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Saturday, April 23, 2011

FDR Speaks Out Against the Koch Brothers in 1936

April 22nd, 2011 10:15 PM


Franklin D. Roosevelt's speech at Madison Square Garden, October 31, 1936:

...

ROOSEVELT: Only desperate men with their backs to the wall would descend so far below the level of decent citizenship as to foster the current pay-envelope campaign against America's working people. Only reckless men, heedless of consequences, would risk the disruption of the hope for a new peace between worker and employer by returning to the tactics of the labor spy.

Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the 1936 version of the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.

Every message in a pay envelope, even if it is the truth, is a command to vote according to the will of the employer. But this propaganda is worse—it is deceit.

...
FULL SPEECH:

ROOSEVELT: Senator Wagner, Governor Lehman, ladies and gentlemen:

On the eve of a national election, it is well for us to stop for a moment and analyze calmly and without prejudice the effect on our Nation of a victory by either of the major political parties.

The problem of the electorate is far deeper, far more vital than the continuance in the Presidency of any individual. For the greater issue goes beyond units of humanity—it goes to humanity itself.

In 1932 the issue was the restoration of American democracy; and the American people were in a mood to win. They did win. In 1936 the issue is the preservation of their victory. Again they are in a mood to win. Again they will win.

More than four years ago in accepting the Democratic nomination in Chicago, I said: "Give me your help not to win votes alone, but to win in this crusade to restore America to its own people."

The banners of that crusade still fly in the van of a Nation that is on the march.

It is needless to repeat the details of the program which this Administration has been hammering out on the anvils of experience. No amount of misrepresentation or statistical contortion can conceal or blur or smear that record. Neither the attacks of unscrupulous enemies nor the exaggerations of over-zealous friends will serve to mislead the American people.

What was our hope in 1932? Above all other things the American people wanted peace. They wanted peace of mind instead of gnawing fear.

First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise.

Next, they wanted peace in the community, the peace that springs from the ability to meet the needs of community life: schools, playgrounds, parks, sanitation, highways—those things which are expected of solvent local government. They sought escape from disintegration and bankruptcy in local and state affairs.

They also sought peace within the Nation: protection of their currency, fairer wages, the ending of long hours of toil, the abolition of child labor, the elimination of wild-cat speculation, the safety of their children from kidnappers.

And, finally, they sought peace with other Nations—peace in a world of unrest. The Nation knows that I hate war, and I know that the Nation hates war.

I submit to you a record of peace; and on that record a well-founded expectation for future peace—peace for the individual, peace for the community, peace for the Nation, and peace with the world.

Tonight I call the roll—the roll of honor of those who stood with us in 1932 and still stand with us today.

Written on it are the names of millions who never had a chance—men at starvation wages, women in sweatshops, children at looms.

Written on it are the names of those who despaired, young men and young women for whom opportunity had become a will-o'-the-wisp.

Written on it are the names of farmers whose acres yielded only bitterness, business men whose books were portents of disaster, home owners who were faced with eviction, frugal citizens whose savings were insecure.

Written there in large letters are the names of countless other Americans of all parties and all faiths, Americans who had eyes to see and hearts to understand, whose consciences were burdened because too many of their fellows were burdened, who looked on these things four years ago and said, "This can be changed. We will change it."

We still lead that army in 1936. They stood with us then because in 1932 they believed. They stand with us today because in 1936 they know. And with them stand millions of new recruits who have come to know.

Their hopes have become our record.

We have not come this far without a struggle and I assure you we cannot go further without a struggle.

For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

The American people know from a four-year record that today there is only one entrance to the White House—by the front door. Since March 4, 1933, there has been only one pass-key to the White House. I have carried that key in my pocket. It is there tonight. So long as I am President, it will remain in my pocket.

Those who used to have pass-keys are not happy. Some of them are desperate. Only desperate men with their backs to the wall would descend so far below the level of decent citizenship as to foster the current pay-envelope campaign against America's working people. Only reckless men, heedless of consequences, would risk the disruption of the hope for a new peace between worker and employer by returning to the tactics of the labor spy.

Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the 1936 version of the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.

Every message in a pay envelope, even if it is the truth, is a command to vote according to the will of the employer. But this propaganda is worse—it is deceit.

They tell the worker his wage will be reduced by a contribution to some vague form of old-age insurance. They carefully conceal from him the fact that for every dollar of premium he pays for that insurance, the employer pays another dollar. That omission is deceit.

They carefully conceal from him the fact that under the federal law, he receives another insurance policy to help him if he loses his job, and that the premium of that policy is paid 100 percent by the employer and not one cent by the worker. They do not tell him that the insurance policy that is bought for him is far more favorable to him than any policy that any private insurance company could afford to issue. That omission is deceit.

They imply to him that he pays all the cost of both forms of insurance. They carefully conceal from him the fact that for every dollar put up by him his employer puts up three dollars three for one. And that omission is deceit.

But they are guilty of more than deceit. When they imply that the reserves thus created against both these policies will be stolen by some future Congress, diverted to some wholly foreign purpose, they attack the integrity and honor of American Government itself. Those who suggest that, are already aliens to the spirit of American democracy. Let them emigrate and try their lot under some foreign flag in which they have more confidence.

The fraudulent nature of this attempt is well shown by the record of votes on the passage of the Social Security Act. In addition to an overwhelming majority of Democrats in both Houses, seventy-seven Republican Representatives voted for it and only eighteen against it and fifteen Republican Senators voted for it and only five against it. Where does this last-minute drive of the Republican leadership leave these Republican Representatives and Senators who helped enact this law?

I am sure the vast majority of law-abiding businessmen who are not parties to this propaganda fully appreciate the extent of the threat to honest business contained in this coercion.

I have expressed indignation at this form of campaigning and I am confident that the overwhelming majority of employers, workers and the general public share that indignation and will show it at the polls on Tuesday next.

Aside from this phase of it, I prefer to remember this campaign not as bitter but only as hard-fought. There should be no bitterness or hate where the sole thought is the welfare of the United States of America. No man can occupy the office of President without realizing that he is President of all the people.

It is because I have sought to think in terms of the whole Nation that I am confident that today, just as four years ago, the people want more than promises.

Our vision for the future contains more than promises.

This is our answer to those who, silent about their own plans, ask us to state our objectives.

Of course we will continue to seek to improve working conditions for the workers of America—to reduce hours over-long, to increase wages that spell starvation, to end the labor of children, to wipe out sweatshops. Of course we will continue every effort to end monopoly in business, to support collective bargaining, to stop unfair competition, to abolish dishonorable trade practices. For all these we have only just begun to fight.

Of course we will continue to work for cheaper electricity in the homes and on the farms of America, for better and cheaper transportation, for low interest rates, for sounder home financing, for better banking, for the regulation of security issues, for reciprocal trade among nations, for the wiping out of slums. For all these we have only just begun to fight.

Of course we will continue our efforts in behalf of the farmers of America. With their continued cooperation we will do all in our power to end the piling up of huge surpluses which spelled ruinous prices for their crops. We will persist in successful action for better land use, for reforestation, for the conservation of water all the way from its source to the sea, for drought and flood control, for better marketing facilities for farm commodities, for a definite reduction of farm tenancy, for encouragement of farmer cooperatives, for crop insurance and a stable food supply. For all these we have only just begun to fight.

Of course we will provide useful work for the needy unemployed; we prefer useful work to the pauperism of a dole.

Here and now I want to make myself clear about those who disparage their fellow citizens on the relief rolls. They say that those on relief are not merely jobless—that they are worthless. Their solution for the relief problem is to end relief—to purge the rolls by starvation. To use the language of the stock broker, our needy unemployed would be cared for when, as, and if some fairy godmother should happen on the scene.

You and I will continue to refuse to accept that estimate of our unemployed fellow Americans. Your Government is still on the same side of the street with the Good Samaritan and not with those who pass by on the other side.

Again—what of our objectives?

