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The Economy

  

 

 WHAT’S WRONG WITH OUR ECONOMY, AND HOW TO FIX IT 

A PRIMER FOR BONEHEADS

By F Eric Saunders

June 22, 2011

Actually, this article is not really for boneheads.  Only those who won’t read it, or those who do read it and still ‘don’t get it’, are the boneheads.  What this IS is a look, past most of the complicating factors, into a very complex subject – the economy.  We need to concentrate on solutions, rather than wallowing in the complexity.  (BTW, I like that phrase “IS is”.  Where did I hear that before?)  There are already a lot of articles on Freedomsite.US discussing one or more of the issues touched upon here.  But this one will attempt to bring together the most important issues relating to our economic crisis.

While it is true that there are MANY factors that go into making up the economy, and which contribute to either its health or malaise, we can and should ignore the periphery – at least for the time being.  One thing we do know is that a generally healthy economy can weather small problems, and an already ailing economy cannot.  So let’s worry about the small things later.  We HAVE to deal with the big ones first, AND NOW – a sort of economic triage.  The “Big Three” are:  Public debt, private debt, and big government.  Note that, while I am discussing these three problems individually, herein, I’m sure you will notice that they are all, really, just three aspects of the same problem.

I can’t disagree that the TIMING of the onset of the current economic disaster was probably influenced by the fact that businessmen and investors were painfully aware that our (then) next President was apparently going to be the one who had promised to redistribute wealth, raise taxes on the ‘rich’, burden us with socialized medicine, and in every other way imaginable, destroy our economy.  But that hardly matters now, as the fact that the big slide would begin, sooner or later, was inevitable, given the degree to which we had allowed all three of these major problems to escalate over the past decades. 

 

Public debt:

Public debt hurts the economy in a lot of ways, but the two most important are that it takes money out of private hands, and that it makes the future very uncertain.  Taxes deplete the private economy in at least two ways.  Firstly, any portion that goes to paying interest on existing debt is, of course, theivery from the present to pay for past mistakes.  But a worse crime is spending our childrens' money on present mistakes, and that is exactly what borrowing to bail ourselves out (or worse, to fund 'nice' projects and programs that we could really do without) amounts to.  (For a full discussion of the effects of taxation on the economy, we have written extensively about that in  Freedomsite.US, particularly at Taxed to Death.)  ALL taxes hurt the economy – they divert money that should be available to reinvest in businesses and throw it into the black hole of bureaucracy, where all the efficiencies of the private sector are lost.  Abandon hope, all ye (dollars) that enter here!   Almost all the money that government gets its hands on goes to what private industry would call ‘overhead’, and only pennies on the dollar actually get back into real productive aspects of the economy (other than in the form of wages to bureaucrats, which does go toward improving their position as consumers – a minor consolation).  No matter how you look at it, ALL taxes are bad for the economy.  (It may occur to you that there are some exceptions to that rule, but see the full discussion on Freedomsite.US before making up your mind on that, particularly the article: Net Gain or Net Loss.)  Some taxes may be necessary evils, but we clearly have to redefine our definition of ‘necessary’.  Again, this whole subject is just too extensive for this brief article, but suffice it to say that the speed of circulation of money is a critical factor, and government acts like a bottleneck to the flow.  Please do read the more detailed articles on this subject here in Freedomsite.US.

The other deadly effect that public debt has on the economy is that it destroys predictability and confidence in the future – both of which are necessary to investment.  Without confidence and predictability, investors won’t invest and create jobs, even if they have the money.  But how can an investor have a firm and confident outlook when we have so much debt?  If you have not done so, you should take a look at USdebtclock.org.  As of a few minutes ago (midday June 13, 2011), it was at $14,426,990,569,000, but it is a lot more now, of course.  The GOOD news is that, if we were to stop all borrowing immediately and then immediately begin to pay back the debt at the rate of $1.00 every thousandth of a second – or $1,000.00 every second (24 hours per day, 365 days per year), then it would only take 2,404,498,428 minutes, or 40,074,974 hours, or 1,669,791 days, or 4,575 years to pay that debt.  That’s right folks, in only a few hundred years more than just twice as long as it has been since Jesus Christ last walked the earth, we could pay it all back, at the rate of $1,000.00 per second.  But, as I said, that’s the good news.  The BAD news is that those figures don’t include interest.  The REAL truth, is that we could NEVER pay off our debt, with interest, within the lifetimes of our great grandchildren, at any rate short of MILLIONS OF DOLLARS PER SECOND.  How could anyone be sanguine about the future, knowing that?  We have incurred more debt since Obama took office than we did throughout the entire history of our country up until that time.

In summary here, I will repeat a quotation from Thomas Jefferson that I have used elsewhere:  We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds...[we will] have no time to think, no means of calling our miss-managers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers... And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for [another ]... till the bulk of society is reduced to be mere automatons of misery... And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression."

Private debt:

We are a nation of prolific spenders.  There are good and bad aspects to that, and we probably could stand to reign it in, just a bit.  But there is no single spending/saving ratio that is ideal for all situations.  Spending does help to stimulate the economy.  Saving does free up money for banks to loan and does provide somewhat of a hedge against uncertainty.  And even debt, per se, is a valuable economic tool, if used prudently and kept carefully in check.  But the debt that really hurts is that which we simply can’t afford – imprudent debt.  And the king of such indiscretion is the overextending in real estate in which many of us indulged over the past few decades.  Many of us saw this problem coming years ago, and some of us – including a significant number of our legislators – tried to do something about it. 

Most of the factors being discussed here are the joint responsibility of both Republicans and Democrats – the Democrats because they have pushed for and endorsed socialist policies, and the Republicans because they have lacked the courage or fortitude to stop the Democrats.  In the defense of the Republicans, it is a serious – perhaps even unsolvable – conundrum that one must get elected to effect change and, at least in the environment prevailing in the past, to get elected one must carefully avoid being seen as standing against many of the wonderful social programs proposed by the Democrats.  In the defense of the Democrats, many of them sincerely think that socialism is a viable system, but that is the inevitable result of only thinking things half way through.  All of us want to help the least fortunate among us.  We all want to provide for the children, the elderly, and even the improvident.  Only a complete idiot would charge, as some complete idiots do, that either Republicans or Democrats, as a whole, hold their own selfish interests above that of the country and their fellow citizens.  True, some individuals from both sides do that, but that is the exception, not the rule.  But Republicans do generally differ, usually very adamantly, in their attitudes toward whether socialist policies are the best way to improve conditions for all.  And this example – the housing crisis – is the most demonstrably clear example of this schism.  By now, surely you are familiar with the videos of the congressional hearings wherein Republicans were trying to stop the lending, by Fannie and Freddie, to those who could not afford it, while Democrats (particularly Elmer Fudd, er, I mean Barney Frank and Sheila Jackson Lee) were heaping praise upon them for getting those houses in the hands of the poor – and sending them on their way, with increased taxpayer participation, to do more such “good works”.  If you have not seen those videos, then get on YouTube and look them up.

Anyway, the housing crisis is a BIG part of our problem right now.  When President Reagan took over from Carter, other than the lack of a housing crisis such as we have now, our economy (stock market, jobs, etc.) was in worse shape than at the beginning of the Obama administration.  But Reagan, rather easily, got us out of that mess – mostly by getting Government the hell out of the way and letting businesses recover, instead of taxing them to try to create imaginary government jobs.  But then, admittedly, Reagan did not also then have the collapse of real estate market with which to deal.  The conjunction of the big-three factors that we have now is unprecedented – at least since the Great Depression, and it will take unprecedented efforts to get out of it – efforts completely opposite to those which have so far been undertaken by the Obama administration.        

Big government:

President Clinton famously proclaimed that, “The era of big government is over.”  Clearly, he recognized the problem.  If he had said, instead, “The era of big government MUST be over, if we are to survive,” then he would have been right.  But one can hardly blame him for making the mistake of thinking that no one, certainly no President, would bring more and bigger government down upon us the way that Obama, and Bush in the last days of his second term, have done.

