What is Equity? Not what you probably think, if you read our mainstream media narratives. You’ve probably seen this representation of equity in some form or another:
Unfortunately it’s deceptively misleading and beside the point. It focuses on reaping the rewards of productive bounty, rather than that bounty’s production and equitable distribution. Here it seems the fruit of the tree is always FREE! (as are the stair lifts). But nothing is more misguided (except perhaps in the Garden of Eden).
I was just reading Hillsdale College’s latest issue of Imprimis, an excellent free publication espousing Hillsdale’s educational mission and came across this paragraph written by Hillsdale’s president, Larry P. Arnn (Harvard should be so lucky):
“One of the most beautiful laws ever passed was the Homestead Act, signed by President Lincoln in 1862. It consisted of only 1,400 words, and it gave away ten percent of the land area of the United States to unknown people who would never be entitled to vote for anybody serving in the Congress that passed the law. Is it imaginable that the Russian Czar at the time, who in principle owned every inch of Russia, would have acted in such a way? Or the King of England, who in principle had approval power even over private lands in his realm? No. But it is hardly more imaginable that Congress or most of our state legislatures would act in such a way today. The force of centralization has come to seem inexorable. But it should be our highest political priority to reverse it.”
I would argue that this Homestead Act was one of the most momentous legislative acts that helped shape the economic and political future of the US.
Why?
Because the Homestead Act, basically giving away land that could be productively cultivated, empowered people who lacked capital and were landless, but capable of body and mind to apply themselves to improving that land and reaping the resulting wealth.
Citizens who were otherwise penniless, could obtain free land on which to cultivate an independent source of income, essentially their share of economic freedom. This could not have happened if they had been trapped in low-wage servitude in the industrial East.
The resulting economic development of the breadbasket of America gave rise to widespread supply and demand from a working to middle class population spread across an expansive nation. This gave rise to new transportation technologies on rivers and railroads and the explosion of trade across the country. It gave rise to new industrial capacity and consumer demand for finished goods.
History has shown us that capitalism is unbounded when it combines the inputs of human ingenuity and hard work with the necessary resources to create wealth that is directly and widely distributed to those people creating it. These resources include land, physical capital, financial capital, and today, highly developed intellectual and social human capital and information networks.
Countries that Dr. Arnn cites - Russia and England - allowed for the complete concentration of ownership and control of land. A classic example even more comparable to the US is Argentina. Argentina possessed all the advantages of the US in terms of natural resources, climate, ocean access, European immigration, and finance capital. But the ownership and control of these resources accrued to a small landed elite that grew rich amidst the poverty around them. As a result, from a position of parity at the turn of the 20th century, Argentina’s per capita income has stagnated while US per capita income and wealth has soared to make it the richest society in history. Per capita income in the US is now twenty times that of Argentina.
Quoting from a study by the Mercatus Center hints at the extent of the problem:
How could a society that achieved astonishing wealth and splendor in less than half a century move from being a developed country to being an underdeveloped one? The most obvious question to ask is, What went wrong? The answer lies in a lack of inclusive and participatory robust legal and institutional framework that would have prevented the reforms from being undermined.
One could easily blame this all on Peronista politics and the weak institutional foundations of democracy—all of which are crucial to economic success. But this ignores the necessary economic foundation for a strong, robust sustainable democracy that is a thriving middle class.
We should not underestimate this fact. Many of the political, economic, and social challenges we face today in the US result from the skewed distribution of the successes of American capitalism. While land was the crucial factor of production in the 19th century, in the 20th this was eclipsed by financial capital necessary for mass production and distribution. The dynamics of financial capital, like land ownership, adheres to the Pareto Law of nature that concentrates the benefits of success in fewer and fewer hands. (This was also Karl Marx’s insight into the dynamics of capitalism, after which he got everything wrong.) If one doubts this growing inequality, you can just track the income wealth of CEOs in America relative to their workers.
Whereas inequality of outcomes will always exist—any casino will demonstrate that at the end of the night—dangerously skewed maldistributions of income and wealth kill off the basis of trade and thus lead to financial corrections in asset prices (market crashes), or worse, political and social revolutions.
So let us get to this question of equity. Equity in financial and economic terms alludes to the attribution of financial risk and reward. “He who takes the risk, claims the reward (as well as, importatnly the loss).” This is the basic law of capitalism and human behavior. One does not get reward without taking risk, unless one steals it from those who do bear the risk.
Unfortunately, violations of this equity rule happen all the time, whether it be corporate conflicts of interest, exploitation of power relationships (another Marxian tenet), or using democratic politics to expropriate wealth from someone else (tax the rich?).
To cut a long story short, the problem we are facing in America (and the rest of the world as well), is that the powerful have manipulated financial and political policies to reward themselves while using their power in politics to socialize the risks they take. This is an immoral situation that we must correct. It is the true source of our political divides between elites and everyone else.
In a capitalist society all citizens need to accumulate the necessary resources to participate in the wealth creation process. This means access to financial capital and information through widespread ownership and control (an updated Homestead Act that promotes asset accumulation and personal data control?). Participation in capitalism also implies widespread risk-taking and risk management. Anything less is inequitable, and this all has nothing to do with tribal identity politics or preferential group treatment. It has everything to do with merit and democratic accountability.
Hi. Thanks for this article. I came here from reading your mild critique on the Braver Angels website. I recently began attending some of their events and have found them curious qnd rather unsatisfying, for the very reasons you described: their debates don't really allow the opportunity to drill down into the issues raised, in a methodical, thorough manner, in order to resolve the issues and find common ground. I agree it's useful to have a forum that facilitates and encourages everyone to listen to each other, and for these fora to be popping up around the country, but it doesn't really help--or teach methods for--coming to a meeting of the minds.
My main goal in attending is to share information that is being heavily censored in schools, academia, healthcare, and the mainstream media, so simply being given a little space to raise the issue is helpful for getting out the word on my community's side of the issue. And I also appreciate being able to hear conservatives articulate why they hold the views they do.
Since you wrote about Braver Angels not quite satisfying the need for more effective and useful debate to resolve conflicts, have you considered starting a similar organization, say, at a small, local scale, but one that has a more effective debate format that helps people air, analyze, and hopefully resolve issues better?
It would be nice to see such an organization started, and facilitated to grow similar to the way that Braver Angels facilitates its replication and growth.
Or do you know of any such political discussion and debate organization that exists, please?
Or any organzation or group that might start one?
Thanks again for your mild critique. Do you still attend BA debates?