Of course we will continue our efforts for young men and women so that they may obtain an education and an opportunity to put it to use. Of course we will continue our help for the crippled, for the blind, for the mothers, our insurance for the unemployed, our security for the aged. Of course we will continue to protect the consumer against unnecessary price spreads, against the costs that are added by monopoly and speculation. We will continue our successful efforts to increase his purchasing power and to keep it constant.

For these things, too, and for a multitude of others like them, we have only just begun to fight.

All this—all these objectives—spell peace at home. All our actions, all our ideals, spell also peace with other nations.

Today there is war and rumor of war. We want none of it. But while we guard our shores against threats of war, we will continue to remove the causes of unrest and antagonism at home which might make our people easier victims to those for whom foreign war is profitable. You know well that those who stand to profit by war are not on our side in this campaign.

"Peace on earth, good will toward men"—democracy must cling to that message. For it is my deep conviction that democracy cannot live without that true religion which gives a nation a sense of justice and of moral purpose. Above our political forums, above our market places stand the altars of our faith—altars on which burn the fires of devotion that maintain all that is best in us and all that is best in our Nation.

We have need of that devotion today. It is that which makes it possible for government to persuade those who are mentally prepared to fight each other to go on instead, to work for and to sacrifice for each other. That is why we need to say with the Prophet: "What doth the Lord require of thee—but to do justly, to love mercy and to walk humbly with thy God." That is why the recovery we seek, the recovery we are winning, is more than economic. In it are included justice and love and humility, not for ourselves as individuals alone, but for our Nation.
That is the road to peace.