Everything that government does is an intrusion on someone’s freedom.  To the extent that it intrudes on our freedom to murder, rape, steal, and such, most of us agree that the loss of those particular freedoms is a good thing.   But government is going way beyond any nightmarish, drug induced distortion of a ‘legitimate government function’.  (See the article Drawing the Line, discussing the limits of legitimate government functions.)  Now government is dictating what we should do in our private lives, and it is using our own money to enforce those mandates.  And some sheeple are going along with it, because what the government is doing is really very ‘nice’ – the sort of thing that any good person would want to see done.  One thing we HAVE to keep in mind is this:  Just because something is ‘a good idea’ doesn’t mean that government should do or mandate it.  It is a good idea to have CO2 detectors in our homes, but now California is mandating that we do that.  It is a good idea to have midnight basketball leagues to keep kids off the street at night, but we just can’t afford it – find some other, cheaper, and MORE EFFECTIVE way.  It is a good idea to eat a balanced diet.  Do you really want Government telling you what, and when to eat?  It is a good idea to exercise daily.  Do you really want the exercise police monitoring you?   And on, and on, and on, and on, and on.  There doesn’t appear to be any limit – because we constantly keep passing milestones that we once thought would never be passed, and then we constantly keep readjusting what we believe to be the limits past which government will never really dare to go.

Big government is like a cancer – as it grows it consumes and displaces all the good things about our society AND our economy.  It is also addictive – as it is just about impossible to wean people off of “entitlement” programs.  Can you imagine an addictive cancer – how evil and destructive such a thing would be?  Well, we have one in our midst.  As Barry Goldwater said, “Any government big enough to give you everything you want is big enough to take everything you have.”  And as Thomas Jefferson wrote, "Experience hath shewn, that even under the best forms [of government] those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”  And, as George Washington so eloquently put it, “How soon we forget history .... Government is not reason. Government is not eloquence. It is force. And, like fire, it is a dangerous servant and a fearful master."  Most of all, big government is completely incompatible with a vibrant economy.           

When it comes to the economy, the problems with Big Government are not just academic or philosophical.  It is a simple fact that excessive government regulation drives away business.  If you don’t believe me, ask California.  And in today’s international economy, the same rules apply to countries as they do to states. 

We discussed taxes, above, in relation to the Public Debt.  But taxes are a factor here, too.  Here, taxes are not the end evil, but the contributing evil.  The way to stop big government is to cut off its blood supply.  That’s really the ONLY way, as socialist leaning types will ALWAYS come up with wonderful programs, that are really great ideas, that would certainly benefit us all – and those of us who most need it particularly, that would contribute to the health and well being of our society as a whole, and which our government should certainly support, else we are all evil, unworthy, capitalists.  Can we afford all such programs?  Of course not.  But our legislators, eager to get reelected, will continue to vote for them.  So, how to stop them?  Don’t give them the damned money!   I don’t care if you pay the taxes, or if I do, or if GE does.  I simply don’t want Government to have the money it needs to take over every aspect of our lives.  And, as a side benefit, if it doesn’t have the money, it can’t “invest in shovel ready projects”, and such, to screw up our economy.   FINALLY, we seem to be making some progress with our legislators on the point that we can’t go on getting further and further into debt.  Please don’t let us make the mistake of supplanting the evil of borrowing with the evil of raising taxes.  THAT WOULD BE WORSE!  Let’s just cut and slash the budget until only the very basic essentials are left.  To hell with going at it with a scalpel.  It’s just too late for that sort of silliness. 

What to do about it:

Like many of the facts of life, a truism turns out to be true, no matter how you approach it.  I believe that God (or nature, if you prefer) made it so.  Right is right, and wrong is wrong, no matter how you disguise or candy coat wrong, and no matter how you distort, slander, or malign right.  I believe that it is right to give people the greatest amount of freedom possible, so that they can flourish and grow, so that they can let their minds and spirits soar, the way that God (or nature, if you prefer) intended.  I believe that it is wrong to force people into cells where they will be ‘comfortable’ throughout their lives, but at the expense of their freedom.  I believe that it is right to be concerned about those less fortunate than ourselves, and to do everything within our power to help such people.  But I believe that it is wrong to use socialist means to achieve those goals, since both history and common sense dictate that, as well meaning as such an approach might be, it will inevitably lead to the destruction (economic, if not total) of us all – the so-called rich and the poor alike.

But, as I suggested above, how you analyze the problem should not affect your arrival at the truth.  Should we cut spending so that we can lower taxes, or should we lower taxes to force cuts in spending?  I have long argued that (contrary to the prevailing sentiment), as a practical matter, it makes more sense to worry first about cutting taxes while simultaneously forcing our ‘leaders’ to conform their spending to the available revenue, thereby also cutting off the blood supply to the cancerous growth called ‘Big Government’.  But, look at it the other way around, if you like.  If you think that debt is the bigger problem and taxes only a related issue, so be it.  These are only practical considerations.  Either way, we MUST cut spending, and we MUST cut taxes, and we MUST get government out of the business of ruling over every aspect of our lives – both personal and economic. 

At the outset of this article, I promised that it would lead to simple solutions.  I will not here be so unkind as to suggest that we need simple solutions because that is the only kind our legislators could possibly understand.  It’s not just the legislators.  We all need to try to simplify things in order to understand and prioritize them.  The problem is that the ‘way things are done’ in Washington is so well established that our legislators continue to do things that way, instead of stepping back and really taking a fresh look at the issues.  In fact, what needs to be done is so simple that even a child should be able to understand it, even if it may not be so apparent to lawmakers and most of the rest.  We need to stop spending, cut taxes and decrease the size of government.

Stop spending:

Stop ALL unnecessary spending.  The economy can and will recover from the loss of jobs that would directly result from stopping unnecessary government spending.  On the other hand, given the gross inefficiencies of government programs, no quantity of government jobs could make up for the loss of jobs in the private sector caused by the taxation necessary to create or maintain the government jobs.  If you don’t believe me, then at least you should believe the statistics released by the Obama White House.  According to their own data, there were about 2.4 million jobs “created or saved”, at a cost of about only $278,000 per job.  Of course, the concept of counting “saved” jobs is just ridiculous.  And most of the jobs that were “created” were temporary jobs, such as census jobs that would have been created no matter what.  Or, if you don’t like the White House figures, then believe the Counsel of Economic Advisors, Obama’s hand-picked group – who tell us that the actual cost per job “created or saved” was more like $1,400,000.  The only way to “create” a job that will have any lasting positive effect on the economy is to allow the economy to grow such that there is an actual demand for such a job.

Put another way, with a few exceptions (such as police and fire fighters) any government worker that is really necessary could and would be hired by the private sector to do the same, or similar, job.  They would very probably get a raise in pay for making that transfer, and we would all be better off because their job would cost us only a fraction of what it costs us now, if you consider both their direct salary and benefits and the bureaucratic overhead.    The very best example of this would be school teachers.  If we had vouchers instead of public schools, our children would get a better education, our teachers would be paid more, and it would cost us far, far less.  No one, except perhaps a few excess administrators and most, or all,  of the union officials, would be out of a job.  And remember, if a person loses a job that was not contributing to the overall well being of the economy in the first place, then suffering that extra temporarily unemployed person is the medicine we must take to set the economy back on the right track – even if it is temporary painful.  The ‘invisible hand’ is still at work.  Unless government interferes, it WILL not just create jobs – it will create them where they are needed or wanted, instead of where some bureaucrat or stupid law decides they should be.

 And, as for all of those programs that are really, really nice:   I don’t care how damned nice they are. Many of those do-gooder programs are just gross intrusions into our freedoms.  Good riddance!  As for some few others – cancer research and such – by all means continue them, but cut out the fat.

Cut taxes:

This seems to be the one about which there is the most debate.  A lot of people want OTHER people to pay more – presumably so that they will get more back from the government.   Indeed, we may have to work out some sort of compromise that combines SOME temporarily increased taxes with drastic cuts in spending, in order to get out of this mess.  But just because we may end up having to do that doesn’t mean it is the ideal solution.  Ideally, we should CUT ALL TAXES NOW, and then cut spending also.  The more we raise taxes, the harder it will be for the economy to recover.  I won’t disagree with you if you think that the most important of the three factors is the public debt, and that we need to do whatever we can to get out of it.  But I will disagree that raising taxes of any kind is the way.  Don’t forget that we have all three of these problems, not just one.  If we LOWER taxes, that will help the economy to recover, which will allow us to recover from the housing crisis and the massive private debt problem.  The increased prosperity will mean that we will have an increased tax BASE from which we COULD draw revenues – although I argue that just because we could doesn’t mean that we should. And, finally, and I think most importantly, any actual decrease in revenues would actually be a good thing, even if it is only temporary – as it would stifle the interference with our economy in which our government is now engaging.

