Does wealth equal power?

That request was the first on the list and it came from Ezra Abrams, who wrote:

Wealth is equal to raw naked power: the power to fund PACs; the power to endow university chairs to influence people; the power to tear down neighborhoods and erect shopping malls. to what extent does the increase in wealth and income of the upper x% (relative to median or some other broad measure) mean that too much power is concentrated in the hands of too few people one amusing example is from Kahnemann’s thinking fast and slow. Small schools show the best results b gates poured money into small schools However, what gates didn’t realize is that this is a small numbers artifacts; small schools show the best and worst results cause with a small school you can deviate from the mean …there you have raw naked power having a huge influence on educational policy

I disagree with most of that.  The scholarly literature suggests that campaign finance reform doesn’t matter as much as people think.

The big banks control our government less than some critics have suggested.

Academics are quite liberal/democratic, yet college students seems to be slightly more conservative than the American public as a whole.  The major impact of endowed chairs is to cement the roles of Harvard, Princeton and comparable schools as intellectual leaders.

Bill Gates influenced computer operating systems a good deal, but since he earned his money I’m not sure he has had a big impact on final outcomes.  (The anti-malaria campaign may yet pay off.)  He also has moved away from the “small classroom” idea, after he viewed the data.  Fiscal pressures — not pressures from the wealthy — probably mean the idea will lose out anyway.

There are several reasons why wealth does not translate into power so easily.  First, effective philanthropy is extremely difficult to achieve, especially if that philanthropy is trying to counteract prevailing social trends.  Nor should it be assumed that non-profits are always the drivers of change.  Second, the wealthy in groups do not always coordinate very effectively, to say the least.  Each is used to being in charge (remember when the Lakers had Karl Malone and Gary Payton as well as Bryant and O’Neal?)  Third, many of the very wealthy choose to consume ego rents rather than effectiveness.  Fourth, “democracy” and “the market” control large chunks of modern life, and it is hard for outsiders to commandeer those processes.  Most of the major functions of government are there because people want them to be there, for better or worse.

The best way to think about wealth and power is with some ideas from Harry Eckstein.  There will be, for reasons of spontaneous order, a general concordance between the status and influence of groups in the broader world, and the power of those groups when it comes to government.  American economic policy, for instance, really is more pro-business than in much of Europe, and that does stem from the more commercial nature of our republic.  That said, the ability of the rich at the margin to control policy through intentional acts, either individually or in groups is much overrated.

Wealth does protect you from the depredations of others, such as being treated very badly by the police or legal system.  In this defensive sense wealth can give you a good deal of power.

Overall the quality of argumentation and evidence on this topic is extremely low.

Addendum: Iceland, by the way, doesn’t want the money of the Chinese billionaire.


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