Tyler Cowen: America Isn’t an Oligarchy

Is America ruled by an oligarchy—that is, a small group of tightly knit, self-serving, and very wealthy people? We hear this argument increasingly, most of all from the Democratic Party. Their fundraising emails have begun to stress this point over the last year, blaming “billionaires” for driving America into ruin. I call this “billionaire derangement syndrome.”

Let’s look at the facts. First, in people’s daily lives, they typically interact with their state and local governments more than with the feds. And if you look at what state and local governments do, most of it is driven by voter demand, and I do not mean billionaire or oligarchic voters.

Most state and local government spending goes toward schools, roads, and increasingly, Medicaid. None of those reflect the agendas of most billionaires. For example, Medicaid dollars flow particularly to lower-income recipients. Hospitals and doctors receive income from this program, but reimbursement rates are relatively low, and many of the best doctors do not accept Medicaid patients and don’t make a living from the program.

Now look at the federal budget. The major components of spending are Medicare, Social Security, Medicaid (joined with the states), defense, and interest on the national debt. Those programs are a mix of popular and necessary, and they were not put in place, and are not kept in place, by billionaires or oligarchs.