Get rid of Big Government:

If we were to approach the problem of Big Government in a vacuum, I admit that it would be almost impossible to solve.  There are a lot of human factors that tend to make government grow, and only strict discipline will keep it in check.  For instance, there is a human tendency to want to “do” something about any perceived problem.  For every perceived injustice or potential hazard, sheeple want the government to DO something.  And our Legislators love to write bills, even though we already have far too many laws.  They go home to their constituents and brag about how many bills they authored, when they should be ashamed of it.  Madison, in one of his contributions to the Federalist (Papers) opined that if laws ever become so numerous or so complicated that they are difficult for business people to understand, then the economy is doomed.  He was right.  Yet we continue to pile law upon law, and regulation upon regulation.

But the genius of a coordinated attack on all three of these factors is this:  If we cut taxes and cut spending, then keeping the size of government in check will be the natural outcome.  Politicians WILL continue to interfere with our personal freedoms, with our financial freedoms, and every aspect of our lives and our economy, as long as they have the money with which to do so.  (If you are not convinced of that simple fact, I refer you, again, to the quotations from our founding fathers, above.)  DON’T LET THEM HAVE THE MONEY!  If you are a true loyal American, then you will be for ALL tax cuts.  Tax cuts for the so-called “rich”.  Tax cuts for the poor – or at least for those with lower incomes that still do pay taxes.  Tax cuts for businesses.  Stop worrying about who is getting tax cuts and start rejoicing in the fact that Big Brother is being starved of the resources he needs to continue driving us down the Road to Serfdom.  Getting rid of the deficit first, and then the national debt, is important.  But do remember that these are not our only problems.  There are other reasons why we should, indeed must, stunt the growth of Big Government.  But we can, and will, kill all these birds with one stone if we first concentrate on cutting taxes.

                                             

Post Script:

The above essay argues the practical reasons for cutting taxes.  In short, we know that experience has shown that it is the best way to stimulate the economy.  But if you are the sort that doesn’t acknowledge, or doesn’t believe that experience, then you can just use common sense.  Government is far less efficient than a free economy.  Do you think that money is used more efficiently to create jobs by Government planning or by a free economy?  These things, alone, should be enough to make the case.  But there ARE other reasons for cutting taxes.  We would get numerous added benefits, especially including that Big Brother would not have the resources to try to take over every aspect of our lives.

Those are mostly practical considerations, albiet with some moral implications.   But there are also more purely moral reasons for better tax equality.  The so-called “rich” are now paying amost ALL the taxes – leaving the majority, most of whom pay little or no taxes, free to enact whatever addle brained social programs they like, in the comfortable knowledge they they will not have to pay for them.  Is that moral?  Is that wise – to have the majority free to tax the minority at will?  One COULD argue that it is immoral to impose a greater tax rate on one person than on another.  A flat tax would certainly be the most equitable and most fair system.  But the problem is that a small percentage of a small paycheck is a very small amount – not enough to feed the government pig.  So we must have the “rich” pay more than their fair share, else we will never have the huge coffers we need to move steadily toward Socialism.  Thus, we now have the “rich” paying well over 50% of their income in various taxes.  Some people think that is not enough.  Some people will never be happy until we TOTALLY destroy the economy, our country, and the American way of life, by taxing those who prosper for themselves, and thereby create jobs for others, until they simply stop doing so.   

I enjoyed reading the little fiary tale, below, which I did not myself write.
 

                                            A FATHER & DAUGHTER DISCUSSION:


A young woman was about to finish her first year of college. Like so many others her age, she considered herself to be a very Liberal Democrat, and among other liberal ideals, was very much in Favor of higher taxes to support more government programs, in other words redistribution of wealth.  She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed.  Based on the Lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.

One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs.  The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father. He responded by asking how she was doing in school. 

Taken aback, she answered  rather haughtily that she had a 4.0 GPA, and let  him know that it was tough to maintain, insisting that  she was taking a very difficult course load and was constantly studying, which left her no time to go  out and party like other people she knew.  She didn't even have time for a boyfriend, and didn't really have many college friends, because she spent all her time studying. 

Her father listened and then asked, 'How is your friend Audrey doing?' She replied, 'Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She's always invited to all the parties and lots of times she doesn't even show up for classes because she's too hung over.'

Her wise father asked his daughter, 'Why don't you go to the Dean's office and ask him to deduct 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA, and certainly that would be a fair and equal distribution of GPA.' The daughter, visibly shocked by her father's suggestion, angrily fired back, 'That's a crazy idea!  How would that be fair?  I've worked really hard for my grades!  I've invested a lot of time, and a lot of hard work!  Audrey has done next to nothing toward her degree. She played while I worked my tail off!' 

The father slowly smiled, winked and said gently, 'Welcome to the Republican party.'


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One Reason Why “Stimulus” Doesn’t Work


By F Eric Saunders


8/10/2011

 

There are a lot of reasons why “Stimulus” is a bad idea. If you have studied economics then you will understand that, even in theory, unless stimulus money is spent very efficiently, it will result in an exogenous spending multiplier of less than 1.0.  And bitter experience has shown that, in fact, stimulus money is NEVER spent efficiently – that is a practical impossibility, given the human factors involved and the inherent inefficiency of ANY Big Government.  (Turns out a lot of them “shovel-ready-projects” weren’t really shovel-ready.  Duh!!!)  For example, as our friend Jerry Pollard puts it, “Stimulus will not work for the same reason Socialism doesn’t work.”  In short, all of the efficiencies and incentives of capitalism are missing from both, and human frailties, such as sloth and envy, insure the failure of both.  (As just one example, it was just in the news that a California county used its “stimulus” money to increase county employees’ benefits, rather than to create even a single additional job.  I’m sure you know that the news is full of such examples, assuming that you don’t get your news from one of those “main stream” sources that habitually editorialize by omission.) But, in fact, although there are many other reasons, and although "stimulus" does include more than just government jobs (see the first cartoon below this article for our comment on that), one need look no further than the chart below to understand why “Stimulus” doesn’t work.

    

GOVERNMENT JOBS

PRIVATE SECTOR JOBS

 

(1) WAGES OF EMPLOYEES HELP FUEL THE ECONOMY

But the contribution to the economy from Government jobs is more than offset by the drain on the economy from the taxes required to pay those public employees. 

 

(1) WAGES OF EMPLOYEES HELP FUEL THE ECONOMY

This is the feature that comes the closest to being the same either way.  BUT, private sector jobs tend to grow the private economy, thus leading to even more jobs and even more wages, while government jobs tend to drag down the private economy (as discussed in relation to the other categories, below).

 

  (2) EMPLOYEES PAY TAXES

But the amount of taxes paid back to the Government is FAR less than the cost of the jobs.  Increasing the number of Government jobs exponentially increases the burden on other taxpayers.  This is a KEY point that most Keynsians seem to miss entirely.  (You can’t increase net revenue by paying someone $25,000 a year and getting $3,000 back in taxes.)

  

(2) EMPLOYEES PAY TAXES

Hopefully, those taxes will be used to pay for things we need – to help those who need help, etc., AND to build infrastructure that will support the economy, but NOT to burden taxpayers with even more public employees.

 

(3) MANY GOVERNMENT JOBS END SOON

Many Government jobs are temporary – lasting as long as the funding for a particular project.  This (a) temporarily hides the effects of an economy that is really failing, (b) costs jobs in the private sector that might otherwise be doing the same project and (c) dumps those workers back on a weakened economy at the end – thereby making a bad problem even worse.

 

(3) PRIVATE SECTOR JOBS ARE CREATED WHEN THEY ARE NEEDED, AND END WHEN THEY ARE NO LONGER NEEDED

The fact that some private sector jobs do eventually end is a good thing.  Without that, where would we get the employees for our next great new enterprise?

