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Charles Murray on crony capitalism and the superrich

Here is a really interesting exchange on inequality between AEI’s Charles Murray and the Wall Street Journal’s Mary Kissel (via RealClearPolitics):

MARY KISSEL, WSJ: Why are these themes that are so divisive, income inequality, fairness, why do Democrats use them? Why do they work?

CHARLES MURRAY: Partly they use them for their own reasons, but they do it partly because the American upper class has given them a wide open target.

KISSEL: You’re blaming the 1 percent, why?

MURRAY: Yeah, to a great extent. I’ll give you some examples: the 25,000 square foot homes, the private jets, but more than that, the sense that a lot of Americans have that the game is rigged now. And the problem is, a lot of that is true.

KISSEL: But Charles, we’re a capitalist society, what’s rigged? I mean, if you make a lot of money, what is wrong with building a big home or owning a private jet? We would support that on the editorial page.

MURRAY: There’s a couple of things, one is that it’s an American tradition that you don’t get too big for your britches once you get rich.

KISSEL: I thought that was a Social Democratic tradition in Britain or Australia. The tall poppy syndrome.

MURRAY: No, that was very capitalist, that you were one of the people once you got successful. That’s not nostalgia, that’s true. Back in the 1960s or 50s, when I was growing up, the executives of the Maytag company, in the town where I lived, wouldn’t buy Cadillacs, that was getting too fancy, too flamboyant.

There’s another thing that’s going on, Mary, which is even bigger: capitalism in bed with the government. Big time. The American people look at the way people make zillions of bucks because they can get the regulations they want to, because they get the government to support their technology. They see that going on, plus the crony capitalism. And the number of these capitalists are enthusiastically in favor of real competition is depressingly small.

KISSEL: Alright, but when the Democrats say the game is rigged, I’m thinking of Massachusetts Senator Liz Warren, this is a theme she uses all the time. She’s not talking about less regulation, she’s talking about more.

MURRAY: Yeah, yeah. I have no truck with the Warrens of the world. I’m actually speaking as someone who loves competition and free enterprise. And I’m saying to the people who are supposedly on my side, you guys better practice what you preach. Because a lot of you aren’t.

KISSEL: Do you think that the Occupy Wall Street movement on the left, and the Tea Party on the right are both reactions to that same thing, that kind of cronyism?

MURRAY: It’s the same thing, there is a new upper class no that is increasingly really happy being a new upper class. They have left behind the American tradition of saying hey, we’re just folks. They are, actually, rather enjoying the position. It’s Un-American, Mary.

Plenty of center-right folks don’t even think inequality is worth talking about, that doing so accepts a left-wing worldview. But Murray is right in that there can be unseemly aspect to all this: As Murray writes in Coming Apart:

Recently I asked a successful entrepreneur, an ardent proponent of free markets, what he thought about the bonus of several hundred million dollars that a board had decided to award a departing CEO of a large company as a thank-you gift. He looked at me sharply and said, “It’s obscene.” That is a reasonable way for people to react whether they are liberal, conservative, or libertarian — the issue is not what should be legal but what is seemly.

And Murray is bang on in lamenting how crony capitalism is driving inequality, not to mention making the US economy less efficient, whether it is “too big to fail’ backstops for the megabanks or strict patent and copyright law. Murray wants the wealthy to preach the values they practice, such as work and marriage, and business community to practice what its preaches about competition and markets.

 

 

4 thoughts on “Charles Murray on crony capitalism and the superrich

  1. Kudos to Murray.

    When I was growing up in the 50s and 60s in a small town in Wisconsin, the richest guy in town went out his way to appear ordinary, and teachers had enormous respect.
    Nostalgia usually informs our notion of the good old days, but this change is truly poisonous.

    • Those are relics of the last Gilded Age, in which robber barons also earned opprobrium. James Monahan makes the common mistake of assuming that equality is the normal state of affairs in America when the opposite is true. From the Economist:

      “Another important issue is the extent to which inequality (or equality) is normal. Here we may have been misled by the middle of the 20th century which saw a dramatic reduction in inequality, known as the Great Compression. This was down, Mr Piketty suggests, to the effect of world wars, high taxes and high inflation which destroyed private wealth (by contrast, in the 19th century, many upper class people lived quite comfortably off the income from government bonds).

      This he expresses in the form of a capital/income ratio. In 1910, national wealth (or capital) was about seven times income or GDP; a ratio it had maintained for the previous two centuries. By 1950, this ratio had dropped to three times. It has since climbed rapidly and is back between five and six times. A similar process has occurred in France (in fact, the capital ratio is even higher).”

      http://www.economist.com/blogs/buttonwood/2014/03/demography-and-inequality

      In periods of slow/no growth, accumulated wealth keeps appreciating when wages do not. And, no, it does not trickle down.

  2. There’s a couple of things, one is that it’s an American tradition that you don’t get too big for your britches once you get rich“…

    Charles Murray again offering up another pointless mea culpa for co-authoring the Bell Curve?

    Perhaps if billionaires learned from middle class wage earners instead of the right singing the praises of the rich, this country would be a better place“…

    Perhaps if the country got rid of the socialist parasites & statists that want to spend other people’s money it would indeed be a better country…

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