Obama Exploits A Downturn To Engineer Us Socially, with Gordon Lloyd (Forbes.com) September 27, 2012

Mitt Romney’s 47 percent are “dependent…victims” remarks to donors and Barack Obama’s I “believe in redistribution” speech as an Illinois state senator nicely frame one of the important debates of this presidential election.   Under the surface of the arguments over big and small government, government spending and the deficit, and the future of entitlements and taxes lies a crucial difference between the presidential candidates on social policy:  Romney believes in equality of opportunity while Obama seeks equality of outcome.

Equality of opportunity has historically been the distinctive American way.  When the French journalist Alexis de Toqueville visited America early in the republic, he noted that, while the French revolution had been about equality, the American revolution was to win liberty.  Equality of opportunity was grounded in the Declaration of Independence and its affirmation that all men are created equal—which does not mean, of course, that all people are born with the same color of skin, or the same gender, or even the same intelligence.  What it means is that these differences do not matter, that no person is born intrinsically better than another, that a permanent aristocracy in the economic realm, or a divine right of kings in the political realm, are no part of the American system.

But the economic recession and the presidential campaign have renewed calls that equality of opportunity isn’t enough, that it is outmoded or morally wrong and should be replaced by a quest for equality of outcomes.   The recent one-year anniversary of the Occupy Movement, which was long on passion but short on policy, reminded us of protests over economic inequality and abuses on Wall Street.  This movement ranted about “the 1%” of top earners as against the 99% who earned less money, and sought an ill-defined way to blame society and government.

These issues naturally come to the fore in an economic downturn since, when all ships are rising, few notice that some classes benefit more than others.  So in the presidential campaign of 1932, in the midst of the Great Depression, Franklin Roosevelt similarly decried the myth of “rugged individualism” and offered up a New Deal.  He saw “one-third of a nation ill-housed, ill clad and ill nourished” and called upon government to intervene and alter those outcomes.  Now Obama sees one-fifth of a nation ill-healthed and its markets ill-regulated.  In his early campaign keynote speech in Osawatomie, Kansas, in December, he identified income inequality as one of his primary concerns, attacking the “breathtaking greed of a few” and the “mortgage lenders that tricked families into buying homes.  “Those at the top,” he said, “grew wealthier… than ever before.”

No matter that, in the October, 2011 data from the Congressional Budget Office, which is used to fuel the class warfare rhetoric, in fact all categories of income rose during the studied period (1997-2007).  In more recent data from the Census Bureau, there was no growth in upper income levels in the past year and a modest decline below.   Also, drawing long-term conclusions on data from the great recession has its own limitations.  But, as a psychologist friend likes to say, don’t get rational on me.

Obama would have America accept increased regulation because, in an equality of opportunity society, if individuals do not get a good outcome, it is a failure of the system, a market failure.  He reminds those whose opportunities have resulted in profitable businesses that “you didn’t build that,” that in some sense government is responsible for your success, so we need to “redistribute” some of your money to those for whom opportunity never unfolded as it did for you.  As he put it in that speech as an Illinois state senator, “I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate redistribution . . . .”

There is no evidence that Obama’s increased government programs in healthcare, regulation and entitlements will grow the economy, and only his tax increases directly address income inequality.  So, in effect, what this comes down to is using an economic downturn—as his former aide Rahm Emanuel famously said, it’s a shame to waste a crisis—to accomplish some major social engineering.   While Obama seeks to blur the distinction, leaving the impression that there is only equality of outcome, an important question for this election is whether Romney can articulate the important and historic American distinction between equality of opportunity and equality of outcome.

Gordon Lloyd is a professor of public policy at Pepperdine University.