Libertrarianism and the concentration of wealth at the top

[giskard]

So from the 19th century to now, wealth has been getting more and more concentrated at the top. In this country, maybe 80% of the total wealth is owned by the top 1%? Does anyone disagree this is a problem? Those who have the gold make the rules (tax laws etc), and the rules result in them getting wealthier.

So how do Libertrarianism and the Mises institute address this?

[Bradley in DC]

So from the 19th century to now, wealth has been getting more and more concentrated at the top. In this country, maybe 80% of the total wealth is owned by the top 1%? Does anyone disagree this is a problem? Those who have the gold make the rules (tax laws etc), and the rules result in them getting wealthier.

So how do Libertrarianism and the Mises institute address this?

Since the 19th Century, we have imposed many restrictions on an individual's right to contract his labor, start a business or compete with larger companies because the regulatory burden falls disproportionately on smaller institutions. The concentration of wealth is a direct result (unintended consequence) of the Progressive Era's misplaced faith in government regulation.

[Bryan]

It depends upon what you consider wealth, I consider it the control over land and other natural resources, those things that didn't cost anyone anything to produce and are free gifts from the Earth. This is the one big area where I think the Libertarians are off since our current system could turn 99% of the people into near slaves of those who "own" all the land (which was free). How does this promote freedom? Unfortunately there are no easy solutions here nor are people generally interested in discussing them.

So yes, I do consider it an issue.

[lifeasariver]

So from the 19th century to now, wealth has been getting more and more concentrated at the top. In this country, maybe 80% of the total wealth is owned by the top 1%? Does anyone disagree this is a problem? Those who have the gold make the rules (tax laws etc), and the rules result in them getting wealthier.

So how do Libertrarianism and the Mises institute address this?

We will always have social classes, elites, haves and have-not's, that's a given in a market driven society. The problem is the lack of social mobility not the existence of classes. If we don't want classes, we may choose between socialism and communism. 80% of the wealth in the hands of the 1% of the population raises a flag though but it is rather easy to spot where the problem is by looking at the major sources of that wealth: Big Oil, Banking (Finances) and the Military-Industrial complex, all of them in bed with all the corrupt politicians today on Capitol Hill.

[Brandybuck]

Does anyone disagree this is a problem?
In an of itself, I don't have a problem with this. Really I don't.

But I do have a problem with a government that sells privilege and power to the highest bidder. In such an environment, concentrations of wealth become dangerous. I don't fear a man that has twenty Rolls Royces in his garage, but I do fear a man that has twenty full time lobbyists.

The solution isn't to punish success or forbid inheritance (the typical leftist solutions), but to shrink government down to tiny size.

p.s. Of course, under a true free market system, the huge disparities would not be quite so wide. That's because many of the uberwealthy got that way through government privilege.

[winston84]

Right, I concur with Bryan. The primary goal of government should be to provide the essentials of order; everything else is up to each person’s taste. The electric and other public utilities companies should be government owned. Why should private companies monopolize or even compete for the resources within our own nation, just to sell it back to us? Although the idea of government ownership of public utilities can only do so much as far as distributing income more equally...

[Gee]

So from the 19th century to now, wealth has been getting more and more concentrated at the top.
Thats not true. The gini index is currently higher than it was in 1913, for example. It obviously spiked with the Great Depression (the rich are rarely effected much by those things), and sunk below .40 in the late-60s. Of course, it depends who is measuring, and their methods.

I'm not sure if good data is available prior to 1913? I've been looking. I believe the industial revolution caused a significant amount more equality than most people thought at the time, due to the more "visible" poor making their way to the nation's cities. The gini coeffecient is usually used to measure this inequality, but its rather ill-suited for comparing a large, diverse nation like the US to smaller, less diverse ones.

Libertarians generally do not consider wealth inequality to be a problem the government should address. However, under our constitution, states could invoke measures to correct this (socialistic or otherwise) if they wished. Its my opnion that the vast majority of economic progress has benifited the average man more than the rich. The rich man is rarely effected by droughts or famine, had servants to fetch him water and cook him meals, and rarely had to walk anywhere. Today everyone has these luxuries, though the rich certainly have them better.

Our laws certainly don't help, though. The poor usually end up paying inheritence taxes, while the rich sidestep them with trust funds. The poor pay capital gains tax on a house they sell, the rich do a 1031 exchange and re-invest. The rich do pay more in income tax, though.

[Kuldebar]

Take away the Government/Banking/Corporation love fest and a lot of things become balanced out and addressed: fiat monetary system, high taxes, runaway inflation, bloated regulatory agencies.

[drinkbleach]

I have to agree that many of the problems with the concentration of wealth involve welfare and favoritism for the wealthy elites.

[JaylieWoW]

I'm a bit of a novice in the ways of Miseian thought, but I would have to agree that fiat money is one of the primary roots of poverty. (This has also contributed to our "entitlement" minded Americanism.)

Chodorov's The Rise and Fall of Society (http://www.mises.org/books/society.pdf) is a very easy to understand read that I highly recommend to anyone wanting to get started understanding why fiat currency is so evil. For those interested, the book is print on demand (FREE!!) from the Mises website. (Oh those evil capitalist free-traders, how DARE they give away great stuff for free, there MUST be a catch). ;)

The basics of it are the same as simple supply and demand for anything. If there are more dollar bills in ciruclation then the dollars are worth less in purchasing power.

