If You Want to Learn the First Lesson for Solving Income Inequality-Ask a Pilgrim

December 9th, 2013

In a speech to the Center for American progress last week, President Obama spoke passionately about the problem of income inequality in America.  Obviously, this is an issue Republicans and Democrats agree needs to be addressed.  Countries become practically unlivable when there is an enormous gulf between rich and poor and the middle class is squeezed to the point of nonexistence.

What’s clear is that both parties are miles apart when it comes to ways to solve the problem. For Republicans, the solution is creating an economic environment where businesses can grow and hire.  This requires reducing taxes and relieving businesses from unnecessary regulations which stifle growth and innovation.

Obama’s approach is entirely opposite.  Based on the president’s speech, his vision is more akin to that of French president, Francois Hollande. That should give everyone pause since France currently continues its economic decline with an unemployment rate of 11%. It’s even worse for youth where the unemployment rate is a staggering 26%.

What’s been so interesting about the Obama presidency is that it’s built on an idyllic vision of people that at the very least isn’t grounded in history or human nature.  Everyone gets bent out of shape when Obama is dared called a Socialist, but there isn’t much doubt to listen to him than to at the very least believe that he would fit in very nicely in many European Socialist states. Given that, one might fairly assume that Obama’s vision is predisposed to failure since both history and the current state of European Socialist countries indicate it will.

First, there is the history.

Left leaning people become apoplectic when conservatives suggest that the experience of William Bradford and the Pilgrims illustrates the flaws of a communal arrangement where everyone is handed whatever the group believes each individual needs.  They argue it never really happened that way.  What they can’t deny is the fact that this arrangement known as “common course” ended three years after the Pilgrims arrived because at the very least, they didn’t like it.

In fact, historian Richard Pickering, an expert on the Pilgrims’ experience described the chief reason common course failed to the New York Times a few years ago as follows: “Bachelors didn’t want to feed the wives of married men, and women don’t want to do the laundry of the bachelors.”

That was in 1623.  Using history as your guide, you could easily extrapolate that thinking to issues today.  For example, young people may not like being forced to foot the bill for older and sicker people by buying expensive health insurance they don’t believe they need.  Perhaps that sounds hard hearted, but if young people fail to sign up for ObamaCare in the numbers needed to make that system work it may just simply follow historic trends and with that basic human nature and thus ultimately fail .

Historically, economies where people have been incentivized individually to perform better are more successful overall.

This brings us to the most recent example where studies of history and human nature have been lost and that’s Europe which continues to try its Socialist experiment.  Without getting too far into the weeds here, let’s just say it’s ultimately doomed to fail in its current state.

That’s not to say it isn’t more successful in some parts of Europe than others.  Northern European countries which are smaller and more homogenic tend to do better in such arrangements.  The further south one travels the worse things get.  Where there is greater population diversity and a predisposition to distrust government, the less successful these systems prove to be.  Given that, perhaps the best that can be said in Obama’s favor is that his ideas could possibly work in Minnesota but don’t stand much of a chance in Texas or Florida.

We certainly need to address the income inequality issues Obama raised, but let’s do it in a way that comports with human nature and experience rather than a Utopian ideal that sounds nice in speeches but doesn’t offer much hope of truly changing things for the better.