(4)  THOSE GOVERNMENT JOBS THAT DON’T END SOON LAST WAY TOO LONG

There will always be a need for useful and necessary Government employees – police, fire, air traffic control, etc.  But MOST bureaucracies live way past their usefulness.  After bureaucracies are created, their primary purpose is self preservation, and they are extremely good at that one thing.

 

(4) PRIVATE SECTOR JOBS ARE CREATED WHEN THEY ARE NEEDED, AND END WHEN THEY ARE NO LONGER NEEDED

 

(5) WHAT JOBS ARE NEEDED IS DECIDED BY BUREAUCRATS

Even outright hard-core communists have long-ago recognized that central control of the economy just doesn’t work.

 

(5) WHAT JOBS ARE NEEDED IS DECIDED BY THE ECONOMY, AND BY BUSINESSMEN ACTING IN THEIR OWN BEST INTERESTS


(6) GOVERNMENT JOBS TAKE MONEY OUT OF THE ECONOMY

For the most part, they produce nothing of value that can be sold to China, or such.  But they DO take money out of the private economy, which might otherwise be used to create goods and services AND to create the demand for such goods and services. (Government can only give to one person/business what it takes away from another person/business.)  Put in the terms used by economists, Public Investment “crowds out” Private Investment.

 


(6) PRIVATE SECTOR JOBS CONTRIBUTE TO THE ECONOMY

They produce goods and services that people want to buy – and that can be traded internally AND to our foreign trading partners.

(7) GOVERNMENT JOB CREATION IS INEFFICIENT

MOST of the cost of Government jobs is not in the wages paid to the recipients of those jobs.  Witness the recent so-called “stimulus” where only a few single-digit cents on the dollar actually trickled through to the intended recipients.  Most of it was eaten up by the bureaucracy in between.

 

(7) PRIVATE SECTOR JOB CREATION IS EFFICIENT

It’s efficient because it HAS to be, for the employer to stay in business.  For example, private sector HR people are employees, just like any other, with their jobs at stake if they do not deliver.

(8) GOVERNMENT WORKERS ARE INEFFICIENT

If you are a hardworking and dedicated public servant, then thank you.  I know that there are many of you out there.  But it’s just a fact that effective lifetime tenure and lack of private-sector controls mean that those who are NOT self motivated and conscientious can find safe haven in a Government job.

(8) PRIVATE SECTOR WORKERS ARE EFFICIENT

Or else!!!

 

 

 

 

 

 

(9) RETIREMENT AND OTHER BENEFITS ARE OUT OF PROPORTION TO MARKET VALUE

We have always known that Government employees  have hugely disproportionate retirement and health benefits.  That used to be “excused” because they supposedly made less in salary.  But recent studies have shown that Government employees actually make MORE than their counterparts in the private sector.  But whether that is correct or not, there is just no way to justify the munificence of Government pensions and benefits.  This problem is made MUCH worse in combination with the fact that, in contrast to the private sector, almost all Government employees do end up on the retirement rolls, sucking the life out of the economy way after their contributing years have ended.  (Again, we mean nothing personal about this.  We know that many public employees are dedicated public servants.  But it’s the aggregate effect we are talking about here.)

 

(9)  IN THE PRIVATE SECTOR, THE MARKET DETERMINES COMPENSATION AND BENEFITS

Despite some inefficiencies, caused by Unions, Government interference, and such, there is still no comparison.  For the most part, salaries and benefits are part of the calculation in the decision to hire, and also in the decision about whether to accept a particular job.  Benefits, like salaries, are set by the market rather than by politically motivated legislators trying to buy votes by lavishing benefits on public sector employees.

 

(This last distinction was suggested by Chris Wilborn.  Thanks.)    

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And don't forget - 100% of "stimulus" is borrowed money - mostly from China.  Given the impossible burden of debt we have already accumulated over the last 30 or so years, that alone should be sufficient argument against so-called "stimulus"

                               

 

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The Fascist Threat

by Llewellyn H. Rockwell Jr.
on October 7, 2011

[This talk was delivered at the Doug Casey conference, "When Money Dies," in Phoenix on October 1, 2011.]

Everyone knows that the term fascist is a pejorative, often used to describe any political position a speaker doesn't like.

[Editor’s note:  A great example of this is that liberals, knowing little of history and caring little for accuracy, love to call conservatives “fascists” while here, of course, we equate fascism with socialism, knowing the two are usually found lurking together.  But, as the author of this article explains, below, we need also be alert for fascism in the guise of conservatism.  The world is much more complex, sometimes, than we would like it to be.  That’s why we are here at Freedomsite.US – trying to understand and to be understood.]

 There isn't anyone around who is willing to stand up and say, 'I'm a fascist; I think fascism is a great social and economic system."

 But I submit that if they were honest, the vast majority of politicians, intellectuals, and political activists would have to say just that.

Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police state as the source of order, denies fundamental rights and liberties to individuals, and makes the executive state the unlimited master of society.

This describes mainstream politics in America today. And not just in America. It's true in Europe, too. It is so much part of the mainstream that it is hardly noticed any more.

It is true that fascism has no overarching theoretical apparatus. There is no grand theorist like Marx. That makes it no less real and distinct as a social, economic, and political system. Fascism also thrives as a distinct style of social and economic management. And it is as much or more of a threat to civilization than full-blown socialism.

This is because its traits are so much a part of life — and have been for so long — that they are nearly invisible to us.

If fascism is invisible to us, it is truly the silent killer. It fastens a huge, violent, lumbering state on the free market that drains its capital and productivity like a deadly parasite on a host. This is why the fascist state has been called the vampire economy. It sucks the economic life out of a nation and brings about a slow death of a once-thriving economy.

Let me just provide a recent example.

The Decline

The papers last week were filled with the first sets of data from the 2010 US Census. The headline story concerned the huge increase in the poverty rate. It is the largest increase in 20 years, and now up to 15 percent.

But most people hear this and dismiss it, probably for good reason. The poor in this country are not poor by any historical standard. They have cell phones, cable TV, cars, lots of food, and plenty of disposable income. What's more, there is no such thing as a fixed class called the poor. People come and go, depending on age and life circumstances. Plus, in American politics, when you hear kvetching about the poor, everyone knows what you're supposed to do: hand the government your wallet.

Buried in the report is another fact that has much more profound significance. It concerns median household income in real terms.

"The fascist economic model has killed what was once called the American dream."

What the data have revealed is devastating. Since 1999, median household income has fallen 7.1 percent. Since 1989, median family income is largely flat. And since 1973 and the end of the gold standard, it has hardly risen at all. The great wealth-generating machine that was once America is failing.

No longer can one generation expect to live a better life than the previous one. The fascist economic model has killed what was once called the American dream. And the truth is, of course, even worse than the statistic reveals. You have to consider how many incomes exist within a single household to make up the total income. After World War II, the single-income family became the norm. Then the money was destroyed and American savings were wiped out and the capital base of the economy was devastated.

It was at this point that households began to struggle to stay above water. The year 1985 was the turning point. This was the year that it became more common than not for a household to have two incomes rather than one. Mothers entered the workforce to keep family income floating.

The intellectuals cheered this trend, as if it represented liberation, shouting hosannas that all women everywhere are now added to the tax rolls as valuable contributors to the state's coffers. The real cause is the rise of fiat money that depreciated the currency, robbed savings, and shoved people into the workforce as taxpayers.

This story is not told in the data alone. You have to look at the demographics to discover it.

This huge demographic shift essentially bought the American household another 20 years of seeming prosperity, though it is hard to call it that since there was no longer any choice about the matter. If you wanted to keep living the dream, the household could no longer get by on a single income.

But this huge shift was merely an escape hatch. It bought 20 years of slight increases before the income trend flattened again. Over the last decade we are back to falling. Today median family income is only slightly above where it was when Nixon wrecked the dollar, put on price and wage controls, created the EPA, and the whole apparatus of the parasitic welfare-warfare state came to be entrenched and made universal.

Yes, this is fascism, and we are paying the price. The dream is being destroyed.

The talk in Washington about reform, whether from Democrats or Republicans, is like a bad joke. They talk of small changes, small cuts, commissions they will establish, curbs they will make in ten years. It is all white noise. None of this will fix the problem. Not even close.

