Large fortunes through public assets

From Income Inequality Isn’t The Problem by David R. Henderson. An interesting discussion of the different forms, beneficial and destructive, of inequality. This is the interesting piece of information I did not know.

Now let’s consider the second figure. In the early 1940s, as a Congressman from Texas, this man defended the budget of the Federal Communications Commission when a more senior member of the House of Representatives was trying to cut it. So the FCC owed him a favor. One FCC official suggested the politician have his wife apply for a license for a radio station in the underserved Austin market. She did so and within a few weeks, the FCC granted her permission to buy the license from the current owners. She then applied for permission to increase its time of operation from daylight-hours-only to 24 hours a day and at a much better part of the AM spectrum—and the FCC granted her permission within a few weeks. The commission also prevented competitors from entering the Austin market.

These moves made Lyndon Johnson and his wife very rich. When he ran for President in 1964, the radio station accounted for over half of his $14-million net worth. This increase in his wealth added slightly to wealth inequality. But customers in the Austin market were, due to the FCC restrictions on further radio stations, slightly less well off than if more stations had been allowed. When I tell this story to college audiences and ask them if they think there’s an important difference between McCulloch’s and Johnson’s methods of increasing wealth inequality, virtually all of them do, and few will defend the latter way.

$14 million in the 1960s? How much is that worth today? A different article sheds light. LBJs net worth in 2010 dollars was $98 Million.

Interesting to compare that to the net worth of the President who might be considered the archetype of the wealthy, privileged president, Franklin Delanor Roosevelt, acknowledged patrician with an inheritance of $60 million, acquired via inheritance and marriage.

So the son of poverty and public service (LBJ) had net wealth 50% greater than that of the silver spoon president FDR.

Kind of shocking that the "man of the people" president acquired the bulk of his immense fortune through "public service" and essentially via deep state bribery. But to be fair there are pretty obvious parallels of such rent seeking among certain politicians in recent years.