The definition of a plutocrat is “a person who derives power from wealth.” Warren Buffet fits in that category. Buffet said in 2011 about the U.S. government: “We are still a democracy, but we have moved in my lifetime towards a plutocracy. We do not have a plutocracy, I want to emphasize that, but the distribution of wealth and the influence of wealth have moved in that direction.”

These are troubling words from Buffett, but he should know. Ironically, though, he, like other plutocrats in their own areas, has gained greatly from government help in order to create monopolies.

In 2009, his company, Berkshire Hathaway, purchased 77 percent of the shares of the Burlington Northern Santa Fe Railroad for $44 billion, according to David Cay Johnston in his best seller “The Fine Print: How Big Companies Use Plain English to Rob You Blind.” (You can see BNSF railcars in Auburn.)

Had you purchased $1 worth of stocks in BNSF just after Buffett bought the lion’s share, the value would have grown to $3.75 by 2012, much better than the stock market a year after the 2008 economic crash. By understanding how he did it, we can consider what it says about Buffett, and plutocrats as a group.

BNSF is a near monopoly, controlling 49 percent of rail traffic in the West. For farmers who need to ship their products to the cities, it’s the cheapest and virtually only means they have to do so. Truck hauling is far too expensive compared to trains. Farmers are considered “captive shippers.”

Forty-four percent of rail freight in 2012 was coal. According to Johnston, the best and most sulfur-free coal comes from Wyoming. The federal government limits coal production to cut down on air pollution, so most of the U.S. coal comes from Wyoming. Therefore the price is higher. This was a factor in Buffett’s purchase of BNSF.

Just before Buffet bought BNSF, the Surface Transportation Board, which regulates the industry, made an announcement that BNSF’s rates were too low – meaning that they could be raised. The STB tends to have more empathy for the railroads than it has for rail customers. That is the current attitude of both state and the federal regulatory agencies toward large corporations, according to Johnston.

Buffett, in buying the BNSF, now had two positive ways to make a profit: the opportunity to raise rail rates and a near monopoly on shipping coal. Buffett is known to prefer “market monopolies.” Competition, as Buffet says, “tends to eat up any excess profits.” This is the antithesis of capitalism, which is supposed to thrive on competition.

Buffet also owns an electric utility in Oregon, PacifiCorp, which uses coal to generate electricity. So not only does he control a railroad virtual monopoly, he also owns another government-regulated monopoly, a power utility.  According to Oregon law, utilities were given the right in 2011 to pocket state taxes, something that Buffett’s lobbyists were able to lobby into law through the Oregon legislature. So, Oregon taxpayers unknowingly pay a state tax that goes directly into the pockets of PacifiCorp.

Buffet raised railroad rates, which in turn raised utility rates in Oregon. This meant he benefited from rising prices from both companies, and the consumers were held captive to those rising costs.

Railroad executives used to complain about employee “featherbedding” by unions who did not allow railroads to lay off excess workers.  “Now we have, by government policy, what might be called ‘capital featherbedding’. But you won’t hear the railroad executives gripe about that,” Johnston writes.

Part of the problem with the nation today is that plutocrats have been able to control government through lobbying of Congress and by financing political campaigns, thus buying influence. This, in turn, increases profits for the super wealthy and creates monopolies.

The consumer experiences rising prices and reduced buying power while the superrich like Buffett and other plutocrats get even richer. Buffett’s giving away of part of his wealth to noble causes conceals the money-grubbing plutocrat he really is. We are truly living in a second Gilded Age – bright and shiny gold on the outside, but of low quality on the inside