If We Are Dependent on Government for Our Livelihood, We Are Part of the Problem

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.” - Alexis de Tocqueville

Statism, the Belief that Government Is Inherently Superior to the Citizenry, Is the Greatest Threat

By James Bovard, Campaign For Liberty
November 11, 2010

Pervasive confusion over the nature of government and freedom has opened the gates to perhaps the greatest, most widespread increase in political power in history. If we are to regain and safeguard our liberty, we must reject the tenets of modern political thinking. We must repudiate the moral presumptions and prerogatives that allow some people to vastly expand their power over other people.

The state has been by far the largest recipient of intellectual charity during the past hundred years. The issue of government coercion has been taken off the radar screen of politically correct thought. The more government power has grown, the more unfashionable it becomes to discuss or recognize government abuses — as if it were bad form to count the dead brought about by government interventions. There seems to be a gentleman’s agreement among some contemporary political philosophers to pretend that government is something loftier than it actually is — to practice noblesse oblige and to wear white gloves when discussing the nature of the state.

The great political issue of our time is not liberalism versus conservatism, or capitalism versus socialism, but statism — the belief that government is inherently superior to the citizenry, that progress consists of extending the realm of compulsion, that vesting arbitrary power in government officials will make the people happy — eventually.

What type of entity is the state? Is it a highly efficient, purring engine, like a hovercraft sailing deftly above the lives of ordinary citizens? Or is it a lumbering giant bulldozer that rips open the soil and ends up clear-cutting the lives of people it was created to protect?

The effort to find a political mechanism to force government to serve the people is the modern search for the Holy Grail. No such mechanism has been found, and government power has been relentlessly expanded. Yet, to base political philosophy on the assumption that government is inherently benevolent makes as much sense as basing geography on the assumption that the Earth is flat. Too many political thinkers treat government like some Wizard of Oz, ordaining great things, enunciating high ideals, and symbolizing all that is good in society. However, for political philosophy to have any value, it must begin by pulling back the curtain to bare the nature of the state.

Trusting contemporary governments means dividing humanity into two classes: those who can be trusted with power to run other people’s lives, and those who cannot even be trusted to run their own lives. Modern Leviathans give some people the power to play God with other people’s lives, property, and domestic tranquility. Modern political thinking presumes that restraints are bad for the government but good for the people. The first duty of the citizen is to assume the best of the government, while government officials assume the worst of him.

The history of the rise of the idealistic conception of the state is inevitably also the history of the decline of liberty. We cannot put the state on a pedestal without putting the people under the heel of the politician and bureaucrat. To glorify the state is to glorify coercion — the subjugation of some people to other people’s will and dictates.

Welfare-state freedom is based on the illusion that government can financially strip-mine the citizens’ lives without undermining their ability to stand on their own two feet. Citizens are assured that dependence on government is the same as self-reliance, only better. Today’s citizen is obliged to find his freedom only in the narrow ruts pre-approved by his bureaucratic overlords. In the name of freedom, the citizen is obliged to lower the drawbridges around his own life to any government employee who thinks he knows better.

The Supreme Court declared in a 1988 decision, “Servitude means ‘a condition in which a person lacks liberty especially to determine one’s course of action or way of life.’” Yet, despite the vast increase in the number of government decrees restricting people’s “course of action or way of life,” there is little recognition of the growing servitude of the American people to the federal government. Lives are made up of choices. Insofar as government nullifies or demolishes the choices that people can make, it effectively confiscates part of their lives.

Modern democracy

Nowadays, “democracy” serves mainly as a sheepskin for Leviathan, as a label to delude people into thinking that government’s big teeth will never bite them. Voting has changed from a process by which the citizen controls the government to a process that consecrates the government’s control of the people. Elections have become largely futile exercises to reveal comparative popular contempt for competing professional politicians. The question of who nominally holds the leash has become far more important than whether government is actually leashed.

The ability to push a lever and register a protest once every few years is supposedly all the protection citizens’ liberties need — or deserve. Americans are implicitly taught in government schools that they will be able to control their government, regardless of how large it becomes. But the bigger government grows, the more irrelevant the individual voter becomes.  

The current theory of democracy is a relic of an era when government was a tiny fraction of its current size. The illusion of majority rule is now the great sanctifier of government abuses — and perhaps the single greatest barrier to people’s understanding the nature of government. No amount of patriotic appeals can hide the growing imbalance between the citizen’s power to bind the government and the government’s power to bind the citizen.

Modern democracy is now largely an over-glorified choice of caretakers and cage-keepers. Are citizens still free after they vote to make themselves wards of the state? Supposedly, as long as citizens are permitted to push the first domino, they are still self-governing — regardless of how many other government dominos subsequently fall on their heads. Democracy is further corrupted by a demagogy that portrays a right to vote as a license to steal.

Faith in the redemptive powers of government permeates contemporary political thinking. “Fairness” has become a bewitching word to lull people to sleep before politicians attach the latest “shackle of the month.” The more activities government criminalizes, the fairer society supposedly becomes. The tighter the regulatory thumbscrews are twisted, the higher citizens’ souls presumably rise.

Private citizens have become the moral underclass in the modern state. The values of politicians and bureaucrats are presumably so inherently superior that they have a right to coercively impose them on others, the same way that imperialists in the 1800s forcibly “saved” the backward natives in Africa and Asia. But now, instead of the “white man’s burden,” we have the “bureaucrat’s burden” — consisting of endless Federal Register notices, entrapment schemes, and abusive prosecutions. In practice, justice has become whatever serves the political or bureaucratic needs of the government. Every new definition of fairness becomes another trump card that politicians and bureaucrats play against private citizens. Public-policy disputes routinely degenerate into morality plays in which the government is almost always the “good guy.”

