There is nothing that The Welfare State hates or fears more than free-market Capitalism. by Republicae
(libertarian)
Saturday, January 10, 2009
The common view is that government is unlimited in its ability to provide for a functional society; thus, the view holds; that when a social need arises, the government is there to fill the need, provide for the gaps in every social sector possible. Unfortunately, we have grown accustom to that particularly well-manicured view in this country, we have lost a great deal of both the potential and the possibilities of a society without the overwhelming presence of government in our society.
While it is commonly thought that the government provides what the market cannot, the truth is that the government can never adequately substitute for the voluntary actions of the market. Now, obviously, when I use the term market I am not referring to the market that we see today, for it is far from free and far from capitalism. The government, as we have witnessed over the last 7 decades, has attempted to be all things to all people, the social worker of the country, but the solutions provided by the government has been far from successful since it is a poor replacement for just about every possible service that the market would otherwise provide. It has basically embarked on a system of coercive redistribution of both income and wealth to provide its services. In the end, this always fails to produce the desired results and usually, as history provides the lesson, ends in failure and much more social distress than would otherwise be experienced.
The "war on poverty" is a perfect example, since the vast and expensive government programs began; poverty levels have increased proportionally in this country. So, this system, while widely promoted as beneficial, makes very little sense when looking at the facts. While the general standard of living has increased in this country, primarily because of a massive debt addiction, the gap between "The HAVES" and "The HAVE-NOTS" has only increased. Likewise, other government programs present the same lack-luster results, just look at education in this country, it's an absolute mess.
The last century has seen a massive explosion in both the scope and power of the government in this country. Now, to follow common logic, it would appear that such an expansive and strong government would be able to accomplish feats unheard of in history on all social fronts however, that is not the case. The only success has been in the government itself, it has prospered, expanding its personnel departments to unprecedented levels; indeed the government has created a massive "business empire".
So what's the problem? Well, it can't be free-market capitalism since we haven't had such markets in this country for decades. This country has been gradually transformed into a social-democratic model, heavily centralized economic planning under the misguidance of the Federal Reserve System and a government that abides by its monetary policies without much questioning.
We are about to see the new administration make the most impressive mistakes made in the economic history of this country, all under the illusion that it is able to repair the very damage that the government helped cause. As we have seen in the past, we will see again. Anytime the welfare state spends so recklessly as our has done over the last few decades, running chronic and expansive deficits, loosening and thereby expanding easy credit; it will do the only thing it possibly can and that is to print more money. This of course will eventually lead to rapidly increasing inflation, the government will, as it usually does, place the blame on something other than itself, the "free-market" is always, without except the scapegoat they choose. We can eventually expect price controls, at first they will be "completely voluntary" as the government provides the "standard and acceptable guidelines" for the markets to follow.
This massive welfare state can only arise; it can only flourish by crafting, maintaining and subsisting upon a very specific set of economic delusions, particularly in the hearts and minds of the voters. They have produced a very effective system that suits the purpose of sustaining the welfare state at ever-increasing levels.
The evolution of the massive mega-machine of the government since the 1860s, with a highly centralized system of government has increasingly ignored the frame-work of State and local governments, which were much more workable than anything the centralization process has provided to this country. While it appears that the government has an inexhaustible amount of funds at its disposal thanks to the fiat monetary system that was created to solely provide for the benefit of the government, the truth of the matter is that it will prove to be one of the most devastating combinations of unlimited fiat money and ever-expanding power. The truth is that the current model, the one that has evolved for the last 96 years in particular, cannot create real wealth and prosperity. The government does not create wealth, nor can it actually promote it in any substantial way.
With all the quasi-nationalization, government underwriting of various economic sectors, redistribution of wealth and what has been touted as a social security system to provide safety nets from cradle to grave, the system is, as was expected and predicted decades ago, simply falling apart.
The common theme throughout all the evolution of the mega-government has been the apparent united front against capitalism and its alleged inhumanities and inequities in society. Of course, particularly in this country, capitalism raised the average standard of living, to unprecedented levels, for a vast portion of the population over the decades compared to other countries of the world. Remember, at one time the United States was not only the bread-basket of the world, the creditor of the world, but it was also the land of opportunity. That image has gradually tarnished over the decades, especially during the last 40 years. The opportunity that was once available to anyone in this country has been diminished over the years, stratified by a credit/debt mechanism that leaves a vast section of the population in almost a permanent caste system.
Fabianism, a gradual socialization of this government and the economic system in this country has promoted an ever-expanding welfare state in which sound and orthodox economics has been replaced with very odd form government-centered policies that are anything but productive. For decades, under the banner of equalitarianism, has promised abundance and equal prosperity, but it has delivered little to the people and far more to the government. The most prosperous under such a system is always those select few who enjoy the benefits of being politically connected to the Washington D.C. "politburo".
A constant stream of new ideas, programs, interventions, regulations, acts, legislations, codes flow from the centralized minds in Washington in hopes to maintain the mega-government and further the illusion that our politicians actually know what they are doing. Of course, the use the fiat monetary system to create an open illusion that the people are not actually paying for all of the "innovations" that emanate from Capital Hill, keeping the taxes much, much lower than they would be if the government didn't have a "printing press" at its disposal. The D.C. "politburo" sees no reason to skimp when it comes to matters of public expenditures since all such spending is, after all, to benefit the majority of the people.
The government has been extremely effective in promoting the idea that it cannot fail, the "Full Faith and Credit of the United States" has served it well over the decades, but the full faith and credit is only as good as the true faith and credit that really exists within the system and that is rapidly being eroded.
