How Government Created The Super Rich and Blamed it on Capitalism

This seems like a good a time as any to ask how the super-rich-multi-billionaire types come into existence. There are some who are marching on cities citing the egregious concentration of 40% of wealth within the 1% as a problem of the so-called free markets, but it’s all a lie.

Radical leftists are hell bent on bringing socialism to America claiming that our system is unfairly tilted in favor of the rich, and I just might agree with them. That is clearly a symptom of a much larger disease. What ails us is big, anti-market government. I have long contended that America has not had capitalism for 80-100 years, starting with the Federal Reserve Act of 1913, yet we are constantly hearing capitalism blamed for all and every economic woe.

Government Intervention Creates The Super Rich

When government intervenes into the market place, it often time creates a new set of mandates by which corporations that wish to be seen as law abiding must adhere to. The problem is, the market is then unable to innovate as fast because smaller upstart competitors cannot keep up with the rising cost of never ending government interventions. Considering how quickly government spending has gone up enforcing regulations, the only players equipped to battle to government are large, established businesses and business people.

Lets say you are Amish and want to sell fresh, unpasteurized milk to neighbors and others who believe that major nutritional value is lost through this government mandated process. The FDA can come and shut you down. In fact, all across America the FDA has been shutting down small town farmers and Amish who sell unpasteurized milk to an educated public who want the product as it is being sold. No one is being duped, tricked or forced. However, the federal government in all its wisdom has shut down a small dairy businesses, leaving milk customers to take their dollars elsewhere. While there is no evidence to suggest that the FDA was in collusion with Big Dairy, it inadvertently helped out that 1% group.  If something like this were to happen to a major dairy farmer, they would have the fiscal staying power to combat accusations in court, and if the demand for unpasteurized milk was great enough, hire a lobbyist to get the needed laws overturned to protect their share of the unpasteurized milk market after the federal government did the dirty work of eliminating their low level competition. Sounds like something out of a mob movie does it not? In this and most scenarios, the government essentially acts an enforcer, protecting the turf of the five families and putting any enterprising start-ups down, or at the very least leaving the new comers with no choice but to be bought out by the big dogs.

It comes as no surprise then that as government intervention grew, the wealth gap widened significantly.

The same could be said of banking regulations. Massive regulations were put into place to protect the consumer, starting with the Community Reinvestment Act of 1977 and several subsequent usurpations of power by the federal government can directly be attributed to the financial collapse of 2008 and the destruction of smaller banks leaving the consumer with little or no choice in some regions and higher banking costs all around. Yet, who does the consumer blame? The CEOs making billions of dollars, not the government who illicitly cultivated the banking environment, unintended or otherwise.

Isn’t This Capitalism?

No. This is not capitalism, this is something far different. The basis for our current system lies in the idea that the consumer needs protecting because all who are profit seeking are automatically dangerous. The basis of all government interventions into the market are considered to be heroic and not thuggery. What the little guy gets, however, is thuggery rebranded as heroism. There is a legitimate case to be made that certain nutrients are lost during pasteurization. Yet the government steps in to protect the consumer to the detriment of the small business person and against the natural choice of the consumer.

Obviously, the examples could go on in perpetuity. The government creates the environment for the super rich to spawn by muscling out small timers with heavy handed laws and regulation , and then blame the free market. The government creates laws, mandates and regulations to protect the consumer, but ultimately remove the greatest mechanism for consumer protection already built into the market, a market correction. Sure, in the past corrections did create small bubbles and recessions once every decade, however the market was organically repairing itself at the will of the consumers. Now bureaucrats have that control, not the people. Free market capitalism is a system in which an individual is free to make choices regardless of the opinion of the government, yet that is not what we have. Can it even be called capitalism anymore? Are we ready to finally hold the real thieves accountable?