In the 19th century, socialists openly ridiculed the notion of a night-watchman state — a government limited to protecting the rights and safety of citizens. The night-watchman state has long since been junk-heaped, replaced by governments zealous to re-engineer society, control the economy, and save persons from themselves. Unfortunately, rather than a triumph of idealism, we now have highway-robber states — governments in which no asset, no contract, no domain is safe from the fleeting whim of a bevy of politicians.

Public policy today is a vast maze of payoffs and kickbacks, tangling everything that the state touches in political intrigue and bureaucratic dependence. Modern societies are increasingly dominated by political money laundering — by politicians commandeering scores of billions of dollars from one group to foist on another group, from one generation to another, or from the general populace to specific occupational groups (such as farmers). And when government defaults on its promises to the citizenry, it is not robbery, but merely sovereign immunity.

Paternalism and happiness

It was a common saying before the Civil War: “That government is best which governs least.” Nowadays, the rule appears to be “that government is best that penalizes most.” Salvation through increased state power means maximizing the number of swords of Damocles hanging over each citizen’s head — maximizing the number of individual lives that can be destroyed by political edicts and the number of people who can be locked away for possessing prohibited substances — people whose homes and cars and wallets can be seized without proof of wrongdoing, whose children can be taken away from them, who can be barred from using their own land, and whom the government devises pretexts to forcibly disarm.

The welfare state offers an “under my thumb” recipe for happiness. Paternalism presumes that the path to the citizen’s happiness consists in increasing the number of government restrictions imposed on him and the number of government employees above him. The more power government acquires, the more a symbol of the superiority of some people over others the state becomes.

Every expansion of government budgets and statute books is another step towards the nationalization of the pursuit of happiness. While earlier types of government coerced people to keep them in their place, the welfare state uses coercion to make them happy — in their place. But the success of the welfare state cannot be measured by the number of citizens who rattle their tin cups when politicians pass by.

The issue is not whether government should or can be abolished; instead, the issue is whether the use of force should be minimized and limited. In the American colonies from the early 1700s onwards, fierce disputes raged between prerogative parties and anti-prerogative parties — between those that favored an expansive interpretation of the king of England’s power and those that sought to restrain or roll back the monarch’s power over colonists. In the future, the grand division in American politics will be between those who champion increased government power and those who demand that government power be slashed.

The notion that governments are inherently entitled to obedience is the most costly entitlement program of them all. Seventeenth-century English philosopher John Locke, who inspired the Founding Fathers, declared, “Tyranny is the exercise of Power beyond Right.” Locke recognized that governments that oppress citizens destroy their own legitimacy. Yet there now seems to be an irrefutable presumption of legitimacy for any exercise of government power not involving genocide or racial discrimination.

Modern political philosophy largely consists of glorifying poorly functioning political machinery — the threats, bribes, and legislative cattle prods by which some people are made to submit to other people. It is a delusion to think of the state as something loftier than all the edicts, penalties, prison sentences, and taxes that it imposes.

Have we transferred to government the rights that we previously condemned in slaveowners? If not, then we must radically reduce the power that some people have captured over everyone else.

The Social Welfare State: With Voter Bribery, Government as Santa Claus Was Possible

The Social Welfare State – Motivated Not By Compassion But Political Self-Interest

By Monty Pelerin, Monty Pelerin's World
January 26, 2012

The siren song of Socialism contains the seeds of destruction that now threaten the very foundations of civilization. Socialism as a disease progresses slowly, but has been underway for more than 100 years. The malignancy is now metastasizing. Unfortunately we are the generations that will experience its pernicious outcomes.

Feckless politicians blame anyone and everything but themselves for the impending tragedy. They are responsible for the condition of the world. Ultimately, “we the people” are also responsible. We allowed these political opportunists to create this world threat.

What Went Wrong?

Deterioration in the quality and orientation of government is a long story which has been a long time developing. No one political villain can be blamed.

The decline did not begin with the rants and ravings of Karl Marx nor any of his disciples. The fountainhead was Otto von Bismarck in the late 19^th Century.

Bismarck is considered the founder of the welfare state, which is modern day Socialism. He detested Marxian Socialism. He was a pragmatist, not an ideologue and is considered the founder of realpolitik which translates to “practical politics.” He was not an idealist trying to improve people’s lives. He acted purely in his own best interest.

The motive behind Bismarck’s concept of a social welfare state was simple. It was to placate the masses in order to obtain votes and solidify his hold on office. As he expressed it (emboldening added):

My idea was to bribe the working classes, or shall I say, to win them over, to regard the state as a social institution existing for their sake and interested in their welfare.

Bribery to create an illusion designed to expand the wealth and power of the State at the expense of productive people is hardly an admirable course of action or objective. His simple deception provided powerful means for subsequent political classes. Specifically it provided the means for politicians to grow and expand their power and wealth while solidifying their tenure in office.

Despite the pious claims of current welfare state advocates, Bismarck never espoused noble purposes beyond that of his political self-interest.

Politicians in Western democracies saw the power in Bismarck’s idea and patterned their careers on winning election and re-election via the Bismarckian bribe. Convincing the public that government existed for their sake and their welfare enabled expansion into areas previously considered off limits.

Tradition and law were eventually brushed aside. The US, constrained by a magnificently sculptured Constitution and a predisposition toward liberty, held out longer than its European counterparts. Its later start and slower progression is a fact often cited as a reason why the US economy was able grow from a backwoods beginning to an economic colossus by the early 1900s.

