More on Gravity Payments

I’ve been thinking a lot over the last few weeks about Dan Price’s choice to increase the salaries of his employees at the expense of his own and all the press coverage he’s gotten over it.

As I’ve thought, I’ve taken time to ponder the central question of my post a few weeks ago: what are the first principles here?

There were at least two principles at work in Dan’s decision:

1. Make life better for his employees by paying them as much as he could without sacrificing the integrity of his business. In this case, that meant cutting his own salary to pay for their raises.
2. Maintain (or improve) service to his customers. It appears he hoped to achieve this by reducing the stress he saw his employees deal with because of their financial position.

To my mind, both principles are unequivocally correct. So I’m disturbed with the glee that some commentators have shown at the struggles Dan is now facing.

I’m disturbed because I usually tend to agree with these commentators, but on this point I don’t.

I’m disturbed because they seem to think that somehow his decision to spread his own wealth around represents a sneaking kind of socialism that ought to be stamped out before it can spread.

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Early on when I started writing this blog, I considered writing a couple of posts about the difference between liberalism and socialism. Socialism (which manifests recently in the U.S. under its old-new nom de guerre, progressivism), is the ideological system that entails “the abolition of private enterprise, of private ownership of the means of production, and the creation of a system of ‘planned economy’ in which the entrepreneur working for profit is replaced by a central planning body.”¹.

Liberalism, on the other hand, is not the ideology espoused by the modern Left. This liberalism is classic liberalism, and is somewhat more (although not entirely) ideologically connected to the modern conservative movement. It is the ideology in which the Rule of Law, private property, and free markets are allowed to govern as much as possible, so as to ensure maximum economic, personal, political, and religious freedom.

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So when Rush Limbaugh and other commentators call what Dan Price is doing “socialism,” they really are just plain wrong. Dan’s decision to pay his employees more than the market demands is not socialism. It’s not calculated to abolish free enterprise, neither does it entail the creation of a centrally-planned economy.

That’s not to say that it doesn’t share some features with socialism. Certainly it shares at least one goal: the redistribution of some of Dan’s wealth to those who are less affluent.

But so does charity.

If Dan Price had decided on April 15th that he was going to give away 93% of his income every year to the Boys and Girls Club, no one would accuse him of engaging in “pure, unadulterated socialism.” Assuming he held the same kind of press conference, he might get a few minutes of congratulatory fame in the press, but by and large we’d forget him in a week or so.

We also wouldn’t be talking about him if he decided to make sure every one of his employees makes 5% more next year than they made this year. I can’t imagine him throwing a press conference to announce that sort of decision. But if he did, I have a hard time seeing him receive more than a collective “meh.”

Both of these things are examples of true capitalism, even though both decisions amount to the redistribution some of his own wealth to others who are presumably less affluent.

So what is it about Dan Price and Gravity Payments that makes some want to brand him a socialist?

I submit that it’s the unfamiliarity of his decision.

In most people’s understanding of capitalism, financial affluence is the ultimate purpose of economic freedom. Or, to say it another way, for most Americans there is no higher economic goal than to be “independently wealthy.” And for many people, taxes and other government interference are the greatest visible obstacle to that wealth.

So given the current political climate in the U.S.—especially in cities like Seattle—where the cries for “income equality” are tied closely to calls for raising the state-mandated minimum wage and other socialist policy proposals, it’s all too easy to see a headline like “CEO guarantees every worker a $70,000 working wage” and simply think “Aha! Socialism!” without really considering the issue.

But if you ask me, Dan’s idea is exactly the sort of thing we should want to spread. Dan made the choice to give up his own wealth in order to accomplish something that meant more to him than his own wealth. Namely, helping his employees achieve the kind of financial independence that would help them be happy.

Maybe I approve of his decision because its closely aligned with my own goals. If I were in his position, I’d take great satisfaction in paying my employees as much as I could.

I don’t know Dan and I don’t know what really motivated him, so I can’t say for sure that he wasn’t motivated by his own socialist tendencies. I’m also certain there were better tactical decisions he could have made in raising his employees’ wages the way he wanted. But whatever his motivations and whatever his failings, what he did wasn’t socialism. It was better than capitalism.

It was liberalism at its finest.