Happy Now?
What's at stake in America's battle over free enterprise.


On May 13, 2009, at Arizona State University, Barack Obama delivered his first commencement address as President of the United States. At one of the most frightening economic moments in America’s history, it was a chance to be a mentor, a teacher, and the nation’s inspirer-in-chief.

Did the president urge the graduates to get out there and create the growth and jobs our country needs? Did he inspire them to be the next generation of great American innovators and entrepreneurs? No; instead, he told the graduates that people who “chase after all the usual brass rings” display “a poverty of ambition.” He averred that this thinking “has been in our culture for far too long.” He told them they could do better than trying “to be on this ‘who’s who’ list or that top 100 list.”

If you’re a free marketeer, you’ve faced this charge a thousand times: You are a materialist. Meanwhile, your progressive interlocutors are interested in the higher-order things in life — such as fairness, compassion, and equality. Your vision for America might be wealthier, but theirs is happier.

Progressives have been making this case for generations. Their reasoning is clear. When people pursue “the usual brass rings” in the free market, there are winners, and there are losers. Many people get rich; many others do not. These differences may reflect merit and they may not. But one thing is for sure: Income inequality will result. And inequality, for many progressive leaders and intellectuals, is the enemy. In their view, it leads to an unjust, unhappy, Hobbesian, all-against-all society.

A modern, compassionate society, they believe, can do better than the current system with its rising inequality. But that means employing more than soft rhetoric. We also need policies that weaken the free-enterprise system by lowering the rewards it brings to the winners as well as the consequences to the losers. As candidate Obama famously told Samuel Joseph Wurzelbacher — “Joe the Plumber” — on the campaign trail in October 2008, “I think when you spread the wealth around it’s good for everybody.”

Adherents to this philosophy believe that the best ways to meet their objectives are forced income redistribution, expansion of the state, or both. This is why the landmark policy initiatives of the past year — from health-care reform to financial-market regulation — have had bigger government and rising income redistribution at their core. Bureaucracy and taxes are not incidental to these policies, and not a mere cost of doing business; they are part of what many of our leaders seek to create and what they see as a better, fairer America.

It is factually incorrect to argue that income inequality has not risen in America — it has. The U.S. Census Bureau measures economic inequality through what is known as a Gini coefficient, which ranges from 0 to 1. Zero means no inequality (everyone has the same income) and 1 indicates perfect inequality (a single person has all the income). Between 1970 and 2005, the Gini coefficient in America increased by more than 20 percent, from 0.39 to 0.47.

As many progressives see it, this is a major problem, because inequality makes people unhappy. This argument has to be taken seriously, because, at first blush, the data appear to support it: Poorer people in almost every community tend to be unhappier than richer people. For example, the 2004 General Social Survey found that if you have an annual salary of less than $25,000, you are less than half as likely as someone earning more than $75,000 to describe yourself as “very happy.”