Progressives in the US initially used the “general welfare” clause of the Constitution as justification for a social welfare state. Deliberate ignorance and distortion of the Founders’ original intent was an important aspect of their attacks. Subsequent attacks used the argument that the Constitution was a “living document” meant to be changed to reflect modern day”needs.”

Eventually tradition and law succumbed to the incessant battering of progressive activists in the US. The people’s defense against government tyranny was weakened. Government was then emboldened to redefine itself in almost whatever fashion it chose.

Bismarck’s method of “bribery” was the model that altered the nature of politics practiced in democracies. With voter bribery, Government as Santa Claus was possible. The people loved this myth and the initial effects. Politicians loved buying votes as evidenced by political campaigns where competing political factions tried to outbid each other with more “freebies.”

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In 2011, Taxpayers Will Pay $19 Billion to Fund Federal Pensions, While Federal Employees Will Contribute Only $1 Billion

The Truth About Public Education in the U.S.: Public School Systems Are Overfunded and Public School Employees Are Overcompensated

Society Is Becoming Dependent on the Government to Care for Them

Blame the Fed for the Pension Crisis Because They Engineered It

The Advance of Socialism

For almost one hundred years, Bismarckian bribery, via an expanding welfare state, has been the predominant political strategy. Over time strategies grew bolder, ratcheting to higher levels each election cycle.

Today modern economies are being destroyed by Socialism as practiced via the welfare state. After generations of propagandizing Statism, the goodness of government intervention as a necessary means to equity and prosperity and the need to invade and manage virtually every aspect of our lives, a majority of voters believe the myth.

Even the term “welfare state” was phony. It was a marketing euphemism to avoid the proper, but pejorative, description — Socialism. The euphemism conveniently conveyed the Bismarckian myth that government cared for and could take care of its citizens.

In reality, the social welfare state was backdoor Socialism. The euphemism also provided convenient cover for what amounted to political enrichment and job security.

The Effects of Socialism

A good description of the effects of current Socialism was provided by Joseph A. Harriss. Although Mr. Harriss described France and Sarkozy’s re-election chances, these conditions apply to most other leaders in European states as well as the US:

What no politician had the courage to say was that the French are witnessing, in slow motion, the end of their welfare state, known locally as the French Social Model. For the last 30 years it has been sustained through political sleight of hand and financed on credit. The French were assured they were entitled to work only 35 hours a week, take five weeks vacation, have single payer health care, pocket generous unemployment benefits, and enjoy a cornucopia of handout programs. As a result, they work on average six fewer weeks a year than the Germans, fewer hours even than the laidback Greeks.

Let the good times roll was the implicit program of politicians both left and right. Now the inevitable bill is coming due right at election time. There’s no way Sarkozy can avoid paying the political price.

Countries have now run out of both time and money. The malignancy of Socialism nears its ugly end, in the manner predicted by Margaret Thatcher:

The trouble with Socialism is, sooner or later you run out of other people’s money.

All welfare states have attained her “sooner or later” point, with most at the “sooner” end of the spectrum.

Sarkozy is in political trouble for the same reason that politicians in all social welfare states are in trouble. Whether he is the right or wrong man for the job is irrelevant. He, like his peers, is a victim of history. He just happens to be the unfortunate one holding the bag when the music is ending. There is no right man for the job in France or anywhere else. The Socialist scam is imploding.

The three-legged stool that supported the fantasy of the social welfare state for the last 100+ years was based on the following:

• Prosperity is available without effort.


• Government creates prosperity.


• Government will take care of its people

Politicians were able to support this hoax only with “other people’s money.” It is now apparent to many that none of these premises were true.

The money obtained to sustain the myth has seriously damaged economies. Some of it was obtained by destroying the seed capital provided by previous generations. Some of it was obtained via obscene levels of taxation. Much of it was obtained via borrowing funds that were never intended to be paid back. The ability to obtain additional funds from these sources is dubious, particularly the last one.

The funds were obtained via coercion and under false pretenses. Inarguably, the social welfare state has crippled modern economies. The game is about over as the scam becomes more apparent by the day.

The damage done to our political system is likely irreparable. Consider current day politicians as compared to our Founders. George Washington was offered a kingship and turned it down. How many current politicians would reject a similar offer?

Current politicians are indistinguishable from clever street hustlers with inflated self-images of their importance and wisdom. They pass laws in areas they cannot possibly understand, often not even bothering to read the bills on which they vote. One wonders whether they would even understand them.

Self aggrandizement has transformed into pay and perquisites that even some well-to-do are unable to obtain. The immoral economic rewards of public office, both above and below the table, have turned politics into a career rather than public service. The political class has set themselves apart as elites in every regard, including protection from laws the rest of us must follow.

As bad as the changes to the political system and the character of politicians have been, the effects of Bismarckian bribes have ruined modern day economies. Here are a few examples:

• The incentive structure and work ethic for large sections of each country’s population has been destroyed. Instead of having citizens with the natural human spirit to progress, all countries now have a zombie class, untrained, unmotivated citizens living off government handouts.


• The regulatory state and its onerous taxes has destroyed productivity. Entrepreneurs and risk capital have fled to climes where they are treated fairly. Much of the manufacturing base has been outsourced to emerging countries where jobs and not snail darters are appreciated.


• The zombie class is growing. The “takers” rather than “makers” find it more comfortable (or lucrative) to not work but to collect welfare. This class has forgotten or never learned work habits and consider themselves entitled to live at the expense of others.


