Horatio Alger Matters

The traditional—or at least doctrinaire—response of conservatives and libertarians to the phenomenon of income inequality has been, “So what?” The common attitude of many on the Right is that, in a free-market economy, individual differences in ability, skill, and effort will lead to inequality of income. James Madison summed up the sentiment nicely in Federalist 10 when he stated that the “first object of Government” consists of “the protection of different and unequal faculties of acquiring property,” which “immediately results” in “the possession of different degrees and kinds of property.” In a free society, it is often believed that unequal results are inevitable—for some, even desirable

Charles Murray challenged the sanguinity of that position in his 2012 book Coming Apart, which documented a large and growing wealth gap between America’s highly educated elites and the blue collar workers who formerly comprised the middle class. Even more troubling than the yawning economic chasm was Murray’s depiction of the accompanying cultural decay among working class whites, reflected in their rising display of the illegitimacy, unemployment, criminality, and drug use that burden the black underclass in this country. Over the past 50 years, our society has become highly stratified, and the trends Murray identified in the “new lower class” four years ago have only gotten worse.

And that was the year (2012) when a lackluster President Obama exploited the rhetoric of class warfare to win reelection. His use of the income-inequality issue brought him a comfortable victory over a patrician Republican opponent who was perceived as out of touch with disgruntled voters.

The Republican frontrunner in this year’s race for the White House—a billionaire with a common touch and incendiary rhetoric against the powers that be—has tapped into the festering discontent with this social divide, and related economic immobility, among GOP and independent voters. The conventional GOP coalition is disintegrating in a sea of anger about America’s ailing middle class beset, many are claiming, by globalization, one-sided trade deals, and uncontrolled immigration.

To address this political sea change, it would behoove conservatives to overcome their reflex of dismissing the idea of income inequality and seriously consider the causes, extent, and consequences of the current economic and social situation. Helpful in that effort is the timely and thought-provoking new book by George Mason University law school professor Frank Buckley, The Way Back: Restoring the Promise of America.

Buckley, always adept at lacing his political/legal analysis with literary allusions, begins with a panegyric to Horatio Alger’s character Ragged Dick, the plucky urchin of late 19th century fiction who rises from the streets of New York City to a position of respectability by dint of honesty, thrift, and hard work. To Buckley, the rags-to-riches parable of Ragged Dick exemplifies the core value at the heart of America: upward mobility. The extinction of this national type in our time forms the theme of the book. “The level of income inequality today is higher than at any time in the last 90 years,” he warns; and to make matters worse, “there’s even less mobility in America than in most First World countries.”

The Way Back makes a powerful empirical case that this is a serious problem, even a crisis. American society, Buckley argues, is trending toward a caste system, in which one’s future economic prospects are largely dictated by the status of one’s parents. The American Dream depends on the realistic possibility of achieving Horatio Alger-style success in real life. Like Nixon was able to go to China, Buckley—who in his Acknowledgments section makes clear his grounding on the political Right— advocates an agenda to restore upward mobility with sensible free-market reforms, which he drolly calls “socialist ends through capitalist means.”

Buckley believes the current sclerosis is largely caused by government policies, not technological change. Specifically, he sees a de facto aristocracy having struck an unholy bargain with the lumpenproletariat to conspire against the middle class. Using historical examples from 19th century Britain (the author, a Canadian native, is an unabashed Anglophile), Buckley posits that America’s wealthy (and mostly liberal) elites support “policies that preserve their privileges and those of their children at the expense of a rising middle class.”

He observes that uncontrolled immigration produces cheap labor, which is good for Big Business but bad for unskilled American workers. Globalization and “free trade” outsource once-lucrative manufacturing jobs, but produce cheap goods and increase corporate profits. Buckley doesn’t dispute that globalization “has proven an astounding blessing for most of the world’s people,” but makes the sometimes overlooked point that “it has also meant the loss of low-tech, middle class jobs in America.” Ultimately, he resigns himself to the inevitability of globalization and does not propose restrictions on free trade, but he points to it as a contributing factor to inequality and immobility. He is not a Canadian version of Pat Buchanan or Donald Trump.

In fact he makes what are often mainstream conservative (and familiar) points: Big Government inhibits upward mobility through crony capitalism, barriers to entry, a loophole-ridden tax code (though he says it favors the rich), and impediments to aspiring entrepreneurs. (He illustrates the difficulty a modern-day Ragged Dick would have in navigating the myriad business and occupational regulations to climb the economic ladder today.) Cheap money generated by Federal Reserve policy benefits Wall Street at the expense of retirees and middle class investors.

As surely as contract law spelled the end of feudal serfdom, the rule of law is indispensable to upward mobility. But the rule of law has been hobbled by an overly-complicated legal system that empowers unscrupulous prosecutors, enriches elite lawyers, and reduces the certainty and predictability of everyday commerce.

Simultaneously, our education system (K-12 and higher education alike) fails to equip America’s youth with the requisite skills and learning to succeed—primarily serving the teachers’ unions and swollen ranks of administrators who drive the cost of education ever upwards as student achievement consistently declines. The New Class cynically “buys” the acquiescence of the “peasants” (and their leaders) with generous welfare benefits, plentiful government jobs, affirmative action, and Progressive policies that wreak havoc on the middle class, but which largely spare the New Class, ensconced in its gated enclaves, cloistered communities, and private schools.  In Buckley’s telling, stagnant mobility in the United States relative to the rest of the developed countries has produced a “Legacy Nation, a society of inherited privilege and frozen classes.”

The thesis explains many things, including why Goldman Sachs and other Wall Street financiers so lavishly support Hillary Clinton’s candidacy, and why the political leadership of both parties is so indifferent to the interests of middle class Americans. (Opinion polls show, for example, that the public overwhelmingly favors significant reductions—if not outright cessation—of immigration levels, yet Congress refuses to act.) The solutions Buckley offers—reforming education (mainly by adopting school choice), paring back government regulation, simplifying the tax code, adopting a Canadian model of immigration (focusing primarily on the skills of the immigrant and the needs of the host country), tort reform, and so forth—are sensible whether or not they would solve the problem of inequality and immobility.

Some other reforms he suggests (requiring mens rea for all criminal offenses, for example), and his closing (and uncharacteristically gloomy) ruminations about the demise of the American Empire and the superiority of the parliamentary system (a familiar theme from his 2014 book The Once and Future King), seem off-topic but do not diminish the impact of the analysis.

Many conservative intellectuals hostile to Trump have tended to discount the predicament of middle class Americans, in effect blaming them for their own hapless plight. This is a grave mistake. Trump appeals to a large swath of the electorate that is understandably angry at the Washington establishment. The only way to navigate out of the current political morass is to address that anger constructively. The Way Back does so.

Call it conservative populism. Let the conversation begin.