College of San Mateo Economics History Paper

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TAX THE
SUPERRICH
The Conservative Case for
Restoring Progressive Taxation
On the Super-Wealthy
100%
$400,000,000
75%
$300,000,000
50%
$200,000,000
25%
$100,000,000
0%
Average Household Wealth
Top Income Tax Rate
Average Household Wealth of Top 0.01 Percent in Constant
2010 Dollars, Together with Top Income Tax Rate
$0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2012
Top Income Tax Rate
Top 0.01 Percent Avg Wealth
Lanny Ebenstein / MARCH 2019 DRAFT
Critical Acclaim for the
Work of Lanny Ebenstein
Chicagonomics: The Evolution of Chicago Free Market Economics
“Ebenstein … has written 10 books on economic and political history … With this book, he joins
a group of detractors of modern-day American conservatism who are sympathetic to many of the
ideas of conservatism but harshly critical of how it is now practiced.”
–New York Times Book Review Editors’ Choice Selection
“Mr. Ebenstein’s book does a fine job of differentiating classical liberalism from libertarianism …
For that reason alone, the book deserves to be read by all those with an interest in economic
policy.”
–The Economist
“Offers a comprehensive and noteworthy examination of the University of Chicago’s influence
on economic theory in the U.S. … accessible, clear, and entertaining”
–Publisher’s Weekly
A Bloomberg Best Economics Book of 2015
Milton Friedman: A Biography
“A powerful book about the most influential economist since Adam Smith.”
–Martin Anderson, Domestic Policy Adviser to Presidents Richard Nixon and Ronald Reagan
“Lanny Ebenstein gives us a careful and illuminating exposition of the life and ideas of Milton
Friedman. A genuinely rewarding read.”
–George P. Shultz, U.S. Secretary of State under President Ronald Reagan
“Definitely worth reading to help understand the development of an extraordinary individual.”
–Gary Becker, Nobel Laureate in Economics
Friedrich Hayek: A Biography
“A conscientious and fair-minded job.”
–The Economist
“It is good to have this solid intellectual biography of Hayek available.”
–James M. Buchanan, Nobel Laureate in Economics
“A splendid biography of the 20th century’s greatest philosopher of liberty. A well written,
sympathetic, yet critical examination of his life and intellectual contributions.”
–Milton Friedman, Nobel Laureate in Economics
2
Works by Lanny Ebenstein
The Greatest Happiness Principle:
An Examination of Utilitarianism
Great Political Thinkers:
Plato to the Present
Introduction to Political Thinkers
Today’s Isms: Socialism, Capitalism, Fascism,
Communism, Libertarianism
Edwin Cannan: Liberal Doyen
Friedrich Hayek: A Biography
Hayek’s Journey:
The Mind of Friedrich Hayek
Milton Friedman: A Biography
The Indispensable Milton Friedman:
Essays on Politics and Economics
Reforming Public Employee
Compensation and Pensions
Chicagonomics: The Evolution of
Chicago Free Market Economics
3
For Maggie
“It is not very unreasonable that the rich should contribute to the public expense,
not only in proportion to their revenue, but something more than in that
proportion.”
–Adam Smith
“Community and equality are mutually reinforcing, not mutually incompatible.
Social capital and economic equality moved in tandem through most of the 20th
century. In terms of the distribution of wealth and income, America in the 1950s
and 1960s was more egalitarian than it had been in more than a century…. [T]hose
same decades were also the high point of social connectedness and civic
engagement…. Conversely, the last third of the 20th century was a time of
growing inequality and eroding social capital.”
–Robert Putnam
4
Contents
Preface
7
Introduction–The American Ideals of Democracy, Liberty, and Equality
15
1. Top Tax Rates and Economic Growth
Appendix. Supply Side Economics
39
2. Top Tax Rates and Inequality: The Turn to Plutocracy
65
3. America’s Regressive Tax and Government Revenue System
83
4. Top Tax Rates and the Family
Appendix. Christian and Utilitarian Cases for Progressive Taxation
101
5. Top Tax Rates and Government: The Rise of Debt
6. The 2017 Tax Reform Act and the “Reverse Laffer Effect”
Conclusion–Restoring Progressive Taxation on the Superrich, and
Cutting Everyone Else’s Taxes
Appendix. Ronald Reagan’s Classical Liberalism
109
Endnotes
121
References
Index
5
6
Preface
The goal of this work is to reconceptualize United States tax and economic growth
policy–historically and prospectively. A great experiment was tried during the 1980s to lower top
income tax rates in order to increase economic growth. Advocates also predicted this reduction
would not have much influence on inequality. This experiment has been tried for more than 30
years now, and it is a manifest and grievous failure. Low top income and estate tax rates are
perhaps the major source of the social, political, and economic ills that confront the United
States at this time. There can be no return to the society of the immediate postwar decades–a
conservative society of high economic growth, relatively small government, strong nuclear
families, and a predominant middle class–without a return to the main tax policy of these
decades: highly progressive taxation at the very top of the economic spectrum and lower taxes
for everyone else. This statement is put forward, moreover, not as one of normative belief but of
empirical fact.