• The shrinking productive sector is forced to support the growing zombie class. Up til now, much of this support has come via enormous government borrowings, sheltering the productive class from the real costs that they will eventually have to bear. The era of leverage is ending and with it will come lack of support for the government-created and supported zombies.


• Developed economies have been crippled and hollowed out to the point where decades of slow or no growth is the best that can be expected. Many of these economies will implode.


• Standards of living are decreasing and have been for a while. Bill Bonner points out that the average real hourly wages of non-high school graduates has declined by 47% percent over the last 32 years! Separately it has been shown that the average weekly earnings in this country, again in real terms, are below where they were in 1966.


• Governments have bankrupted themselves, their financial systems and their central banks. They attempt to continue the charade by having bankrupt central banks bail out bankrupt financial systems so that they can purchase bankrupt government securities.

Despite all the propaganda from the Statist machine, government produces nothing and never has. It depends upon a thriving private sector and bond market to play Santa Claus and continue the pretension that it is the source of prosperity.

The fraud cannot go on much longer because governments have crippled the golden goose via onerous rules, regulations and taxes. For three or four decades government was able to hide the problem by spending more than it took in. Governments around the world have reached the point where spending levels can no longer be sustained via tax revenues and bond markets. The latter source has practically dried up for some governments. Eventually it will for all.

France and other social welfare states (including the US) are virtually tapped out. Living standards are going down and insolvent Governments can no longer hide this fact via the charade of “debt” prosperity.

The dirty secret of Socialism has become apparent: It was never anything more than a political gimmick to gain or retain office and power. Politics has turned into what Bismark envisioned – an elaborate scam of voter bribery.

As a result, the world faces sovereign defaults, financial system collapse, civil unrest and a Depression that will make the 1930s look mild in comparison.

Thanks Otto von Bismarck for providing the the clever idea to our modern day criminal class who pose as politicians. One can only hope that civilization is not destroyed in the coming financial apocalypse.

The New American Divide

By Charles Hugh Smith, OfTwoMinds
January 25, 2012

A recent Wall Street Journal article entitled The New American Divide by demographer Charles Murray described a widening cultural divide between the "haves" (the upper middle class, roughly the top 20% managerial/creative class) and the "have-nots," what many would call the lower middle class and working class.

Murray chose to focus on Caucasian Americans to avoid all the issues and emotions of ethnicity, but I think we can apply many of his class-related observations to ethnic minority populations in the U.S. as well.

This article (based on a forthcoming book) is important not because it encapsulates this tangled subject, but because it offers a well-researched first step to a much broader spectrum of issues that the author touches upon in passing.

The cultural divides the author cites is symptomatic of powerful financial and social forces that operate well below the surface of everyday life. I don't claim to have "answers" to these issues, but I find it remarkable that the author ends up concluding that community has been displaced by the Savior State, and the ultimate solution is to return to a life based on community rather than handouts and subsidies from the Savior State.

This aligns with my own conclusions stated in my books.

I think there is much that was left out of his carefully apolitical exploration of class in America and much left out of his general explanation for the widening divide between the "haves" and the "have-nots."

I think he is correct in fingering Savior State "free money" as the primary cause of the dissolution of working-class America's communities and households: with welfare, Section 8, food stamps, Medicaid, etc. then working-class women no longer need a husband to afford children, and men either drop out, become financially dependent on someone else, enter the "war on drugs"/prison complex or "work the system" to avoid working altogether.

He is also correct in pointing out the self-sustaining feedback loops created by Savior State support and Power Elite membership: both groups' children grow up in worlds where welfare or Elite status and perquisites are the expected norm. In this profound way, people grow up in completely different Americas, and these culturally inherited mindsets are very difficult to pierce and change.

What he delicately avoids exploring is the reality that the Status Quo works very well not just for the top 1% but also for the top 20% that forms what I call the Upper Caste of American society: the technocrat, managerial, creative class that does the heavy lifting for the top 1% who own most of the assets and income streams.

The bottom 80% is employed as service workers/debt serfs or bought off with bread-and-circus welfare to keep them quiet and passive. The system doesn't have to work for the bottom 80%, it just has to sustain them at a level that doesn't spark revolt.

The housing bubble was a gigantic scam foisted on the top layer of the working class and the lower layer of the middle class as a "sure-fire way" to join the speculative financial frenzy that enriched the top 1% and their enablers, the Upper Caste technocrat class. When the bubble burst, so did fantasies of living the Upper Caste lifestyle without the hard slog to a meaningful university degree and long hours slaving away for Corporate America to join the Upper Caste.

This notion that America no longer works for the bottom 80% (I would even say the bottom 90%) is something that standard-issue pundits like Murray cannot speak to or even admit. His "solution" is ultimately for the 80% to get on with life as an underclass and make the best of living in an economy which serves their interests only enough to avoid open insurrection.

Murray, a media-pundit in his field, studiously avoids the role of mass media in the creation of the divide. He touches briefly on the fact that we all once watched the same TV shows, a unifying cultral factor, but only because they were the only shows on TV. What I see, and what I believe research supports, is a vast chasm between the media the Upper Caste consumes and what the "have-nots" consume.

The really creative class is too busy to watch much TV or many films, or while away time texting and talking on cellphones. Rather, they create the context and content for these media and devices, and do so by avoiding addiction to their own creations--much like drug pushers never sample their own wares.