Big Brothers: Thought Control at Koch



Just before the November election, Koch Industries sent materials to 50,000 employees advising them who they should vote for. The Nation obtained a copy of the packet sent to workers in Washington state.
On the eve of the November midterm elections, Koch Industries sent an urgent letter to most of its 50,000 employees advising them on whom to vote for and warning them about the dire consequences to their families, their jobs and their country should they choose to vote otherwise.
The Nation obtained the Koch Industries election packet for Washington State—which included a cover letter from its president and COO, David Robertson; a list of Koch-endorsed state and federal candidates; and an issue of the company newsletter, Discovery, full of alarmist right-wing propaganda.
Legal experts interviewed for this story called the blatant corporate politicking highly unusual, although no longer skirting the edge of legality, thanks to last year’s Citizens United Supreme Court decision, which granted free speech rights to corporations.
“Before Citizens United, federal election law allowed a company like Koch Industries to talk to officers and shareholders about whom to vote for, but not to talk with employees about whom to vote for,” explains Paul M. Secunda, associate professor of law at Marquette University. But according to Secunda, who recently wrote in The Yale Law Journal Online about the effects ofCitizens United on political coercion in the workplace, the decision knocked down those regulations. “Now, companies like Koch Industries are free to send out newsletters persuading their employees how to vote. They can even intimidate their employees into voting for their candidates.” Secunda adds, “It’s a very troubling situation.”
The Kochs were major supporters of the Citizens United case; they were also chief sponsors of the Tea Party and major backers of the anti-“Obamacare” campaign. Through their network of libertarian think tanks and policy institutes, they have been major drivers of unionbusting campaigns in Wisconsin, Michigan and elsewhere.
“This sort of election propaganda seems like a new development,” says UCLA law professor Katherine Stone, who specializes in labor law and who reviewed the Koch Industries election packet for The Nation. “Until Citizens United, this sort of political propaganda was probably not permitted. But after theCitizens United decision, I can imagine it’ll be a lot more common, with restrictions on corporations now lifted.”
The election packet starts with a letter from Robertson dated October 4, 2010. It read: “As Koch company employees, we have a lot at stake in the upcoming election. Each of us is likely to be affected by the outcome on Nov. 2. That is why, for the first time ever, we are mailing our newest edition of Discovery and several other helpful items to the home address of every U.S. employee” [emphasis added].
For most Koch employees, the “helpful items” included a list of Koch-approved candidates, which was presented on a separate page labeled “Elect to Prosper.” A brief introduction to the list reads: “The following candidates in your state are supported by Koch companies and KOCHPAC, the political action committee for Koch companies. We believe these candidates will best advance policies supporting economic freedom.”
What the Kochs mean by “economic freedom” is explained on the next page. As the mailer makes clear, Koch Industries tailored its election propaganda to the state level, rather than focusing on national elections. Of the nineteen candidates that Koch Industries recommended in its Washington State list, sixteen were Republicans. The three Democratic candidates approved by the Kochs included two members of the “Roadkill Caucus,” Washington’s version of the conservative Blue Dogs.
Only two of the nineteen races on the list were for national office, and in both cases Koch Industries backed Tea Party–friendly Republicans: Dino Rossi, an antilabor candidate, who lost to incumbent Democratic Senator Patty Murray; and Jaime Herrera-Beutler, who ran in the Republican primary as a moderate, but who came out recently as a Tea Party radical, much to her constituency’s surprise.
After guiding employees on how they should vote, the mailer devoted the rest of the material to the sort of indoctrination one would expect from an old John Birch Society pamphlet (the Koch Brothers’ father, Fred Koch, was a founding member of the JBS). It offers an apocalyptic vision of the company’s free-market struggle for liberty against the totalitarian forces of European Union bureaucrats and deficit-spending statists.
The newsletter begins with an unsigned editorial preaching familiar Tea Party themes, repackaged as Koch Industry corporate philosophy:
For more than 40 years, Koch Industries has openly and consistently supported the principles of economic freedom and market-based policies. Unfortunately, these values and principled point of view are now being strongly opposed by many politicians (and their media allies) who favor ever-increasing government…. Even worse, recent government actions are threatening to bankrupt the country…. And the facts are that the overwhelming majority of the American people will be much worse off if government overspending is allowed to bankrupt the country.
Further into the company newsletter is an article headlined “What’s a Business to Do?” It portrays corporate titans like the Kochs as freedom-fighting underdogs, modern-day Sakharovs and Mandelas targeted for repression by Big Government statists: “Citizens who are openly critical of the European Union bureaucracy in Brussels or the out-of-control government of the United States are being shouted down by politicians, government officials and their media and other allies.”
In this scenario, Big Government wants to muzzle the Kochs before they can spread their message to the people. That message comes down to preaching the benefits of lower wages:
If the government insists that someone should be paid $50 per hour in wages and benefits, but that person only creates $30 worth of value, no one will prosper for long…. Anything that undermines the mobility of labor, such as policies that make it more expensive and difficult to change where people are employed, also increases unemployment…. Similar policies that distort the labor market—such as minimum wage laws and mandated benefits—contribute to unemployment.
Easily the strangest and most disturbing article of all comes from the head of Koch Industries himself, Charles Koch, who offers an election-season history lesson to his employees. Koch’s essay sets out to rank the best and worst US presidents in terms of their economic policies. Charles—who with his brother David is worth $44 billion, putting them fifth on the 2010 Forbes 400 list—warns his readers that his history lesson may surprise them. And to his credit, Koch doesn’t disappoint.
Koch glorifies Warren G. Harding and his successor Calvin Coolidge for producing “one of the most prosperous [eras] in U.S. history.” Koch explains that what made Harding great was his insistence on “cutting taxes, reducing the national debt and cutting the federal budget,” all policies that Congressional Republicans are proposing in today’s budget negotiations. What made Harding so great, in other words, is what made radical Republican candidates so great in November 2010.
Koch’s pick for worst president is Herbert Hoover, whom he accuses of undermining “economic freedom” and thus precipitating the Great Depression. “Under Hoover,” he writes, “federal spending roughly doubled and personal income tax rates jumped from 25 percent to 63 percent. He raised corporate taxes, too, and doubled the estate tax. Hoover also pressured business leaders to keep wages artificially high, contributing to massive unemployment.”
According to most historians, the Harding and Coolidge administrations’ free-market romp was one of the key factors that led to the Great Depression. Their time in office was marked by obscene corruption, racial violence, unionbusting, feudal wealth inequalities and, shortly thereafter, the total collapse of the American economy.
* * *
Legal experts say that this kind of corporate-sponsored propagandizing has been almost unheard-of in America since the passage of New Deal–era laws like the National Labor Relations Act, which codified restrictions on political activism and pressure in the workplace. NYU law professor Samuel Estreicher, director of the Center for Labor and Employment Law, told The Nation in an e-mail interview that such overt politicking to employees is still rare. “I am not aware of it happening with many employers,” he wrote.
According to UCLA’s Stone, although Citizens United frees Koch Industries and other corporations to propagandize their employees with their political preferences, the same doesn’t hold true for unions—at least not in the workplace. “If a union wanted to hand out political materials in the workplace not directly relevant to the workers’ interests—such as providing a list of candidates to support in the elections—the employer has the right to ban that material,” says Stone. “They could even prohibit its distribution on lunch breaks or after shifts, because by law it’s the company’s private property.”
Stone points to a landmark Supreme Court ruling in 1915, Coppage v. Kansas, which protected employers’ right to draw up contracts forbidding employees from joining unions. Justice William Day’s dissent in that case pointed out that if the state was ready to enforce the employers’ contractual bans on union activity, then it was opening the way for the state to enforce employers’ legal right to control their employees’ political and ideological activities:
Would it be beyond a legitimate exercise of the police power to provide that an employee should not be required to agree, as a condition of employment, to forgo affiliation with a particular political party, or the support of a particular candidate for office? It seems to me that these questions answer themselves.
With Citizens United, it seems, the country is heading back to the days of court-enforced corporatocracy. Already, workers at a Koch subsidiary in Portland, Oregon, are complaining about being subjected to political and ideological propaganda. Employees at Georgia-Pacific warehouses in Portland say the company encourages them to read Charles Koch’s The Science of Success: How Market-Based Management Built the World’s Largest Private Company and to attend ideological seminars in which Koch management preaches their bosses’ “market-based management” philosophy.
Travis McKinney, an employee at a Portland Georgia-Pacific distribution center, says, “They drill into your head things like ‘The 10 Guiding Principles of Koch Industries.’ They even stamp the ten principles on your time card.”
McKinney, a fourth-generation employee of Georgia-Pacific, says relations have sharply deteriorated since Koch Industries bought the company in late 2005. He and fellow employees at three Georgia-Pacific distribution centers are locked in a yearlong contract battle with the new Koch Industries management. Workers there, members of the Inlandboatmen’s Union of the Pacific (an affiliate of the International Longshore and Warehouse Union) recently voted unanimously to reject management’s contract and voted overwhelmingly to authorize a strike if management continues to try to impose cuts in benefits and job security in the new contracts.
Political propagandizing is a heated issue in Oregon, which passed SB-519 in the summer of 2009, a bill placing restrictions on corporations’ ability to coerce employees to attend political meetings and vote the way the corporation tells them to vote. In late December 2009—just before SB-519 was to go into effect—the US Chamber of Commerce filed a lawsuit with Associated Oregon Industries to block the bill from becoming law. A similar bill in Wisconsin was struck down in November in a federal court. However, the Chamber’s lawsuit in Oregon was thrown out in May 2010 by US District Court Judge Michael Mosman on procedural grounds, leaving open the possibility that it could still be struck down.
In the meantime, workers across the country should start preparing for a future workplace environment in which political proselytizing is the new normal.

