How the Left and Right see each other

There is an old, instructive, Chinese proverb that tells us:

"Never criticize a man until you have walked a mile in his shoes. That way you are a mile away when you voice your criticism. And you have his shoes!"

Its message is that it can be quite revealing to look through an opponent’s eyes. How does the Left perceive neoliberals and free marketeers?

To over-simplify to a perhaps unforgiveable degree, the Left sees the rich comfortably off while the poor find it hard to manage. Those on the Left want to take some of that surplus from the rich and give it to the poor. This would make the poor better off and create a more equal society. This is why they advocate tax increases on the rich, and greater benefits to those less well off.

They see their opponents as being on the side of the rich, wanting them to keep their wealth, and deny the poor the higher standard of living which that wealth would bring them. Not surprisingly, they brand their opponents as both wicked and greedy, wanting to keep the poor in poverty, while allowing the rich to keep wealth that could redress suffering and squalor. This is one reason why so many of them are so angry. They despise what they perceive to be the motives of their opponents.

If they could look at the world through the eyes of free marketeers and neoliberals, they would be surprised to see what they themselves look like. In the first place they are seen as economically illiterate. The neoliberal position incorporates the lessons of the real world, about what happens in practice. They see the Left as over-reliant on pure theory, with insufficient attention paid to the outcomes that result when it is applied in practice.

For example, the Left assumes that a higher tax rate on the rich will bring in more revenue, and they set about calculating how it should all be spent. Neoliberals know something that the Left seem unaware of, that taxation acts to change behaviour. They have seen how higher tax rates can encourage people to shelter income, and deter them from expanding their business or starting new ventures. This can make higher tax rates yield less revenue than lower ones.

Neoliberals look at studies of Corporation Tax that assess where its burden falls in practice. They see that approximately 60 percent of it falls on the employees of an enterprise, some 25 percent is paid by its customers, and 15 percent by its shareholders. They see higher corporation taxes, called for by the Left, not as money taken from "business," but as something paid mainly by employees and consumers.

Neoliberals sympathize with people who have to pay rents higher than they can
really afford, as does the Left, but they disagree with the Left on what should be
done to redress this. 

The Left calls for rent controls, fixing rents by law to levels below market rents. Neoliberals regard this as further evidence of illiteracy, pointing out that below-market rents cause properties to be withdrawn by landlords, or under-maintained, leading to shortages of rental properties. They attribute over-high rents to a shortage of rental properties, and call for
measures that will increase the supply. These might include tax kickbacks to landlords and would-be owners of buy-to-let properties. The aim of lowering rents might be the same, but the centre-right solution derives from real-world experience. It has worked in practice, unlike rent controls which have not.

Seen through neoliberal eyes, the Left seem blissfully unaware that they are repeatedly committing the zero-sum game fallacy, that of supposing a fixed supply where there is none. If the amount of wealth is fixed, for some to receive more, it must be taken from others who will then receive less. Money for the poor must be taken from the rich. Neoliberals observe that in the real world wealth is not fixed, and both poor and rich can receive more if wealth expands.

They observe that in practice, it has not been redistribution that has increased the wealth of the poor, but economic growth and expansion that has made both rich and poor able become richer.

If a policy causes both rich and poor to gain wealth, the Left are concerned if it increases the gap between them, that is, if it increases inequality. Neoliberals are much less concerned about this, observing that in practice their absolute command of resources matters more to poor people than does the gap between themselves and the rich. Neoliberals want poor people to have enough to eat, to provide them with adequate shelter, sufficient heating, access to decent
education, healthcare, transport, and other things people think essential and desirable. They think this matters far more than the gap between rich and poor.

A good thought-test is to ask whether a policy that makes the poor twice as rich should be implemented if, in doing so, it makes the rich three times as rich. To poor people it is the rise in their living standards and access to goods and services in practice that counts. Some theoreticians favour a more equal society, even if it means a poorer one, and will accept living standards for the poor that are lower than they need be, because they think equality is more
important. Neoliberals are more concerned with absolute improvement rather than with relative improvement.

Instead of arguing the merits of opposing theories and predicting what the results of them might be, they point to the actual, real-world experience of free trade and free markets when they have been applied in practice. It is as if a gigantic experiment has been carried out on a global scale. With China and India leading the way, but with many other countries following a similar course, countries that had practised state ownership, state control of industry, and
collective planning and provision, turned instead to introduce markets, private ownership, incentives and opportunities for individual enterprise.

In the three decades since this change of policy was applied, the results have been clear and spectacular. More people have been lifted from subsistence and starvation than ever before in the entire history of humankind. Amongst the poorest, real incomes have doubled, and their food supply has moved from the critical to the sufficient. Countries that hovered on the brink of starvation and were net importers of food have become able to support themselves and be net exporters. Almost every measure of improvement in the human condition that follow from this increased wealth shows that life has become less precarious, with deaths from disease and malnutrition now a fraction of what they were, and deaths in childbirth or infancy down to historic lows on a world scale.

To neoliberals, with their reliance on real-world results, these results count as evidence in favour of the policies that produced them. This evidence is supported by the failure to achieve similar results by countries that did not apply those policies. While it remains possible that alternative policies might produce better results, there is no evidence to suggest that they have done so in practice, or that they could do so. To support the policies that have failed to achieve these practical results appears to neoliberals as evidence of the economic illiteracy of those who advocate them.

If the aim is to improve the common lot of humankind, the policies that achieve this in practice, and that have achieved this, are shown by the results to be superior to those that have not done so. Neoliberals sometimes despair when they see people on the Left advocate policies that have been tried before and have failed before. They ask what use is experience if it is to be ignored in favour of the fashionable theories it has shown were worthless in practice? The consequences of nationalization are known because of the experience of nationalized industries. The consequences of price caps are known because we have seen what happened when they were tried. Too often the lessons of what happened in the past are ignored in favour of speculation about what might happen in the future.

At the heart of this intellectual error lies the notion that society can be changed at will by the application of simple solutions, and that those who oppose this do so either out of self-interest, or because they lack the common humanity to care for the fate of others. Its proponents think that if prices are too high and wages are too low, they should be fixed by law, and that if industries are not producing socially desirable outcomes, then government should run them so that they do. They overvalue the ability of intellect to devise solutions that overcome the
limitations that experience has exposed.

The real dispute is not one of morality, of the virtuous Left versus the wickedness of neoliberalism. It is instead a dispute over methodology. Neoliberals support free trade and free markets because they have been shown in practice to be the most effective means of improving the lot of those at the bottom. They work in practice. The streak of empirical practicality that runs through neoliberalism means that these policies are occasionally modified so that they work better, even if this results in an application of them that is less than pure. The test is practice, of whether they achieve the desired results in the real world.

If the Left could see themselves through the eyes of neoliberalism, they would see people whose motives might be laudable, but whose methodology is not. They are seen not only as economic illiterates, but as ones with no sense of history, no knowledge, or even concern, with what has happened before. They appear as people whose fixation with theory lifts them above the practicalities of the world as it is. Their proposals are just as impractical, error-strewn and doomed to failure as they were the last time they were tried. Human nature as it is, not as it might be, often thwarts their intent. It exists in the real world, where neoliberalism has its roots and works with the grain of human nature, not against it.

Neoliberals take it that the world can be improved, and the lot of humankind made better, but that this is more likely to be achieved by their methodology than that of their opponents. They take it that the results achieved thus far support them in that view.