The managerial Upper Caste have all the devices and services, but their workload limits the amount of time they have to consume "entertainment" and communicate with text, twitter, email, etc. for amusement. But it is not just a matter of time constraints; they are highly conscious of the fact that consuming media and "entertainment" in quantity does not further their career. What provides the elitist sheen they desire to "fit in" to the upper tier of their caste?

The signifiers of membership in this High-Caste status are leisurely foreign travel in prestigious cities or exotic areas and foreign postings, study abroad, the ability to speak a foreign language, tasteful art in the home and office, facility with corporate-speak, participation in High-Caste cultural events such as the symphony, art-house foreign films, theater, an association (however flimsy) with an Elite university or other respected institution, pursuit of costly sports such as skiing, boating, etc., and last but not least, a network of associates and "friends" (real friendship being an increasingly rare commodity in America) who can be mentioned in conversation as owning/participating in these same high-caste signifiers.

The working class, on the other hand, is a voracious consumer of all media and entertainment; the TV is often left on 24/7 in working-class households and merely muted at night, and an iPod or internet radio is always providing a soundtrack to every activity, while Facebook (i.e. Global Channel of Me) can be a near-obsession, interrupting or taking precedence over all other activities, including, it seems, sex. Texting is constant, and social success is measured by signifiers such as the latest film on bootleg DVD, high-quality street drugs, large collections of films and music (i.e. media) and in rural areas, fishing and hunting trophies.

As correspondent Chuck D. recently observed, the divide extends to money management: the High-Caste class is deeply interested in investments and view high-earning investments as signifiers of status while the working class only sees the spectrum of consumption.

When High-Caste politicos like Al Gore or Mitt Romney attempt to cross the divide and mimic working-class signifiers, their attempts are either comical, wooden or downright painful. They live in a completely different America from the voters they are clumsily appealing to.

In some ways I have a bit of experience on both sides of this divide, having been lucky enough to graduate from an Elite prep school, snag a (non-Elite) university degree and gather the requisite bits of foreign languages and travel.

On the other hand, I worked in the construction/building field for many years alongside both deserters from Corporate/Central State America and working-class guys for whom construction was a relatively high-paying avenue to a middle-class life, if they saved their money (unfortunately not the norm).

There are two other critical long-term issues not addressed in the article:

1. The "mancession"-- the trend toward an economy that values the "female" skills of communiciation, cooperation and education, while the "male" virtues of a strong back and a physical-world skill have steadily lost value. This is a very complex set of issues, but we can "state the obvious" by noting that the decline in factory/manufacturing work has apparently hurt males more than females, who have shifted to retail, healthcare, pink-collar and government work more readily than working-class males.

2. The ladder from the lower classes to the Upper Caste--upward mobility--is crumbling. Many commentators have noted that the gateway of upward mobility has narrowed. Yes, anyone can "make it in America," but making it America requires an increasing number of cultural knowledge bases and values--the very values and knowledge bases that are eroding in the classes below the top 20% Upper Caste.

While Murray describes the complex and knotty issue of declining marriage rates and soaring out-of-wedlock births, the larger question is what is powering these trends. Are men simply no longer needed as breadwinners, or are they being "selected out" for other reasons? Could the mass media once again be a critical if unspoken factor, as it has presented malehood as little more than an extended adolescence without end and fatherhood as a role for bumbling losers?

Yes, it's easy to "blame the media" but once again we must start by asking who is absorbing thousands of hours of this politically convenient (i.e. distracting and deranging) "entertainment" and who avoids it like the plague. How can ceaseless propaganda not influence those who watch it daily for hours on end?

As many oftwominds readers have noted, Step 1 in liberating oneself from propaganda is to stop watching broadcast TV.

This divide speaks very directly to the core problems we face, which are not simply financial or political but cultural.

For historical perspective, back in 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes (compared to 20% and 38.02% in 2008); the lower-earning 50% made 17% of the income and paid 6% (compared to 12.75% and 2.7% in 2008) of the nation's individual income tax bill.

How the U.S. Feels About the Wealth Gap

Only about 10 million (or seven percent) of the 140 million people in the U.S. workforce earn more than $100,000 per year. Only 25 percent of the U.S. workforce earns $65,000 per year or more (the average salary of federal employees is $79,197 per year or $119,982 per year when benefits are factored in; the average U.S. worker's salary is $39,336 per year). The widening divide between the Upper Caste and everyone below is not just of income and wealth--it is also cultural and values-based.

American Public Radio
February 8, 2010

Most everybody has lost economic ground the past few years, but some people are still wealthy while others are getting by on less. Monthly contributor Dan Ariely talks with Kai Ryssdal about wealth distribution.

TEXT OF INTERVIEW

Kai Ryssdal: Most everybody has lost economic ground over the past two years or so. But before the recession and the financial crisis and the wealth destruction that they brought, people in the upper reaches of society were proportionately way better off than most of the rest of the country. While over the past decade or two everybody else has been figuring out how to get by with less. Dan Ariely polled more than 10,000 people -- including, via our Web site, some of you -- to discover how we feel about the ever-increasing U.S. wealth gap. Dan, it's good to talk to you again.

DAN ARIELY: Same here, as always.

Ryssdal: So it is the haves and the have nots, a little wealth distribution that you've been looking at.

ARIELY: Yes, and the first thing I should tell you is that you don't have many people listening to you.

Ryssdal: To this show?

ARIELY: Yeah, only about 600 people filled out the survey.

Ryssdal: All right. So it's actually 601 because you gotta count my mom.

