Concentration of wealth reflects liberty, not injustice

In response to popular wisdom asserting that you can't be too rich or too thin, doctors warn that you can be too thin if you care about your health, and Kevin Phillips insists that you can be too rich if you care about the health of democratic institutions.

His new book "Wealth and Democracy," bristling with statistics and historical analogies, argues that the accumulation of wealth by a tiny percentage of the population distorts our political life as well as our economy. It's a surprising position for a one-time GOP strategist (and author of the influential 1969 tract "The Emerging Republican Majority"), but then Phillips conceded on my radio show that he no longer considers himself a conservative.

Instead, his book advances the vintage left-wing whine that the widening gap between the super-rich and the rest of us threatens American prosperity, justice and security. Even in the midst of his complaint, however, Phillips displays enough intellectual integrity to cite an observation of historians Will and Ariel Durant:

Concentration of wealth is a natural result of concentration of ability, and recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the law … democracy, allowing the most liberty, accelerates it.

If they are correct, and concentration of wealth amounts to the "natural" result of "democracy" and "liberty," then the only way to avoid that concentration is through an unnatural reduction in liberty. The most tempting and obvious way to address inequalities requires the confiscation of some (or all) of the wealth generated by society's most productive members. It should come as no surprise that many of the most oppressive regimes in human history have boasted of their commitment to the elusive principle of total equality.

Phillips, of course, scarcely mentions such discredited socialist utopias, but he does allude approvingly to cycles in U.S. history when activist government (particularly in the Progressive Era and New Deal) tried to curb the excessive power of those Theodore Roosevelt described as "malefactors of great wealth." In his view, these plutocratic predators ran roughshod over the public interest in the Reaganite '80s as well as the Clintonoid '90s, removing appropriate restrictions on their sinister power. His argument largely ignores the salient fact that the U.S. government imposes a larger cumulative tax burden than at any time in our history, and that the top 1 percent of taxpayers pay a larger share of that total burden than ever before.

His lengthy tome also pays insufficient attention to the obvious fact that wealth and poverty, particularly in the United States, represent temporary, often fleeting conditions. The book's lists of the greatest family fortunes at various moments in American history show very few consistent names, indicating the mobility and fluidity that characterize our economic system.

This famous openness and opportunity (my immigrant grandfather worked his whole life as a barrel maker) not only allows for shifts in status from one generation to another, but even within a single life span. At age 28, a medical resident may look poor, even oppressed – working 60 hours a week for minimal compensation, owing a fortune in student loans, living in a shabby, low-rent apartment – but at age 48 the same individual will probably enjoy the favored life of an established physician.

In the final analysis, wealth and poverty represent relative concepts – classifications that take on meaning only in relation to one another. In a Rwandan village, a household with a '78 Chevy, a TV set, and a few chickens and goats would look rich, but in a California suburb the same family might seem destitute. The urban poor in contemporary America enjoy choices and resources in terms of leisure time, entertainment, transportation, clothing and food that even an upper-middle-class family of the 1800s might envy.

Poverty exists in every society because some people, sadly enough, lack the brains, energy or good luck to keep up with their neighbors. At least 16 million American adults face life with IQs below 75 – meaning they will develop only limited literacy or reasoning ability. It's obviously absurd to expect that this vast segment of society will achieve the same material blessings as the most gifted and energetic among us.

That doesn't mean that government should do nothing to protect or assist the weakest, most vulnerable of its citizens – and America in recent decades has spent trillions in often ineffective efforts to "fight poverty," clear slums, and "level" the proverbial playing field.

But it makes no sense to judge a nation in angry, indignant terms (as Kevin Phillips and liberal demagogues regularly do) because people of limited ability enjoy only limited success. The long struggle for justice in human history involves a constant effort to remove obstacles (aristocratic privilege, racial discrimination) to individual achievement. Western democracies have progressed so far in this effort that individuals of exceptional – or even ordinary – skill and imagination now enjoy unprecedented opportunities to enjoy life and accumulate wealth.

For better or worse (mostly worse in the last few weeks), more than half of all American families now hold some stake in the stock market. Despite left-wing attempts to incite envy and resentment at the idea that some fortunate few have become obscenely, dangerously rich, the uneven concentration of wealth facilitates creative endeavor and productive investment, and reflects a triumph of liberty that ultimately benefits all Americans.