Hurting the Poor, Helping the Rich


Coming from Randian roots, I have a deep appreciation for the virtues of business, and of wealth that has been earned. I do not consider myself to be a liberal-tarian. I usually agree with the Right and disagree with the Left. But the more I look around, the more I see that socialism is really a tool by means of which millionaire elites keep the poor masses from rising up. Libertarianism or “classical liberalism,” on the other hand, can accurately be described as the friend of the poor and the enemy of the rich. I have already written in Liberty (January 2010) about how capitalism helps the poor. What I want to focus on in this Reflection is how statism helps the rich, especially the old money aristocracy, the metaphorical James Taggarts of the United States.

The evidence is overwhelming. Look at education. Rich people send their own children to expensive private schools, which put them on track for Ivy League universities and white collar jobs; meanwhile the political establishment makes sure that the only choice available to poor children is a horrible public school system that teaches nothing and trains students only for low-income jobs. The public schools are controlled by teachers' unions that oppose merit-based pay and favor a seniority system, which is a terrible model for achieving high educational excellence. The modern liberal reply is to say that the system is broken but could be fixed by raising taxes to give more funding to public schools. The real solution is to use school vouchers so that poor children can attend the rich children’s schools — a prospect that few wealthy parents care to consider.

Or look at business. Statism helps wealthy corporations in many ways — not by giving them tax breaks as the modern liberals complain, but by giving them rentseeking handouts such as farm subsidies and defense contracts. Ending all subsidies and all pork barrel spending would be a huge loss for rich people with political connections, yet the modern liberals have bamboozled the poor into thinking that statism actually helps the poor and hurts the rich. On Wall Street, the SEC’s maze of rules makes legal compliance so difficult that it is virtually impossible for newcomers to compete with the old established investment banks. Established businessmen use taxes and regulations to stifle competition from start-up entrepreneurs and up-and-coming small businessmen who can’t afford to hire compliance lawyers and tax consultants, as their old money rivals can. Yet small business is precisely the engine of opportunity for hard-working ambitious people from poor backgrounds.

Now look at the professions. Affluent professionals in the medical and legal fields enjoy salaries that are artificially increased because the AMA and the ABA maintain systems of doctor licensing and lawyer licensing that restrict the supply of new doctors and lawyers. I predict that if ObamaCare does lead to a socialist single-payer national healthcare system, that system will be run by AMA-approved bureaucrats whose inefficiency and nepotism will drive up the price of healthcare, allowing doctors favored by the state to make more money than they would have in a free market. In the ObamaCare nightmare the rich will probably be able to afford to obtain treatment from high-quality doctors, but the poor will be faced with no alternative to the low-quality healthcare that the system is certain to produce. ObamaCare will be a disaster for the working poor.

In every situation mentioned, above socialist measures help the rich and hurt the poor, creating a caste system in which vast fortunes can be inherited but cannot be built up from scratch. The instances described above have all been justified on the ground that they benefit society as a whole or protect the whole public from the dangers of free markets — in itself a distinctly socialist justification. But a logical person would expect socialism to favor the wealthy, because it vests tremendous economic power in the class of bureaucrats and government officials, and one would expect the upper class to have the means to exploit that power. The rich are the ones most likely to be able to afford to run for office and to purchase influence among politicians by means of campaign contributions and special interest lobbying.

Socialism favors the wealthy because it vests tremendous economic power in the class of bureaucrats and government officials, and it is the upper class that has the means to exploit that power.

What I am offering is not an empirical claim but a deductive argument: the wealthy are inherently better positioned than the poor to exploit the state’s power; therefore, the more powerful the state becomes, the more advantage the rich have over the poor in terms of the opportunity to make money. Ayn Rand hinted at this idea when she contrasted “the aristocracy of money,” that of people who earn wealth, with “the aristocracy of pull,” that of people who exploit the state to obtain wealth. But in the end I think Rand loved the rich so much that she failed to see how socialism may actually be a plot by the rich against the poor.