ARIELY: OK, so aside from the fact that not many people are listening or at least not many people filled the survey, here is the question that we're interested in. The philosopher Rawls proposed a long time ago that a fair society is a society that if you knew everything about it, you'd be willing to join it in a random place in the distribution. You would be willing to toss the dice and put you in one bin of wealth, for example. So we posed people two questions, we said: What do you think the wealth distribution in the U.S. is? And what do you think is the ideal wealth distribution?

Ryssdal: So in other words, what do you think in the United States now, who has most of the money and then what ought it be, right?

ARIELY: That's right. And what happened is that first of all, people dramatically underestimate the wealth inequality in the U.S.

Ryssdal: Underestimate. So the fact of the matter is fewer people have more of the money.

ARIELY: That's right. So if you look at the whole world in terms of wealth distribution -- before the recession, I don't have data about after the recession -- but before the recession we're basically between the Western world and South America. We were the most skewed distribution of the Western world in terms of the haves and the have nots. But now the more interesting question is what do people think it should be. And what we found was that actually there's a huge agreement between people in terms of what it should be. And this happened to both your listeners and the general sample population. You would take, for example, Republicans and Democrats, and you would think that they would vary dramatically, and they don't, I mean they differ but they don't differ so much. So you take Republicans and they basically agree with Democrats, and you take people with low income versus high income, and they basically agree.

Ryssdal: Can you quantify what we have right now? I mean, what percentage of people have what percent of the wealth?

ARIELY: Right now the top 20 percent of the people have about 85 percent of the wealth. People think that they only own 68 percent of the wealth, so people underestimate the inequity, but if you ask them what's kind of an ideal world in the Rawls kind of sense that you would actually want to participate in, they say 33 percent. So they say in an ideal world, we want the top 20 percent to own more than 20 percent, we want them to be wealthier, but we want them to own about 33 percent of the wealth.

Ryssdal: That's so interesting. They still want the rich to be rich, but just not as rich?

ARIELY: Yeah, you know, actually, rich to be rich is a perfectly reasonable idea, right? I mean, people that have money can create jobs, they can create factories, so there is benefit in non-equal distributions of wealth, the question is what is the ideal?

Ryssdal: I'm stuck on the idea that there is a segment of society out there that thinks that inequality is the way it ought to be.

ARIELY: Yeah, you know, everybody thinks inequality is the way to be. The main lesson for me from this whole study is that when we look at the political arena, we kind of have this huge polarization, and yet when we ask people a question that is not tainted by saying Republicans or Democrats -- it's just formed and here are the numbers, and what kind of society do you want to live in -- the answers come out quite close. And for me that's kind of the optimistic outcome of all -- of this -- is, in fact, as a society, I think we're much more similar to each other than the political arena plays out how it looks like.

Ryssdal: You learn something new everyday. Dan Ariely teaches behavioral economics at Duke University. Dan, thanks a lot.

ARIELY: My pleasure.

The 'Haves' and 'Have Nots': Is the U.S. Government the Last Great Source of Middle Class American Jobs?

If you drive through Northern Virginia, you will find nearly entire neighborhoods of $500,000 to $900,000 homes owned by government workers or contractors. Then you can drive five streets over and find $200,000 to $400,000 homes owned by those who pay the salaries for those government employees. It’s a fascinating distribution of wealth. Most government employees and contractors could not earn more than $60,000 on the free market. Their only chance to make that kind of money comes from having an employer that not only never has to make a profit but can forcibly take money through taxation. - Public Servants Live Better Than the Public, and Federal Pay Continues to Skyrocket, The Daily Bail, October 26, 2009

End of the American Dream
August 10, 2010

Once upon a time, private industry was the engine of the great American economic machine. From coast to coast, expanding industries spawned massive cities filled with optimistic Americans who were able to achieve middle class lifestyles on the good jobs that American companies were providing for them.

The largest middle class in the history of the world had been created and it seemed possible for just about everyone to live the American Dream. But today all of that has changed. The private sector is being dominated by gigantic global corporations that have shown absolutely no hesitation to ship jobs overseas. Millions upon millions of good jobs have been sent to China, India and the third world and they are never coming back.

Pay and benefits for middle class Americans working in private industry have been slowly eroding and are now at dangerously low levels. Meanwhile, working as a "government servant" has never been more rewarding. Today, the average government worker makes far more than the average worker in the private sector does.

How much more?

Well, according to a new study from the Heritage Foundation, U.S. government workers earn 30 to 40 percent more money than their private sector counterparts on average.

So, in essence, the "servants" make substantially more money than the taxpayers who employ them.

Isn't the system great?

In fact, according to the study, if you add in retirement and health care benefits, the average federal employee now earns nearly twice as much as the average private sector employee.

Ouch.

Just check out this excerpt from the study....

"Including non-cash benefits adds to this disparity. The average private-sector employer pays $9,882 per employee in annual benefits, while the federal government pays an average of $32,115 per employee."

Yes, it is very good to be a U.S. government employee in 2010.

Meanwhile, the private sector continues to bleed jobs. The U.S. economy lost 131,000 more jobs during the month of July. Needless to say, the vast majority of those job losses came from private industry.

The truth is that it is becoming very, very difficult to live a middle class lifestyle if you do not work for the government.

A reader of this column named Tim recently shared the difficult experiences he has been going through as an employee in the private sector....

Been with my current company over 12 years. Last pay raise I got was six years ago. The last two years we’ve had our salaries actually reduced. 401K matching, vacation time, company stock purchase plans, actual pay, all gone or reduced. Me and buddies figure it to be about ~14% overall reduction. At my level I was averaging a 10% annual bonus (which are now a vague memory).

