How the Rich Rule


How the Rich Rule | The American Conservative

The wealth gap is created by government creations, not lower taxes.


Sheldon Richman is one of my favorite left-libertarians. I’m sure that he wouldn’t endorse the blurb with which you’ve introduced his piece. Richman’s argument is that the rich use the state to corrupt markets to their own advantage:

[QUOTE=Richman]The financial system isn’t the only way that the rich benefit at the expense everyone else. The corporate elite have better access to the regulatory agencies and rule writers than the rest of us. (University of Chicago economist George Stigler dubbed this “regulatory capture.”) Wealth also gives the elite a clearer path to politicians and candidates for office, who will be amenable to policies that make wealthy contributors happy, such as subsidies, bailouts, and other measures that socialize costs and privatize extra-market profits. Campaign finance “reform” doesn’t change this, and even tax-funded campaigns would only drive the quid-pro-quo process underground.[/QUOTE]

In a scenario where the scales are tilted in favor of the rich, why shouldn’t we expect disproportionate tax cuts and regressive tax schemes to exacerbate income inequalities? In fact, there is no reason why we shouldn’t expect such a thing, and Richman certainly doesn’t argue that this wouldn’t be the case. Let’s not kid ourselves into pretending that we’re operating in a free market here; that’s “vulgar libertarianism,” which is exactly what Richman is arguing against in this piece. I can tell you with certainty that Richman doesn’t want anything to do with Republican party talking points.


Republicans would do well to listen to Richman, staking out territory in stark contrast to the Democrats and embracing the limited government to which they pay lip service. Voters would have an actual choice, but alas.

[QUOTE=Richman]The conventional understanding of rich and poor, capitalism and socialism, is profoundly misleading. A corporatist, mixed economy institutionalizes financial privilege in ways that are overlooked in everyday political discourse—in part because of the ideological deformations created by the system itself. As Austrian-school macroeconomist Steven Horwitz put it in a lecture this year, one need not be a Marxist to see that the state is indeed the executive committee of the ruling class.[/QUOTE]


It is quite clear after reading this article that Sheldon Richman has never built, ran or in any way been connected to any productive enterprise in any market.

There is nothing more grueling than reading an academics attempt to explain the success of various groups of people without admitting that the effort, judgment, willingness to sacrifice early on and commitment to obtaining their goal were the primary cause of this groups success.


I don’t think he’s talking about you, RET. He’s talking about folks who helped make California what it is today and made life harder for you. While it might disgust him and certainly J. to hear me say this, he’s talking about most especially about the James Taggarts and the Wesley Mouches of the real world. He is calling for vastly less government regulation and control over the economy.

I don’t understand what you disagree with really.


He is claiming that “old money” got wealthy through

through the enclosure of commons, land grants, and mercantilist subsidies
And he perpetuates the fantasy that wealth in America can endure due to these “advantages”.

America has always been and is today the most fluid economy in world history, it is easier to earn tremendous wealth and lose tremendous wealth in the United States than anywhere else in the world.

He spews all the tired B.S. about the Federal Reserve and the Fiat currency that has nothing to do with who gets wealthy or stays wealthy even if you believe all the illogical arguments that condemn this structure, I have as much access to the money supply as any corporation and I have access to the same interest rates.

So does everyone else.

His intellectually disconnected and indefensible claim for why our economy cycles;

In short, financial intervention on behalf of well-heeled, well-connected groups begets recessions, depressions, and long-term unemployment, which in turn beget vulnerable working and middle classes who, ignorant of economics, are willing to accept more powerful government, which begets more intervention on behalf of the wealthy, and so on—a vicious circle indeed.

This is just ridiculous, a few favored sons do get payoffs from politicians but these rewards never save bad companies from folding or amount to a drop of water in the ocean in regards to the overall economic cycles.

Regulation destroys industries and markets but cannot create any substantial, enduring market that can only be accessed by a select group.

It is the Government class that is enriched by government action, businesses do try to predict and influence the actions of government to avoid being destroyed by getting caught off guard but there is no widespread partnership between any productive entity and government.

Efficiency and productivity still dominate over all lesser competitors, nothing the government does helps any business be efficient or productive. The only “James Taggart’s” that exist are the Ross Perot’s who exclusively provide government services as kickbacks and they are not numerous enough cause any “Booms or Busts”.

