As usual, Paul Krugman is blind to the statist origins of a problem, in this case, increasing inequality. Don Boudreaux takes issue with him in this letter:
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
Dear Editor:
In the course of rightly criticizing crony capitalists who hypocritically bemoan being overburdened by the very government that gives them special privileges, Paul Krugman not only paints with too broad a brush against ‘the rich’; he makes at least two logical errors (“Plutocrats Feeling Persecuted,” Sept. 27).
The first error occurs when Mr. Krugman writes that “thanks to surging inequality, these petty people [the “plutocrats”] have a lot of money.” Contrary to Mr. Krugman’s implication, however, crony capitalists “have a lot of money” not because of rising inequality but, rather, because government gives them special privileges. Inequality here is the RESULT of actions by the agency so trusted by Mr. Krugman – the state – rather than the SOURCE of itself.
Mr. Krugman’s second error is his claim that “money brings power.” In fact, only government brings power. While it’s true that people with lots of money are disproportionately able to use whatever government power exists, a government of few and strictly limited powers would be unable to grant special privileges even to the wealthiest of people. The root problem, therefore, isn’t “money” or “the rich”; it is, instead, the existence of the expansive and vigorous government power that Mr. Krugman famously, if illogically, believes is key to freedom, prosperity, and greater equality.
Sincerely,
Donald J. Boudreaux
Professor of Economics