There is a great perplexity growing in official circles, not only in the political arena, but in the monetary arena; they have yet to realize that the system is rapidly approaching its limitations. Sooner, rather than later, they will realize that they entire model in which they place their faith, and from which they reap such benefits, is the incorrect model.
They have yet to fully grasp that even if all income were taxed at 100%, it would still be far too little to maintain the system they have created over the years. Yet, they will continue to confiscate, continue to print, continue to spend with very little to show for it in terms of actual solid prosperity in this country, except for government prosperity. The government is doing very well, fare weather or foul, it prospers. The "vampire economy" has provided with greater government production, massive military might, and subsidies to various groups, public works, and new employees with new offices, new equipment and the politicians are encouraged to find bigger and better programs on which to spend. Actual capital is diverted to less productive purposes that can never provide advancements in the general living standards of the majority of the people in this country.
The massive employment machine of government, all of course in the name of "public service", has gradually created more and more salaried public servant jobs that could easily be preformed by the private sector with far greater efficiency, less cost and far more ancillary productivity in the economy, but the welfare states promotes a very different economic model than that of free-market capitalism. The result will always be far less than satisfactory.
The "federal welfare state" mentality has also infected State and local governments. Public spending has increased so much over the years, even in lower level governments, budgets increases have sky-rocketed. The philosophy has now permeated the entire system, and there has been almost a stealth nationalization that has taken place even on the State and local levels of government. There has been an expropriation of various sectors within our economy, even on local levels there are now services provided by city government which would easily be preformed by private companies far better, with better pricing. Public utilities are a perfect example of run-a-muck "nationalization". It appears that through the years, States and local governments have followed the federal government toward a centralization process that will always provide less service for ever-increasing costs. Government is not, nor was it ever intended to be a business, no matter what level of government we are speaking about. There is no "enterprise" within government; there is only a siphoning-off of actual economic production being replaced by non-productive government programs that have never been shown to actually produce the results for which they were created in the first place. Even the bureaucratic management of government is completely wasteful and inefficient, yet the government thrives because it is not restrained by normal economic principles that would mandate proper business principles necessary to operate.
Unlike productive businesses, the government is neither a capital producer nor tax-payer; it is a consumer of vast amounts of the country's wealth and productivity. The financial management abilities found within government at just about every level tends to lack responsibility of stewardship, even on services that could possibly be considered worthwhile. Deficit spending would never occur for any length of time in the private sector without dire consequences. As we have seen throughout the years, there have been episodes of insolvency that has plagued many municipalities and even States. Poor decision-making processes are influenced by the fact that there is a tax-base of support to fund any decision, whether good or bad. No matter how much "reform", whether political or financial, there will never be a true remedy for the inefficiency found within the public sector because the very system itself promotes un-business-like practices.
There appears to be a prepossession that the system can always sustain any degree of abuse since it is completely outside any business model. The public treasury is seen as infinite and yet, the reality is becoming increasingly evident as expenditures outstrip actual revenues and government coffers are bled dry. Deficit spending is little more than future productivity being drained from the economy.
History has some valuable lessons for us if we would only take the time to explore those lessons. The government however, doesn't appear to be very interested in such lessons as it continues down the feckless road of economic socialization. It has failed to realize that the economic problems facing this country do not stem from capitalism, but from a lack of it.
We are about to learn a very valuable lesson however, one that will be hard to forget. As this new Administration reaches into the same old bag of tricks used since the 30s, perhaps the realization will finally hit the American People that the government, while claiming to have the answers, only contributes to the problems. The next couple of years will provide us with a great many of experiences, which, hopefully, may be powerful enough to finally induce the American People to scrupulously analyze all the propaganda that the welfare state promotes. Perhaps the curtain will be pulled back and the People will see the reality behind the illusion that The Welfare State is a replacement for Free-Market Capitalism.
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Posted By: Jahfre Fire Eater
Date: 2009-01-10 21:05:29
Hi Republicae,
Another fine article. There will certainly be lessons learned. The question I have is will the lessons learned by survivors be the same lessons learned by the politicians and experts who caused our problems? Probably not. The lesson they have learned is that there is political power to be had from weilding Keynesian or Friedmanite economic policies. They do this knowing that the Austrian school has rendered their arguments and assumptions moot.
No matter what lessons are learned by whom, the lesson that probably will not be UNLEARNED is that Austrian economics hinders their quest for power by removing the black magic from fiscal and monetary policy making.
I'm afraid the lessons to be learned in the near future are the same as those learned by survivors of the Great Depression. They learned how to stand quietly while the parasitic government latched onto their productivity. For the common good, you know. The lessons of the Great Depression were the lessons of cattle, not the lessons of liberty.
Thanks Jahfre....unfortunately, the American People, and especially those in our government, have been so intoxicated by the Fiat Sibyl over the decades that it may take very difficult times to shake them into sobriety.
Posted By: Jake, the champion of the constitution
Date: 2009-01-11 06:24:42
Dear Jahfre -
Thankfully Al Gore invented the internet, cell phones, and global warming. MoooooooooOOOOOOoooo! It will be different this time around, better or for worse I dunno. Not sure if you heard about the riot in Oakland last week.
Global warming... speaking of which, somebody forgot to tell the weathermen in China - 2008 was the coldest winter on record in China in recorded history, and I wouldnt be surprised if 2009 surpasses it. Brrrrrrr!!!
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