The “Westley Mouche’s” exist in all the regulatory agencies but their agenda is to empower government and destroy private concerns, they are not a “friend” to any productive entity corporate or otherwise and the “Fairness” agenda that Ayn Rand ascribes to them is not even close to the reality.

The “Rich” do not rule, the “Rich” get that way and stay that way by understanding the ramifications of the actions that those who do “Rule” will have on markets and positioning themselves out of harms way as best they can, those that do not follow the actions of the “Rulers” closely enough to protect themselves get caught with their pants down and are crushed.

I do not oppose “Managed Economies” because I cannot prosper in them, regulations are as predictable as the math tables so it is always possible to profit from the destruction they cause. I oppose “Managed Economies” because I prefer to spend my time competing and producing for my lot and I want everyone to have the Liberty to do this as well.

There are not any markets that a box-boy at the grocery store cannot access with the same ease as a bankers son, while it is sad that this reality remains largely unknown due to government schools the fact remains that most corporations are publicly traded.

That means that ANYBODY can own a piece of them with the same dollars that they spend on gourmet coffee or interest on cars that they are upside on.

Corporations are the ultimate equalizer to the economic classes, from the jobs they provide to the tax base they provide to the ownership opportunity that all have access to they are an open opportunity for everyone. If people spent more time studying markets and the actions of government toward markets they would see how some entities will be harmed and others will be in a position to prosper accordingly, that enables everyone to stay invested in the upside.

Instead, most people completely ignore the markets that they have complete access to and instead spend their time deciding what group to demonize and blame for their own ignorance while pretending that these “Corporations” are not owned by their neighbors and their own managed retirement accounts but are instead some elusive, dark enemy.

Those who choose ignorance to the science of money will never have much of it for very long, those that learn the science of money will rarely want for much. That is the source of the varying economic classes and that is also the evidence that Richman has no idea what he is talking about. If what he was preaching was true then I and all who came from working, unconnected roots would be doomed economically and all those born with a silver spoon would remain wealthy.

That is just not how it turns out in America, at least not up until this point. I find much to agree with in Richman’s writing but he buries the legitimate concepts under so much ridiculous propaganda that those who follow him end up assigning importance to all the B.S. and using it as an excuse instead of seeing how his defensible arguments (The Free Market arguments) are easier to access today than in any time in all history. Free Market principles apply in America not because our markets are perfectly “free” but because the elements that make them not “Free” do not remove the elements of competition and efficiency.

Supply and Demand still rule our economy, the government adds much cost and burden to everything so the prices we pay are higher than they would be otherwise and many markets are filled from other countries because we chase away the producers but the final price is still determined by who has the sharpest pencil.


I have observed it personally at the local level and some at the state level, RET. Perhaps things are different when we deal with federal law, and perhaps the federal government isn’t a tool of the corporations and business. I’ve watched businessmen use land use laws for personal gain. I’ve seen it with eminent domain, locally and nationally (Kelo). My city has an open-ended contractual requirement to use eminent domain to provide a private developer with land to run a mile-long pipe in exchange for land for a water treatment plant. Rather than purchase the land, the city placed the cost of acquiring the land on any property owner between the wastewater treatment plant and the private developer’s property, and the private developer gave up the need to negotiate for the property

Regulations are largely written based on the experts in an industry. The regulations increase the barriers to entry and limit competition. Who lobbies for licensing requirements? Businesses that are large enough can afford the cost, especially if it prevents competition from developing. Read some Art Robinson if you’re interested good conservative take on the same subject. He’s someone you *might *appreciate. He discusses these same problems, although he talks much differently from Richman and J. Campaign Updates | Art Robinson for U.S. Congress | Oregon District 4 Read Common Sense in 2012 | Art Robinson for U.S. Congress | Oregon District 4

That some rich businessmen have worked hard is not in question in my mind. That some of them are corrupt, that politicians are corrupt and that they work together is not in question either. That the effect of their collusion is detrimental to our economy, the individuals who make economic decisions, cannot be in doubt. That you can learn your way around these barriers and make things work doesn’t change the fact that it’s harder for many to do so. If they are imposed, keeping some of the less brilliant from entering a market when they could and negatively impacting the economy, it ain’t right. That you admit that it exists but doesn’t really affect anything substantively is a disagreement over the scale of the problem. I think it’s not so small a problem. One or two competition-limiting, free-market distorting, poverty-creating rules and regulations aren’t a big deal. When thousands or millions of them have been implemented over 200 years, we’ve got a problem.