The key point in conservative progressive taxation–the tax policies of the Eisenhower,
Nixon, Ford, and first term of the Reagan administrations–is that it is aimed on the summit of the
wealth and income pyramid. This is where the great shift in the economy has occurred in recent
decades. The problem is not that there are rich and poor. There will always be rich and poor. The
problem is when the extremes between rich and poor become too great, as they are at present.
Opposition to plutocracy and superplutocracy should not be confused with advocacy for equal
outcomes or socialism.
Conservative progressive taxation characterized the tax policies in the United States
during the immediate post-World War II decades–when America’s position in the world and its
domestic economic prosperity were at their peak. This was when the American economy grew
the most, its families were the strongest, government was smaller, and the middle class was in
charge. It is possible to recreate this society. This will occur through reinstituting progressive
income and estate taxes at the apex of the economic order while reducing payroll and other
regressive taxes and government fees for everyone else. It is desirable and possible to support tax
cuts that are targeted on the middle and working classes, not the superrich.
It is important to emphasize that the current comprehensive American tax and
government revenue system is nonprogressive and even regressive: that is, those with less
income–and incomparably less wealth–often pay a greater proportion of their income as well as
their wealth in taxes and government charges than those at the very top. This point is little
understood both by those on the political left as well as political right, and is why his book is
subtitled The Conservative Case for Restoring Progressive Taxation on the Super-Wealthy.
Historically, the comprehensive United States tax and government revenue system was
7
progressive. It no longer is. Indeed, the “supply side” economics transformation of the United
States tax and government revenue system from progressivity to regressivity was a fundamental
departure from historical American practice. It is time to return to the tax policies and philosophy
that guided America through its first two centuries.
Though many liberals support progressive taxation, they do so often primarily for reasons
of undue emphasis on equality or to grow the size of government–both of which are rejected
here as appropriate societal goals. Smaller government and lower overall taxes, as well as a
society in which there continue to be significant but not chasmic differences in income and
wealth, are among the goals of conservative progressive taxation. Ironically, contemporary
liberals often do not focus on the real problem with respect to the division of income and wealth
in the United States at this time: the great, inordinate, and inefficient possession of wealth and
income particularly by the top 0.5, 0.1., and, especially, the top 0.01 percent, the superrich and
super-wealthy. These are the income and wealth groups who have gained incredibly in recent
decades, whose income and wealth is excessive, and whose income and wealth must be reduced
if America is to become great again.
The problem concerning taxation in the United States is not that the top 10 percent (or
some similar figure) should all pay modestly to moderately higher taxes to fund more
government programs, but that more or less exclusively the top 0.5 percent should pay much
higher taxes–and everyone else, including most in the top 10 percent excluding the ultra-rich,
should pay lower taxes. Conservative progressive taxation sets at its goal neither a completely
equal society nor modestly higher taxes on approximately the top tenth of the population. Rather,
conservative progressive taxation targets almost exclusively the top 0.5 percent (one-half of one
percent, one in two hundred), and, within the top 0.5 percent, the top 0.1 percent (one tenth of
one percent) and, particularly, the top 0.01 percent (one hundredth of one percent, one in ten
thousand) for much higher tax rates. These are the groups who have gained unduly and
inefficiently from tax rate cuts since the 1980s. Everyone else, including the 90th through 98th
percentiles, is now worse off than in the 1980s with respect to the share of national wealth they
own. Vitally, conservative progressive taxation seeks to recreate a traditional middle class
society through tax cuts for working and middle income groups rather than increased
government spending and greater government direction and control of business. Revenues
generated by tax increases on the superrich should predominantly be used to cut everyone else’s
taxes, not to increase the size and scope of government.
