The Wealth of Nations and the Work of Fables

One of the challenges of a fragmented, partisan, hostile political landscape is to get reliable insight into conversations you disagree with. Recently, we have discovered that Russian agencies are seeking to amplify social division in the U.S. However it is unfair to (only) blame the Russian government: they are amplifying something that is already here. My students feel very uncomfortable when I push them to seriously consider other points of view on policy. They are not sure where I stand politically, and that makes them nervous because most of the media (on both sides) continuously makes the argument that the ‘other side’ in American politics is ill-willed, ill-intentioned, and foolishly destructive.
What follows is a story that was forwarded many times by email, and according to its own self-reporting, is a quote of a widely-shared Facebook posting. So I am fairly convinced that this is a reliable portrayal of a conservative point of view, not one that has been cherry-picked by partisan media. I will include the entire message, and then contemplate the troubling work this fable does.

An important message for your children if they don’t already know, but especially for grand children and great grandchildren in this day and age where the movement for socialism is alive and well. This is a good non-confrontational way to get the message across that capitalism and hard work go hand in hand and are the ONLY sure roads to success. BUT, never forget: “MAKING A LIVING IS NOT THE SAME AS MAKING A LIFE!”

A genuine capitalist with a grasp of the real world! Good read!
The Corvette. A man named Tom Nicholson posted on his Facebook account the sports car that he had just bought and how a man approached and told him that the money used to buy this car could’ve fed thousands of less fortunate people. His response to this man made him famous on the internet. READ his story as stated on Facebook below:

A guy looked at my Corvette the other day and said, “I wonder how many people could have been fed for the money that sports car cost.”
I replied I am not sure;
it fed a lot of families in Bowling Green, Kentucky who built it,
it fed the people who make the tires,
it fed the people who made the components that went into it,
it fed the people in the copper mine who mined the copper for the wires,
it fed people in Decatur IL. at Caterpillar who make the trucks that haul the copper ore.
It fed the trucking people who hauled it from the plant to the dealer
and fed the people working at the dealership and their families.
BUT,… I have to admit, I guess I really don’t know how many people it fed.
That is the difference between capitalism and welfare mentality.
When you buy something, you put money in people’s pockets and give them dignity for their skills.
When you give someone something for nothing, you rob them of their dignity and self-worth.
Capitalism is freely giving your money in exchange for something of value. Socialism is taking your money against your will and shoving something down your throat that you never asked for.

The first line assumes a condescending attitude towards “children if they don’t already know” that capitalism (and hard work) is the only way. This kind of absolute certainty about a set of policies is only justified if overwhelming evidence supports that position. The financial crisis that began in 2007 is strong evidence that a deregulated capitalist system is unstable and capable of destroying the wealth and savings of hundreds of millions of people. So, the certainty expressed in this story is not justified.
That does not mean that other answers are automatically correct, either. But advocates of deregulated capitalism insist only on their own yardstick: either one must be absolutely certain that this specific version of capitalism is correct (you “already know”), or equally certain that some other solution is absolutely correct. That is a “straw-man” assumption that is not even stated, so the author does not need to take responsibility for asserting such a narrow point of view. But there is a different yardstick: the actual evidence. In practice, markets that are regulated to maintain competitiveness and prevent instabilities seem to perform best. The actual evidence is messy, and does not fit any doctrinaire ideology. the core problem of insisting on a normative ideal is that such certainty leaves no room for listening, for responding to evidence that might show that your one solution might have serious flaws.

Second: the author states the purpose of the story: “to get the message across that capitalism and hard work go hand in hand and are the ONLY sure roads to success” in contrast to socialism “in this day and age where the movement for socialism is alive and well.”
My main concern here: capitalism and socialism are not mutually exclusive. In fact, in modern economies, capitalism and socialism are inseparable. This goes straight back to Adam Smith, who was trying to figure out how to restructure the British political economy to help grow the wealth of the whole nation. The Wealth of Nations does not mean the wealth of individuals. In Smith’s era, it meant the common-wealth, rather than the wealth of the permanently privileged class of aristocrats. One of his suggestions: liberate the markets from the direct meddling of the aristocrats, and guarantee the property-rights of commoners by having tax-funded police and courts that anyone could access.
Smith also argued that liberated markets would find a balance of high productivity, high quality, and lower prices so long as: (a) producers sought to sell the most at the highest price they could; and (b) buyers could comparison-shop for the best quality at the lowest price. That is what Smith meant by the “invisible hand.” There is nothing mysterious about the invisible hand: it is both a tension and a balance that occurs in competitive markets. And there is nothing mysterious about when the invisible hand fails: it fails when markets become non-competitive.
Smith was arguing for markets that were freed from the control of a privileged few, and kept competitive through government regulations. Is that capitalism or is that socialism? The answer is yes. In other words, functional market competition and government regulation cannot exist separate from each other. In practice, there is no way choose one “versus” the other.
What parts of the American system are socialist? Public schools. Libraries. Freeways. Regulation of money supply and the prime lending rate. Product safety: food, vehicles, drugs, toys, paints, and clothing. The Seventh Amendment of the U.S. Constitution guarantees that commoners have access to a tax-funded court system to defend property rights, just as Smith recommended.

