Monday, October 20, 2008

Why Did the New Deal Make the Rich Richer and the Poor Poorer?

Howard S. Katz has an excellent blog this week concerning what he terms the liberty-benevolence split. Katz poses an interesting question to New York Times editor Abe Rosenthal:

"Explain this to me Mr. Rosenthal. In the great days of America, the gap between rich and poor kept getting narrower. An originally poor man would invent a new product, make a million dollars and raise the standard of living of the American people...Explain, Mr. Rosenthal. Before the New Deal the gap between rich and poor shrank. But today the gap between rich and poor grows. How could this possibly be happening?"

The answer, of course, is the fallacious "liberty-benevolence split" between libertarians of left and right. Freedom of contract and free markets are the greatest protection that the poor have. In contrast, government programs like the Federal Reserve Bank have impoverished the poor. Programs like urban renewal have created slums and excluded minorities from "white" neighborhoods. Regulation has prevented working class entrepreneurs from inventing new products and moving up the ladder. In contrast, the feudalistic "aristocracy" that Progressivism and the New Deal establishes, the corporate elite who accomplish nothing but have fancy credentials and degrees and state-bestowed authority, but are almost inevitably incompetent, have come to dominate our society. In particular, the Times has cheered the allocation of massive amounts of credit to incompetent Wall Street and banking interests who have paid themselves large sums at public expense (because the credit is ultimately private property that the Fed has expropriated) and so impoverished the average productive worker. It is not enough for the Times, Wall Street and its army of quack economists that inflation has exploited the public for decades. They cheer ever more aggressively for direct bailouts so that incompetent bankers can lend ever more money to hedge fund managers. And note that there is little difference between "conservative" Progressives of the "right" and social democratic Progressives of the "left".

Howard's blog is excellent. Read it here.

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