Friday, June 13, 2008

Why give welfare to the rich?

The $290 billion farm subsidy bill has the effect of giving welfare to the wealthy. The biggest beneficiaries of this massive wealth redistribution bill are large farm conglomerates, who were also instrumental in lobbying for the bill in the first place. How is taking $1000 for every man, woman and child in the US and giving it to a very small number of already wealthy farmers an example of helping the poor?

And this is clearly not a partisan issue as both Republicans and Democrats got this bill passed. It's a class issue, it's an issue of rich people with lots of lobby dollars using government to take money from the poor and give it to themselves. It's sickening to think there are people that profoundly greedy, but wherever government coercion is, you will always find these bottom dwellers.

This is perhaps the most glaring example, but the US Federal budget is chock full of such redistribution. Disaster assistance, for example, is abused by wealthy individuals as a massive insurance subsidy, locating expensive dwellings on scenic property too dangerous to be privately insured. We take money from the neediest (minimum wage workers in East LA for example) and redistribute them to the wealthiest. Blackwater, Halliburton, aerospace defense contractors, the "military industrial complex."

This is the opposite of the intention of socialism, but it is both inevitable and utterly predictable.

Why?Well, it's quite simple, really. We know that, as a rule, businesses (and individuals) will act in their own interests - for businesses, this is always monetary profit (in the case of individuals, it may be more complex since people have lots of ways to achieve their self-interest). I believe it was Adam Smith who argued that businesses will work in their self-interest by attempting to control the market because, if they can control the market, they can exempt themselves from the relentless spectre of competition and they can set terms of trade favorable to maximizing their profits.

If you're a farmer, what could be better than legally forcing taxpayers to buy produce from you which will be simply plowed under? This is no better than an aristocracy, if you think about it. The farmer planted the crop knowing full well it would simply be destroyed. The crop is just a story which serves to make this look different than simple aristocracy. If you're a wealthy homeowner, what could be better than forcing the taxpayers to insure your scenic beachfront spread built so close to the water that collapse in a severe storm ("natural disaster") is inevitable?

Milton Friedman says, "When anyone complains about unfair competition, consumers beware, this is really a cry for special privilege always at the expense of the consumer."

It should be obvious that since wealthy individuals and large business interests have the most money to lobby the government with, most regulations which redistribute wealth will benefit those special interests, perhaps - or should I say always - in non-obvious ways. Do not safety regulations benefit manufacturers of safety products? If you had to guess, who do you think the foremost lobby of these regulations would be? Minimum wage laws benefit labor cartels (unions) by the effect of substitution (if an employer can employ two MW employees or 1 union employee and the MW rises, it may be cheaper to fire the two MW employees and hire a single union employee). Who do you think one of the biggest lobbies behind MW laws are?

I would go so far as to say that if you support wealth redistribution, market regulation or economic interventionism, you are a stooge for the wealthiest and most powerful individuals and business interests who wish to convert their wealth, through the mechanism of government, into controls on the market which decrease the likelihood of future competition and enable the maximization of profits by restructuring the market in favor of their interests.

I wonder who the biggest lobbies are behind the push for universal health care? Certainly not the American Medical Association or its affiliates!

No comments: