That is the notion that wealthy people are responsible for holding back economic progress by others because they have too much and spend too little. Iain Murray of the Competitive Enterprise Institute is responsible for the term, borrowed from the fearsome, wealth-hoarding dragon in The Hobbit. He proceeds to demolish the fallacy in this Freeman piece.

“Progressives” love the Smaug Fallacy because it serves as an excuse for taking wealth away from people who earned it and having government spend it, usually in ways that provide jobs and wealth for government officials and campaign propaganda for the politicians.