The problem is more fundamental. It is the quality of the money. It is the very existence of 10,000 regulatory agencies. It is the whole assumption that you have to pay the state for the privilege to work. It is the presumption that the government must manage every aspect of the capitalist economic order. In short, it is the total state that is the problem, and the suffering and decline will continue so long as the total state exists.

The Origins of Fascism

To be sure, the last time people worried about fascism was during the Second World War. We were said to be fighting this evil system abroad. The United States defeated fascist governments, but the philosophy of governance that fascism represents was not defeated. Very quickly following that war, another one began. This was the Cold War that pitted capitalism against communism. Socialism in this case was considered to be a soft form of communism, tolerable and even praiseworthy insofar as it was linked with democracy, which is the system that legalizes and legitimizes an ongoing pillaging of the population.

In the meantime, almost everyone has forgotten that there are many other colors of socialism, not all of them obviously left wing. Fascism is one of these colors.

There can be no question of its origins. It is tied up with the history of post–World War I Italian politics. In 1922, Benito Mussolini won a democratic election and established fascism as his philosophy. Mussolini had been a member of the Italian Socialist Party.

All the biggest and most important players within the fascist movement came from the socialists. It was a threat to the socialists because it was the most appealing political vehicle for the real-world application of the socialist impulse. Socialists crossed over to join the fascists en masse.

This is also why Mussolini himself enjoyed such good press for more than ten years after his rule began. He was celebrated by the New York Times in article after article. He was heralded in scholarly collections as an exemplar of the type of leader we needed in the age of the planned society. Puff pieces on this blowhard were very common in US journalism all through the late 1920s and the mid-1930s.

"When you run out of everything else to spend money on, you can always depend on nationalist fervor to back more military spending."

Remember that in this same period, the American Left went through a huge shift. In the teens and 1920s, the American Left had a very praiseworthy anticorporatist impulse. The Left generally opposed war, the state-run penal system, alcohol prohibition, and all violations of civil liberties. It was no friend of capitalism, but neither was it a friend of the corporate state of the sort that FDR forged during the New Deal.

In 1933 and 1934, the American Left had to make a choice. Would they embrace the corporatism and regimentation of the New Deal or take a principled stand on their old liberal values? In other words, would they accept fascism as a halfway house to their socialist utopia? A gigantic battle ensued in this period, and there was a clear winner. The New Deal made an offer the Left could not refuse. And it was a small step to go from the embrace of the fascistic planned economy to the celebration of the warfare state that concluded the New Deal period.

This was merely a repeat of the same course of events in Italy a decade earlier. In Italy too, the Left realized that their anticapitalistic agenda could best be achieved within the framework of the authoritarian, planning state. Of course our friend John Maynard Keynes played a critical role in providing a pseudoscientific rationale for joining opposition to old-world laissez faire to a new appreciation of the planned society. Recall that Keynes was not a socialist of the old school. As he himself said in his introduction to the Nazi edition of his General Theory, National Socialism was far more hospitable to his ideas than a market economy.

Flynn Tells the Truth

The most definitive study on fascism written in these years was As We Go Marching by John T. Flynn. Flynn was a journalist and scholar of a liberal spirit who had written a number of best-selling books in the 1920s. He could probably be put in the progressive camp in the 1920s. It was the New Deal that changed him. His colleagues all followed FDR into fascism, while Flynn himself kept the old faith. That meant that he fought FDR every step of the way, and not only his domestic plans. Flynn was a leader of the America First movement that saw FDR's drive to war as nothing but an extension of the New Deal, which it certainly was.

But because Flynn was part of what Murray Rothbard later dubbed the Old Right — Flynn came to oppose both the welfare state and the warfare state — his name went down the Orwellian memory hole after the war, during the heyday of CIA conservatism.

As We Go Marching came out in 1944, just at the tail end of the war, and right in the midst of wartime economic controls the world over. It is a wonder that it ever got past the censors. It is a full-scale study of fascist theory and practice, and Flynn saw precisely where fascism ends: in militarism and war as the fulfillment of the stimulus-spending agenda. When you run out of everything else to spend money on, you can always depend on nationalist fervor to back more military spending.

In reviewing the history of the rise of fascism, Flynn wrote,

One of the most baffling phenomena of fascism is the almost incredible collaboration between men of the extreme Right and the extreme Left in its creation. The explanation lies at this point. Both Right and Left joined in this urge for regulation. The motives, the arguments, and the forms of expression were different but all drove in the same direction. And this was that the economic system must be controlled in its essential functions and this control must be exercised by the producing groups.

Flynn writes that the Right and the Left disagreed on precisely who fits the bill as the producer group. The Left tends to celebrate laborers as producers. The Right tends to favor business owners as producers. The political compromise — and it still goes on today — was to cartelize both.

Government under fascism becomes the cartelization device for both the workers and the private owners of capital. Competition between workers and between businesses is regarded as wasteful and pointless; the political elites decide that the members of these groups need to get together and cooperate under government supervision to build a mighty nation.

The fascists have always been obsessed with the idea of national greatness. To them, this does not consist in a nation of people who are growing more prosperous, living ever better and longer lives. No, national greatness occurs when the state embarks on building huge monuments, undertaking nationwide transportation systems, carving Mount Rushmore or digging the Panama Canal.

In other words, national greatness is not the same thing as your greatness or your family's greatness or your company's or profession's greatness. On the contrary. You have to be taxed, your money's value has to be depreciated, your privacy invaded, and your well-being diminished in order to achieve it. In this view, the government has to make us great.

Tragically, such a program has a far greater chance of political success than old-fashioned socialism. Fascism doesn't nationalize private property as socialism does. That means that the economy doesn't collapse right away. Nor does fascism push to equalize incomes. There is no talk of the abolition of marriage or the nationalization of children.

"No matter how much you may believe that you are free, all of us today are but one step away from Guantanamo."

Religion is not abolished but used as a tool of political manipulation. The fascist state was far more politically astute in this respect than communism. It wove together religion and statism into one package, encouraging a worship of God provided that the state operates as the intermediary.

Under fascism, society as we know it is left intact, though everything is lorded over by a mighty state apparatus. Whereas traditional socialist teaching fostered a globalist perspective, fascism was explicitly nationalist. It embraced and exalted the idea of the nation-state.

As for the bourgeoisie, fascism doesn't seek their expropriation. Instead, the middle class gets what it wants in the form of social insurance, medical benefits, and heavy doses of national pride.

It is for all these reasons that fascism takes on a right-wing cast. It doesn't attack fundamental bourgeois values. It draws on them to garner support for a democratically backed all-around national regimentation of economic control, censorship, cartelization, political intolerance, geographic expansion, executive control, the police state, and militarism.

For my part, I have no problem referring to the fascist program as a right-wing theory, even if it does fulfill aspects of the left-wing dream. The crucial matter here concerns its appeal to the public and to the demographic groups that are normally drawn to right-wing politics.

If you think about it, right-wing statism is of a different color, cast, and tone from left-wing statism. Each is designed to appeal to a different set of voters with different interests and values.

These divisions, however, are not strict, and we've already seen how a left-wing socialist program can adapt itself and become a right-wing fascist program with very little substantive change other than its marketing.

The Eight Marks of Fascist Policy

John T. Flynn, like other members of the Old Right, was disgusted by the irony that what he saw, almost everyone else chose to ignore. In the fight against authoritarian regimes abroad, he noted, the United States had adopted those forms of government at home, complete with price controls, rationing, censorship, executive dictatorship, and even concentration camps for whole groups considered to be unreliable in their loyalties to the state.

After reviewing this long history, Flynn proceeds to sum up with a list of eight points he considers to be the main marks of the fascist state.

As I present them, I will also offer comments on the modern American central state.

Point 1. The government is totalitarian because it acknowledges no restraint on its powers.

This is a very telling mark. It suggests that the US political system can be described as totalitarian. This is a shocking remark that most people would reject. But they can reject this characterization only so long as they happen not to be directly ensnared in the state's web. If they become so, they will quickly discover that there are indeed no limits to what the state can do. This can happen boarding a flight, driving around in your hometown, or having your business run afoul of some government agency. In the end, you must obey or be caged like an animal or killed. In this way, no matter how much you may believe that you are free, all of us today are but one step away from Guantanamo.