All in all, I am NOW working longer hours, at a much less satisfying job (it actually sucks), for about 20-25% less than I was making just 3 years ago.

My company was once a very highly respected company for the way it treated employees and the loyalty that created. We were long term focused, made great products. But now? ha! Upper management pushes harder and harder so they get their *quarterly* bonuses. Below VP level, people, and I mean a LOT of people are now pushing 55-60+ hour weeks for fear of losing their jobs.

With all this said – I still consider myself LUCKY. Even with the ~20% pay reduction, I still make very good money. But one thing has drastically changed. I no longer circulate my money. It all goes into savings. Every spare penny. And while this is good for me, we all understand it is at the expense of the local economy.

The saddest thing is to see my kids now graduating from college (two in the last four years!). They are entering a dismal job market with no hope of “true” recovery in the foreseeable future.

Of course the U.S. government cannot keep paying their workers above market wages forever.

But for now, if you need a good job and can stand to do it, working for the U.S. government pays really, really well.

Might as well jump on the gravy train for as long as it lasts.

So is this a good system?

Of course not.

The true wealth of a nation is produced by the private sector. But unfortunately, the private sector is providing fewer and fewer good jobs in the United States.

The truth is that the U.S. government has become the last great source of middle class American jobs. This will not be able to last indefinitely, but for now those seeking the safety and security of a job ("just over broke") should be looking to the government because the chances of getting a great job in the private sector are getting slimmer by the day.

Why Can't We All Work for the Feds?

It is becoming very, very difficult to live a middle class lifestyle if you do not work for the government. More than 40 percent of Americans who actually are employed are now working in service jobs in the private sector, which are often very low paying. So the tables have turned: the private sector now works to service the public sector, the last great source of middle class.

wiseGEEK

Socialism and communism are ideological doctrines that have many similarities as well as many differences. It is difficult to discern the true differences between socialism and communism, as various societies have tried different types of both systems in myriad forms, and many ideologues with different agendas have defined both systems in biased terms. Some general points distinguishing the two concepts, however, can still be identified.

One point that is frequently raised to distinguish socialism from communism is that socialism generally refers to an economic system, while communism generally refers to both an economic and a political system. As an economic system, socialism seeks to manage the economy through deliberate and collective social control. Communism, however, seeks to manage both the economy and the society by ensuring that property is owned collectively, and that control over the distribution of property is centralized in order to achieve both classlessness and statelessness. Both socialism and communism are similar in that they seek to prevent the ill effects that are sometimes produced by capitalism.

Both socialism and communism are based on the principle that the goods and services produced in an economy should be owned publicly, and controlled and planned by a centralized organization. Socialism asserts that the distribution should take place according to the amount of individuals' production efforts, however, while communism asserts that that goods and services should be distributed among the populace according to individuals' needs.

Another difference between socialism and communism is that communists assert that both capitalism and private ownership of the means of production must be done away with as soon as possible in order to make sure a classless society, the communist ideal, is formed. Socialists, however, see capitalism as a possible part of the ideal state and believe that socialism can exist in a capitalist society. In fact, one of the ideas of socialism is that everyone within the society will benefit from capitalism as much as possible as long as the capitalism is controlled somehow by a centralized planning system.

Another difference between socialism and communism is centered on who controls the structure of economy. Where socialism generally aims to have as many people as possible influence how the economy works, communism seeks to limit that number to a smaller group.

---

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. [Justice Litle, Is America’s Economic Recovery on the Whole Based on a Rotten Sham?, Daily Markets, April 20, 2010]

Freedom and initiative are being replaced by ever higher taxation, regulation and centralization of power in Washington. Our economy is now stagnant and our standard of living is declining. Each year government takes a bigger share of our earnings, employs more and more of our people, enacts more rules that strangle our economy, and controls more and more of our lives. In the enjoyment of plenty, have Americans lost the memory of freedom? When citizens are willing to sacrifice their liberty for security, they will have neither liberty nor security and will soon find themselves living under tyranny. [Ellen Sauerbrey, The Spark That Has Triggered Rebellion, American Thinker, September 13, 2009]

The government does not create a traditional sellable product and thus produces no revenue outside of what it collects from taxpayers or what it seizes from the people. Public sector workers are the most protected and most over compensated group of workers in the world. They have the powerful, politically-backed unions on their side, taking away the voices and votes of the taxpayers who pay their salaries. Like typical government dependents, they display a sense of entitlement at the expense of others. They don't want to make the same sacrifices that the private sector is forced to make. It comes down to this: Either the government workers must contribute more toward their benefits or taxes will have to be increased.

"If one understands that socialism is not a share-the-wealth programme, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs. Communism or, more accurately, socialism is not a movement of the downtrodden masses, but of the economic elite." [Gary Allen, None Dare Call It Conspiracy, Concord Press, 1971]

The Ruling Elite's Wealth Redistribution Plan

Obama’s Wealth Redistribution

By Barack Obama's Tax Plan
Copyright 2008

The idea of the redistribution of wealth is an appealing one, especially for people who don’t consider themselves wealthy. Many people believe that economic equality is the only way to truly make people equal. After all, one of history’s most famous urban legends — Robin Hood — took from the rich and gave to the poor.

However, what many people don’t realize is that Robin Hood was actually stealing from the government — an oppressive aristocracy which was taxing its citizens unfairly — and giving back money which was originally the poor’s in the first place.

But does wealth redistribution actually help society? Is it more beneficial to the rich than it is to the poor? Is it a cheap stunt used by politicians to get votes?

