Last week AOC was in the press (she seems to like that doesn’t she?!) claiming that it is impossible for someone to earn a billion dollars. She is not arguing that people aren’t being paid a billion dollars, but she is making a more substantive (but incorrect) claim that no one who earns that much money in the marketplace can legitimately claim that their individual effort resulted in creating that much value. In essence, she is drawing back on that old Marxian fallacy of surplus value which is captured from the proletariat by the capitalists. In other words, Jeff Bezos is a billionaire because he stole from the underpaid Amazon workers.

Now she is rightly being castigated by the those on the right. As Ben Shapiro notes, “Lies. Billionaires get rich by innovating and risk-taking, offering new and better goods and services at prices people are willing to pay,” he wrote on social media. “Government makes cash through confiscation. AOC’s conspiratorial, envious view of the world leads to impoverishment and tyranny.” Even the Washington Post rejected her view, asking if AOC thought that people like Michael Jordan or Taylor Swift didn’t earn their billions. Others chimed in with great retorts:

Noah Smith, the author of an economically focused Substack, expressed concern about the Democratic Party’s direction in reaction to the clip about Ocasio-Cortez. “I am concerned that the Dems are becoming the party of ‘millionaires who resent billionaires,'” he wrote. “‘I made my millions fair and square, but you cheated and exploited the workers to make your billions, you capitalist pig!'”

Jennifer Sey, founder and CEO of XX-XY Athletics, asked, “So how do these ladies feel about billionaire Tom Steyer trying to buy the CA governor’s race with his unearned billions? Or Daniel Lurie buying the SF mayoral race? Those billions are ok?”

But all this is failing to see AOCs brilliance, which is obviously not in economics, but in politics and the pursuit of her own political power as she gears up for a race for higher office in 2028. Like Mayor Mamdani, she understands that people may not support all her analysis, but she knows they feel the pain of higher prices and affordability. And since her philosophies directly lead to a large source of the unaffordability of American life, she has to offer a plausible alternate villain. She has to muddy the waters. In effect she’s saying “You’re struggling with affordability because there are groups of rich people that are taking some of your money.” Yet the roots of unaffordability is the step change in the spending of government that is unconstrained. Consider the chart below:

Average spending by the federal government has been around 21% for decades, while tax revenue has been close to 18%; the gap being why our national debt has risen dramatically over time. But with the Covid spending binge, exacerbated by the election of Joe Biden, the U.S. political system ratcheted up spending to a new steady state of 23+% of GDP, with no end in sight. And since the Democrats are philosophically in favor of a much larger level of government spending, and the current political leadership of the Republicans thinks taking on political spending is a loser, both sides have an interest in obfuscation. Now I’m still firmly in the economic camp that says inflation is always and everywhere a monetary phenomenon, yet the Fed doesn’t simply wake up and say “hey, let’s create some inflation.” No, they monetize the spending that the government doesn’t want to pay for with taxes and is unwilling to allow their debt to pay normal interest rates. Now we really don’t need to get to that level of economic discussion to understand this. We simply need to realize that when government takes more of the economic output, there is less for the rest of us, which means that prices are going to be higher for what’s left. And that is precisely what AOC and the rest of the politicians do not want us talking about.

So when you see your side blast AOC for her obvious economic illiteracy, however well deserved, you have missed her brilliance. Once again she is taking the real issue away from the very thin ice her party is institutionally committed to and changed the conversation to a stronger one, one in which a significant part of the country is willing to hear. AOC is a bad economist, but she’s a brilliant leftist politician.