Economics Questions

Re: Government and Social Inequality

Justin Spahr-Summers — Fri, 19 Feb 2010 19:23:14 GMT

Kenneth:
It just makes too much sense for a rich person to spend money on bribes and lobbies than to actually risk money in producing goods in the free market. This is why Ayn Rand called the business class the original collectivists.

Did she?

Also, the irony of referencing both Chomsky and Rand in the same paragraph is overwhelming.

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 16:43:19 GMT

Kenneth:

What you want is empirical proof and that is very tedious way of finding out the answer. However, we can employ praxeology and develop a theory that can say a lot about rich people and the state. Hans Hermann Hoppe has done this and also Noam Chomsky, although Chomsky uses a different method. It is just in the incentive system of the state. There is an enormous mismatch of incentives between voting and corporate lobbying. A concentration of power in the state apparatus tends to attract the next largest concentrations of power, or corporations. It just makes too much sense for a rich person to spend money on bribes and lobbies than to actually risk money in producing goods in the free market. This is why Ayn Rand called the business class the original collectivists. And I think we can look at history and easily come to the conclusion that the state has largely benefited the corporate elites than the little guy.

That's fine, but theory is not as good as proof.

EDIT: for specific individuals. Also, the degree to which these rich people have been helped by the state must certainly vary. I'm just trying to say that even though in general, I think you're right in many ways, but in terms of specifics, it's much trickier.

Re: Government and Social Inequality

Kenneth — Fri, 19 Feb 2010 16:28:55 GMT

What you want is empirical proof and that is very tedious way of finding out the answer. However, we can employ praxeology and develop a theory that can say a lot about rich people and the state. Hans Hermann Hoppe has done this and also Noam Chomsky, although Chomsky uses a different method. It is just in the incentive system of the state. There is an enormous mismatch of incentives between voting and corporate lobbying. A concentration of power in the state apparatus tends to attract the next largest concentrations of power, or corporations. It just makes too much sense for a rich person to spend money on bribes and lobbies than to actually risk money in producing goods in the free market. This is why Ayn Rand called the business class the original collectivists. And I think we can look at history and easily come to the conclusion that the state has largely benefited the corporate elites than the little guy.

Re: Government and Social Inequality

Praetyre — Fri, 19 Feb 2010 16:13:34 GMT

Kenneth:
Ok. I was wrong in saying 'most rich people gain their wealth through the state'. What I would like to say was that the richest of the rich or at least a large number of them gain their wealth through the state. Do you really think that people like Rothchild are natural elites?

If you are defining "richest of the rich" as "billionaire" (which would fit you designating the Rothschild family as an example of such), then you might want to look at some of the numerous folk listed on Wikipedia's helpful list of billionaires article. Going just by the top 5, we have:

Bill Gates: His industry is a comparatively unregulated one, with the only major interference by government being intellectual property laws and, of course, the anti trust lawsuit against Microsoft.

Warren Buffett: Berkshire Hathaway presumably profits from FRB, but to what degree? And what relationship does he have with government officials and lobbyists?

Carlos Slim Helu: Probably the strongest case for a crony capitalist here, considering he's A. Operating in Mexico and Central America and B. In telecommunications, an industry I would rank below only utilities, finance and heavy industry in terms of cronyism.

Ingvar Kamprad: I know of at least one case where IKEA has stolen land, though to what extent IKEA benefits from this compared to profits made by legitimate means I would not know. Someone from the Scandinavian countries may be better able to answer here.

Lawrence Ellison: See Bill Gates, above. Computers tend to be less of a cronyised markets than others.

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 15:35:49 GMT

As a response to the OP, I tend to think that in many ways, the programs that are touted as being the most beneficial to the "poor and disadvantaged" are often the ones that keep them exactly where they are in an aggregate sense. So really, I tend to think of it as a great example of how the best of intentions can yield the worst of results.

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 15:33:08 GMT

LvMIenthusiast:

I probably should of said "some", instead of "most". Sorry about that.

Just trying to keep things fair is all.

Re: Government and Social Inequality

LvMIenthusiast — Fri, 19 Feb 2010 15:30:03 GMT

bloomj31:

LvMIenthusiast:

What about the bailouts?? If the FED wasn't around (or any other central bank for that matter), almost all of those banks would be long gone if they attempted to expand credit. Also look at some of the regulation(s) passed within the last few years, like the Sarbanes-Oxley Act. What about the unions, the ABA, the AMA? What about the Military Industrial Complex?

