Over the weekend, I spent a lot of time in an influenza-fuelled haze. I’m not sure how everyone else experiences flu infections – but my fever dreams are usually repetitive fixations on the same set of connected thoughts. It’s all very tiresome, especially when the fixation seems to be a kind of existential economic angst.

I know, right – I must have been ill.

Anyway, the thing that I kept coming back to (over and over again) is that the world of political economy seems split into two key narratives.

So let me frame them.

Narrative 1: The Liberal Problem

Meet Nate. Nate has an IQ that is off the charts – but he was born to the wrong parents in the wrong neighbourhood. His dad was a deadbeat, and disappeared just before Nate’s little sister was born. Nate was 3 at the time. His mom moved from job to job, and started using drugs when the pressure became too much. By the age of 10, Nate was the adult in the house. He cooked and cleaned and did paper rounds to pay for food. He made sure that his sister went to school, and he worked to keep up his grades. He already knew that a good academic record was one of his best chances to make a better life for him and his sister. And his mom, if she was still around.

A teacher noticed him, and managed to find him a rich philanthropic sponsor – one who spent time trying to help smart kids with a difficult background. His sponsor managed to get him a full scholarship at an elite private school, but his mom stopped him from going because she needed him to take care of her and his sister. She also forbade the sponsor from having any further contact with her son.

After complaints from a neighbour, Nate’s mom was arrested for dealing – and Nate and his sister were placed into the foster care system by Social Services. Nate and his sister moved homes four times during that first year. When Nate was 15, he was living with a sister in a neighbourhood that was caught up in a territorial dispute between two rival gangs. In order to safely get from his house to school and back every day, Nate joined the stronger gang. 

He was arrested a few times for minor theft, and spent some time in jail. By the time he left the prison system, his sister had gotten married to her teenage boyfriend, and had two children. Nate hadn’t graduated high school, and struggled to find work with his criminal record.

Eventually, Nate started working as a shelf-packer at the local K-mart, earning a minimum wage, with no real prospects of doing anything better with his life.

Nate never really had a fair chance. 

In this view of the world, poverty and economic constraints are a function of environment and historical context. This is the world in which government intervention is needed, because almost any help is better than none.

Narrative 2: The Conservative Problem

Meet Mark. Mark has an IQ that is off the charts – but he was born to the wrong parents in the wrong neighbourhood. His dad was a deadbeat, and disappeared just before Mark’s little sister was born. Mark was 3 at the time. His mom moved from job to job, and started using drugs when the pressure became too much. By the age of 10, Mark was the adult in the house. He cooked and cleaned and did paper rounds to pay for food. He made sure that his sister went to school, and he worked to keep up his grades. He already knew that a good academic record was one of his best chances to make a better life for him and his sister. And his mom, if she was still around.

A teacher noticed him, and managed to find him a rich philanthropic sponsor – one who spent time trying to help smart kids with a difficult background. His sponsor managed to get him a full scholarship at an elite private school, but his mom stopped him from going because she needed him to take care of her and his sister. She also forbade the sponsor from having any further contact with her son.

After complaints from a neighbour, Mark’s mom was arrested for dealing – and Mark and his sister were placed into the foster care system by Social Services. Mark and his sister moved homes four times during that first year. When Mark was 15, he was living with a sister in a neighbourhood that was caught up in a territorial dispute between two rival gangs. In order to safely get from his house to school and back every day, Mark was tempted to join the stronger gang. 

Instead, he decided to get a part-time job in order to pay for gang protection. He found work at a small grocery market for minimum wage. He worked long hours on weekends, and was eventually promoted to after-hours store manager. He helped his boss’ wife to set up her new computer, and showed her some basic tips. His boss then asked him for some help with budget spreadsheets, and started paying him a bit extra on the side. 

As part of a school computer project, Mark started working on a basic app that would allow his boss to compare budget to actual sales in real time. Mark won a competition for it, and used his cash prize to get a PC that he could use at home. The computer was stolen within weeks of him getting it – but with the recommendation of his teachers, he managed to get a place at a programming workshop during his summer holidays. He persuaded his grocery market boss to pay for the workshop as an advance. During the workshop, Mark won another prize for his programming skills, and used that cash prize to repay his boss. 

He then left that job, and went to work with a small start-up team of developers that he’d met at the workshop. He started working on business analytics software, and continued to study part-time. He applied for legal emancipation, and managed to get custody of his sister. The siblings moved to a better neighbourhood, and Mark started earning a better salary.

Then the IRS showed up on their doorstep, and demanded backpay in tax, including penalties, for the undeclared income on his cash prizes, as well as the salary that he’d been earning at the start-up. Unfortunately, the start-up team hadn’t realised that they’d reached the threshold where they were required to be deducting payroll taxes.

Mark pulled himself up, and got punished for it.

In this version of reality, people who make ‘better’ choices, and work things out despite their disadvantages, are essentially punished for doing so with tax. The Marks of this world are required to support the Nates, as though Mark is just ‘fortunate’ and ‘especially blessed by circumstance’ while Nate is simply ‘unlucky’, and social justice demands a re-ordering of that. Whereas actually, Mark should get to take some credit for getting to his current position, and Nate should take some responsibility for being in his.

In a nutshell:

  1. People who are unsuccessful generally prefer to believe that their lack of success is mostly a result of their circumstances, and that anyone who is successful just lucked out in the genetic lottery.
  2. People who are successful generally prefer to believe that their success is mostly a result of their hard work, and that anyone who is unsuccessful is just not working hard enough – except for the really disadvantaged, for whom there are charities.

The problem is that both those viewpoints hold grains of truth.

Yes, some people are born lucky – but having a good hand in cards doesn’t mean that you play it well. Many people don’t use their good circumstances to make good lives for themselves, and instead seemed destined to make constantly poor decisions that drive them down the rabbit-holes of debt and bankruptcy. And for many ‘conservatives’, these are the old school-friends, acquaintances and distant relations who made a complete hash of it by making rash business decisions, getting swindled by get-rich-quick schemes, going crazy with credit card debt, or by cancelling their insurance policies just before calamity struck.

On the other side of this argument: if you’re playing against someone who has a good hand, and they know what they’re doing, then it doesn’t matter how well you play a bad hand, you’re never going to win. History has its own far-reaching influence – “sins of the father”, etc.

But despite the fact that we’re capable of crediting and blaming more than one cause, it seems to be anathema for a conservative to seriously credit anything other than his hard work for his good fortune; just as it’s equally anathema for a liberal to properly blame anything other than his circumstance for his lack of it.

And I think that’s why this divide is so difficult. These aren’t really provable things: these are beliefs.

For the record, I have strong liberal leanings in this area: I believe that the genetic and environmental lottery is the dominant factor when it comes to success – and outwitting that lottery is its own special kind of luck. But simultaneously, when it comes to genetic lotteries, I’m also conscious of the fact that we don’t tax the photogenic in order to redistribute their good noses and muscle definition to the ugly.

Although that’s possibly because we haven’t quite figured out how to do that yet.

That aside, I’m not sure that there are real solutions here – mainly because any dialogue sounds more like a fighting match between religious zealots on different sides of a bible verse than a conversation between rational economists.

Ah well. At least we know that the debate seems destined to indefinitely rage.

*suggests that we all collectively medicate more*

*drops mic*

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.