Free Market Fundamentalist Opinion

Conservatives Need to Take Inequality Concerns Seriously

If conservatives remain unconcerned about inequality, hard-won victories could be at stake.

The far left is ascendant. Syriza, Greece’s radical left-wing party, has won two national elections in a row this year. Jeremy Corbyn, a relic of 1970s Britain, has taken command of the Labour Party. Polls put the Bernie Sanders, a socialist senator from Vermont, ahead of former secretary of state Hillary Clinton in the early-voting states of Iowa and New Hampshire for the Democratic Party’s presidential nomination in the United States.

All three seem to have captured the imagination of especially young voters.

Perhaps there is nothing new here. Young people everywhere are more liberal than their parents and always have been. As they get older and settle down, marry, buy houses and have children, their priorities typically shift from the causes that galvanized them in their youth to bread-and-butter issues. Their voting behavior shifts accordingly, from the left to the right.

Perhaps we’ll look back in twenty years and see this surge in youth activism on both sides of the Atlantic as but the latest iteration of an age-old pattern in which the seemingly carefree 1990s were the exception.

Conservatives and liberals shouldn’t take the chance.

The 1970s and 1980s saw big ideological battles over reproductive rights, nuclear weapons and the morality of markets. Westerners now in their twenties no longer care. Only in the United States is abortion still a political issue. As far as young voters are concerned, the fight for gay and transgender rights has been won. Only the far left still occasionally protests against nuclear weapons. Nearly everyone accepts that markets are generally better at providing products and services than the state.

But today’s left-wing cause célèbre threatens to undermine that consensus.

The likes of Corbyn and Sanders see concerns about inequality as a vindication of their long-held beliefs. But their solutions are all wrong.

Renationalizing utilities isn’t going to cut people’s electricity bills. We know that state-run institutions are less cost-efficient than private ones. It’s why utilities and so many other national “champions” were privatized in the first place.

Taxing the rich is hardly the solution either. We’ve seen that raising taxes beyond what the wealthy are willing to pay actually leads to less revenue coming in. It’s why Britain’s Conservatives cut the highest rate of income tax from 50 to 45 percent. The result was that they got more money to spend on education, health care and infrastructure.

The Laffer curve gets it basically right and the fact that even the Scandinavians have lowered their top income tax rates in the last couple of decades but still have money left to finance the most generous welfare states on Earth should put this argument to rest.

Tackling inequality is going to be complicated. It will require a combination of government action and private-sector solutions.

The political right has a lot to contribute to this debate. Think charter schools and simplifying tax regimes to remove deductions and exemptions that mainly benefit the rich. Think adapting pension schemes and unemployment benefits to flexible labor markets, rather than falling back on trade unions.

But the right must be willing to contribute.

Some conservatives argue that a measure of inequality is a good thing. It’s not for the government to equalize the outcome of people’s lives, they say, and hard work ought to pay off. They’re right. But if inequality is too high, opportunities are few and far between for those who grew up in a bad neighborhood or were raised by a single parent on low income.

When it comes to education and giving people on low incomes a (tax) break so they can get ahead in life, conservatives have the right ideas. They shouldn’t be afraid to frame them as solutions to the same problem the left cares about.

If they don’t, some hard-won victories could be at stake.

Inequality is already undermining the left’s faith in markets. Syriza is in power in Greece. Jeremy Corbyn leads Britain’s second largest political party. The former will have to enact liberal economic reforms and the latter will never win a national election. Nor will Bernie Sanders. But the fact that they’ve got this far, and that they’re appealing disproportionately to young voters, should give their opponents pause. A movement is growing on the left. The right needs to start thinking about how to stop it.