I'm not arguing that those government actions/institutions/programs haven't made some people very wealthy. But whether or not they constitute "most wealthy people' is another question entirely.

Seems like either a biased sample or a hasty generalization.

I probably should of said "some", instead of "most". Sorry about that.

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 15:26:01 GMT

LvMIenthusiast:

What about the bailouts?? If the FED wasn't around (or any other central bank for that matter), almost all of those banks would be long gone if they attempted to expand credit. Also look at some of the regulation(s) passed within the last few years, like the Sarbanes-Oxley Act. What about the unions, the ABA, the AMA? What about the Military Industrial Complex?

I'm not arguing that those government actions/institutions/programs haven't made some people very wealthy. But whether or not they constitute "most wealthy people' is another question entirely.

Seems like either a biased sample or a hasty generalization.

Re: Government and Social Inequality

LvMIenthusiast — Fri, 19 Feb 2010 15:19:12 GMT

bloomj31:

Kenneth:

Just like to say, most rich people today have their wealth because of the state

Proof of claim?

What about the bailouts?? If the FED wasn't around (or any other central bank for that matter), almost all of those banks would be long gone if they attempted to expand credit. Also look at some of the regulation(s) passed within the last few years, like the Sarbanes-Oxley Act. What about the unions, the ABA, the AMA? What about the Military Industrial Complex?

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 15:16:43 GMT

Kenneth:

Ok. I was wrong in saying 'most rich people gain their wealth through the state'. What I would like to say was that the richest of the rich or at least a large number of them gain their wealth through the state. Do you really think that people like Rothchild are natural elites?

I don't know enough about the history of the Rothschilds to be able to say whether or not they are only rich because they are "servants of the state." From what I understand, historically, they're just a family of Jewish bankers who happened to do business with various governments over the centuries. They're basically just good with money. State or no state, that family would probably be rich.

When we talk about "richest of the rich" are we now talking about billionaires? Last I read, there were about 1000 billionaires worldwide (trying to find a source for this.) We could try to find the names and origins of each of these people's wealth and figure out who got rich because of state sanction and who got rich because of the market. I'm not saying I'm up to the task, just saying that before we start accusing these people of being "rich because of the state," we should probably see if there's any evidence to back up said claim.

EDIT: Upon further review, I have found that Fortune released a list of the known billionaires: They say there are 793. down from 1125. Are all these people rich because of the state? I have no idea, but it would be interesting to try and find out.

Re: Government and Social Inequality

Kenneth — Fri, 19 Feb 2010 15:06:09 GMT

Ok. I was wrong in saying 'most rich people gain their wealth through the state'. What I would like to say was that the richest of the rich or at least a large number of them gain their wealth through the state. Do you really think that people like Rothchild are natural elites?

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 14:51:44 GMT

I found an article that could help us here.

A new survey by Chicago-based Spectrem Group asked affluent households (those with investible assets of $500,000 or more) how much it takes to be rich. Of the respondents, 45% said $5 million or more, 25% said $25 million or more, and 8% said $100 million (It’s a good bet that the 8% lives in Manhattan or Silicon Valley.)

Only 22% said $1 million is enough to be rich.

EDIT: So how are we going to define "rich?" A million dollars? 5 million? 25? 100?

Re: Government and Social Inequality

Fephisto — Fri, 19 Feb 2010 14:43:35 GMT

Acquiring wealth by theft is wrong, but that doesn't imply that acquiring wealth is wrong.

Similarly, income inequality produced from the State may be ethically wrong, but it does not imply that income inequality is ethically wrong.

Re: Government and Social Inequality

bloomj31 — Fri, 19 Feb 2010 14:36:26 GMT

You think that's sufficient evidence and not a sort of hasty generalization? I mean sure, some people get rich with the help of the state. But to say "most" without some really strong proof seems irresponsible to me. Not that anything on this forum is going to be taken too seriously by anyone outside of this forum, but just saying. Your point of view seems to be gained from a worldview that you have, not necessarily by any kind of thorough investigation. Now whose side bears the burden of proof? I don't know. But it seems to me that by stating "most rich people today have their wealth because of the state" is to indict a large percentage of rich people unfairly. Let's start with some criteria. What is "rich?" How many people in the US qualify based on that criteria?

Re: Government and Social Inequality

Kenneth — Fri, 19 Feb 2010 14:17:16 GMT

Large banks, Big Pharma, Agribusiness like Monsanto and subsidized agribusiness in Europe. Noam Chomsky's research reveals a lot about this. Hans Hermann Hoppe also admits that rich people who gain their wealth honestly or natural elites are becoming extinct.