How Washington Grows Rich

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I see that I’m quoted in Annie Lowrey’s New York Times Magazine story, “Washington’s Economic Boom, Financed by You”:

David Boaz, executive vice president of the Cato Institute, told me: “Washington’s economy is based on the confiscation and transfer of wealth produced elsewhere. Out in the country they’re growing food, building cars and designing software — all these things that raise our standard of living. Here in Washington, everyone is writing memos to each other about how to take some of that money and which special interest should get it.” I asked him if he liked living in the city, which has become undeniably nicer. Boaz sputtered a bit. “I can’t walk to lunch from my office without having to avoid the construction projects!” he said. “For Washington, it does mean better restaurants and better entertainment, and the potholes get filled faster. But for the country as a whole? I don’t think it’s a good thing for America.”

I’m confident I didn’t sputter, but otherwise this sounds right. I’ve been writing about the wealth of the Washington area and where it comes from for years.  

In 2005 I wrote about – yes – the construction projects that block my way to lunch in a “big-government building boom.”

In 2006 I leaned on Waylon and Willie to offer some advice to parents: 

Mammas, don’t let your babies grow up to be cowboys,

Don’t let ’em make software and sell people trucks,

Make ’em be bureaucrats and fed’rals and such.

Here are a few other links to discussions of Washington’s wealth, starting with the most recent news:

http://www.cato.org/blog/happy-new-year-washington

http://www.cato.org/blog/its-fall-washington-livin-still-good

http://www.cato.org/blog/lobbying-booming-business-politicized-economy

http://www.cato.org/blog/obamas-k-street-recovery-plan

http://www.cato.org/blog/no-recession-washington

http://www.cato.org/blog/washington-booming-bush-obama-years

focused on why money flows to Washington way back in 1983 in the Wall Street Journal:

Business people know that you have to invest to make money. Businesses invest in factories, labor, research and development, marketing, and all the other processes that bring goods to consumers and, they hope, lead to profits. They also invest in political processes that may yield profits.

If more money can be made by investing in Washington than by drilling another oil well, money will be spent there.

Nobel laureate F.A. Hayek explained the process 40 years ago in his prophetic book The Road to Serfdom: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.”

As the size and power of government increase, we can expect more of society’s resources to be directed toward influencing government.

And all of this relates to an idea I discussed in Libertarianism: A Primer:

Libertarians developed a pre-Marxist class analysis that divided society into two basic classes: those who produced wealth and those who took it by force from others.  Thomas Paine, for instance, wrote, “There are two distinct classes of men in the nation, those who pay taxes, and those who receive and live upon the taxes.”  Similarly, Jefferson wrote in 1824, “We have more machinery of government than is necessary, too many parasites living on the labor of the industrious.”  Modern libertarians defend the right of productive people to keep what they earn, against a New Class of politicians and bureaucrats who would seize their earnings to transfer them to nonproducers.

Sheldon Richman has more on this libertarian class analysis that focused on “conflict between producers, no matter their station, and the parasitic political classes, both inside and outside the formal state,” or “between the tax-payers and tax-eaters.”