The New ‘Culture War’ Over Free Enterprise

 
By Arthur C. Brooks
President, American Enterprise Institute

During the 1972 presidential campaign, Democratic candidate George McGovern told an audience of workers at an Ohio rubber factory that he planned to raise inheritance taxes significantly. This, he assured them, would help level the playing field and steer extra dollars away from the wealthy directly into their pockets. The workers responded with boos.

McGovern was baffled by this reaction. He shouldn’t have been. The reaction was not rooted in economics but in culture. Americans dislike policies that abridge our freedom and opportunity to prosper—our free enterprise—whether those policies look like a good personal financial deal or not.

President Obama is repeating many mistakes made by McGovern. He promotes policies that, in exchange for short-run economic relief, will double our national debt over the coming decade, nationalize large swaths of the private economy, and insinuate the government deeper and deeper into citizens’ lives. This is not a partisan point—Obama’s policies follow years of fiscal profligacy by Republicans.

The response to politicians of both parties has been massively negative. Witness the tea parties, the town hall meetings, and the recent “Live Free or Die” march on Washington. These protesters are motivated by an “ethical populism.” They are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare, and bankers who kept their heads during the frenzy and don’t need bailouts.

These were the people who were doing the important things right—and who are now watching elected politicians reward those who did the important things wrong and propose more long-term violence to the free enterprise system still. The government and much of the media insist that these protests were the work of a small minority of citizens, fomented by talk radio hosts and the like.

The data tell a different story, however, and indeed make the protesters look quite mainstream. In March 2009, The Pew Research Center asked a random sample of American adults, “Generally, do you think people are better off in a free market economy, even though there may be severe ups and downs?” Fully 70% agreed with this statement, while 20% disagreed (the rest were undecided).

Free enterprise is a manifestly middle-of-the-road taste. It is the government that is out of step today. What do Americans object to in the redistributive ideology? Nobody likes to be taxed punitively or to see wasteful government spending.

Fundamentally, though, we object to the materialistic belief that the economy is nothing more than a money pump—for government, social projects, and various constituencies. On the contrary, Americans view our economic system as an expression of our entrepreneurial values.

Despite its misstart, the administration can still find its way. To do so, it must embrace policies that Americans favor and which therefore strengthen the free enterprise system, rather than weaken it.

President Obama could cut the corporate tax in half. No Republican would dare try this. He could also move to a consumption tax and gut a tax code that is currently a rabbit warren of special deals for interest groups.

He could reboot the health care reform debate and start over with a plan to deal with our problems, instead of using them as a pretext for nationalization.

He could show that he cares about future generations by not racking up an enormous debt burden—he could even show that he is more fiscally responsible than George W. Bush was. The best way to start would be to begin canceling the outstanding parts of the government stimulus bill.

These—and many other—policy prescriptions are ready made and have been studied carefully by the nation’s top scholars and policy experts (including my colleagues at the American Enterprise Institute).

It appears unlikely that the president or Congress will take any such suggestions, however. The reason is that income redistribution is the cultural objective itself. From health care reform to the economic stimulus, we are seeing policies that are intended to confiscate from the “rich”—but which also take from future generations and, indeed, from whoever is unable to guard his wallet.

This, then, represents the new “culture war” in America. In 20 years, we will remember 2009 for the struggle between the culture of redistribution versus the culture of free enterprise. How this struggle ends is up to us.