Obama Back To Base-ics with David Sirota and Joe Madison

Uploaded by  on Apr 22, 2011
Cenk Uygur discusses President Obama's strategy to energize his progressive base for the 2012 election. Does President Obama deserve the support of the progressive left again? David Sirota and Joe Madison discuss ways for the progressive left to organize and pressure President Obama.

Obvious Bias In Fox News Story On Obama Gas Speculation

Uploaded by  on Apr 22, 2011
Ben Mankiewicz discusses the slant of an article on the Fox News website on President Obama's plans to have Eric Holder lead a task force to investigate speculation in the oil markets. Can the recent rise in gas prices be connect to fraud by oil companies?

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Obama says it’s only ‘fair’ to raise taxes on the rich. He’s wrong.


By Arthur C. Brooks, Friday, April 22, 1:16 PM

President Obama’s criticisms of the Republican budget proposal put forward by Rep. Paul Ryan of Wisconsin center on one main objection: It is unfair.
The Ryan plan is based on three premises. First, our economy is headed for a predictable disaster because of the ruinous levels of government spending. (Standard & Poors’ decision this week to downgrade its outlook for U.S. debt only confirms this worry.) Second, we already have one of the highest corporate tax rates in the world, and we can’t load more income taxes onto entrepreneurs without expecting collateral harm to jobs and economic growth. Third, therefore, we must cut spending and reform entitlements, and this would necessarily affect the nearly 70 percent of Americans who take more from the government than they pay in taxes.
The president isn’t buying it. “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires,” he said in a speech on April 13. Knowing that some polls show support for tax increases, he also complained that, over the past decade, “the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?” And in his town hall meeting Wednesday, he called for a tax code that is “fair and simple,”proposed spending cuts that are “fair” and ask for shared responsibility, and concluded that he wants to “live in a society that’s fair.”
While conservatives have criticized the economic principles and class-baiting cadences of Obama’s budget rhetoric, no one has answered his fundamental charge that the Ryan plan is unfair. Conservatives have long stayed away from fairness debates, preferring to build unemotional arguments on the right angles of economic efficiency. This is a lost opportunity. Advocates for limited government can win the fairness argument in a walk.
For years, economists have conducted experiments to study attitudes about economic fairness. One such experiment is the “ultimatum game.” Two strangers are asked to split $10. One is given the $10 and instructed to choose how much to offer the other. Say you and I are the players, and I offer you $3, meaning I would keep $7 for myself. If you accept my offer, we both keep the respective amounts. If you reject it, we both leave empty-handed.
Economic theory predicts that you should accept any positive offer — even one penny — because it’s better than nothing. But, of course, that’s wrong. If the offer seems too unfair, you’ll walk away out of spite and punish me for my selfishness. In the United States, games like this have an average offer of about $4, and offers are accepted about 85 percent of the time.
Note that merit is not part of the experiment; nobody earned the $10. When we bring merit into the mix, the results change. Another experiment shows this by asking subjects to imagine they are lying on a hot beach, craving a cold beer. Would they be willing to pay more, less or the same for their favorite beer if it were purchased from an upscale resort hotel versus from a run-down grocery store?
It turns out that people are willing to pay up to 77 percent more to buy the beer from the fine hotel. A reasonable interpretation is that if you have high prices because you run a nicer business with higher costs, people believe it is fair for you to charge them more than if you have low costs and worse service. An additional inference is that it would seem unfair to force the hotel to lower its prices just because the grocery store charges less.
In general, when resources are perceived as unearned, people think it fair that they be split up somewhat evenly. But when merit is involved, people believe it is fair to reward it with more money. This exemplifies the two most common definitions of economic “fairness” in public policy. The $10 game involves redistributive fairness; the beach-beer experiment reveals meritocratic fairness.
Public opinion studies show that Americans tend to prefer beer on the beach. In 2006, the World Values Survey asked a large sample of Americans to imagine two secretaries with the same job but one earning considerably more. However, the higher-paid secretary is “quicker, more efficient and more reliable.” The survey asked whether a pay difference between the two was fair. About 89 percent said the gap was fair, while about 11 percent said it was unfair.
Of course, for this example to translate into a fair economic system, both secretaries must have the opportunity to develop their skills. It’s not fair at all if the less-effective secretary couldn’t go to school and doesn’t know how to read.