"This nation, conceived in liberty, has been kidnapped by the fascist state."

As recently as the 1990s, I can recall that there were moments when Clinton seemed to suggest that there were some things that his administration could not do. Today I'm not so sure that I can recall any government official pleading the constraints of law or the constraints of reality to what can and cannot be done. No aspect of life is untouched by government intervention, and often it takes forms we do not readily see. All of healthcare is regulated, but so is every bit of our food, transportation, clothing, household products, and even private relationships.

Mussolini himself put his principle this way: "All within the State, nothing outside the State, nothing against the State." He also said: "The keystone of the Fascist doctrine is its conception of the State, of its essence, its functions, and its aims. For Fascism the State is absolute, individuals and groups relative."

I submit to you that this is the prevailing ideology in the United States today. This nation, conceived in liberty, has been kidnapped by the fascist state.

Point 2. Government is a de facto dictatorship based on the leadership principle.

I wouldn't say that we truly have a dictatorship of one man in this country, but we do have a form of dictatorship of one sector of government over the entire country. The executive branch has spread so dramatically over the last century that it has become a joke to speak of checks and balances. What the kids learn in civics class has nothing to do with reality.

The executive state is the state as we know it, all flowing from the White House down. The role of the courts is to enforce the will of the executive. The role of the legislature is to ratify the policy of the executive.

Further, this executive is not really about the person who seems to be in charge. The president is only the veneer, and the elections are only the tribal rituals we undergo to confer some legitimacy on the institution. In reality, the nation-state lives and thrives outside any "democratic mandate." Here we find the power to regulate all aspects of life and the wicked power to create the money necessary to fund this executive rule.

As for the leadership principle, there is no greater lie in American public life than the propaganda we hear every four years about how the new president/messiah is going to usher in the great dispensation of peace, equality, liberty, and global human happiness. The idea here is that the whole of society is really shaped and controlled by a single will — a point that requires a leap of faith so vast that you have to disregard everything you know about reality to believe it.

And yet people do. The hope for a messiah reached a fevered pitch with Obama's election. The civic religion was in full-scale worship mode — of the greatest human who ever lived or ever shall live. It was a despicable display.

Another lie that the American people believe is that presidential elections bring about regime change. This is sheer nonsense. The Obama state is the Bush state; the Bush state was the Clinton state; the Clinton state was the Bush state; the Bush state was the Reagan state. We can trace this back and back in time and see overlapping appointments, bureaucrats, technicians, diplomats, Fed officials, financial elites, and so on. Rotation in office occurs not because of elections but because of mortality.

Point 3. Government administers a capitalist system with an immense bureaucracy.

The reality of bureaucratic administration has been with us at least since the New Deal, which was modeled on the planning bureaucracy that lived in World War I. The planned economy — whether in Mussolini's time or ours — requires bureaucracy. Bureaucracy is the heart, lungs, and veins of the planning state. And yet to regulate an economy as thoroughly as this one is today is to kill prosperity with a billion tiny cuts.

"Have you ever noticed that the military budget is never seriously discussed in policy debates?"

This doesn't necessarily mean economic contraction, at least not right away. But it definitely means killing off growth that would have otherwise occurred in a free market.

So where is our growth? Where is the peace dividend that was supposed to come after the end of the Cold War? Where are the fruits of the amazing gains in efficiency that technology has afforded? It has been eaten by the bureaucracy that manages our every move on this earth. The voracious and insatiable monster here is called the Federal Code that calls on thousands of agencies to exercise the police power to prevent us from living free lives.

It is as Bastiat said: the real cost of the state is the prosperity we do not see, the jobs that don't exist, the technologies to which we do not have access, the businesses that do not come into existence, and the bright future that is stolen from us. The state has looted us just as surely as a robber who enters our home at night and steals all that we love.

Point 4. Producers are organized into cartels in the way of syndicalism.

Syndicalist is not usually how we think of our current economic structure. But remember that syndicalism means economic control by the producers. Capitalism is different. It places by virtue of market structures all control in the hands of the consumers. The only question for syndicalists, then, is which producers are going to enjoy political privilege. It might be the workers, but it can also be the largest corporations.

In the case of the United States, in the last three years, we've seen giant banks, pharmaceutical firms, insurers, car companies, Wall Street banks and brokerage houses, and quasi-private mortgage companies enjoying vast privileges at our expense. They have all joined with the state in living a parasitical existence at our expense.

This is also an expression of the syndicalist idea, and it has cost the US economy untold trillions and sustained an economic depression by preventing the postboom adjustment that markets would otherwise dictate. The government has tightened its syndicalist grip in the name of stimulus.

Point 5. Economic planning is based on the principle of autarky.

Autarky is the name given to the idea of economic self-sufficiency. Mostly this refers to the economic self-determination of the nation-state. The nation-state must be geographically huge in order to support rapid economic growth for a large and growing population.

This was and is the basis for fascist expansionism. Without expansion, the state dies. This is also the idea behind the strange combination of protectionist pressure today combined with militarism. It is driven in part by the need to control resources.

"I can think of no greater priority today than a serious and effective antifascist alliance."

Look at the wars in Iraq, Afghanistan, and Libya. We would be supremely naive to believe that these wars were not motivated in part by the producer interests of the oil industry. It is true of the American empire generally, which supports dollar hegemony.

It is the reason for the planned North American Union.

The goal is national self-sufficiency rather than a world of peaceful trade. Consider, too, the protectionist impulses of the Republican ticket. There is not one single Republican, apart from Ron Paul, who authentically supports free trade in the classical definition.

From ancient Rome to modern-day America, imperialism is a form of statism that the bourgeoisie love. It is for this reason that Bush's post-9/11 push for the global empire has been sold as patriotism and love of country rather than for what it is: a looting of liberty and property to benefit the political elites.

6. Government sustains economic life through spending and borrowing.

This point requires no elaboration because it is no longer hidden. There was stimulus 1 and stimulus 2, both of which are so discredited that stimulus 3 will have to adopt a new name. Let's call it the American Jobs Act.

With a prime-time speech, Obama argued in favor of this program with some of the most asinine economic analysis I've ever heard. He mused about how is it that people are unemployed at a time when schools, bridges, and infrastructure need repairing. He ordered that supply and demand come together to match up needed work with jobs.

Hello? The schools, bridges, and infrastructure that Obama refers to are all built and maintained by the state. That's why they are falling apart. And the reason that people don't have jobs is because the state has made it too expensive to hire them. It's not complicated. To sit around and dream of other scenarios is no different from wishing that water flowed uphill or that rocks would float in the air. It amounts to a denial of reality.

Still, Obama went on, invoking the old fascistic longing for national greatness. "Building a world-class transportation system," he said, "is part of what made us an economic superpower." Then he asked, "We're going to sit back and watch China build newer airports and faster railroads?"

Well, the answer to that question is yes. And you know what? It doesn't hurt a single American for a person in China to travel on a faster railroad than we do. To claim otherwise is an incitement to nationalist hysteria.

As for the rest of this program, Obama promised yet another long list of spending projects. Let's just mention the reality: No government in the history of the world has spent as much, borrowed as much, and created as much fake money as the United States. If the United States doesn't qualify as a fascist state in this sense, no government ever has.

None of this would be possible but for the role of the Federal Reserve, the great lender to the world. This institution is absolutely critical to US fiscal policy. There is no way that the national debt could increase at a rate of $4 billion per day without this institution.

Under a gold standard, all of this maniacal spending would come to an end. And if US debt were priced on the market with a default premium, we would be looking at a rating far less than A+.

Point 7. Militarism is a mainstay of government spending.

Have you ever noticed that the military budget is never seriously discussed in policy debates? The United States spends more than most of the rest of the world combined.

And yet to hear our leaders talk, the United States is just a tiny commercial republic that wants peace but is constantly under threat from the world. They would have us believe that we all stand naked and vulnerable. The whole thing is a ghastly lie. The United States is a global military empire and the main threat to peace around the world today.

To visualize US military spending as compared with other countries is truly shocking. One bar chart you can easily look up shows the US trillion-dollar-plus military budget as a skyscraper surrounded by tiny huts. As for the next highest spender, China spends 1/10th as much as the United States.