Conservative progressive taxation raises taxes on the superrich, and reduces everyone
else’s taxes. Conservative progressive taxation is not about punishing success, but to reverse the
plutocracy America has become, reward hard work, and strengthen families. Early in the 20th
century, Republican presidents led the successful efforts for income and estate taxation,
particularly on the superrich. It is time for new Republican leadership to reinstitute progressive
taxation at the zenith of the economic system.
I attempt to establish a number of empirical propositions in this work:
8
1) Low top tax rates result in less, not more, economic growth; high top tax rates
result in greater, not lower, economic growth. This point is crucial. Notwithstanding views to
the contrary among economists on both the right and the left, there is not a historical relationship
between low top tax rates and greater economic growth and between high top tax rates and less
economic growth: the correlation is in the opposite direction. The higher top tax rates have been,
the more the economy has grown; the lower top rates have been, the less the economy has
grown. This has been true both on long-term and intermediate-term bases. Economic growth
from the late 1940s to 1970s was substantially greater than from the 1980s to the present. Since
the 1980s, growth has also been more when the top federal income tax rate has been higher.
Raising top income and estate tax rates will increase, not reduce, economic growth.
2) High top tax rates result in more widely shared economic growth. Higher top tax
rates do not merely result in greater overall economic growth–they result in more widely shared
prosperity. Contemporary liberals support progressive taxation largely for redistributionist
purposes. It is true that progressive taxation leads to more equality, but this is not the whole or
even the main point. The conservative argument for progressive taxation is not that it equalizes
shares in an existing economic pie, but that it grows both the overall size of the economic pie and
the proportionate size of the pieces for everyone but the superrich. The conservative case for
progressive taxation does not set as its goal complete equality of income and wealth, but
affirms that in a meritocratic, just, and diverse society there will always be significant differences
in income and wealth. The conservative argument for progressive taxation is in part, indeed, that
it creates more economic diversity than current policies do which divide society merely into a
few superrich and everyone else, or policies that would level almost everyone down. Economic
diversity, not plutocracy or economic equality, is the goal of conservative progressive taxation.
3) Low top tax rates result in great economic inequality. Middle class societies are
typified by an absence of extreme division between rich and poor. Conservatism does not flourish
in economically divided societies–in societies in which the bottom half have nothing or almost
nothing, as in the contemporary United States. It is socially, as well as economically, undesirable
for most Americans to have almost no private wealth. This is not the American dream. The main
source of the vastly increased economic inequality in the United States and elsewhere since the
1980s is low top income and estate tax rates. Rich people have paid a smaller proportion of their
income in taxes as top tax rates have been cut, and everyone else has paid a greater share of their
income in other taxes and government fees and charges. Low top income tax rates take from the
“bottom” 99.5 percent of Americans and give to the top 0.5, 0.1, and particularly top 0.01
percent.
4) The “snowballing effect” of income and wealth concentrates income and wealth at
the very top of the economic spectrum without progressive taxation. Progressive taxation at
the very top of the economic system also compensates for the “snowballing effect” 1 of income
and wealth. As described by economist Emmanuel Saez, high income leads to high wealth in a
continuing progression. As income becomes more stratified, there is a compounding effect on
wealth. Since high incomes are disproportionately financialized, capital income at the top of the
economic pyramid increases. Wealth as well as income becomes increasingly stratified. Income
inequality leads to wealth inequality, which leads to greater income inequality which leads to
9
greater wealth inequality. Progressive taxation at the very top of the economic order is required
to break this regressive and unproductive chain.
5) The comprehensive American tax and government revenue system is regressive.
Most economists and the general public do not recognize that the current comprehensive United
States tax and government revenue system is regressive. This was historically not the case, going
back to America’s founding. Among the strongest arguments for progressive income and estate
taxation is they compensate for regressive payroll and sales taxes and regressive government fees
for services and other charges. America’s current tax and government revenue policies are
inconsistent with its founding ideals. Poor, working, and middle income people often pay
proportionately more of their income in payroll, sales, and property taxes, and in other
government fees and charges, than individuals at the peak of the income and wealth structure,
who often do not pay tax on all of their income, especially unrealized capital gains, and as a
result of real estate depreciation. Other provisions of the tax code–including the absence of
Social Security and Medicare taxation on investment and other unearned income, the cap on
earned income subject to Social Security tax, lower tax rates on dividends, and the virtual
elimination of estate and gift taxes–are also all regressive. Moreover, government fees for
services and other charges, predominantly at the local and state levels, are a substantial source of
comprehensive government revenue and are very regressive.