The marketplace will always resist and outright reject any attempt at meddling via falsifying interest rates and the money supply. Further, when new money is printed to make up our shortfalls the ones who receive the money first are the banks. So, they get the newly printed money that carries the value of today. By the time the money "trickles down" to the very poor, the money is worth much less because of inflation.

In essesnce, fiat currency is the REAL problem for the poor. Not that welfare isn't just as insidious, but as far as striking the root, reinstating the gold standard (or a commodity based currency, historically gold has been the most sound) would be the BEST thing we could ever do for the middle class and the poor of our country.

One thing that has always really ticked me off is the government's ability to spend more than it collects. Why? Why is this allowed to happen? What would happen to you if you continually spent more than you had over and over? Eventually you would go broke and lose everything you have.

I know all the answers to these questions, I'm only posing them to get others to really dig in and think through all the answers you can come up with. Again, you will be led to fiat currency as the root of out of control spending. There is no hesitation to spend spend spend when the FED can just print up more money. In most parts of the world if you or I do something like this to make up our shortfalls it is called COUNTERFIETING, when the government does it, they call it "STIMULATING THE ECONOMY". Yeah, for the banks.

My apologies for going off on a rant, but I'm so sick of hearing the Iraq war as being THE issue of this campaign. Equally as important to me is our economic future! Without any discussion on how to tackle our current deficit we won't HAVE any money to fight wars and we may very well be looking at China or some other country building bases in Mexico!

[Brandybuck]

My apologies for going off on a rant, but I'm so sick of hearing the Iraq war as being THE issue of this campaign. Equally as important to me is our economic future! Without any discussion on how to tackle our current deficit we won't HAVE any money to fight wars and we may very well be looking at China or some other country building bases in Mexico!
Amen! One single issue may be attracting everyone, but that does not mean that Ron Paul is a single issue candidate. There are three pillars to a free society: free markets, a foreign policy of nonintervention and free trade, and a free people.

[axiomata]

This is from CATO's email digest (http://www.cato.org/view_ddispatch.php?viewdate=20070530#3) I received today:


Clinton: Economic Fairness "Doesn't Just Happen"

"Presidential hopeful Hillary Rodham Clinton outlined a broad economic vision Tuesday, saying it's time to replace an 'on your own' society with one based on shared responsibility and prosperity," the Associated Press reports. "The Democratic senator said what the Bush administration touts as an ownership society really is an 'on your own' society that has widened the gap between rich and poor. ... That means pairing growth with fairness, she said, to ensure that the middle-class succeeds in the global economy, not just corporate CEOs. 'There is no greater force for economic growth than free markets. But markets work best with rules that promote our values, protect our workers and give all people a chance to succeed,' she said. 'Fairness doesn't just happen. It requires the right government policies.'"

In the policy analysis "Has U.S. Income Inequality Really Increased?" Cato senior fellow Alan Reynolds writes: "There are frequent complaints that U.S. income inequality has increased in recent decades. Estimates of rising inequality that are widely cited in the media are often based on federal income tax return data. Those data appear to show that the share of U.S. income going to the top 1 percent (those people with the highest incomes) has increased substantially since the 1970s. However, there have been large changes in U.S. tax rules over time that have made a dramatic difference on what is reported as income on individual tax returns. ... Meanwhile, studies of inequality that are based on tax return data usually exclude transfer payments, which results in exaggerating the shares of income received by those at the top by ignoring growing amounts of income at the bottom."

Susan Semeleer, editor, ssemeleer@cato.org



And this is the article the blurb links to if you want to read the full thing or the executive summary: http://www.cato.org/pub_display.php?pub_id=6880

[Kuldebar]

Any system in place to distribute wealth will do so unfairly.

Socialism/communism doesn't work because the redistribution of wealth in a society is a flawed ideal.

The reason it doesn't work is simple: the people in authority over the system become the new elite and the wealth is unfairly distributed. The story is as old as human history and doesn't change with the labels.

The one, revolutionary solution: don't steal from other people or support people who steal from other people. Robbing Peter to pay Paul even though Paul has cancer and needs the money, is immoral.

Remember, the original Robin Hood of legend along with his merry band were stealing from the brutal sheriff and his tax collectors, not the the honest rich.

There is nothing wrong with being wealthy, but becoming the wealthy elite in our current system often means you have benefited from the Corporate State.

The best way to ensure ongoing injustice, unfairness and outright theft is to keep a redistributionist system in place.

The philosophy of liberty. (http://www.isil.org/resources/introduction.swf)

[randall_burns]

I consider myself a guest here-rather than part of the libertarian mainstream.

Now, there are folks with clear libertarian tendencies that clearly addressed the issue of concentration of wealth. Henry George (http://en.wikipedia.org/wiki/Henry_George) and John Stuart Mill are examples.

There has been substantial research suggesting that governments with large inequality of wealth tend to be unstable-and undemocratic.

Some libertarians, like Charles Murray (http://en.wikipedia.org/wiki/Henry_George), have endorsed the idea of a guarenteed annual income as a means to combat poverty.

One of the leading economists studying the issue of the distribution of wealth is leftists Edward Wolff at NYU. He advocates use of the tax system to create a more even distribution of wealth. He and other economists have noted that if wealth were taxed, a much greater portion of the population could be exempt from direct taxation.

I tend to believe the claims that wealth and power in the US are becoming increasingly concentrated-and I see that as a problem. Frankly, I think libertarians have been taken for a ride by their alliance with economic royalists-and I don't think they'll really get any place until they present themselves as a swing vote that really does "swing" and determines elections.