Does wealth equal power? – Tyler Cowen

Marginal Revolution: Does wealth equal power?

… 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.