6) Low top tax rates weaken the family. As described by Charles Murray early in his
career, there is a strong link between a society that is severely stratified economically and
negative sociological pathologies among the very poor. Though many contemporary
conservatives maintain that any degree of inequality–no matter how great–does not influence the
character of society, this opinion is badly mistaken. Conservatism is not about enriching those at
the very top or sanctioning and supporting a plutocracy or superplutocracy for the top few tens
and hundreds of thousands. It is about creating and sustaining a measured and ordered society
which is a partnership among the living, the dead, and the yet-to-be-born. Extreme relative
inequality may lead to more negative sociological pathologies than even extreme absolute
poverty, as the history of recent decades in the United States seems to confirm. Similarly, it
appears not to be absolute material rewards which are the most significant motivators to
productivity and innovation, but relative material rewards and other indicators of place in
society. Extreme inequality leads to less innovation and productivity, not more. Most people have
little incentive to be productive. Economic systems of less inequality beneficially require
productive cooperation. When families with children receive a small share of national income
and wealth, family formation is impeded and children’s opportunities are reduced. Families do
best in middle class societies, not superplutocracies.
7) Progressive taxation leads to a greater sense of community. Conservatives
emphasize the importance of civic and nongovernment institutions. These are hard to create and
sustain in societies of profound inequality. When society is divided into the few superrich and the
many have-nots, with a relatively small, dispirited, and powerless middle class, there is a loss of
social cohesion, less individual dignity, more societal division, and a decline of communitarian
bonds. The American founders and their true successors have always advocated middle class
societies in part because these are more likely to possess strong, nongovernment, intermediary
10
institutions between government and the people. These institutions were more robust when top
tax rates were higher, the economy grew faster, society was more equal, and families were more
cohesive.
8) Progressive taxation at the top of the income and wealth system leads to lower
government budget deficits and less national debt. There is also a strong historical correlation
between low top income tax rates and high government budget deficits, and between high top tax
rates and low government budget deficits. When top income tax rates have been cut, budget
deficits have increased. When top rates have been raised, budget deficits have declined. It is as
simple as that. The 1980s and 1990s provide perhaps the best respective examples of these
relationships, but they are also exemplified by the 2000s and again in more recent years. The
direct negative influence of top tax rate reductions on budget deficits is compounded by the
slower economic growth and increased government spending to which regressive and nonprogressive taxation lead. Increasing top federal income and estate tax rates raises government
revenue, boosts economic growth, cuts government expenditures, and reduces government debt.
9) Progressive taxation results in smaller government. There is also a strong historical
relationship between high top tax rates and smaller government. When top tax rates were higher,
government spent less. As top tax rates have been cut, government has increased in size, scope,
and expense. If individuals receive more money through the private sector and the economy
grows faster, they will not have to rely on government. People will not have to participate in
welfare programs to make ends meet. Family formation is easier, with its attendant and abundant
benefits.
10) Low top tax rates weaken the upper middle class. Among the most undesirable
outcomes of tax policy in recent decades is the relative decline of the upper middle class,
especially in relationship to the superrich. Perhaps surprisingly, the group that has lost the most
wealth share in the United States since the late 1970s is the 90th to 98th percentiles. In 1978, this
group owned 44 percent of American household wealth; in 2012, the 90th to 98th percentiles
owned 35 percent of household wealth, about one-fifth less.2 By way of contrast, the top 0.01
percent–the top one in ten thousand Americans economically (now about 33,000 people)–owned
2.2 percent of national household wealth in 1978 and 11.2 percent in 2012, an increase of
approximately 400 percent.3 When progressive taxation is not practiced at the summit of the
economic system, wealth concentrates at the pinnacle. Progressive taxation at the very top is
required to recreate a middle class society with a strong upper middle class.
To be emphatic and clear: progressive taxation is not required primarily for reasons of
equality. Progressive taxation is required to make capitalism work. The restoration of
progressive taxation may be the crucial conservative public policy issue of our time. Without the
restoration of progressive taxation, capitalism may be lost. How do most Americans benefit from
the current economic system?
This book is, in the first instance, a study in what my revered mentor Milton Friedman
termed “positive economics”: what is, rather than what should be, in economics.4 Friedman–who
11
advocated progressive taxation early in his career and was concerned with the distribution of
income and wealth throughout his career–distinguished between facts and values, between
empiricism and normative policy recommendations, between science and ethics. It is a clear,
vital, and essential distinction.