Perhaps all you ever see is honest, industrious, hard-working people. That’s good, and it’s cause for hope. I know many myself. I’d like to see them prevail over the current political climate of entitlement and subsidy.

An aside to one of your points: If the corporate sector *does *use the political machine to gain power, RET, the fact that the corporation is owned by our neighbors makes it no more right than to simply write those neighbors a government check.


[quote=“RET423, post:6, topic:37389”]
That is just not how it turns out in America, at least not up until this point. I find much to agree with in Richman’s writing but he buries the legitimate concepts under so much ridiculous propaganda that those who follow him end up assigning importance to all the B.S. and using it as an excuse instead of seeing how his defensible arguments (The Free Market arguments) are easier to access today than in any time in all history. Free Market principles apply in America not because our markets are perfectly “free” but because the elements that make them not “Free” do not remove the elements of competition and efficiency.

Supply and Demand still rule our economy, the government adds much cost and burden to everything so the prices we pay are higher than they would be otherwise and many markets are filled from other countries because we chase away the producers but the final price is still determined by who has the sharpest pencil.
[/quote]Yes, RET, we compete in the environment we have. Supply and demand still rule. They force our economy to correct itself. It’s the corrections that hurt so much. And even when our Keynesian central planning committee gets in the way, the desires of the members of the economy are still there, putting pressure on the system to correct itself. The person with a sharp pencil still can get ahead. Fortunes still can be made and lost. I don’t disagree at all, but it isn’t what it ought to be. And Richman identifies the reasons very well.


I do not disagree that corporations attempt to influence the regulatory climate, my point is that this is defensive. I know of no industry that thrives in America exclusively, ALL the large Corporations have moved much of their operations out of America.

If they were in bed with the politicians, they would have created a very plush and protected environment for themselves instead of minimizing the destructive impact of these regulations/taxes by leaving for more friendly environments. That is what frustrates me so much about the “Corporations are ruling America” crap, the evidence shows that they are being run out of America.

The same evidence shows that the only true “protected classes” are the Unions and those who receive Social Spending, they are the “Classes” that always remain unscathed regardless of the economic realities.

I contend that what is good for business is good for everyone, nothing insures high wages and prosperity more than an economy that encourages risk and a business environment that is growing and innovating faster than they can find qualified workers.

I am aware of all the mutual “back scratching” that takes place between politicians and businesses, I don’t pretend that this can ever be eradicated however and I also don’t see how it is much more than an annoyance as long as the work they provide is quality at a reasonable price and the governments needs are restrained by the principle of a Constitutional government.

The very worst “padded” contract that a government awards is still far cheaper and better than the very best government entity that could be formed to handle the task without a private contractor.

The strongest Corporations in the world are not centralized in the United States, every strong entity from Apple to the biggest oil company has considerable segments of their operation based outside of the United States. I find it impossible to believe that they chased themselves away by using their influence to protect Unions and get taxes raised on themselves while simultaneously demanding that their “bought and paid for” politicians regulate them into bankruptcy.

Richman focuses far more on this illogical premise of banks and business mucking up the market and very little on the consistent and obvious culprits that anyone can see **are protected at ALL cost’s **(Unions and Social Spending recipients) even unto the destruction of the currency and the bankrupting of our nation.

I see no evidence of government employees fleeing their jobs, I see thousands of applications being turned in for every government opening.

I see plenty of evidence that Corporations are seeking a more global presence and very few examples of industries expanding and booming within the U.S. borders.


The problem has the two legs you describe, unions and the entitlement crowd. It has a third leg, corporate welfare. Different folks focus on different problems, but they’re all interconnected by a hundred thousand rules, regulations, taxes and subsidies. “We the people” have learned to vote themselves largess out of the treasury.


