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Yes, Virginia, There Is No Santa Claus

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One of Karl Marx’s most effective and influential methods of argumentation was to use language and mental imagery which were descriptive of an earlier stage of human history and then apply them to the emerging market-oriented society in which he lived.

For example, the politically enforced caste systems of the old days became, for him, the “class struggle” of capitalism; those who owned the means of production were engaged in an endless “struggle” with their employees.

A second example: The economic plunder of a bygone era, in which some used the power of the state to seize the wealth of others, became, for Marx, “capitalist exploitation”; the “exploitation” was represented by the profits earned by the employer in the marketplace.

A third example: Earlier epochs of violent conquest, in which brute force determined who lived and who died, became, for the father of modern communism, capitalist “anarchy of production”; the “anarchy” was evidenced by each producer peacefully competing for customers by making better, and less expensive, goods than his rivals.

Of course, this type of language correctly described the ancient political systems of power, privilege and plunder. But unfortunately, Marx’s erroneous use of it to analyze the new world of personal freedom, peaceful exchange and productive enterprise soon permeated Western thought and culture. And the regrettable result is that most people in the 20th century have, at some time or another, fallen into the linguistic and conceptual traps which Marx set: “excess profits,” “unearned income,” “people before property,” “a living wage,” “exploitive labor practices,” and the like.

Even as a large part of the world is freeing itself from the external manifestations of communist ideology — the totalitarian state — most people remain prisoners of it, to various degrees, in their minds.

The Welfare State has grown out of Marx’s long shadow over the West. The modern Welfare State began a little over a hundred years ago in Imperial Germany. It was Prince Bismarck’s response to the strong showing the socialists had been making in elections to the German Parliament — the Reichstag. His plan was classic realpolitik: defeat the socialists by instituting the paternalistic economic programs advocated by them, thus winning over the loyalties of the German “masses” for the imperial policies of the established government.

In 1913, an American, Elmer Roberts, even entitled a book about the economic policies of Bismarck and Kaiser Wilhelm II, Monarchial Socialism in Germany. The title was not meant to be an accusation, but instead an endorsement that many American intellectuals shared in those years. Often going to Germany to study in the years before the first world war, these intellectuals returned to the United States believing that Germany was showing how to solve the “class conflicts” of the age.

These Americans studied with scholars known as members of the German Historical School. They argued that Marx was right: there were “irreconcilable class conflicts” in society; capitalists did “exploit the workers”; and selfish profit motives were put before the interests of “the people.” But Marx was wrong about the need for a violent revolution to bring about radical change and reform. Enlightened government, they said, guided by a farseeing, “disinterested” and compassionate intellectual elite, could cure society’s ills through wise state intervention and wealth redistribution.

And, thus, was born the ideology and rationale for the Welfare State in 20th-century America. Though many American Welfare Statists may be totally ignorant of the historical origin of their own ideas and policies, they are nonetheless the great-grandchildren of German intellectuals who took on the job of being apologists for Bismarck and Imperial Germany.

The consequences for the United States, and indeed, the rest of the world, have been devastating. And the devastation is not merely because of the great amounts of wealth that have been plundered from people through taxation; not merely because of the growth of huge bureaucracies that control, regulate and intrude into every aspect of our social and economic affairs; and not merely because of the vast ocean of special-interest groups who fight over the political spoils under the banner of “social justice” through redistribution of wealth.

No, the most devastating effect has been the way we have come to think about ourselves and the economic world in which we live. If people have accumulated great wealth in the marketplace, we assume that it must have come about through theft, cheating or a “gouging” of the public. If some people own great industrial enterprises, we assume that it has been acquired by stealing from the workers, whose labor “really” produced all that the owner possesses. If some lack a better standard of living and, therefore, live a more humble material existence, we assume that this must be because of the greed of those who have not shared the riches they control.

And if these are the realities, then it is the duty, indeed, the responsibility, of government to rectify the injustices by taking from those who have so that it may be given to those who lack.

Government has become society’s Robin Hood and Santa Claus. It takes from the rich to give to the poor and it bestows gifts from Washington — the political heaven — with, it is claimed, no negative effects on the social order.Man’s natural state in the world is one of poverty, and unfortunately, that is how most men have lived their lives throughout human history. But a little over two hundred years ago, a government was established in America under which human beings were declared to have an inalienable right to their life, liberty and property. They could pursue any occupation and enterprise of their own choice. And they could keep the fruits of their own labor, free from either arbitrary or oppressive taxation.

The consequence was the creation of a prosperity the likes of which the world had never known. Why? Because for the first time, people knew that if they saved a portion of what they had produced, it would not be taken away from them “for reasons of state.” And with those savings, people acquired the means of producing the tools to enhance their productive capabilities. At the same time, they obtained the means to offer work to others who either did not have the ability to save or lacked the inclination to do so. Those who were less well off were raised up by those who already had the ability and vision to improve themselves. Thrift, not theft, created work and wealth in America.In the market economy, wealth is not theft. It is the result of honest and hard work whereby individuals apply their industry and savings to improve their own conditions; and they do this by serving their fellow men through voluntary exchange of goods and services.

And, contrary to popular opinion, government largess is not a harmless gift. It not only drains incentives from those who produce and save, it also destroys the human spirit. It does so by deluding men into thinking that neither their successes nor their failures are the result of their own honest doings. Any material reward they enjoy in the market must be because they have cheated, exploited or “gouged” their fellow men. Guilt surrounds success. Claiming to have earned an “honest dollar” only applies if your income does not exceed the average. Material achievement above the norm always carries the stain of “social injustice.”

At the same time, failure to achieve one’s material goals is always explained away as someone else’s fault. Self-responsibility no longer has any connection with outcomes experienced. Every undesirable outcome was “beyond my control,” caused by the injustices of “unscrupulous” market forces. And once the government has declared that it has the responsibility to provide people with the things they have not acquired through their own effort in the market, it is a small, but profoundly destructive, step to the claim of being “entitled” to that which others have. After all, if “they” have, it is only because they have cheated or exploited “us.”

Yes, Virginia, there is no Santa Claus. There is no political Santa Claus because there is nothing to give away unless it has first been produced. And production does not occur without effort. It involves costs to those who do the producing. And a taxing away of the benefits that may result from incurring those costs in the market destroys the incentives for doing the work that creates the “gifts” that are ultimately dispensed from the political heaven called Washington.

The belief in a political Santa Claus also exacts the price of distorting the understanding that men should have about how the world in which they live and work actually functions. And worst of all, it eats away at the spirit of the individual, the spirit that is the source of all bounty and beauty that we call civilization. If having such an understanding and such a spirit be considered among the greatest gifts individuals can have, then we truly can say that there is a Grinch who stole Christmas. His name is Karl Marx.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).