I've always understood why the very rich would favor economic ideologies that support their self-interest. What I've never quite understood is why so many people who aren't Galtian overlords buy that crap. Lance Mannion puzzles over the same thing (italics original):
The Koch Brothers are under a different delusion, that we live in a feudal society and they are Medieval land barons and the rest of us are their serfs and retainers. Never mind them for now. I'm talking about the retainers.
The country is lousy with people who are essentially corporate flunkeys who think they are John and Jane Galts. They haven't invented anything. They haven't built any industries or businesses. They don't own anything. From junior vice-presidents on up to CEOs,they are all employees. And they make their money mainly by skimming. But they make a lot of it. They are wealthy. They have "created" wealth, for themselves, at least.
And they've convinced themselves that simply by acquiring all this loot and then spending it willy-nilly on whatever toys, gadgets, gizmos, luxuries, or whims they choose they are creating wealth for the whole nation.
He then explains their cognitive dysfunction (boldface mine):
I wouldn't mind that they think they are creating wealth by working for the real John and Jane Galts (the very few of those who actually exist) if they understood that everybody else who worked with them for the Galts, including the secretaries, janitors, loading dock workers, truck drivers, and repairmen were creating the wealth too. But they don't understand it or they pretend not to or they understand it fine, they just hate the idea....
They don't see that their McMansion, their suburb, their jobs that earn them the wealth they think they've created wouldn't exist without good roads, safe bridges, airports---every frequent flyer coupon these business class travelers rack up should be stamped "Your tax dollars at work."---competent police and fire departments, reliable trash collection, and good public schools turning out not just a well-educated work force but a well-educated citizenry everywhere! Not just in their neighborhoods but all across the country.
I think there's a fair dollop of cognitive dissonance going on here. Most people aren't sociopaths, yet quite a few of the retainers work in ethically challenged positions (in most cases, mind you, not illegal). One way to rationalize this is to turn really nasty and blame those who haven't made the same lucrative choices you have. Ludicrously, these choices will be referred to by the retainers as 'sacrifices.'
I know plenty of people who fit, in terms of their jobs, into what Mannion calls the flunkey class. Yet they're not mean and nasty because they've been able to come to terms with the choices they've made. For them, taxation is simply about the money. But for the Galtian retainers, this is a matter of self-worth and identity, not the money. It's much more personal, and that's why they're so passionate (if misguided).
IMHO one of the more useful concepts out there is the 'velocity' of money. In rough terms what runs the economy isn't wealth, or jobs, or investments. It is the speed and numbers of times the money changes hands because every exchange is an exchange in value and an active participation in the economy.
People with wealth simply don't engage in the numbers of transfers that poor people do given the same amounts of cash. By definition wealth says you have what you need and spending is discretionary. Yes, the spending that is done is larger scale. But it is also less frequent and it doesn't travel far or very fast, or to many hands. Poorer folks make many more purchases, do it much more frequently, and do it with other poorer people who return the favor. The money veritably flies through the community as one transaction triggers other transactions in an economic chain reaction.
Combined with the fact that there are a hell of a lot more poorer people and it is easy to see how they, we, are far more effective at establishing and maintaining higher velocities of money.
@Art, #1: Is that still true? Poorer people spend more and more of their money at big box stores, chain restaurants, etc., so that very little of their income stays in the community and more and more heads (at high velocity) to a national headquarters.
Art, that's what I've been thinking about India: a huge hierarchy of people who live on relatively little money, but participate in widespread and (relatively) highly organized networks that seem designed to spread small amounts of value among as many people as possible, by encouraging more small transactions. Some of the factors at work are a "small" currency that allows tiny transactions, friendliness (people tend to trust each other more than N. Americans), and buying locally.
How is India going to work when more and more value gets vacuumed up by national and multi-national chains? Or will people band together and walk away from the non-local providers?