Sean King

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San Juan, Puerto Rico, United States

Monday, October 25, 2010

I Toldja Big Government Benefits the Wealthy Establishment!

As the nearby chart shows, by almost every measure, the middle class hasn't benefited much at all over the past two years – the number of employed has fallen while wages, disposable income and home prices have pretty much flatlined.

At the same time, Wall Street and big business have made out like bandits. The Dow is up 30 percent since Obama took office, and corporate profits have shot up 42 percent.

Meantime, companies are sitting on so much cash -- nearly $2 trillion worth -- they don't know what to do with it all. The non-financial companies in the S&P 500 index have seen their cash stockpile climb 26 percent over the previous year. Apple alone has amassed almost $26 billion in cash.


Read the whole thing.

I don't know why this is so hard to understand: Regulation and high tax rates act as barriers to entry, reducing competition and favoring those businesses that have already achieved economies of scale. A big business with reduced competition is able to charge higher margins, increasing profits.

Hence, regulation and high taxes favor the well-to-do. After all, why do you think Bill Gates and Warren Buffet and George Soros and you-name-the-billionaire are all big-government "progressives"? Do you really think its because they feel sorry for the "little guy"?

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