Yet Another Socialist Brainfart

Jonathan Freedland, writing in the Guardian, laments the recent defeat of Segolene Royal in the French elections. I was also sad to see her lose, although for different reasons. But Mr. Freedland sees a silver lining in this cloud:

Yet there are some signs, tentative for now but noticeable all the same, that movement is under way even in the US, inside the belly of the capitalist beast. They come partly in reaction to the ever worsening state of inequality in that country. You can pick your stat, ranging from the claim that just two men - Bill Gates and Warren Buffett - have as much money between them as 30% of the entire American people......

America's politicians have begun to notice. The Democratic presidential candidate John Edwards speaks of the "two Americas". Barack Obama tells audiences that not only is caring for the poor an American tradition, but that "those with money, those with influence, those with control over how resources are allocated in our society, are very protective of their interests, and they can rationalise infinitely the reasons why they should have more money and power than anyone else".

Mr. Freedland mentions the great wealth of Messrs Gates and Buffett, but fails to note that these 'awakened' politicians: Edwards and Obama, are also very wealthy. Although not in the Gates/Buffett class, they are both certainly wealthier than 99.9% of all Americans.

There is a big difference in the manner in which these two pairs of men acquired their wealth. Bill Gates was a pioneer in the microcomputer revolution, building the world's most successful software company from scratch. He earned his wealth by offering people value for their money. Moreover, he has compensated his employees quite well, thousands of current and former Microsoft employees are millionaires.

Warren Buffett built his wealth through savvy investing. Using the vehicle of Berkshire Hathaway, which is essentially a closed-end mutual fund, Buffett repeatedly selected companies with winning strategies. By doing so he provided a valuable service to the US economy. His stock picks ensured that capital flowed to some of the most efficient and productive companies.

I cannot heap such praise on Edwards nor Obama. Both men earned their fortunes by acting as parasites on the US economy, not by providing value as Gates and Buffett did. Edwards earned his fortune as a trial attorney, winning huge legal fees through medical malpractice suits, thereby driving up the cost of health care for people who are not wealthy.

Obama became wealthy by trading political favors for money, often through complicated schemes like the Clintons did. In a previous post to this blog, I linked to the story of how Barack made money from Chicago slumlords who were supposed to provide housing for the poor, but actually ended up cheating people.

Thus, there are two types of wealthy people. Those who provide value to their customers and those who act as parasites. In the parasite group we can include Bill and Hillary Clinton, who traded political favors for money, sending their daughter to elite private schools like Sidwell Friends and Stanford, while the children of the poor are confined to ineffective and unsafe public schools.

Unfortunately, I must include President Bush in the parasite class too. He had little success as a businessman but then traded on his father's status as vice-president and then president to become wealthy. Fortunately he put a stop to it when he became governor of Texas and has also refrained from graft and corruption as president.

The problem is that simpletons like Freedland can't understand the difference between a Gates and an Obama. If the USA were run like the former Soviet Union, people like Obama and Edwards would be members of the 'nomenklatura', the privileged class, whereas people like Gates and Buffett would be imprisoned or executed as dissidents.