The third really questionable part of the story above is the section about buying a luxury car versus giving to charity. Socialism is equated with charity, without any clear explanation of why they are supposedly the same thing. This maneuver demands that you accept this questionable equivalency. Then, the author implies that all socialism is the same as a coercive Communist regime: “Socialism is taking your money against your will and shoving something down your throat that you never asked for.” The storyteller condemns socialism, taxation, and charity all at the same time, and folds them all together. He characterizes charity as “giving a man a fish” without teaching him how to fish.
But where do we “learn how to fish” for ourselves? Where do we get the capabilities to innovate, start businesses, and earn a living? Tax-funded, comprehensive public schooling to teach literacy, math, and analysis. So this attempted bundling of taxation, charity, and coercion falls apart from its own contradictions. Also, voluntary charity is pretty different from Stalinist confiscation of property, which is usually what is implied by the “against your will” reference.

Fourth: the Corvette-owner’s response shows awareness of all the people involved in production. He uses a very socialist ‘dignity of labor’ argument for why his purchase is a good thing. I actually agree strongly with the dignity of labor; as did Eisenhower who allowed a third of the American labor force to unionize. Yes: if you work hard, your labor should be rewarded, your rights and property protected, and yes, that includes the right to pursue happiness. Conservatives from Nixon onward have had a very poor track record of promoting the dignity of American labor in any way. So in this case, borrowing a socialist argument when you demonstrably oppose it is dishonest and dishonorable.

Stepping back for another look: the political work of fables

The actual event probably happened. But the re-telling and re-framing and sharing of this story means that the role of this story is now as a fable. Fables have a purpose, a social function. What work does this fable do? For those who accept the assumptions of this fable, it helps them justify their point of view by belittling a straw-man version of a ‘socialist’ point of view.

First: it works because it is simple in structure: an out-of-context retort by someone who is offended by a challenge.

Second: it portrays the Corvette-owner as the victim of condescension from the “charity” person. The re-telling of this story is a collective act of conservatives repeating to each other that they are victims of condescension from the ‘other side’. Those who agree with the fable do not see themselves as condescending: “This is a good non-confrontational way to get the message across…” However that is a blindness that comes from not looking too closely at their own tone, their own story-telling. Ancient Greeks had a word for such deficient self-critique: hypocrisy. I don’t want to slip into a ‘what about-ism’ here by implying that liberals, socialists, and all other unsundry folk are not condescending. Acknowledging condescension is a first step towards being respectful to differing viewpoints.

Third: the ‘take-away’ ending lines argue against taxation. Note that there are other ways to fund governments rather than taxes: through sales of oil, rare minerals, or other natural resources. There are governments which rely on nationalized oil revenue, and do not tax their people, such as Nigeria, Angola, DR Congo, Kazakhstan, and Myanmar. So taxation is not as inevitable as death. However, non-taxed people pay a very different price. Non-taxing governments understand that since the people do not fund them, they owe the people nothing. As odious as taxation may be, we must be careful what we wish for.
Taxation is irritating, and for exactly that reason, it is also a powerful mechanism of government accountability. No one likes paying taxes. The ongoing struggle of governments to extract taxes from reluctant populations is a process that holds those governments accountable at least as much as voting does.

Fourth: this corvette fable does important political work right now. In 2005, George W. Bush’s failure to respond to the flooding of the poor parts of New Orleans damaged his reputation. The current Republican-controlled government faces a similar threat with the poor response to hurricane damage in Puerto Rico. How to disparage calls for a government response? If tax-funded disaster-recovery work is characterized as charity, and charity is “taking your money against your will and shoving something down your throat” like assistance to an island of Spanish-speakers, this tone of conversation may protect Republican reputations while delivering a minimal response.

How to challenge such a fable?

Challenging this fable requires persnickety analysis. Detailed analysis does not mobilize voters or win heated arguments. George Lakoff is correct: all this reasoned analysis goes nowhere against a simple, emotionally sympathetic, straw-man argument for capitalism “over” socialism. Furthermore, I do not and cannot directly disagree with some of the arguments here–especially the value and honor of labor. I reject the intolerant either/or presumptions of this fable, but that is because actual, functioning capitalism is inseparable from socialism. Any country that has industrialized since 1870 has major socialist components in its political economy.
Furthermore, the either/or argument is totalitarian. The argument pre-constructs any disagreement as an opposition to economic growth and the dignity of labor.  Absolutist arguments like these cripple our ability to tackle the actual, complex problems of managing our economy so that we can produce wealth and well-being through our work.
What I really disagree with is the type of capitalism implied by this fable: de-regulated capitalism. Adam Smith’s arguments, described above, make a strong case for why deregulated markets fail: de-regulated markets “consolidate” into a few dominant firms who dictate prices and service-quality to consumers, and increasingly to suppliers as well. Total monopoly is not necessary for a market to fail. Markets become less-competitive and less efficient when as little as 1/3 of the market is dominated by one firm or a cartel of firms. Keeping markets competitive requires active, tax-funded enforcement of government regulations. If the regulating hand of government is removed from markets, the “freedom” of the market is immediately lost to the meddling hand of oligarchs and plutocrats, the new aristocrats.

But how to make a persuasive argument for a regulatory political economy, where taxes are reinvested in the people to build the common-wealth? How to make that argument with the same, blunt, bumper-sticker simplicity of the Corvette-buyer fable above?

The following ‘visualization exercise’ has the same bluntness. Unfortunately, it probably reads as condescending to someone who is already certain that de-regulated capitalism is the “ONLY sure road to success”:

Imagine a country without taxes.
A place where markets are completely free.
A place where no-one takes your money and spends it on socialist things: schools, roads, building inspections, and workplace safety enforcement.
A place where life is simple because all the red tape, all the regulations have been removed.
There is such a place:

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