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  • Does Free Market or Government Concentrate Power in the Hands of Elites?

    Robert Lawson has a great post at Division of Labor exploring the relation between power, free markets, and government:

    Let’s explore this point a bit by comparing the concentration of financial power in the hands of the 535 members of the United States Congress with the concentration of financial power of the 535 richest people in the United States.

    According to Forbes, the 400 richest people had a combined net worth of $1.57 trillion. Let’s simply assume the next 135 richest people had the same net worth, though they surely didn’t, as the 400th person–$1.3 billion each. That brings our estimate of the combined net wealth of the richest 535 Americans to $1.75 trillion.

    But wait, this is net worth, which is a stock, not income, which is a flow. So let’s figure the annual income flow from the ownership of $1.75 trillion to be 10% of that amount. (I don’t know if this number is high or low. On the one hand really rich folks probably are good at making high rates of return. On the other hand much of that $1.75 in net worth is likely to be speculative, consumptive, and/or illiquid assets like real estate, yachts, artwork, etc where the return is difficult to determine without selling the item. It turns out, you could double or triple this estimated return and still make the point I’m going to make.) Our estimate therefore is that the richest 535 Americans have about $175 billion (10% of $1.75 trillion) to spend on an annual basis.

    Ok, let’s compare this group with the 535 members of the US Congress. According to the latest Economic Report of the President, the annual outlays of the federal government amounted to $2.73 trillion in fiscal year 2007.

    So I estimate that the 535 members of the US Congress enjoy over 15 times the financial power of the 535 richest Americans.

    But do note how charitable I am being here. Unlike the 535 richest Americans, the US Congress also reserves the right to regulate the hell out of practically ever aspect of our lives. Furthermore, unlilke the 535 richest Americans, who hardly know each other and who certainly never hold meetings to coordinate their decisions, the US Congress does in fact meet regularly to decide exactly how this vast financial power is to be spent. Furthermore, I have failed to say anything about the various state legislatures in the land who annually spend an additional $1.9 trillion.

    Why do we worry so much about the supposed concentration of economic power in the hands of “the rich”, a group of strangers who don’t coordinate their actions in any way, but care so little about the vastly greater concentration of economic power in the hands of Congress?

    Posted in Economics [slideshow_deploy]

    6 Responses to Does Free Market or Government Concentrate Power in the Hands of Elites?

    1. John Ward says:

      One other point, a good portion (if not the overwhelming majority) of the money that these private individuals have the power to spend is acquired by providing goods or services in voluntary transactions. The far greater sum that our congress critters have absolute control over is taken from us by force.

    2. BYRON, FAIRFAX says:

      how about one man having control of 750 bil. now that is a real problem. Bush is no conservative and I point everyone to C. Bradley Thompsons article about that topic. Dr. Thompson is a professor at Clemson University here is a link to the article -www.theobjectivestandard.com/issues/2006-fall/decline-fall-american-conservatism.asp

      true conservatives need to start another party or quit voting republican and we need to vigorously defend capitalism, true free market capitalism not compassionate conservatism which is just another name for going to controlled markets at a slower rate. True free market capitalism is compassionate by it's very nature and it should be defended.

    3. Huckabee Fan, Ohio says:

      This is all the more reason to elect Governor Mike Huckabee to President in 2012. His populist message mixed with his social conservative values will allow him to capture the majority percentage of American voters.

      What's holding him back are the Wall Street exec's and the Liberal exec.s. Both of these groups are trying to downsize Huckabee.

      The government shouldn't be ruled by the small minority on the far right and far left financial exec.s. It should be controlled by the average folks out on Main Street where 80% of the jobs are generated.

      Let's stop the greed on Wall Street and Liberal Street and give those on Main Street and Seasame street a fighting chance. It's high time we stop those stealing from the unfortunate.

      Google this word for web sites: Huckapedia

      Take a look at the new revolutionary Huckabee Radar Mapping technology just released for the public. The new proprietary technology pin points where the Huckabee Fans are growing at an astronomical pace. The momentum for Mike Huckabee in 2012 will be a huge tidal wave of support like no other candidate in Presidential history.

    4. Kelly, Castle Rock C says:

      This country is suffering from a credit crunch and an ever-falling dollar. If we had more reserves, more savings this wouldn't be such an issue. When you take assets from the rich (the producers, who employ the rest of us and invent the things that make our lives better, the brains of the country) you reduce our reserves, our savings, our country's wealth and our dollar. This effects all of us in awful ways, as you are seeing. When you borrow to pay off what you've borrowed, then borrow some more to pay that off, you're left with what we've got now…a runaway government ready to tax and spend/regulate some more. Who will they tax when we can no longer afford to pay what the government demands of us? This thievery must stop.

    5. Vince, Ann Arbor, MI says:

      This article is spot on. I believe we are seeing the fruit of well over 70 years of indoctrination in the public education system at all levels. Ignorance of true history permits the proliferation of revisionist history and propaganda that government solves problems for the people rather than simply providing a safe environment in which we (the free people) solve our own problems. This "bailout" is the first blatant attempt by our government to sieze our financial markets. Our economy is struggling for one reason: the government is involved. Free Enterprise does not thrive under regulation and restriction. I agree with Byron in Fairfax that we need a new political organization that actually is conservative and its main goal is to LIMIT and DOWNSIZE our government. The Facism/Socialism of Nazi Germany thrived on control of the financial system and siezure of weapons from the citizens of Germany to remove any means of self defence. A recall against our congress must take place. Does ayone believe that we can overcome the current congress, their media, and their mis-education system. Our greatest threat to our freedom lies within our own borders. Can these people be removed and then be replaced by true conservatives?

    6. Dave, laguna niguel, says:

      So what ever happened to the "watchdogs" who protected the American people for so many years? It seems they have all gone to the left of Lenin, all journalists and reporters belong to the left wing, lets make that the ULTRA LEFT WING as per their ravings about Obama, and their destruction of everything NOT OBAMA!! And our doggies look the other way when the democrats make millions off of Freddie and Fannie, even Obama himself is now rich and he USED TO BE PENNILESS BEFORE HE ENTERED GOVERNMENT!! The whole mess brought on by Barney Frank and Chris Dodd and other crooks everyone knows about but do not care. So why should they care when the democrats have stolen every penny from the social security system and again, no one seems to give a rats ass! I have been paying $400 per month matched by my company, thats $800 per month paid into a fund that will pay me $1600 per month at 65?! We are getting screwed and actually liking it because no one does a thing. And this new mess we are in, we will never get out of especially when this country elects the first SOCIALIST PRESIDENT and we have just witnessed socialist policies bringing down our country! Is there anyone left who actually gives a crap? I really don't think so. Communism has finally taken us over. The Russians and Chinese will be knocking on your door soon.

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