A Nation of Moochers (4 page)

Chapter 2

HAVE WE REACHED THE TIPPING POINT?

By 2004, the nonpartisan Tax Foundation calculated, 20 percent of U.S. households were already getting about 75 percent of their income from the federal government. Government programs accounted for at least 40 percent of the income of another 20 percent of households, meaning that two in five households were reliant on the government for their livelihoods.
¹

Roughly 60 percent of American households actually were receiving more government benefits and services than they were paying back in taxes, and the Tax Foundation estimated that under the 2009 federal budget, 70 percent of households would take in more than they contribute.

“Look at it this way,” commented Rep. Paul Ryan (R-Wis.), “three out of ten American families are supporting themselves plus—through government—supplying or supplementing the incomes of seven other households. As a permanent arrangement, this is individually unfair, politically inequitable, and economically dangerous.”

The numbers, said Ryan, suggest that we are approaching or perhaps have even passed a “tipping point.” Once we pass that point, he says, “we will become a different people.”

The Sucker Principle

The explosion of free taxpayer cash has its own seductive logic.

If the government is handing out money, the argument goes, who am I to say no? Subsidies for flood insurance for my beachfront villa? Payments to farmers for disasters they didn’t suffer or for crops they never grew? Tax credits to buy myself a new car? Debit cards and free stays on luxury liners? In many circumstances the decision to pocket the free money is completely rational, if occasionally distasteful to both payers and payees. No one wants to be the first to walk away empty-handed, and everyone hopes they will be able to cash in before the pyramid collapses.

So what is the tipping point for most people?

Think about the common experience of standing in a line, for a bus, concert tickets, or a ride at Disney World. Generally, people will wait their turn, recognizing that the first-come, first-served system is, if not strictly fair, at least manageable and comprehensible and will in all likelihood result in getting on the bus, obtaining the tickets, or getting on the ride.

The queue is maintained by cultural norms and social pressure. If someone tries to jump the line, fellow line-goers likely will object and attempt to enforce the rules. But what if their attempt fails? What happens if not just one or two but dozens of individuals begin ignoring the line, jumping ahead of others and getting their hands on scarce and coveted tickets or bus seats?

Think of it as the sucker principle: The line remains intact only until those who play by the rules and wait patiently in line begin to regard themselves as suckers.

Now consider what happens when society’s rewards go to those who jump the line and grab the subsidies, transfer payments, and other freebies offered by the government rather than to those who work, invest, and save prudently.

Tipping Points

One of the central questions of this book is whether we are at or nearing that “tipping point.”

• When do independent, self-sufficient men or women realize that they are society’s suckers, being made to work for the benefit of an ever-growing, ever-shifting, and increasingly insistent and more grasping class of moochers? When do they decide to jump the line?

• When does the principled politician who ran for office against pork and waste look around him at the rush for boodle and recognize that he and his constituents are being left out of one of history’s great cash grabs? And when does he join the rush for the freebies?

• When does a businessman decide that the competitive free market—producing good products at a reasonable price—is a fool’s game when competitors have invested more in clout than innovation? When does he decide that the free market is all well and good in principle but that a realist has to play the game of political grease to get access to cash subsidies, tax credits, pork barrel largesse, or mandates that compel the purchase of their product or service? When does the lobbyist become more important than the engineer, and the political fixer become more important than marketers, or designers? When do lawyers become more critical than the salesperson or the vice president of research?

Are we already there?

Plunder

In his classic
The Rise and Decline of Nations,
economist Mancur Olson describes the turning point in societies when special-interest coalitions emerge that are dedicated to seeking special privileges and benefits. Olson calls them “distributional coalitions” because they are focused not on increasing productivity or prosperity but rather on trying to “capture a larger share of the national income” through lobbying, pushing for more government regulations that protect and benefit them, while also engaging in what other economists call “rent-seeking,” an inelegant term that essentially means mooching. Over time, these “distributional coalitions” cause growth to stagnate, and change the character and culture and ultimately the identity of a society.

“The incentive to produce is diminished,” writes Olson, while “the incentive to seek a larger share of what is produced [by others] increases. The reward for pleasing those to whom we sell our goods and labor declines, while the reward for evading or exploiting regulations, politics, and bureaucracy and for asserting our rights, through bargaining or the complex understandings, becomes greater.”
²

“These changes in the patterns of incentives in turn deflect the direction of a society’s evolutions,” writes Olson, as he describes how a dynamic economy stagnates, then atrophies, and ultimately goes into decline.

Another early prophet of the rise of Moocher Nation, economist Frederic Bastiat, warned of what he called “the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort,” which explains man’s propensity for looting, rather than labor. Since men naturally gravitate toward the easiest path, “it follows that men will resort to plunder whenever plunder is easier than work.” When that tipping point is reached, wrote Bastiat, “neither religion nor morality can stop it.”

The whole point of the rule of law, argued Bastiat, was to make sure that plunder was not more rewarding than labor, and therefore its goal should always be “to protect property and punish plunder.”

But Bastiat envisioned a world turned upside down: “It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”
³

Celebrating Dependency

Not everyone, however, sees this “tipping point” as a bad thing; some leading “progressives” see the growth of dependency as an opportunity for political success.

Writing in
The Atlantic,
liberal analyst Thomas Edsall made a compelling case for the rise of a coalition of takers and dependents that will dominate American politics. In an article entitled “The Obama Coalition,” Edsall argued that such a coalition of those dependent on government aid, public employees, minorities, unions, and other “Social Democrat”–minded liberals could cobble together a majority that would use its clout to spread around even more wealth.
⁴