Except that the Corporations are fleeing and the Union/Entitlement Crowd are prospering, seems pretty clear to me what “legs on the stool” are having success at “voting themselves largess” and what “leg” is “paying for the largess”.

Richman is focusing on the payers who are fleeing in an article titled “How the rich rule”?

He could not be any further from reality or out of touch, he is using what is academically plausible in place of what it is actually occurring in choosing what ox to gore.

That helps*** only the Class Warfare Propagandist’s*** to further their tyranny, it in no way will help educate the populace in what needs to occur to correct our situation.

That is why he ticks me off and that is why I end up making the case so often that the Libertarians usually help the Extreme Left by taking similar positions while claiming different motives, the positions are wrong and destructive regardless of how they are justified.


I have no problem calling out the individual and corporate welfare.

That is the problem with closed minded liberals and conservatives, they only see one side of the coin and will support government intervention when it suits their side.


Corporations and “The Rich” pay nearly the entire tax burden, how the hell can they receive “Welfare” and who are the victims who are paying for it?


I don’t disagree with you on taxes. I favor a consumption tax.

I am not generalizing but the stuff this article speaks of do exist. I have no interest in going after the rich, I just want a free market in place.

When it is possible to gain advantage by exploiting government, any and all groups will take advantage of the opportuniy.


RET, they’re still operating in the United States. They’re still paying taxes, as you note. They haven’t all fled. And this problem isn’t confined to the United States. What’s China done via public policy, for example?


I spent time shooting the breeze with an economic development person yesterday. His take on economic development is that a tax dollar taken out of the economy and used for economic development is the best use of money. Society does stupid things with money otherwise. He says that it must be used to create more wealth. He bets on the government to be able to do that.Individuals aren’t so good at that. The government can see the big picture. This philosophy is not unusual in economic development. In fact, it’s the norm.

His job is to find resources to help improve the economy, businesses, in our area or to convince new businesses to move here. Recently, a wealthy, established firm (not Wall Street large) received $24 million in economic development funds for a project that doesn’t even have a market (and then bully their neighbors to boot, but that’s a different story). That’s local level government spending to benefit a rich man (though probably not Wall Street rich). It’s market favoritism. It’s a corporate welfare. It’s ridiculous. He should pay for his projects himself. Corporations are no more saintly than the people who run them. They include hard workers and total mooches, good and evil people, thieves and good Samaritans. They also, like the unions (but not like welfare cases), actually have the ears and hearts of the politicians.


If I am held at gunpoint and forced to pay confiscatory tax rates, then I mitigate a tiny fraction of that loss by influencing support for a tax deduction or subsidy of some kind, that is NOT Corporate Welfare.

If you think that some Corporations leaving a presence in America as opposed to a complete exodus is evidence that nullifies the mass exodus of most of their productive elements then I guess that explains your defense of Richman.

I do not consider keeping Corporate offices near where the Corporate leaders want to live while migrating all the research, development and manufacturing to places that appreciate jobs and industry a sign that we are not kicking business in the balls hard enough.

China is actually doing what Richman claims (falsely) that we are doing in regards to business favoritism, they are making their companies artificially competitive via protectionist schemes from currency manipulation to artificially low energy cost’s, they will crash under the weight of this burden just as we will crash under the weight of our protectionism for the Union/Entitlement class.

“Still operating in the United States” is a long way from fueling an economic recovery.

It is the government that prevents Corporations/Businesses from Capitalizing on existing worldwide demand for commodities that we are rich in and it is the government that makes the liquidation of safe assets too expensive to justify the risk of funding the innovation that creates new markets.

Are you aware that more money is sitting on the sidelines “protected” than in any time in U.S. History? Capitalist’s did not wake up one morning and decide to retire, they are responding to a government that is punishing them when they engage in the market.

That does not sound like a pampered class who is sleeping sound every night with the knowledge that they are “protected”, meanwhile the Union/Entitlement class are struggling over what color they should order their new car in; safe in the knowledge that they cannot be fired for anything and nothing will stop the flow of money from taxpayers to their bank accounts.


Response acknowledged.


Nice piece from Kevin Carson:

“If ‘Progressives’ didn’t exist, big business would have to invent them.”


Link read and acknowledged. Thanks for it.