Okay Cythie, here is your response as promised:
First of all, this first premise is incredibly vague. You have to spell out exactly what using wealth primarily for one's own benefit, etc. etc. is supposed to involve. Otherwise I'm not sure how to evaluate your claim. Here, I'll be vague too: I'm much more worried about the phenomena of regulatory capture and rent-seeking. The kind of economic power you worry about is way easier to exploit when you have a state powerful enough to run the economy in certain ways. Something that people tend to overlook is that big business is hardly a champion of free markets.
Using wealth primarily for one's own benefit includes things like buying luxury items for oneself, bribing public officials to overlook illegal behavior, or donating to politicians in order to win support for legislation that unfairly benefits a company one owns. I realise that there have been magnanimous business moguls throughout history who give much of their money back to the community, but they appear to be the exception rather than the rule.
I'm not quite sure what you mean by "regulatory capture and rent-seeking" (I'm not familiar with these terms), but if by that you basically mean the act of manipulating legislators and laws for personal profit and/or an unfair competitive advantage, you're going to have to do some explaining to convince me that a more regulated government, as a rule, tends to favor such a thing. Do you mean to say that certain types of regulation (i.e. graduated income tax, inheritance tax, or anti-trust laws) will result in more corruption, that each act of corruption will tend to be more more damaging, or both of the above? I think we agree that the economy has to be competitive in order to be beneficial to the greatest number of people, but how can it be competitive if there's nothing stopping a handful of people from hoarding away the majority of the country's wealth?
Okay, so you're being a little less vague here, but please spell out how people are losing economic freedom in this situation. Define 'economic freedom.'
I would define "economic freedom" as the ability to make a living that doesn't amount to indentured servitude or slavery. Economic freedom in this sense requires that someone has enough disposable income and enough career opportunities to live a comfortable and fulfilling life. When the vast majority of wealth in a society is controlled by a tiny minority of people whose aim is to keep themselves in control, the economy becomes less competitive, which results in higher costs of living and fewer career opportunities for the average person, therefore less economic freedom.
I assume that economic freedom in this sense is a key aim of a libertarian state as well as a 'social safety net' state (which is why I'm making it the focus of this argument), but feel free to correct me if I'm wrong.
One thing that might shed some light on this is to compare the combined wealth of a nation's top earners to the portion of that nation's tax budget not being distributed among its citizens, since it could be argued that an ineffectively libertarian society would have an excessive top-earner share of wealth whereas an ineffectively socialist society would have an excessive tax budget share. I'm not sure where to find good stats for this off the top of my head though.
Hopefully that clears up my argument enough for you. If so, I look forward to your rebuttal when you have time.