Barney Frank: Capitalism is based on inequality
Something else I saw on Bill Maher’s show (transcript) was this exchange with Barney Frank. Now, I love Barney Frank because he has the guts to get out and proclaim he’s gay and make it a political point of his campaigns. But he’s a liberal tool in every other way, and I can’t make sense of him half the time. Like this bit on “Real Time with Bill Maher” where he says that capitalism requires inequity to function. Huh?
Here’s my summary version:
- Bankruptcy laws are good because they let people break promises they make to rich people.
- Capitalism requires inequality to function.
- Bush was re-elected by murderers.
- Allowing people to work together is called “government”.
- All Bush has ever done to get votes is to be president on 9/11.
FRANK: …not all people with money are bad people. Sometimes it’s nice to help them. … We have an economic system, capitalism, which is based on inequality And inequality is necessary for it to work. We’re supposed to have a political system that doesn’t wipe out the inequality but puts some limits on it.
April 30th, 2005 at 1:39 pm
Well… Most of what Frank said made sense to me, but then again, in a political climate tilted so far to the right, we moderates look like Lefties. So what do I know?
Of course Capitalism requires inequality to function. If some of us didn’t earn more than others, where’s the incentive to work harder, to innovate, to even show up? If the financial rewards of your efforts were redistributed _equally_, you’d be living in a communist state. And all we’ve seen how well that works.
Barney Frank also said (although it didn’t make it into the transcript for some reason) that our government is based on _equality_ (i.e. the principle of one person, one vote). Of course our government doesn’t really work in an ideal democratic fashion, but the basic idea is that the system offers us some minimal degree of protection from the inequalities out there. The solution to our problems isn’t a black-and-white extreme of government controlling everything (fascism) or government doing nothing (anarchy), but some reasonable balance inbetween. (And America does O.K. more or less, in my opinion.)
April 30th, 2005 at 10:52 pm
Capitalism is based on trade. I trade some thing I value less than what I get for it. You do the same. We both win. There is no inequality here except in our perceptions, but that doesn’t mean that one of us is “wrong”, only that we have different specific values.
Wages are simply what we trade for our work product. But this is not the inequality that Rep. Frank was talking about. Nor is it a “requirement” for capitalism.
I agree that the government is based on equality of power, but not equality in general (ie. economics). The system of checks and balances is designed to limit the power of government. It’s there because our founders recognized that a powerful government was not a good thing. It worked, too. We have the best government I know of. (But I worry that it exercises too much power still. For example, wielding tax policy as a means of social control is just bad policy.)
The government should not be in the business of limiting free trade. But it is. The fact that Barney Frank thinks this is an essential job of government frightens me. The fact that he wants to lean our economy towards communism, as you describe it, should bother you, too.
Perhaps I am confusing “individualism” with “capitalism”. For me they are essential to each other. As an individual capitalist, I do not gauge my worth in terms of what others do. I know my worth by how well I perform, period. It doesn’t matter to me that someone earns more than I do. But it does bother me to be outperformed. Shall government also be in charge of limiting our abilities?
I’m not sure what a “reasonable balance” between fascism and anarchy is. But I also don’t think that is what anyone proposes. The job of government is to protect us from harm. In my personal opinion, restricting free trade and “equalizing” our economy will instead lead us to harm.
But I strongly disagree with this belief that inequality of wages is what makes us work harder. I get paid well for what I do, and the fact that someone else gets paid more does not make me want to work harder to “get there”. I am proud of my work product and my abilities. I work hard to show off and to get paid. And I work hard to keep my job.
A government which sets as its purpose the restriction of free trade is not one which supports a capitalist economic system. A country whose government opposes its economy is doomed.
September 11th, 2005 at 3:52 pm
Your description of capitalism is a very narrow basic explanation of it. Yes it is based on trade, both by private and corporate entities. But it is by no means an equal flow of distributing goods when one company has a strangle hold on a particular product. You don’t believe capitalism depends on inequality? Take the most basic form of trade–agriculture. We need people to farm. We need people to produce and manufacture. We depend on it in order to survive. But what kind of wages are these people receiving? Are they getting paid more than the businessmen who buy their goods and trade with other corporations? You may say they can always work their way up to other positions in the farming industry and earn more, which is true, but we will ALWAYS need people in these positions to farm and produce. The fact is, even if every single person in this country had an advanced degree from a university it would be impossible for our economy to pay them all a salary that befits that degree. We still need people to work our gas stations, wait on our tables, clean up our trash. And these people are all crucial to a thriving society. That is the unavoidable part of capitalism and where the inequality becomes most obvious.
November 19th, 2005 at 4:42 am
nice..good
August 20th, 2006 at 2:59 pm
If Phil’s description of capitalism is narrow and basic, then Thedude’s is simply wrong by misidentification of the relationship between inequality and capitalism. Do you find examples of inequality within economic systems of capitalism? Certainly. Do you find inequality in systems of socialism, communism, or fascism? Absolutely. Inequality is associated with any system of commerce or government, but as any scientist or philosopher understands, association does not imply causation. Capitalism neither depends upon, nor causes inequality. Inequality is a condition of life and a mind’s interpretation of its current position in it. Inequality is in fact a condition of the physical existence of the universe (if one considers thermodynamics), and it is only our resistance to entropy that makes life and organized human interaction possible. Capitalism exists independently of inequality.
Thedude makes an interesting argument that it is somehow wrong or unfair that agriculture workers are not paid as well as the businessmen who sell their products. There are several aspects of this faulty logic that I would like to address. First off, I would argue that the farmers themselves (not the laborers that they employ), may very well make a better living than many businessmen, since farmers are themselves businessmen who manage significant assets in land, equipment, and personnel. On the point of “unfair wages” for farm laborers: the driving force of capitalism is supply and demand. Since there is a huge supply of able-bodied individuals who can harvest crops (technically simple, entirely repetitive), which I grant is physically exhausting, requires no more than below-average intelligence, limited communication skills, and no education beyond those limited communication skills, there is very little need to pay them extravagantly for their services. To be a businessman however, requires at a minimum, a college education, above average intelligence and communication skills, which makes the supply of such individuals more scarce compared to the aforementioned pool of laborers, and thus more valuable to those who require their employment to run a productive venture. Is the greater value of the innate and acquired skills of the businessman over the farm laborer somehow an expression of inequality? I think not, since this difference is not determined by me, or any other individual for that matter; the difference in value is determined by the market, and the market is made up every member of a society casting their vote with a ballot that can’t be rigged: the dollars from their wallets.
Its popular to say that everyone has equal value in our society, and from a standpoint of civil rights and rights of access to the common resources of society (primary education, government, protection from harm) this is true. The endpoint of Thedude’s logic is incompatible with civilization. If you truly believe that the value of a farm worker’s efforts are on par with those of a neurosurgeon, then I would encourage you to pay the farm worker a neurosurgeon’s salary to pick fruit, and then have the neurosurgeon who is paid as a farm worker operate on your brain; and lastly watch (if you are still able) as the fabric of civilization unravels in span of a single generation.