Where is the debate about this policy? Where is the discussion? It is not going on. It is just assumed by both parties that it is essential for the US way of life that the United States be the most deadly country on the planet, threatening everyone with nuclear extinction unless they obey. This should be considered a fiscal and moral outrage by every civilized person.

This isn't only about the armed services, the military contractors, the CIA death squads. It is also about how police at all levels have taken on military-like postures. This goes for the local police, state police, and even the crossing guards in our communities. The commissar mentality, the trigger-happy thuggishness, has become the norm throughout the whole of society.

If you want to witness outrages, it is not hard. Try coming into this country from Canada or Mexico. See the bullet-proof-vest-wearing, heavily armed, jackbooted thugs running dogs up and down car lanes, searching people randomly, harassing innocents, asking rude and intrusive questions.

You get the strong impression that you are entering a police state. That impression would be correct.

Yet for the man on the street, the answer to all social problems seems to be more jails, longer terms, more enforcement, more arbitrary power, more crackdowns, more capital punishments, more authority. Where does all of this end? And will the end come before we realize what has happened to our once-free country?

Point 8. Military spending has imperialist aims.

Ronald Reagan used to claim that his military buildup was essential to keeping the peace. The history of US foreign policy just since the 1980s has shown that this is wrong. We've had one war after another, wars waged by the United States against noncompliant countries, and the creation of even more client states and colonies.

US military strength has led not to peace but the opposite. It has caused most people in the world to regard the United States as a threat, and it has led to unconscionable wars on many countries. Wars of aggression were defined at Nuremberg as crimes against humanity.

Obama was supposed to end this. He never promised to do so, but his supporters all believed that he would. Instead, he has done the opposite. He has increased troop levels, entrenched wars, and started new ones. In reality, he has presided over a warfare state just as vicious as any in history. The difference this time is that the Left is no longer criticizing the US role in the world. In that sense, Obama is the best thing ever to happen to the warmongers and the military-industrial complex.

As for the Right in this country, it once opposed this kind of military fascism. But all that changed after the beginning of the Cold War. The Right was led into a terrible ideological shift, well documented in Murray Rothbard's neglected masterpiece The Betrayal of the American Right. In the name of stopping communism, the right came to follow ex–CIA agent Bill Buckley's endorsement of a totalitarian bureaucracy at home to fight wars all over the world.

At the end of the Cold War, there was a brief reprise when the Right in this country remembered its roots in noninterventionism. But this did not last long. George Bush the First rekindled the militarist spirit with the first war on Iraq, and there has been no fundamental questioning of the American empire ever since. Even today, Republicans elicit their biggest applause by whipping up audiences about foreign threats, while never mentioning that the real threat to American well-being exists in the Beltway.

The Future

I can think of no greater priority today than a serious and effective antifascist alliance. In many ways, one is already forming. It is not a formal alliance. It is made up of those who protest the Fed, those who refuse to go along with mainstream fascist politics, those who seek decentralization, those who demand lower taxes and free trade, those who seek the right to associate with anyone they want and buy and sell on terms of their own choosing, those who insist they can educate their children on their own, the investors and savers who make economic growth possible, those who do not want to be felt up at airports, and those who have become expatriates.

It is also made of the millions of independent entrepreneurs who are discovering that the number one threat to their ability to serve others through the commercial marketplace is the institution that claims to be our biggest benefactor: the government.

How many people fall into this category? It is more than we know. The movement is intellectual. It is political. It is cultural. It is technological. They come from all classes, races, countries, and professions. This is no longer a national movement. It is truly global.

We can no longer predict whether members consider themselves to be left wing, right wing, independent, libertarian, anarchist, or something else. It includes those as diverse as homeschooling parents in the suburbs as well as parents in urban areas whose children are among the 2.3 million people who languish in jail for no good reason in a country with the largest prison population in the world.

And what does this movement want? Nothing more or less than sweet liberty. It does not ask that the liberty be granted or given. It only asks for the liberty that is promised by life itself and would otherwise exist were it not for the Leviathan state that robs us, badgers us, jails us, kills us.

This movement is not departing. We are daily surrounded by evidence that it is right and true. Every day, it is more and more obvious that the state contributes absolutely nothing to our well-being; it massively subtracts from it.

Back in the 1930s, and even up through the 1980s, the partisans of the state were overflowing with ideas. They had theories and agendas that had many intellectual backers. They were thrilled and excited about the world they would create. They would end business cycles, bring about social advance, build the middle class, cure disease, bring about universal security, and much more. Fascism believed in itself.

This is no longer true. Fascism has no new ideas, no big projects — and not even its partisans really believe it can accomplish what it sets out to do. The world created by the private sector is so much more useful and beautiful than anything the state has done that the fascists have themselves become demoralized and aware that their agenda has no real intellectual foundation.

It is ever more widely known that statism does not and cannot work. Statism is the great lie. Statism gives us the exact opposite of its promise. It promised security, prosperity, and peace; it has given us fear, poverty, war, and death. If we want a future, it is one that we have to build ourselves. The fascist state will not give it to us. On the contrary, it stands in the way.

It also seems to me that the old-time romance of the classical liberals with the idea of the limited state is gone. It is far more likely today that young people embrace an idea that 50 years ago was thought to be unthinkable: the idea that society is best off without any state at all.

"In the end, this is the choice we face: the total state or total freedom."

I would mark the rise of anarcho-capitalist theory as the most dramatic intellectual shift in my adult lifetime. Gone is that view of the state as the night watchman that would only guard essential rights, adjudicate disputes, and protect liberty.

This view is woefully naive. The night watchman is the guy with the guns, the legal right to use aggression, the guy who controls all comings and goings, the guy who is perched on top and sees all things. Who is watching him? Who is limiting his power? No one, and this is precisely why he is the very source of society's greatest ills. No constitution, no election, no social contract will check his power.

Indeed, the night watchman has acquired total power. It is he who would be the total state, which Flynn describes as a government that "possesses the power to enact any law or take any measure that seems proper to it." So long as a government, he says, "is clothed with the power to do anything without any limitation on its powers, it is totalitarian. It has total power."

It is no longer a point that we can ignore. The night watchman must be removed and his powers distributed within and among the whole population, and they should be governed by the same forces that bring us all the blessings the material world affords us.

In the end, this is the choice we face: the total state or total freedom. Which will we choose? If we choose the state, we will continue to sink further and further and eventually lose all that we treasure as a civilization. If we choose freedom, we can harness that remarkable power of human cooperation that will enable us to continue to make a better world.

In the fight against fascism, there is no reason to be despairing. We must continue to fight with every bit of confidence that the future belongs to us and not them.

Their world is falling apart. Ours is just being built.

Their world is based on bankrupt ideologies. Ours is rooted in the truth about freedom and reality.

Their world can only look back to the glory days. Ours looks forward to the future we are building for ourselves.

Their world is rooted in the corpse of the nation-state. Our world draws on the energies and creativity of all peoples in the world, united in the great and noble project of creating a prospering civilization through peaceful human cooperation.

On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises

It's true that they have the biggest guns. But big guns have not assured permanent victory in Iraq or Afghanistan — or any other place on the planet.

We possess the only weapon that is truly immortal: the right idea. It is this that will lead to victory.

As Mises said,

In the long run even the most despotic governments with all their brutality and cruelty are no match for ideas. Eventually the ideology that has won the support of the majority will prevail and cut the ground from under the tyrant's feet. Then the oppressed many will rise in rebellion and overthrow their masters.




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Social  Psychology 101


by F Eric Saunders


September 26, 2011


There is an important aspect of our current economic “crisis” that is getting FAR too little airplay:  The importance of attitudes and beliefs upon businesses and the economy.


Certainly, we are not the only ones to recognize the importance of consumer and investor confidence.  The “Consumer Confidence Index”, and other such tools, help to predict future trends for business.  An organization called the Confidence Board, also provides a monthly index of CEO confidence, which may be by far the most important predictor of long term stability (or instability) for the economy.  But, despite the fact that this data is available, it gets little play in the media, and even less consideration by the pundits whose job it is to provide opinions for those citizens who would rather get theirs pre-packaged than to go to the trouble of rolling their own.

