and it’s the version that’s most philosophically sound. Fortunately, some conservative leaders, like Senate Minority Leader Mitch McConnell and Representative Paul Ryan have begun to stand up on this. I hope others will as well.
FP: In the book, you propose certain policy reforms that can heal this nation. Tell us some of them.
Brooks: First and foremost, we have to get back to economic growth by getting out of the way of entrepreneurs. Weak growth means the end of our opportunity society. That’s about as immoral as you can get. Second, and related to the first, we have to stop picking winners, reject cronyism, and allow entrepreneurs to create jobs. Work provides not just income but is an important part of what gives our life meaning. We have to get serious about entrepreneur-led—not government-led—job creation.
Third, we have to reign in spending to control the debt; there’s nothing fair about spending money our children have yet to earn. So fourth, we have to fix entitlements by making them about a safety net, not robbing future generations to support the middle-class elderly. Fifth, we have to reform our tax code to make it fairer by taking social engineering out of the picture and not penalizing savings and investment—the very things that make growth and jobs possible.
These aren’t radical new ideas. For the most part, they’re ideas conservatives have been working on for years, in some cases for a generation. But we haven’t been successful because we haven’t explained why they’re the morally correct policies. That’s our challenge, and it’s one I spent a great deal of time on in the book.
FP: How important is the 2012 election?
Brooks: I think it’s quickly becoming a referendum on what kind of country we want to be: one defined by redistribution and a low profile on the international scene; or a country defined by dynamism, explosive growth, and a deep belief in American exceptionalism.
But we have to do much more than just elect free enterprise-friendly politicians. We have to continually and without apology stand up to and confront the statists who would turn us into a European welfare state that can’t effectively fight freedom’s enemies around the globe. We have to call out those who claim to believe in free enterprise but really believe in deals, connections, and cronyism. And we have to tell our friends and family and neighbors why we believe in free enterprise and why it’s right for America.
FP: What can the average American citizen do to defend America’s moral system of free enterprise?
Brooks: The book’s website (arthurbrooks.aei.org) has a whole section on how to take tangible action, whether one is a student, policymaker, business leader, or in any other role.
Above all, do this: Understand and repeatedly reiterate the moral case for free enterprise. It’s an argument that should be a slam dunk for us. Only free enterprise allows us to earn our own success, is truly fair, and really helps the poor. The moral case is clear, and it’s compelling. But we have to fight for it.
FP: Arthur Brooks, thank you for joining Frontpage Interview.
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