The first error occurs when Mr. Krugman writes that “thanks to surging inequality, these petty people [the "plutocrats"] have a lot of money.” Contrary to Mr. Krugman’s implication, however, crony capitalists “have a lot of money” not because of rising inequality but, rather, because government gives them special privileges. At root, inequality here is the result of actions by the agency so trusted by Mr. Krugman – the state – rather than the source of itself.
Mr. Krugman’s second, related error is his claim that “money brings power.” In fact, only government brings power. While it’s true that people with lots of money are disproportionately able to use whatever government power exists, a government of few and strictly limited powers would be unable to grant special privileges even to the wealthiest of people. The core problem, therefore, isn’t “money” or “the rich”; it is, instead, the existence of the expansive and vigorous government power that Mr. Krugman famously, if illogically, believes is key to freedom, prosperity, and greater equality.
~ Don Boudreaux
Grouch: Boudreaux pretty much nails the fallacy underlying all of Krugman's op-ed pieces.