My criticism is directed mainly at wealthy members of the socialist or extreme-leftist wing of the Democratic Party. It is no coincidence that many of the most famous Democratic politicians who preach that they are the champions of the poor graduated from Ivy League universities that most poor people could never get into because they could not afford to attend the most prestigious private high schools. Many of these millionaires could not possibly imagine what it is like not to have enough money to pay your bills or to have to work two shifts to make ends meet.

Consider Democratic presidential candidates, past and present. President Obama comes from Harvard Law. John Kerry has the Heinz fortune. Bill and Hillary Clinton were products of Yale Law. And the members of Joe Kennedy’s clan have vast amounts of wealth and several Ivy League degrees behind them. Looking farther back, Franklin D. Roosevelt, the champion of the socialist New Deal, was a man of wealth and privilege; the Rockefeller family inherited an enormous fortune, yet produced many left-leaning politicians, one of them a presidential candidate. People like the ones just mentioned have no right to say that they speak for the poor and underprivileged. Such people are merely exploiting leftism to maximize their already substantial influence.

It is true that the higher taxes championed by modern liberals would hurt the rich. But the bottom line is that in the American capitalism-socialism hybrid, the leftist rich retain the ability to own their vast fortunes while also exploiting the advantages of socialism to prevent ambitious poor people from competing with them. While socialist interference in the economy drives up prices and eliminates jobs, the rich retain their connections, their ability to land good jobs, and their ability to pay for what they want to buy. By contrast, the poor have no choice other than to accept whatever goods and services the government-ruined markets have to offer, and they must desperately seek jobs in a market crippled by taxes and regulations.

The socialist wing of the Democratic Party thinks that decades of the welfare state have made the American poor so lazy and dependent upon government charity that they can be controlled like dogs and trained to bark at capitalism whenever the leftists blow the whistle. This twisted scheme has worked to some extent: common sense and conventional wisdom now hold that lower-class economic interests are aligned with the welfare state.

Libertarians would be well served to focus our ideological energy on fighting this myth. The working poor in the United States have enough trouble to worry about as it is, and it’s not fair to them to tolerate a political system that hurts the poor and favors the rich.

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Henry Engelhardt

The mega-rich and the greedy are asking for real trouble when they continue to keep the poor from a better standard of living. Their greed says the rich should live,and the poor should die. This situation could lead the poor to all unite together and start hurting the rich for being greedy, as it may someday lead to a nation wide riot of perhaps a hundred and fifty million or more people. True,we have a big military,but is it big enough to stop that many people? What's going to happen? Will we nuke our own people? The truth is,we are not civilized when we hurt the poor. I may not be able to do much of anything,but wait til' God judges all. What will you do then,MORONS!?


Society is not built from the top down, but from the bottom up. I wonder if the luxury of life–death does not immediately follow birth for most Americans–allows so many of us to keep fallacious opinions.


The biggest fallacy of the right today is that "the poor, (or immigrant) do not pay taxes".

This is absolutely false. Gleaned from the fact that near 50% of americans do not pay income tax. That is true. But, do you know who makes up the majority of this number that do not pay income tax? Its retired people over 65, who receive government pensions(ss) and taxpayer funded health care (medicare).

Even the few of the very poorest of the poor, who do not pay income tax, pay social security tax, sales tax, gas tax, propert tax, etc. etc. etc.

Rightists should really concentrate on decreasing everyones taxes. Not just the so called "job creators". They are just like the leftist who complain that the poor pay a higher percentage of their income in taxes than the rich. But their solution is to raise the percentage the rich pay, rather than reduce the percentage the poor pay...Rightists solution is to increase the level the poor pay, because they are, somehow, not good for the collective, and should be forced to pay for their poverty.


There is a quote often attributed to Thomas Mellon:

The normal condition of man is hard work, self-denial, acquisition and accumulation and as soon as his descendants are freed from the necessity of such exertion, they begin to degenerate sooner or later in both body and mind.

As civilization advances, and as the hardships of life are removed, it becomes increasingly easy to keep faith in false premises. Men have the luxury of being somewhat less pragmatic when they're not spending most of their time fighting for survival.