Accordingly, though highly critical of the views of many contemporary conservatives and
libertarians, I try to refrain from personal invective or ad hominem attack. Most conservatives
and libertarians are neither unintelligent nor motivated by ill intentions: indeed, the opposite is
the case. However, they are factually mistaken in their understanding of how progressive
taxation at the summit of the economic system works. Especially since I myself once held many
of the positions criticized here, I can hardly be too harsh toward those who continue to maintain
them. I believe it is possible to argue and modify one’s positions on the bases of facts and reason.
I hope to persuade or be persuaded–though mostly the former!
Since conservatives emphasize American history, I begin with an extensive Introduction
on the founding and guiding ideas and ideals of the United States with respect to equality,
democracy, and liberty. These ideas and ideals are often very different than what many
conservatives and libertarians consider them to be. The founders were secular, deists, rationalists,
and democratic. They supported active government and progressive and wealth taxation. They
were not religiously dogmatic or anarchists, nor were they economic elitists. They crucially
believed that all people are morally and spiritually equal. They favored middle class societies and
believed government has an essential role to play in promoting them. They supported the
“consent of the governed,” as stated in the Declaration of Independence, as the foundation of just
government. They were oriented to the future, not the past.
Following the Introduction, I present the main empirical findings of this book in five
chapters: 1. Top Tax Rates and Economic Growth, with an appendix on supply side economics,
2. Top Tax Rates and Inequality: The Turn to Plutocracy, 3. America’s Regressive Tax and
Government Revenue System, 4. Top Tax Rates and the Family, with an appendix on Christian
and utilitarian cases for progressive taxation, and 5. Top Tax Rates and Government: The Rise of
Debt. I consider the 2017 tax reform act in the sixth chapter together with what I dub the
“Reverse Laffer Effect”, where I argue that lower taxes on working and middle income people,
not the wealthiest, spur economic growth and bolster tax revenues and investment.
In the Conclusion, I make public policy recommendations for restoring progressive
taxation at the very top of the economic order and cutting everyone else’s taxes. This book is
intended to help recreate a conservative society in fact, not in theory. For this reason, I hope that
conservatives especially will consider the empirical information and arguments here, change
their minds, and renounce their former positions: I am sincere in this statement–intellectual
objectivity and credibility require it. Issues of transition as well as ultimate outcome are
presented, since transitions are so important and so often neglected. An appendix on Ronald
Reagan’s classical liberalism concludes the text. The endnotes provide more detailed
information. As the References and following acknowledgements make clear, I subscribe to the
words of John Stuart Mill in On Liberty: “He who knows only his own side of the case, knows
little of that.”5
12
This book is largely an internal critique of conservative tax and growth policies from the
right. Somewhat similarly to Friedrich Hayek in The Road to Serfdom (1944), who criticized
socialism not on normative but empirical grounds, my argument is primarily to conservatives
that, if they want to create the sort of society we share in common as a vision and goal–a prolife,
high economic growth, strong family, limited government society–it will not be achieved
through continuing the policies of supply side economics. Probably, indeed, no set of ideas has
done more damage to the realization of conservative ideals than those of supply side economics.
Cutting the taxes of the superrich does not just diminish economic growth, it diminishes a
conservative social order. Neither economic growth nor conservative social policy can or will
flourish in a superplutocracy.
I regret that all of the analysis here cannot be considered final. Since much of the
information is new, it can at times only mark trails that I hope others will follow, modify, and
improve. At the same time, I am confident that the general thrust of this work, as well as most of
the detail, is accurate–and more accurate than existing paradigms of economic theory and
activity.
Many good people provided comments and thoughts on this book whom I would like to
thank. I acknowledge first my students at UCSB, in whose classes I have presented and discussed
many of the empirical propositions and ideas here. The members of the Casier Seminar–the late
Bob Casier and John Busby, Brian Cearnal, John Kay, Barbara Lindemann, Peter MacDougall,
and Stan Roden–reviewed and critiqued successive drafts of the manuscript. Others who read
and commented on a manuscript draft or offered thoughts include Joe Armendariz, Ted
Bergstrom, Dave Dixon, Martin Feldstein, Ted Frech, Jeremy Levine Shelly Lundberg, Greg
Mankiw, Gabriel Pragin, Peter Rupert, Emmanuel Saez, Nik Schiffmann, Tom Schrock, Mark
Skousen, and John Smith. I thank Steve Moore for the opportunity to participate in a debate with
him that clarified my thinking that the years of fastest growth during the Reagan administration
were when the top income tax rate was 50 percent. I was able to develop thoughts on various
subjects in presentations at Young America’s Foundation and FreedomFest conferences and to
develop ideas on Adam Smith in a talk for the Intercollegiate Studies Institute. I have benefited
from participation in a number of Liberty Fund conferences over the years.
I am indebted to the work of many scholars in preparing this book, of whom I would
emphasize Saez, Friedman, Naomi Cahn, June Carbone, Brian Domitrovic, Nicholas Eberstadt,
Arthur Laffer, George Nash, Henry Olsen, Steve Pincus, Thomas Sowell, Joseph Stiglitz,
Michael Tanner, and Gabriel Zucman. Steve LeRoy and Lester Telser provide continuing
support, as do Rob Ebenstein, Michelle White, and Clifton Harrison. The Russell Sage
Foundation sponsors many excellent works on inequality. I thank Nelson Lichtenstein for the
exceptional lecture series of the Center for Work, Labor, and Democracy at UCSB. I benefit from
my association with the Cato Institute as an adjunct scholar–though it will probably not, at least
initially, agree with everything written here, as is the case with others acknowledged. I thank the
Chicago Economics Society for the opportunity to make an early presentation on themes in this
work to it. I finally thank, most of all, Maggie.
13
WE ARE ALL CREATED EQUAL. It is time to reaffirm and reestablish this greatest of
American truths.
Lanny Ebenstein
Santa Barbara, California
14
Introduction–The American Ideals of Democracy, Liberty, and Equality
“All men are created equal”
–The Declaration of Independence
The essential American ideals are equality, democracy, and liberty. Based ultimately in
Christian and Jewish beliefs in the dignity and value of each human soul, and incorporating Stoic
views of the ability of all human beings to participate in a divine reason suffusing and animating
the universe, the ideas of equality, democracy, and liberty have been transcendent and
transformative since the beginning of the republic. Different conceptions of equality, in
particular, have shaped discussions of what it means to be an American and what the American
purpose in the world is. These discussions revolve around the twin (fraternal, not identical)
concepts of equality of opportunity and equality of result. American politicians and philosophers
have generally preferred the former to the latter, but also affirm that if inequality of result
becomes too great–as it is in the United States at this time–it threatens and even precludes
genuine equality of opportunity.6
What most distinguished the United States from Europe in the eyes of early visitors was
equality of income and wealth. Alexis de Tocqueville began his classic work in 1835,
Democracy in America:
No novelty in the United States struck me more closely during my stay
there than the equality of conditions. It was easy to see the immense influence of
this basic fact on the whole course of society….
I soon realized that the influence of this fact extends far beyond political
mores and laws, exercising dominion over civil society as much as over the
government; it creates opinions, gives birth to feelings, suggests customs, and
modifies whatever it does not create.
So the more I studied American society, the more clearly I saw equality of
conditions as the creative element from which each particular fact derived, and all
my observations constantly returned to this nodal point.7
Early American society was egalitarian and democratic as a result of the frontier and free
land.8 Thomas Jefferson remarked on the equality of conditions that characterized the early
republic: “We have no paupers … The great mass of our population is of laborers; our rich …
being few, and of moderate wealth. Most of the laboring class possess property, cultivate their
own lands, have families, and from the demand for their labor are enabled to exact from the
rich … such prices as enable them to be fed abundantly, clothed above mere decency, to labor
moderately and raise their families…. The wealthy, on the other hand, have only somewhat more
of the comforts and decencies of life than those who furnish them. Can any condition of society
be more desirable than this?”9
15
John Locke, avatar of the American Revolution, emphasized equality and democracy. For
Locke, labor creates property. Each person has property in himself or herself, and it is by mixing
one’s labor with the natural resources of the Earth that private property originates. But property
is limited to what an individual can use. Locke wrote in his seminal Second Treatise of Civil
Government (1689) that it will “perhaps be objected … if gathering acorns, or other fruits of the
Earth, makes a right to them, then anyone may engross as much as he will. To which I answer,
Not so.” “‘God has given us all things richly,’” he continued, “is the voice of reason confirmed
by inspiration. But how far has He given it us? To