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Money Is Power and Billionaires Can Subvert Democracy

2017 November 27

Money is the ability to tell other people how to spend their time: what to make, what to do. It is that simple.

The Washington Post has a story about how the Gates Foundation pushed the Common Core curriculum. The details are there, but the bottom line is that once they decided to do it, it happened fast:

The result was astounding: Within just two years of the 2008 Seattle meeting, 45 states and the District of Columbia had fully adopted the Common Core State Standards.

This wasn’t done “democratically,” it was done with money, which bought officials.

The biggest problem with vast wealth isn’t that it directly makes other people poor, it is that it makes rich people disproportionately powerful. They have so much money that they can buy the state.

When they do so, they usually do so in their self-interest. Sometimes, as with the Gates’s in this case, they do so out of a desire to good.

But their idea of good may not be the same other people’s idea of good. They have vastly more weight than ordinary people, and in an unequal society, they can buy people.

It is that simple.

One way vast inequality corrupts is that it makes some people powerful enough to overthrow democracy; in general (as with Citizen’s United), and in particular cases.

Most rich people are not good people. It is well established now, in the academic literature, that rich people have an empathy deficit, that they give less as a percentage of their wealth and income, and that (to put it unscientifically) they tend to become assholes. They don’t need to care what other people think, or about others’ welfare.

And even when they do try to do good, well, they don’t need to go through normal democratic processes; they just buy the results.

Nor are they effective. There is a weird myth that “the private sector” is why solar power is cheap now. That’s effectively a lie. Solar power is cheap now because countries subsidized the markets for years (Germany in particular), and because China pushed it as a policy as well.

The Internet exists because of the public sector. Also, for decades, the US government bought the vast majority of all low-to-high-end computers. If they had not, you would not have cheap, modern electronics. Anyone who says otherwise is either a liar or doesn’t know the actual history.

Money is power. When the government relies on rich individuals and corporations to do what should be done by government, it takes longer and produces less welfare than it should, and it leads to the capture of the government by the rich.

A 90 percent top marginal tax rate and punitive capital and estate taxes aren’t necessary because “government needs the money,” they are necessary so that the rich don’t become so rich they buy the State.

And that includes the ones who try to do some good, like Gates.

(More on rich states vs. rich individuals soon.)


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107 Responses leave one →
  1. Altandmain permalink
    December 3, 2017

    The best book to read about this would be the Entrepreneurial State, by Mariana Mazzucato.

    The more I hear this type of argument about the industry generating government the weaker it seems. The governement did what it’s suppose to do and with computers that was to insure military needs were met to protect the country. Even with that investment computers were rather clunky big hot machines until Noyce perfected the totally integrated circuit and Moore’s law started driving this universally critical industry.

    Without the military spending, Silicon Valley would never have gotten where it was to begin with. It has incrementally improved upon the previous generation and in many ways, integrated existing research together into something user friendly, but government spending is what brought it to begin with.

    Plus, there’s no way to know what a publicly owned semiconductor (Ex: a state owned equal to Intel) might have done – probably largely followed the same trajectory. The closest we might see is TSMC (it’s a private company, but very heavily subsidized by the government of Taiwan) and same with Samsung (a Korean chaebol with very heavy state involvement).

    Interestingly enough entrepreneurship is higher with stronger welfare states:
    https://www.theatlantic.com/politics/archive/2015/03/welfare-makes-america-more-entrepreneurial/388598/

    Why? It gives entrepreneurs something to fall back on. For all the romanticizing of small businesses, they do have a very high rate of failure.

    Without a welfare state, failed entrepreneurs would likely live in bankruptcy and have nothing. From that point of view, it is quite rational for a state to offer something. Another argument could be made for the state acting as venture capitalism. It’s not a perfect system, but it is better than there been just private sector VC money.

    I for one think that student debt relief will likely bring a wave of entrepreneurship.

    https://ssti.org/blog/recent-research-impact-student-loans-entrepreneurship

    Right now though as it stands, entrepreneurship is falling in the US. Student debt no doubt plays a big role.