And so it is in our country. If opportunity in America is a sham — if the system is rigged and some people get the breaks only for reasons of luck, birth, or discrimination — then merit is fictitious and redistribution brings greater fairness. But if America is an opportunity society — if you have the chance to work harder, get more education and innovate — then rewarding merit is fair, and it is fair for some to make more money than others.
Most Americans believe we live in an opportunity society. The General Social Survey has asked Americans since 1973 to answer whether people get ahead because of “their own hard work” or because of “lucky breaks and help from other people.” For four decades, 60 to 70 percent of Americans have said “hard work,” while never more than 16 percent have said “lucky breaks.”
It’s hardly a shock that seven in 10 Americans believe in the American dream. If you descended from immigrants, ask yourself: Why did my ancestors come here? I suspect it wasn’t to find a fairer system of forced income redistribution. It was to find a place where they could get a fair shake, where they could start their own business, and where hard work and good ideas would be rewarded.
Politicians have denied the core American belief in opportunity at their peril. In 1972, Democratic presidential candidate George McGovern delivered a campaign speech to blue-collar workers at a rubber factory near Akron, Ohio. He announced his plan to raise estate taxes to dramatically reduce inheritances and to redistribute the money to people like those assembled. He felt sure his message would resonate with his working-class audience.
Instead, he was booed.
You may be thinking that, yes, opportunity is real in America, but it’s certainly not the only thing. Luck, discrimination and birth affect life outcomes, too. In my case, I was born into a family with little money but was lucky to have parents who valued honesty, thrift and education. Others weren’t so lucky.
Good parents are one kind of luck. Studies have emerged showing that life is easier for beautiful women and tall men who don’t lose their hair. And even if you’re short, bald and unattractive, you can still game the system. We have all had lazy colleagues who have brown-nosed their way to some success, with less merit than us.
Since equality of opportunity is not universal, doesn’t this invalidate — or at least weaken — the romantic notion of meritocratic fairness? Of course not. You’re living in a dream world (or you have tenure) if you really believe merit doesn’t matter. Everyone can think of times when things went well as a direct result of hard work. We can also come up with cases in which we were punished at work or in life for laziness, incompetence, free-riding or stupidity.
And even if only a portion of the outcomes in life were due to merit, we should still gear our system to the part that is under our control. Otherwise, we have no incentive to be industrious, honest, innovative and optimistic — and there’s no reason to teach these values to our kids, either.
Most important, if we reject the ideals of opportunity and meritocratic fairness, we will end up with a system where outcomes are simply based on luck or political power — it would become a self-fulfilling prophecy. In a 2005 study published in the American Economic Review, economists at Harvard University and the Massachusetts Institute of Technology studied 29 countries and showed that a belief in luck over merit was strongly linked to the level of taxation and spending on social programs. Furthermore, they showed that the more citizens believed in a merit-based system, the more their public policies produced such a system.
In contrast, when populations believed that outcomes are a product of luck, birth, connections, or corruption, the people demanded more distortions to the free-enterprise system and ended up with a system that only affirmed their anxieties.
When politicians argue that, for the sake of fairness, we must raise taxes on the entrepreneurial class — and make those “millionaires and billionaires” bring us a few state-subsidized beers on the beach — they are unwittingly undermining the possibility of achieving the opportunity society they regret not having.
We are not a perfect opportunity society in the United States. But if we want to approach that ideal, we must define fairness as meritocracy, embrace a system that rewards merit, and work tirelessly for true equal opportunity. The system that makes this possible, of course, is free enterprise. When I work harder or longer hours in the free-enterprise system, I am generally paid more than if I work less in the same job. Investments in my education translate into market rewards. Clever ideas usually garner more rewards than bad ones, as judged not by a politburo, but by citizens in the marketplace.
There is certainly a role for government in this system. Private markets can fail due to monopolies (which eliminate competition), externalities (such as pollution), the need for public goods (such as education, which is indispensable in an opportunity society), corruption and crime. Furthermore, most economists agree that some social safety net is appropriate in a civilized society. When the government focuses on these things, it assists the free-enterprise system.
But when a government that has overspent for years turns to tax increases instead of spending cuts simply for the sake of “fairness,” it weakens free enterprise, lowers opportunity and impoverishes us in many ways.
And that is simply unfair.

