Sturm: The real deflate-gate: the depressed state of our union
Aired-out uproariously on “Saturday Night Live,” “Deflategate” has been a national fixation since word broke that the New England Patriots used underinflated footballs in their Super Bowl-berth-clinching victory over Indianapolis. The alleged-cheating controversy has even pumped up the loveability of the oft-despised Seattle Seahawks.
However, Think Again if you believe Deflategate is merely hot air. Though overblown, Americans’ disquiet reflects our fairness instinct and commitment to equality of opportunity — the ideal that all competitors in the race of life, no matter their status, can succeed on a level playing field.
Sensing a slanted NFL field, Seahawk Richard Sherman questioned the close relationship between NFL Commissioner Roger Goodell and Patriots owner Robert Kraft, calling it a “conflict of interest.”
Sherman’s unease resonates in an America increasingly distrustful of society’s umpires. President Obama spoke to this anxiety in last week’s State of the Union address.
“This country does best when everyone gets their fair shot, everyone does their fair share and everyone plays by the same set of rules,” he declared, labeling this “middle-class economics.”
Yet the story of our 5-year-old recovery is how poorly working Americans have fared. With workforce participation at 40-year lows, “America’s wealth gap between middle-income and upper-income families is the widest on record,” Pew Research recently reported. From 2010 to 2013, household incomes fell for all except the most affluent 10 percent, a 2014 Federal Reserve survey revealed, with the bottom 40 percent suffering disproportionately.
So while Wall Street, Silicon Valley and Washington boom, the rest of America suffers crisis levels of job insecurity, economic immobility and government dependency, with a record 50 million living in poverty.
That’s because our economy’s playing field is askew, warped by a cronyist system — long in the making — that is neither “middle-class economics” nor Thomas Jefferson’s ideal: “a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement.”
Free to pursue their individual life objectives, American entrepreneurs — and immigrants fleeing societies where one’s start predetermined one’s end — transformed an agrarian backwater into human history’s greatest economic wonder. Between 1800 and 2007, economic well-being (real gross domestic product per capita) increased 32-fold in America compared with 14-fold in Great Britain and fivefold in India.
It’s not a miracle; it’s the free market, where rivals meet in open competition, generating a continuous stream of innovation, choice and value. In return for pleasing customers and being good corporate citizens, entrepreneurs earn profits.
As government has grown, so have its anti-competitive powers, corrupting the free market with corporate cronyism — the incestuous relationship between Big Government and Big Business that rewards political connections over competitive excellence.
Our tax code is a cronyist masterpiece, allowing well-connected individuals and big companies such as GE to lobby for, win and exploit tax breaks, rendering their tax bills negligible and affording lawmakers unending contributions.
Equally distorting are corporate welfare programs sold as economic saviors — the 2009 stimulus, Cash for Clunkers, the farm bill, bailouts, export-import bank-loan guarantees and Dodd-Frank “Wall Street reform.” Each benefits well-connected private companies, forcing Americans who “work hard and play by the rules” to subsidize elites who don’t.
Then there’s cronyism’s granddaddy, Obamacare, “the product of an orgy of lobbying and backroom deals,” according to Steven Brill, whose new book “America’s Bitter Pill” details how the $3 trillion-a-year health industry’s largest stakeholders — drug and medical-device companies, hospitals and insurers — profited at taxpayers’ expense.
When profits accrue for those with the most to invest in politics — and the most to lose in the free market — wealth and opportunity shift from ordinary people to the government and its friends. That’s why Americans struggling to maintain living standards must contend with ever-increasing prices in government-controlled sectors — housing, health and education.
Most worrisome, the small-business sector, which generates two-thirds of new jobs, is languishing. Unable to grow in a market that protects large corporations from competition, and disproportionately burdened by an explosion of regulatory red tape, small-business deaths now exceed business births for the first time in the Brookings Institution’s 30-plus-year history of data collection.
So who are the greedy Gordon Gekkos? Those who prudently risk hard-earned money to continuously deliver life-enhancing benefits — iPhones, 3-D printers, medicines and refrigerators — or cronies who relegate competitors, consumers, employees and investors to the sidelines of a rigged game?
To protect our freedom and broadly share prosperity, shouldn’t we disperse power away from economic leeches, returning it to economic producers whose raison d’etre is the fulfillment of needs and desires?
Think Again — it’s human nature to want competitive advantages, whether tax breaks or deflated footballs. That’s why a free society needs referees with only enough power to assure fair competition, not so much that they become self-interested players in the game.
Melanie Sturm lives in Aspen. She reminds readers to Think Again. You might change your mind. She welcomes comments at email@example.com.
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