Who Are the Real Plutocrats?

In his most recent column, Paul Krugman praises the Wall Street protesters and claims that Republican politicians are in a panic over them.

For example, he paraphrases a quote from Rand Paul. First, this is what Krugman writes:

My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.

This is the article from which he got it:

Sen. Rand Paul (R-Ky.) said Friday that he believes the Occupy Wall Street protests stem from divisive rhetoric from President Obama, who has called for the richest Americans to pay increased taxes to help close the budget deficit.

“I see the president’s rhetoric of envy inflaming the public and saying, ‘Go get yours because rich people don’t deserve it,'” Paul said on Fox Business.

Paul said he was worried that the president would stoke the protestors’ passions to the point that they could become violent.

“I see it as inflaming this Paris mob that I hope doesn’t result in a lawlessness where they say, ‘Well, gosh, those nice iPads through the window should be mine and why don’t I throw a brick through the window to get them because rich people don’t deserve to have them when I can’t have them,'” Paul said.

(Actually, Rand Paul does not have to worry, as a lot of the protesters are carrying Macbooks, iPhones, iPads, and other instruments of technology that apparently they are simultaneously claiming are evil. No doubt, these people really would riot if their demands were brought to fruition and they no longer could purchase — or even steal — them.)

Indeed, with all of his own anti-enterprise rhetoric, what Krugman has been claiming is that a new war against capital formation somehow would help bring recovery. I don’t know how that would happen, but Krugman has been saying that if the government were to sharply raise the capital gains taxes and then replace the coming dearth of private capital investment with government “investment” in things like “green energy,” that we then would have a robust recovery.

Let us travel down memory lane to why we had the financial panics in the first place. The government was strongly encouraging banks and financial houses to “invest” in the housing market, and and said that Alan Greenspan needed a “housing bubble” to offset a dearth of private capital spending. And we got it.

This was unsustainable, and the Austrians got it early. Heck, even Krugman understood that this bubble would burst before it happened. (I told Allegany County’s property tax board in 2006 that the bubble would collapse and that they should not base future financial predictions on the current situation. They laughed at me and one woman replied, “We don’t see that happening.”)

There would have been a solution to the financial crisis, and that would have been for the banks and financial entities to submit to market discipline. Don’t forget that Krugman has parroted the usual line of “the panic happened because the Bush administration let Lehman Brothers fail.”

No, Paul, Lehman Brothers failed because the banks — operating under the infamous “Greenspan and Bernanke Put” — were holding securitized mortgage paper that could not hold its value. The government bailed out a lot of the firms that drank the Kool-Aide, and Krugman endorsed the bailouts, which meant that some CEOs could hold onto their mansions in Connecticut.

Furthermore, let us remember that government housing policies drove this bubble and that the easy credit regime from the Fed — again, done with Krugman’s blessings and encouragement — along with numerous government programs to push people into home ownership and, ultimately, into homes that were too costly for their incomes. For that matter, if Krugman really were against the creation of financial bubbles, then why has he endorsed Ben Bernanke’s policies of spreading dollars around the globe to prop up both private malinvestments AND government bonds?

Let us be honest. When the entirety of the housing bubble was exposed in 2008, the banks got their bailouts (and Democratic politicians, and especially Obama, who was financed in part by Goldman Sachs, got their campaign contributions), and the Fed and the European Central Bank responded by creating an even BIGGER set of financial bubbles.

The situation is obvious: the combination of private mortgage AND government debt is unpayable and must be restructured. Krugman’s “solution” is for governments and central banks to inflate currency in order to “deleverage” the unpayable debt and to repudiate debt through inflation. (One is reminded of debtors in Weimar Germany paying their debts with wagonloads of paper — the ultimate Krugman “deleveraging solution.”)

In the end, the banks pretty much have become the playthings of American politicians and labor unions, who have become the real plutocrats. We now have a president who declares that HE is the law, and that he can assassinate whomever he wishes, and if the target is an American citizen, the Constitutional right of “due process of law” means nothing. If that is not plutocracy, I don’t know what is.

Furthermore, the unions were able to force taxpayers to pony up to bail out General Motors and Chrysler, and then to force bondholders for these companies to stand at the back of the line during bankruptcy proceedings, despite what the law actually said. In other words, Obama and his union allies were able to be their own law, which really is the definition of plutocracy.

Don’t forget that a lot of the money funding this “Occupy Wall Street” movement comes from the plutocrat George Soros, along with unions and other organizations tied to the Obama administration. And don’t you know that in the upcoming political season, a lot of the firms that presently are being targeted are going to pony up and send millions of dollars to Obama and his fellow Democrats in the guise of “campaign contributions”?

Furthermore, the list of “demands” coming from the “Occupy” movement seem a bit suspicious. The immediate end to use of ALL fossil fuels? Hmmm. Sounds like something that might benefit Archer Daniels Midland and all of the “alternative energy” outfits. Gee, maybe the government could force up energy prices so high that even Obama’s favorite company, Solyndra, could become solvent again.

No doubt, the president and his friends would not be facing hardships, but those of us who don’t have limousines and drivers to take us where we want to go might find it difficult to get to work or even to eat. What better way to empower the state than to turn everyone into outright serfs who would be totally dependent upon the whims of politicians?

Had the banks been forced to liquidate their toxic holdings three years ago, we would not be seeing these “Occupy” demonstrations. Yes, the recession would have been sharp, but not as destructive as Krugman and others claim, and then we would be in a real recovery now. Instead, we are going to have years and years of high unemployment and social unrest.

Somehow, I think that is what the plutocrat in the White House wants.

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About William L. Anderson 48 Articles

Affiliation: Frostburg State University

William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

Anderson was formerly a professor of economics at North Greenville College in Tigerville, South Carolina.

Visit: William Anderson's Blog

1 Comment on Who Are the Real Plutocrats?

  1. It’s not about Ipads. Wake up.

    Politicians in the U.S. (and elsewhere) serve monied interests exclusively. Unions and multinationals donate to campaigns, and the politicians dance for them. Is that so hard to believe? If you were in office because you got a million dollars to smear your opponent, wouldn’t you feel a little grateful to the source of that money?

    You said “We now have a president who declares that HE is the law, and that he can assassinate whomever he wishes, and if the target is an American citizen, the Constitutional right of ‘due process of law’ means nothing. If that is not plutocracy, I don’t know what is.”

    While the president’s actions were not constitutional, “unconstitutional” is not a synonym of “plutocratic.” If you think you just gave an example of plutocracy, you’re right to say that you don’t know what plutocracy is. Webster’s dictionary defines plutocracy as “government by the wealthy.” An example of a government by the wealthy is a government whose elected representatives represent only the institutions who give them the biggest check.

    I don’t even know why I’m wasting my time with someone who repeats that Occupy Wall Street “comes from” George Soros. He has nothing to do with it Any idiot can tell that Marx’s ghost is the one funneling billions of dollars into the protestors’ pockets.

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