Please take time to consider the fundamental truths. It is from those that we derive our values. And it is in pursuit of those values that we must make decisions.

Men have to eat. Men do not require an education. So how is it possible we can devolve into a nuanced conversation on the relative values of educational systems for "rich" and "poor"?

We are hundreds of years removed from a time when life was nasty, brutish and short enough to keep false assertions to a minimum, that's how. Society is too comfortable to see any truth anywhere.

Rodney Choate

Mr. Hasan:
"The real solution is to use school vouchers so that poor children can attend the rich children’s schools "

Oh really Mr. Hasan? That's THE real solution? Have you considered the justice of such a proposal? What about people with no children who are then forced to foot the bill for it all, since they would be the only ones to receive no value in return for their stolen property. We are not talking about a small amount of property here. And please spare me the value-to-society argument for publicly funded education.

A secondary effect of such voucher programs is to decrease the size of the victimized group, thus further entrenching statism rather than helping to end it.

The solutions to some of our problems may not be as simple as you think.

Rodney Choate

Mr. Hasan,

Your Reflection did not mention voucher-type programs as an "interim" solution, so I had no way of knowing that you understood more than you wrote. Worse, our failure to mention that "detail" can EASILY give lesser minds than ours the idea that simply shifting around the victims is acceptable, or a solution. As bad as things are, there are still non-sacrificial, or at least much more just, ways of phasing out public education. I'm actually thinking of two possible schemes right now. They are both more difficult than straight vouchers, but that's because they are more civilized! (i.e., integrated with the requirements of freedom).

As an aside, I ask you to also keep in mind what happens when government money enters any market- prices go up noticeably, creating even more collateral victims as an unintended consequence.

We now seem to be rapidly losing the remainder of our freedom. Certainly all rational men are well within their right to fear this now. I have been sounding warnings for years, to anyone who refused to listen. If the tone of my reply disturbed people, it should have. The victimization has to stop somewhere. What better place than this magazine?

Please, let's stop putting out the voucher idea without at least saying that it should be an interim solution. But there are better solutions even than that.

That's all I can think of right now.

Russell Hasan

I believe that Mr. Choate's arguments are valid, although I do not care for the somewhat angry tone of his comment. When it comes to privatizing education and completely eliminating public funding for k-12 education I am entirely in support of the libertarian ideal of the end of all public funding. But since Mr. Choate wants to talk details, let's talk details. What are the poor and middle class supposed to do in a society where a college degree is necessary for a good career when we totally cut off k-12 funding? The only practical approach is to phase in privatization gradually, first by introducing vouchers to at least achieve some level of competition, and then, once Rand Paul is President in 2016 and the Tea Party controls both House and Senate, then accomplish the total privatization of education and create incentives (private economic incentives of profitabiltiy, not government-created incentives) for banks and lenders to give student loans to all deserving children so that the k-12 privatized education system will be adequately funded. But it is absurd to equate vouchers with statism, and also foolish to demand all-or-nothing libertarianism instead of taking a practical, pragmatic, slow and steady approach to change.

Luther Jett

While I completely agree with Mr. Hasan's premise, I feel obliged to point out that neither Bill Clinton nor Barack Obama was born to wealth and privilege. They simply learned to pander to it, early on.


@Luther Jett,

Actually Obama was raised in the upper class environment of his grandparents where he attended private schools. And I don't think his children have ever attended government run schools either.

I, personally, believe there is a very large disconnect between "economic libertarians" and real libertarianism. Libertarianism involves all aspects of all individuals' liberty. If they are poor people from Honduras looking to live and work where they choose, they shouldn't be harrassed by others for doing so.

Too many so called libertarians are perfectly willing to except corporate welfare, and competition killing laws, so long as they are the ones who benefit financially.

Fred Mora

Good analysis. I think you're up to something. Libertarians need a good understanding of why Socialism is attractive for the super-rich. We must deflate the revoltingly fake claims of caring and generosity from the "caviar Left".

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