Looters By Any Other Name

Arnold Kling has a post today about the group identities of the beneficiaries of the bailout and economic stimulus packages passed to avert “economic oblivion”.

The clearest beneficiaries of the financial bailout and the stimulus are the financial firms that designed and implemented sub-prime mortgage securitization and the public-employee unions that are bankrupting state governments. Christina Romer praises the former by saying, […] For the latter, she speaks of the “devastation of state and local government budgets.”

Arnold Kling calls these groups of people the “looting classes”, meaning that they transfer value created by others to themselves while creating very little value themselves. There is another name for this class of people, and that is the value transference class. These people do not create value, but instead have jobs that entail transfering value created by others to themselves. In Marxian language, this would be the bourgeois (not, however, the petit bourgeois, which is a value creation class).

There is a funny story told about people who are in consulting, who have a bookshelf containing books about the “next ideas in business management”, with a bookshelf right next to it containing analysis of the failures of the “next ideas in business management”. Truth be told, CEO’s (of large corprations, with a job mostly dealing with corporate finance and public relations) largely exist to transfer value from shareholders to themselves and possibly others in executive management.

Teachers seem to be in this list solely because of the mechanisms by which we fund education. If there is a monopsony buyer of education, you can be almost 100% sure that sellers will organize into a monopoly — so you can’t stop at simply blaming unionism. By and large, education is funded through state mechanisms, so those selling their services must band together or thus be controlled by the purchasing power of the monopsony buyer.

I just thought I’d connect some verbiage.

H/T Half Sigma.


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