I recently attended a fundraiser for first district Congressman Tom Allen (D-Maine). The congressman faces only token opposition this fall, but I was interested in hearing his analysis of life in the most conservative Congress in my lifetime. During the Q and A following the talk, a friend of mine asked Allen: "How can Republicans continually vote against the minimum wage, vote to cut heating assistance, to slash Medicaid? Do they have any sense of what it takes for ordinary people to get along in today's economy?" Allen responded that many Republicans profoundly believe that people are better off solving problems on their own and that government inevitably either screws things up or even undermines their will and moral fiber. The Congressman added that from his point of view, Republicans missed one essential aspect of traditional US values. Americans do believe in individual initiative and hard work, but they also believe in community and government support to help each other through troubled times. My friend then asked a follow-up question that should stir much more debate on the current agenda: If Republicans believe that every man and woman should make it on their own, why does the party support so many subsidies for oil companies, agribusiness, the major media and the drug companies, among others?
More broadly, we might ask if the current corporate economy, rather than being some pure free market modeled on Adam Smith's Wealth of Nations or Milton Friedman's Capitalism and Freedom, isn't a deck stacked by and for those who are already wealthy, powerful and well esteemed. A recent book by economist Dean Baker, The Conservative Nanny State (which is also available for download at www.conservativenannystate.org) raises the question of whether political debate in this society has been poorly framed. The Bush conservatives are supposed to love the free market whereas advocates of social justice are cast as opponents of the discipline and efficiency of the market. Baker's challenging and persuasive work shows case after case where government subsidies and regulations give advantages to those who are already well placed.
Why are Jeff Bezos and Bill Gates billionaires and why have the drug companies, despite periodic scandals, continued to rake in enormous profits? Gates and the scientists working for pharmaceutical firms are intelligent and creative. Their discoveries surely have benefited us, but both have profited immensely from the ability to patent or copyright their discoveries. Patents and copyrights give their holder the right to be a monopoly provider of a good or service. Adam Smith feared monopolies and wanted to see them granted only under the most restrictive circumstances. Patents for medicine are supported on the basis that these profits finance further research, but the level of protection guaranteed is so substantial that the price of prescription drugs stands at three times the level a competitive market would generate. The pharmaceutical industry's own statistics show it spent $41.1 billion on research in the United States in 2004 but "this means that the country spends more than three dollars in higher drug prices for every dollar of drug research supported through the patent system. The rest of the additional spending went to marketing, high CEO pay and drug company profits."
Innovation is valuable, but could be purchased much more inexpensively and without entrenching a financial aristocracy. Government could increase spending for both fundamental science and for new drug R and D. It could make grants to promising research teams on the condition that all patents are then placed in the public domain. It could award lavish prizes on researchers who made singular contributions. All of these steps would entail far less expense than our current system. In addition, such reforms need not eliminate the older private patent system. If private companies continue to believe their system of patents is more efficient, they could continue to finance secret research for their own patents and simply run the risk that the open system might generate better medicines more quickly. If modern conservatives really are interested in choice, this is an option government policy should offer.
Similarly, computers and the Internet have opened up remarkable opportunities, but tax law often redistributes resources to those who have. When working-class citizens go to the casino and gamble, they pay a transaction tax regardless of whether they win or lose, but when upper-class investors buy and sell stocks, they face no significant transaction tax. Rapid and often market-destabilizing purchase of stocks and bonds are free, but not so with the forms of gambling more common among the working class.
Whole new industries fostered by and disproportionately benefiting upper-class professionals escape taxation. Those of us who are more comfortable browsing the Web and buying our books or clothes over the Internet pay no taxes, while other citizens who are more accustomed to buying these items at the local stores must pay state sales taxes. This huge inconsistency in the law has helped make Jeff Bezos a very wealthy man and has amounted to a subsidy to many middle-class professionals at the expense of many working-class citizens and many local businesses.
Leona Helms once famously argued that taxes were for the little people. It seems that a genuinely free market is also only for the little people. Welfare has been dramatically scaled back, social security and pensions are to be privatized, but state protection thrives for those who are already well placed. Apparently, the rich are worthy because they are rich.
John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email jbuell@prexar.com.
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