Elected officials would never use their political power to make themselves rich at others’ expense, would they? And if so, it must only be the bourgeois capitalist pigs that do it. So here I retell a story told by David Henderson in his excellent, The Joy of Freedom.
Interestingly, one of the clearest documented instances in U.S. History of political power moving in to fill the vacuum left when property rights are not well defined occurred with a radio license granted by the FCC. There was once a congressman who used his political power over the FCC to create a fortune for himself. The cornerstone of that fortune was a license from the FCC to operate a radio station. In 1943, he and his wife had a net worth of approximately zero. But by 1964, when he was elected President of the United States, their net worth was at least $14 million, and the radio station’s value accounted for about half of this $14 million. The congressman’s and President’s name: Lyndon B. Johnson.
LBJ’s line during his 1964 campaign, which only Wall Street Journal reporter Louis M. Kohlmeier and a few other reporters questioned, was that his wife, who owned radio station KTBC in Austin, Texas had turned an asset she had bought for $17,500 into a property worth millions by working hard. Not quite. Instead, as biographer Robert Caro dramatically documents in his masterful biography The Years of Lyndon Johnson: Means of Ascent, LBJ was the one who worked hard — at using his political influence. Between December 1939 and January 1943, despite countless attempts, KTBC’s owners were unable to get permission from the FCC to let them sell the station. But on January 3, 1943, Mrs. Johnson filed her application to buy the station and just 24 days later, after having previously waited over three years, the owners were allowed to sell. In June 1943, Mrs. Johnson applied for permission to operate 24 hours a day, up from daylight hours only, and at a much better part of the AM frequency, and was granted permission just one month later. While all this was happening, the FCC was under attack by a powerful congressman, Eugene Cox of Georgia. Lyndon Johnson strategized secretly with FCC official Red James and used his influence with House speaker Sam Rayburn to deflect the attack. In fact, James later admitted that he had recommended to Mrs. Johnson that she apply for the license. Lyndon Johnson further enhanced the station’s value by doing political favors in return for ad revenues. With the Office of Price Administration (OPA) creating shortages by imposing wartime price controls, scarce goods were often allocated to businesses with political influence. LBJ used his influence to get higher allocations for those who advertised on his station. Months after grocery retailer Howard E. Butt started advertising on KTBC in 1943, for example, Johnson intervened with the OPA to allocate to Butt 150,000 extra cases of grapefruit.
There are three classes of people in America – and they are not the rich, middle class and poor. They are the politicians, their cronies, and everyone else.