    The other issue is that private sector companies, once they become entrenched, engage in what is known as rent seeking. They don’t deliver as much value and try to milk their customers. The telecommunications sector is a good example – Comcast in the US and Rogers in Canada. They also do thinks like create barriers to entry – an example being intellectual property laws (big pharmaceutical firms are notorious for this one as is the media industry). I wonder if these “barriers” are playing a role in declining entrepreneurship.

    There is one other argument for taxing the rich – luck. If you were born the son or daughter of a rich person, you were lucky. Likewise, a good chunk of success in life is caused by good luck or bad luck.

    https://greatergood.berkeley.edu/article/item/success_hard_work_luck
    https://www.theatlantic.com/magazine/archive/2016/05/why-luck-matters-more-than-you-might-think/476394/

    In other words, a lot of what we attribute to ourselves can be attributed to luck.

  2. Tony Wikrent permalink
    December 4, 2017

    Peter is ignorant of basic U.S. economic history. But then, after nearly three quarters of a century of Mont Pelerin Society’s neoliberalism ascending to complete dominance of the economics professions, almost everyone is.

    I will only offer an excerpt from the work of first Treasury Secretary Alexander Hamilton, who created the Constitutional and administrative framework in which the US economy grew, and point out that 1) the Constitutional mandate to promote the General Welfare (which neoliberals like von Hayek insist is the slippery slope to “statism”) is the crowning achievement of the political and scientific Enlightenments; and 2) government support for the development of computers, then the DELIBERATE attempt ti disseminate the new technology into the rest of the economy through the Moore School Lectures, are examples of what Hamilton and Washington intended.

    In his Report on Manufactures, Communicated to the House of Representatives, December 5, 1791, Hamilton wrote: “To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted.” And: “Experience teaches, that men are often so much governed by what they are accustomed to see and practise, that the simplest and most obvious improvements, in the most ordinary occupations, are adopted with hesitation, reluctance, and by slow gradations…. To produce the desirable changes as early as may be expedient may therefore require the incitement and patronage of government… it is of importance that the confidence of cautious, sagacious capitalists, both citizens and foreigners, should be excited. And to inspire this description of persons with confidence, it is essential that they should be made to see in any project which is new—and for that reason alone, if for no other, precarious—the prospect of such a degree of countenance and support from government, as may be capable of overcoming the obstacles inseparable from first experiments.”

  3. Peter permalink
    December 4, 2017

    @Tony

    All I need to know about Hamilton is that he was a Statist devil who discounted the idea of liberty. He was the father of crony capitalism in the US and used his insider position to rip off Revolutionary war veterans.

  4. Peter permalink
    December 6, 2017

    @Alta

    Dreams of productive state factories may create pleasure and fantasies in the commie mind but we have seen the results of that failed ideology. The state has the duty to promote, protect and even regulate the productive power of capitalism but it should never own it.

    The next post just up states honestly that the collectivists such as you are not after the money with their tax plan but control and power for the state. We also know that more state control and power means less liberty and freedom. This is why he commies will fail again.

    I agree with you about companies like Comcast and possibly the drug giants but they could be regulated as utilities.

    The BS about luck and taxes is some form of collectivist psychobabble. If you desire to take more wealth from the successful no matter their beginnings in our progressive taxing system you support consfication for the state which is the basis of the totalitarian state.

  5. Tony Wikrent permalink
    December 8, 2017

    I am happy to let Peter’s embrace of ideological libertarian purity speak for itself.

  6. Tom W Harris permalink
    December 9, 2017

    Thanks for bringing factual history to this discussion, Tony. As for Peter, he’s given up on telling plausible lies and is now just trolling.

  7. Peter permalink
    December 10, 2017

    @Tom

    You are behaving like a typical commie finger-pointing while supporting creeps like Hamilton and todays versions of his ilk.

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