class conflictIn a recent post at The Daily Beast, Joel Kotkin, who teaches and writes mostly about urban affairs, demonstrates his uncanny ability to spot wide socio-economic trends and their implications. Not himself a conservative, Mr. Kotkin nonetheless lays out in this post, a teaser for a forthcoming book, The New Class Conflict, the deeply conservative fact that Progressivism, like all state-centered ideologies, enriches a small, elite class at the expense of the vast majority of the people, and the middle class in particular. In brief, Mr. Kotkin provides irrefutable evidence that “the Age of Obama” is an Age of Oligarchy.

Increased governmental power serves the interests of those with connections to that power. History has seen the hypocritical claims of warrior aristocrats to “protect” the people in exchange for their slavish service. It has seen the less hypocritical claims of robber barons to create wealth for everyone through their vicious cupidity, aided by their political machinations. And millions have suffered due to the massively hypocritical claims of socialists that they would establish a worker’s paradise by forming a new class of bureaucratic elites in charge of all aspects of the people’s lives.

In our post-Marxist age, partisans of state power claim that administrators can readjust our economies to create “equality” without killing the economic goose laying the golden eggs they wish to redistribute. Sadly, though not unexpectedly, this has not been the case. In our move to social democracy a few have grown very rich as most of us have grown poorer. Mr. Kotkin argues that, as much of the new mega-wealth has fallen into the hands of high-tech robber barons exercising monopoly power in various critical markets, along with their brethren in the financial industry, these fortunes have been made possible and protected in large part by the federal government. Moreover, as Mr. Kotkin shows, these figures are joined by new, wholly fraudulent tycoons in various “green” industries utterly dependent on government handouts of other people’s tax dollars and draconian regulations forcing people to patronize “green” businesses.

In supporting tech, financial, and “green” cronyism, Mr. Kotkin points out, both political parties are to blame. Republicans have long served the interests of “the investor class,” but Democrats increasingly have served and been supported by the super-rich of Wall Street and Silicon Valley. Thus, “in 2012, President Obama won eight of the country’s ten wealthiest counties, sometimes by margins of two-to-one or better.” Indeed, wherever millionaires and hedge fund managers dominated, so did President Obama.

Mr. Obama’s supporters have profited handsomely from their political investment. “In the first five years of the Obama Administration the share of financial assets held by the top six ‘too big to fail’ banks soared 37%, and now account for two-thirds of all bank assets.” As for the executives themselves, pay for those at the largest banking firms had reached new records by 2011, a mere three years after they all but destroyed the world economy with their mindless greed. And, as big banks have received huge bailouts, community banks have disappeared, dropping to numbers not seen since the 1930s. In effect, thanks to government policies, Wall Street has been sucking up funds needed for loans to more productive small businesses.

As we contemplate sudden Democratic interest in protecting that hub of crony “capitalism,” the Export-Import Bank, it is well to consider the increasingly direct link between political connections and wealth in this country. Mr. Kotkin cites a report by the libertarian Mercatus Center finding that “politically connected banks received larger bailouts from the Federal Reserve during the financial crisis than financial institutions that spend less or nothing on lobbying and contributions to political campaigns.”

Meanwhile, small business and the wealth and job-creation for which it is primarily responsible have wilted under a new regulatory onslaught. The liberal Brookings Institution has noted the loss of dynamism in an economy in which more firms have closed than started for the first time in a quarter century. Small business start-ups have in fact declined as a portion of all business growth—from half in the early 1980s to just over one-third in 2010. A key explanation of this depressing trend has been the expansion of regulatory power. In particular, “green” initiatives have hurt: environmental regulations cost 364% more per employee for small firms than large ones.

Mr. Kotkin thus provides convincing evidence of a permanent truth: those who promise to use increased political power to help the people in fact “help” themselves and their cronies at the expense of the rest of us.

None of this is to say that Mr. Kotkin himself would have great sympathy for the conservative vision of politics and economics our readers, here, would expect. Perhaps in part to maintain his distance from such an unpopular viewpoint, his piece contains several frankly odd nods to leftist Massachusetts Senator Elizabeth Warren. Senator Warren, of course, is the former Harvard law professor who famously gamed the affirmative action system to academic success. It is hard to imagine how a bit of populist rhetoric might turn a member of the ultimate limousine liberal establishment of Harvard Law into a defender of the middle class. Even if Senator Warren were serious about “reining in” Wall Street, it would be in the interest of her own crony elites among the legal and bureaucratic classes—the academic clerisy Mr. Kotkin knows quite well and lambastes in other contexts.

Still, Mr. Kotkin has his finger on some very hard truths concerning class conflict and the rise of corrupt power: Mr. Obama’s government is the sponsor, as it always has been, not of some utopian “classless system,” but of power, which in turn spawns wealth, and with it more power. Rather than seeking economic salvation in the promises of political and economic climbers in the government, then, we need to look for greater dynamism in the small businesses, closer to home, in which real people with real common interests in their communities strive to make a contribution—and a living—through honest, hard work.

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