Hurting the Poor, Helping the Rich

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Coming from Randian roots, I have a deep appreciation for the virtues of business, and of wealth that has been earned. I do not consider myself to be a liberal-tarian. I usually agree with the Right and disagree with the Left. But the more I look around, the more I see that socialism is really a tool by means of which millionaire elites keep the poor masses from rising up. Libertarianism or “classical liberalism,” on the other hand, can accurately be described as the friend of the poor and the enemy of the rich. I have already written in Liberty (January 2010) about how capitalism helps the poor. What I want to focus on in this Reflection is how statism helps the rich, especially the old money aristocracy, the metaphorical James Taggarts of the United States.

The evidence is overwhelming. Look at education. Rich people send their own children to expensive private schools, which put them on track for Ivy League universities and white collar jobs; meanwhile the political establishment makes sure that the only choice available to poor children is a horrible public school system that teaches nothing and trains students only for low-income jobs. The public schools are controlled by teachers' unions that oppose merit-based pay and favor a seniority system, which is a terrible model for achieving high educational excellence. The modern liberal reply is to say that the system is broken but could be fixed by raising taxes to give more funding to public schools. The real solution is to use school vouchers so that poor children can attend the rich children’s schools — a prospect that few wealthy parents care to consider.

Or look at business. Statism helps wealthy corporations in many ways — not by giving them tax breaks as the modern liberals complain, but by giving them rentseeking handouts such as farm subsidies and defense contracts. Ending all subsidies and all pork barrel spending would be a huge loss for rich people with political connections, yet the modern liberals have bamboozled the poor into thinking that statism actually helps the poor and hurts the rich. On Wall Street, the SEC’s maze of rules makes legal compliance so difficult that it is virtually impossible for newcomers to compete with the old established investment banks. Established businessmen use taxes and regulations to stifle competition from start-up entrepreneurs and up-and-coming small businessmen who can’t afford to hire compliance lawyers and tax consultants, as their old money rivals can. Yet small business is precisely the engine of opportunity for hard-working ambitious people from poor backgrounds.

Now look at the professions. Affluent professionals in the medical and legal fields enjoy salaries that are artificially increased because the AMA and the ABA maintain systems of doctor licensing and lawyer licensing that restrict the supply of new doctors and lawyers. I predict that if ObamaCare does lead to a socialist single-payer national healthcare system, that system will be run by AMA-approved bureaucrats whose inefficiency and nepotism will drive up the price of healthcare, allowing doctors favored by the state to make more money than they would have in a free market. In the ObamaCare nightmare the rich will probably be able to afford to obtain treatment from high-quality doctors, but the poor will be faced with no alternative to the low-quality healthcare that the system is certain to produce. ObamaCare will be a disaster for the working poor.

In every situation mentioned, above socialist measures help the rich and hurt the poor, creating a caste system in which vast fortunes can be inherited but cannot be built up from scratch. The instances described above have all been justified on the ground that they benefit society as a whole or protect the whole public from the dangers of free markets — in itself a distinctly socialist justification. But a logical person would expect socialism to favor the wealthy, because it vests tremendous economic power in the class of bureaucrats and government officials, and one would expect the upper class to have the means to exploit that power. The rich are the ones most likely to be able to afford to run for office and to purchase influence among politicians by means of campaign contributions and special interest lobbying.

Socialism favors the wealthy because it vests tremendous economic power in the class of bureaucrats and government officials, and it is the upper class that has the means to exploit that power.

What I am offering is not an empirical claim but a deductive argument: the wealthy are inherently better positioned than the poor to exploit the state’s power; therefore, the more powerful the state becomes, the more advantage the rich have over the poor in terms of the opportunity to make money. Ayn Rand hinted at this idea when she contrasted “the aristocracy of money,” that of people who earn wealth, with “the aristocracy of pull,” that of people who exploit the state to obtain wealth. But in the end I think Rand loved the rich so much that she failed to see how socialism may actually be a plot by the rich against the poor.

My criticism is directed mainly at wealthy members of the socialist or extreme-leftist wing of the Democratic Party. It is no coincidence that many of the most famous Democratic politicians who preach that they are the champions of the poor graduated from Ivy League universities that most poor people could never get into because they could not afford to attend the most prestigious private high schools. Many of these millionaires could not possibly imagine what it is like not to have enough money to pay your bills or to have to work two shifts to make ends meet.

Consider Democratic presidential candidates, past and present. President Obama comes from Harvard Law. John Kerry has the Heinz fortune. Bill and Hillary Clinton were products of Yale Law. And the members of Joe Kennedy’s clan have vast amounts of wealth and several Ivy League degrees behind them. Looking farther back, Franklin D. Roosevelt, the champion of the socialist New Deal, was a man of wealth and privilege; the Rockefeller family inherited an enormous fortune, yet produced many left-leaning politicians, one of them a presidential candidate. People like the ones just mentioned have no right to say that they speak for the poor and underprivileged. Such people are merely exploiting leftism to maximize their already substantial influence.

It is true that the higher taxes championed by modern liberals would hurt the rich. But the bottom line is that in the American capitalism-socialism hybrid, the leftist rich retain the ability to own their vast fortunes while also exploiting the advantages of socialism to prevent ambitious poor people from competing with them. While socialist interference in the economy drives up prices and eliminates jobs, the rich retain their connections, their ability to land good jobs, and their ability to pay for what they want to buy. By contrast, the poor have no choice other than to accept whatever goods and services the government-ruined markets have to offer, and they must desperately seek jobs in a market crippled by taxes and regulations.

The socialist wing of the Democratic Party thinks that decades of the welfare state have made the American poor so lazy and dependent upon government charity that they can be controlled like dogs and trained to bark at capitalism whenever the leftists blow the whistle. This twisted scheme has worked to some extent: common sense and conventional wisdom now hold that lower-class economic interests are aligned with the welfare state.

Libertarians would be well served to focus our ideological energy on fighting this myth. The working poor in the United States have enough trouble to worry about as it is, and it’s not fair to them to tolerate a political system that hurts the poor and favors the rich.




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Comments

Johnimo

A perfect example of the writer's excellent column are the minimum wage laws of the States and federal government. The laws work to protect current job holders but exclude new labor from entering the market. The striving poor who want to work will continue to find it difficult to find entry level jobs.

Eight hundred million people in India live on less than $2.00 per day. Ever wonder what their minimum wage is?

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