Arthur C. Brooks is president of the American Enterprise Institute and author of “The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future.”

The budget battlegrounds of 2011




There are 7-8 budget battlegrounds this year.  The press focuses on only one at a time. You should understand all of them as this year’s components of a multi-year struggle.
1.  FY11 appropriations – Just concluded.  This one happened this year because last year Congress didn’t get their work done.
2.  Early-ish 2011 debt limit extension – This struggle begins now.  Like FY11 appropriations, the debt limit extension is a must pass bill. Unlike appropriations, the back-end date is somewhat flexible.
3.  FY12 budget resolution – This is a Congressional-only document that does not involve the President. The recently House-passed Ryan budget was the House version. Senate Budget Committee Chairman has done nothing (visible) so far on this. In theory the House-passed and Senate-passed versions should have been conferenced and the conference report passed in both Houses by April 15th. This deadline often slips, but the Senate majority appears completely AWOL this year. Maybe Chairman Conrad is waiting to see what happens in the Gang of Six?
4.  The Gang of Six – Democratic Senators Durbin, Conrad, and Warner have been negotiating with Republican Senators Coburn, Chambliss, and Crapo for a few months.  Expectations are high that they might construct a Grand Bargain, maybe along the lines of the Simpson-Bowles recommendations.
Part 1 is whether they agree and if so, on what. Part 2 is what happens if they do.
If they do, it matters a lot how the leaders react.  Does Budget Committee Chairman Conrad mark up a Senate budget resolution based on it?  If so, it could be the first bipartisan budget resolution in many, many years.  If not, then how does a bipartisan core grow?  Do other Senators start signing on?  Does a House counterpart appear?  Does the President endorse it? Or does everyone just retreat to their corners, attack the parts they don’t like, and watch/help it implode?
5.  FY12 appropriations – If the House and Senate agree on a budget resolution conference report (highly unlikely), or even if they agree only on an appropriations total for FY12, then the FY12 appropriations battle could split into 12 smaller appropriations bills.  Some of these 12 could be resolved amicably or with little conflict, while others (like Labor-HHS) would undoubtedly be large struggles.  This is the way the process is supposed to work.
If instead the House and Senate cannot agree on a topline appropriations number, then FY12 appropriations will be a mess, and will likely lead to another omnibus/CR struggle beginning in the second half of September.  Midnight September 30 is the initial hard deadline.
6. The Biden negotiations – These are getting lots of press attention and yet are probably the forum least likely to lead to legislation.
7.  AMT tax extension – Sometime before April 15, 2012, Congress will need to pass a bill that once again “patches” the Alternative Minimum Tax for yet another year.  All concerned would prefer to get this done before the end of the year.  This bill could become a battleground, but it’s not inherently likely by itself to create a conflict.
8. Another debt limit extension (possible) – Watch how much the spring 2011 debt limit extension law increases the debt limit. From that we can figure out roughly when the next debt limit battle will occur. Congressional Republicans might want to tee up another battleground, maybe even before 2011 ends.
Hey, let’s put this in a handy table!
TimeframeMust pass?Major playersComments
FY11 appropsjust concludedyesPOTUS, Boehner, ReidShould have been done last year
Debt limit #1May-JulyyesPOTUS, Boehnerno hard drop-dead date
FY12 budget resolutionMarch-Mayshould passRyan, ConradConrad/Senate AWOL so far. Will they act?
Gang of SixMay?noDurbin, Warner, Conrad
Coburn, Chambliss, Crapo
Uncertain effect even if they agree
FY12 appropsnow-Fallyes, by October 1Hal Rogers (House R)
Dan Inouye (Senate D)
Will House and Senate agree on a topline total?
Biden negotiationsMay—?noVP, Cantor, KylDon’t bet on it
AMT extensionNov-DeceventuallyCamp, BaucusMight not be a battleground.
Debt limit #2late 11 /
early 12?
yes, depending on #1POTUS, BoehnerDepends on how #1 goes
(photo credit: George L Smyth)

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