Smash the State, Eat the Rich

In Why the Rich Tolerate Being Looted Jeffrey Tucker argues the rich today act differently than they used to. They wear common clothing, avoid luxurious houses and cars, and even call for higher taxes on themselves. Tucker explains this new phenomenon by drawing upon an essay by Peter Leeson and says, “Property rights are weak today… The more property is vulnerable to looting by any source, the more people have the incentive to hide their wealth.” The logic works, however I disagree with the premise. Property rights today are weak when looking at the US economy generally. But property rights specifically for the rich are anything but.

I believe Tucker has fallen victim to a trap that many libertarians fall into when trying to defend freed markets. Tucker is espousing “vulgar libertarianism.” The term, coined by anarchist author, Kevin Carson, refers to times when a libertarian condemns the existing state power (which, of course, Tucker always adamantly does), but at the same time, defends those who benefit most from the state power. And who are the biggest beneficiaries of state violence and theft? The rich. This is not an uncontroversial opinion.

The large sums of wealth that rich people currently enjoy are not the products of entrepreneurship, or productive genius, or voluntary market exchanges. In fact, those things are great and I wish we lived in a world with more of them. Rather, these gigantic personal estates and corporations are a result of state intervention. In Let the Free Market Eat the Rich, Jeremy Weiland points out some of the ways in which the government socializes the costs of being rich leading to a system where the average Joe is subsidizing Bill Gates. He writes,

The biggest subsidy enjoyed by the wealthy lies in government regulation of finance… [Average Joes like you and I] don’t pay for this “service” in proportion to our deposits. Instead, we help subsidize the regulation and maintenance of the financial system from which the elite depositors benefit disproportionately.

This subsidization extends to the realm of property protection as well. Weiland continues, “Police patrols of moneyed neighborhoods provide an example of socialized security, where defense and sentry costs are not paid directly by the beneficiaries.” Since the rich tend to own more property and are more likely targets of theft, they disproportionately benefit from state protective services.

Kevin Carson points out,

The dominant feature of the American polity is welfare for big business and the rich. This welfare consists of a wide array of government interventions into the market to enforce artificial scarcities and artificial property rights.

In fact, corporate welfare is rampant in the US economy. According to a study done by Good Jobs First, for state and local government, “at least 75 percent of cumulative disclosed subsidy dollars have gone to just 965 large corporations.” According to a Cato study, on the federal level, “corporate welfare in the federal budget costs taxpayers almost $100 billion a year.” That’s a $100 billion wealth transfer from the Average Joe to giant corporations.

Plus when we take the US Empire into account, Kevin Carson argues,

Adding up the so-called “defense” budget, two unfunded wars, “national security” spending on DHS, CIA, DOE and NASA, and interest on debt from past wars, the bulk of the federal government’s budget goes to welfare for the Military-Industrial Complex.

In other words, more giveaways to the rich.

These are only direct transfers to large corporations. There are also a myriad of ways in which government regulation games the system, tilting the market in favor of already established, large, hierarchical businesses headed by the rich.

State policies such as urban renewal projects, price and wage controls, licensing and safety requirements, limited liability, costly regulation, capitalization requirements, quantitative easing, financial regulation, zoning requirements, protectionist trade policy, intellectual property laws, and various other barriers to entry all promote centralization and cartelization at the expense of the voluntary transactions and private ingenuity that Tucker, as well as myself, loves so much.

These policies not only created the large disparities in income we see today, they embolden them. When large corporations face little to no competition because they have a stranglehold on the market, the middle rungs of the economic ladder are cut off. We are left at the mercy of the corporations and their special ability to channel state violence for exploitative and anti-competitive purposes.

With the advent of more and more corporatist policies, the distinction between state (“public”) and corporate (“private”) is blurred. As Rothbard argued in Confiscation and the Homestead Principle,

Government, he pointed out, is after all not a mystical entity but a group of individuals, “private” individuals if you will, acting in the manner of an organized criminal gang. But this means that there may also be “private” criminals as well as people directly affiliated with the government. What we libertarians object to, then, is not government per se but crime, what we object to is unjust or criminal property titles; what we are for is not “private” property per se but just, innocent, non-criminal private property. It is justice vs. injustice, innocence vs. criminality that must be our major libertarian focus.

A government by the rich and for the rich is nothing new, though. The status of the rich in the Gilded Age, which Tucker seems to refer to with reverence, was no more honest or virtuous than it is today, which, is to mean not honest or virtuous at all. In State Socialism and Anarchism, Benjamin Tucker identified the four (state created) monopolies of his day: the money monopoly, the land monopoly, the tariff monopoly, and the patent monopoly.” Far from being an era of laissez-faire, the late 19th century was dominated by a class of rich parasites, just like the modern economy.

The freed market, without all these distortions and giveaways, is truly an equalizing force. Weiland went on to conclude,

A truly free market without subsidized security, regulation, and arbitration imposes costs on large scale aggregations of assets that quickly deplete them… It may be that libertarianism, taken to its logical conclusion, is far more egalitarian and redistributionist than we ever dreamed – not as a function of any central State, but rather due to its lack.

Jeffrey Tucker writes,

None of us will be truly safe until the rich again walk the streets with pride, live in huge houses in full view of the hoi polloi, and dress proper to their station in life.

On the contrary, we will only know safety (from the iron fist of state capitalism) when today’s rich walk the street with woe because their friend, the state, is gone. When the rich live in shacks in full view of ghettos because their friend, the state, is gone. When the rich dress in dirty, torn clothes, because their friend, the state, is gone.

Tucker continues,

After all, a world that is not safe for the rich is not safe for the rest of us either.

I believe a firm understanding of the relationship between the rich, their fortunes, and state power leads us to conclude the exact opposite conclusion. A world that is safe for today’s rich will never be safe for the rest of us. Not until the rich’s massive fortunes, and the state power propagating them, is destroyed will we be safe. Smashing the state and eating the rich are two sides of the same coin.