 

Of all the factors that have come together to make this country great, one of the most important has been optimism.  Optimism based on pride in our history, confidence in our people and way of life, and hope for the future, is what has drawn the most courageous and industrious people from around the world to our shores.  It is what fuels business, more even than funding and physical resources.  With enough confidence and hope for the future, we have always found a way to prosper, individually and collectively.  Without confidence, resources lay fallow and we slip further and further toward becoming just another failed experiment.

But let me be perfectly clear about what I mean by “optimism”.  I mean confidence in the American way of life, our Constitution, and the things that have made us great.  I mean a belief that, left alone, the American economic system will self-correct and get back on the right path.  I mean self assurance – that each of us, as individuals, can improve our lots in life, no matter whether we start at the top or at the bottom.  I do NOT mean confidence that we are going to have redistribution of wealth, more wasteful social programs, more regulations, and a bigger more powerful government.  These last things ARE the dreams and hopes of some people (Hope and Change), but they are the exact opposite of what business people hope for, and so “confidence” that progressive “changes” will occur equates as fear, on the behalf of the people that fuel the economy, that they might occur.  The more it looks like the proponents of “hope and change” have good reason for “confidence”, the more our economy will slip into decline.


One of the saddest testaments to our present situation is the phenomenon called the “Wall Street Protests”.  Those protests are sad because, apparently, participants don’t even know what they are protesting about or what their demands are.  But, even sadder is the fact that those people are protesting against the very sort of thing that they SHOULD be aspiring to be part of.  Instead of having the hope and optimism that they can, with hard work and a little luck, join the ranks of the prosperous, they see those who have succeeded as the enemy.


As we have argued elsewhere on Freedomsite, our current financial crisis has been a long time coming - mistakes have been made and compounded with further mistakes going back 50 years and more.  In short, instead of working to insure the future of our nation, we have been “living for today” for most of that time – using our prosperity for every sort of program the mind can conceive to “improve” the world we are living in, meanwhile putting ourselves and our country further in debt and thereby insuring that future generations will NOT enjoy the prosperity our ancestors left for us. 


BUT, although it may really matter little in the overall picture, the TIMING of the onset of this crisis was clearly greatly influenced by the fact that it was becoming clear that our (then) next President would be Obama, and businesses, investors, consumers and potential home buyers panicked.  This is yet another example of how powerful the very perception a “crisis” can be.  And, while it might make those who are not doing so well to feel a bit better, the last thing in the world you want to do is tell those people who are doing pretty well already that there is going to be “fundamental change”.  If that won’t make them pull in like frightened turtles, I don’t know what will.  And that hurts everyone – ESPECIALLY those who were not doing so well before.


But, we hasten to point out that we don’t BLAME Obama for this crisis.  It was going to come, anyway, sooner or later.  While we disagree with virtually all of his economic policies, he has a right to espouse them and to seek support for them.  On the other hand, while his anti-business rhetoric may not have been the cause of this crisis, it may well be an important contributing factor to our inability to get past it.


At the most basic level, we believe that the very use of the word “crisis” is a self fulfilling prophesy.  During the economic “crisis” that was carried over from the Carter years into his own administration, President Reagan was harangued by reporters to say what he was going to do to arrest the precipitous drop in the stock market.  His response was, “Eh, markets go up and markets go down.”  That was it.  He was not about to destroy confidence in the market by declaring what was going on to be a “crisis”.  Sure enough, the market quickly recovered.   


Compare that to the way this present situation has been handled – both by Bush and by Obama.  Rather than using their bully pulpits to instill confidence, so that America can get itself back on track, they have instituted “emergency measures” which serve only to panic consumers and to cause businesses and investors to pull out of markets and speculative investments.  And, although it should be obvious that the country’s leaders should be encouraging private investment and trying to increase consumer confidence, our current President insists on emphasizing, over and over again, that “we are in the worst economic crisis since the great depression”.  But, of course, if you are familiar with the Cloward-Piven theories, then you know that this is the key tactic of progressives who want to move our country, little by little, toward socialism.  As former
White House Chief of Staff, Rahm Emanuel boasted, “We never let a good crisis go to waste.”


What this country needs now is not wasteful “stimulus”.  It needs LEADERSHIP.  We have argued in Freedomsite that a president’s policies can’t do much either way, in the short term, to either bolster OR harm the economy – although there are certainly long term effects of bad policies.  But what the President CAN do is to provide leadership, and good leadership itself helps to instill confidence.  President Clinton, instead of seeing it as the total lack of leadership that it was, seemed to be proud of the fact that he used public opinion polls to make major decisions.  President Obama, on the other hand, is way to self centered to do such a thing.  Instead, he makes decisions based on his perception of what will gain him the most political advantage, or what will move our country further toward his vision of a “green” egalitarian Utopia.1    A real leader does what he knows is right, even if it goes against public opinion polls, even if he knows it will harm his popularity and his legacy.


An effective leader needs to posses these qualities:  He/she needs to have credentials that allow him/her to speak with the sort of authority that can come only from education and experience.  He/she needs to be able to communicate convincingly.  And, most importantly, he/she needs to be both optimistic and honest with the American people.  If a President or Presidential Candidate cannot find it within him/herself to be both optimistic and honest – meaning that he/she honestly believes that there is room for optimism - then he/she should find another line of work and leave the Presidency to someone who does understand that if we only leave the American system to work as it always has, and stop proposing “emergency measures” that will both directly harm the economy and instill a “crisis mentality” in the populace, then we will be OK.


President Obama has often been referred to as an “inspirational speaker”.  But what does that mean?   If it means that he speaks clearly, or with a revival meeting type of transparently phony emphasis and zeal, then I guess he does that – with the exception of the frequent flubs he makes when misreading the teleprompter.  And maybe some people – particularly those who would prefer to share in other people’s wealth – find his promises of redistribution fresh and inspiring.  But he certainly doesn’t inspire those of us who actually contribute to the economy.  When he isn’t reminding us, ad nauseam, that we are in a crisis, he is laying out plans to even further bankrupt the nation.  For example, he has now proposed a bill that will put us further in debt and will further harm the private economy, and has caused it a “jobs bill”, so that anyone who is against this particular step toward socialism must surely be against “jobs”.


A leader must also take responsibility instead of trying to place blame – a basic attribute of leadership that has been recognized throughout history.  In our military academies, where the teaching of leadership has been finely honed for generations the ONLY acceptable retort to a reprimand is. “NO EXCUSE SIR!!!”  Only weenies and weaklings blame others as an excuse for the present predicaments.  All adults know that, yet some of us support so-called “leaders” who resort to the blame-game with almost every speech. 


We need to change the way government works – make it smaller and force it to stop spending money it doesn’t have.  We do NOT need, nor should we want, to “fundamentally change America”.  We were doing pretty well before.  ALL OF US were doing pretty well.  Those who prospered the most were doing well.  But, also, those who prospered the least were doing well.  We used to have the lowest poverty rate in the world.  We used to be making huge strides toward improving education, health care, and opportunity for all.  We used to be heading in the right direction, at least until the “progressives” took over and ran our country into the ground with debt.  The last thing we need is a leader that promises change, when he really means changing away from the things that have made our country great.  That is really just a call to class warfare – the same sort of “change” that has been behind all of the communist and socialist revolutions.  The change we need is to change BACK to the attitudes and practices that brought us this far.


1.  For instance, while in the Senate, he voted FOR the “Bush tax cuts”.  But when he was running for president he responded to a question about whether he would raise taxes on the “Rich”, even if that were proven to lower overall revenue by replying that he would, because that would be “fair”.  THEN, as president, he reversed himself again by clearly and unequivocally stated that, “During a recession it is no time raise taxes on ANYONE” [emphasis in the original] which, by the way, is exactly what his economic Guru John Maynard Keynes taught.  But, now, he has flip-flopped once again.   His latest so-called “jobs bill” includes significant tax hikes for upper income wage earners (ignoring the fact that while this will only hurt the economy and job prospects, and will, at the very best, provide only about a 1% short term increase in revenue) because an escalation of class warfare now seems to be his only hope for reelection.  Is that leadership, or is it pandering?

 
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