In this article, we’ll examine the concept of wealth redistribution, its effect on the United States, and more importantly — how it effects your average taxpayer.

Free Is Really, Really Expensive

These days the only way a politician can get elected is by promising more free stuff than the politician he is running against. But the public doesn’t seem to realize that free stuff isn’t really free.

It would be political suicide for a politician to even suggest that we should cut back in any area of the budget. If you suggest cutting the military budget, the right wing will tell you you’re un-American and there are terrorists under your bed. If you suggest cutting social security, the AARP will mobilize their tsunami of voters against you. And if you suggest cutting Medicare and Medicaid, the entire population will rise up against you screaming, “But health care is the single most important issue of our day!”

The problem is that every issue is the single most important issue of our day. That is why tough choices that need to be made to shore up our economy won’t be made.

To this you must add the fact that the United States of America has essentially become a socialist society living under the delusion that we are still free market capitalists. We forget that WE ARE the government.

The government isn’t some benevolent, separate entity with deep pockets. Whenever a problem arises, the majority always says the same thing — “The government should do something about it.”

They all seem to think that our government should be everybody’s safety net. When major hedge funds overleverage themselves, they think the government should bail them out, and when homeowners over-mortgage their homes, they think the government should save them from foreclosure.

We don’t seem to make the connection that whenever the government “does something about it,” it does so at half the efficiency and twice the cost of the private sector. Then it hands the public the bill through either direct taxation or through inflation taxation (aka the “hidden tax“).

That means, in the end, we all pay.

One of the biggest problems is that we hire (i.e. vote for) the wrong people to decide how our currency is to be spent. I would venture to say 99% of the officials we send to Washington D.C. who are charged with the job of redistributing our wealth, and thus the task of running the economy, know nothing about economics.

And if they do know, they don’t really care because their term is only two, or four, or six years.

President George W. Bush, as captain of our economic ship, decided to correct our course with tax cuts, and then scuttle us on the rocks of reckless spending due mostly to Medicare prescription drug benefits and the war in Iraq. But unlike the captain of the Titanic, he’s not going down with the ship — we are.

The Dangers of Big Government

The biggest problem facing America isn’t the housing crisis, the war on terror, or public education. The biggest problem facing America is really big government. It’s a huge monster that needs continuous feeding.

Before President Roosevelt’s New Deal, the federal government was just 3% of the economy. Today, it’s over 26%. And when you add in state and local governments, plus the cost of regulatory compliance, plus the cost of all the business that provides goods and services that support all the government agencies, it’s more than 50% of the U.S. economy.

The biggest threat the American people have to face in any economic crisis is government coming to the rescue. And with the government so big, and so pervasive, and with everyone expecting government to provide a safety net for every possible contingency — it will continue to grow.

That means it will require more money. Where does it get that money? From you and me. And when it needs more than we are able to give, it creates it out of thin air.

As the famous economist Milton Friedman puts it:

Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens against crimes against themselves or their property. When government — in pursuit of good intentions — tries to rearrange the economy, legislate morality, or help special interests, the costs come in inefficiency, lack of innovation, and loss of freedom. Government should be a referee, not an active player.

People don’t realize what government bailouts of private financial institutions really cost. The savings and loan crisis of the late 1980s cost taxpayers $150 billion. In 1989 the U.S. population was less than 250 million. That means everyone in the U.S. paid more than $600 each ($1,000 in 2007 dollars), either through taxes or inflation, to fix problems stemming from those financial institutions’ stupidity. But that was nothing compared to what looms on our horizon.

The reason the potential for systemic financial failure of our economy exists at all is because the public allowed themselves to be hoodwinked by big government and big banks. It was a process that took a few hundred years to unfold.

1. The first con job was that we allowed ourselves to be taken in by fractional reserve banking policies, which allows banks to create money out of thin air.


2. The second con job was allowing fractional reserve commercial banks to be pyramided on top of fractional reserve central banks (like the Federal Reserve).


3. The third mistake was not rising up against our government and the central banks in 1971 when the Federal Reserve, in collusion with President Nixon, made the U.S. dollar into a purely fiat currency.


4. The fourth, and probably biggest, mistake is allowing government to continue to create money and spend it unchecked as it continues to grow, and grow, and grow.

The result is simple: inflation, inflation, and more inflation.

What Is Socialism?

Socialism refers to a broad set of economic theories of social organization advocating social or collective ownership and administration of the means of production and distribution of goods, and the creation of an egalitarian society where labor is the main source of wealth.

In essence, in a socialist society, everything is owned by one organization, and all money flows into and out of that organization.

In this sense, Socialism is another word for one great, big, gigantic monopoly — where the government is the body that controls this monopoly.

In theory, this is a great system because it promotes “fairness” in the sense that it eliminates poverty. However it also eliminates incentives to succeed, to innovate, and to work hard. It also creates enormous inefficiency, stagnant to non-existent economic growth, and the creation of an elite ruling class that is rife with corruption.

In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

When the government nationalizes an industry, it essentially gains a legal monopoly over that industry and eliminates all competition from the marketplace. The reason monopolies are illegal in the private sector is because when one entity has control over an industry, there are no price controls. Competition drives down the cost of goods and services. Without competition, there is nothing to keep the controlling organization from price gouging its customers.

This is especially dangerous when it comes to necessities, like food, water, medicine, etc.

When you allow government to grow and take over industry, you essentially allow the government to control the price of the goods and services in that industry.

Many people believe this is a good thing because government can keep the price of those goods and services low. However, price limits have historically backfired on all governments who have tried them, because the free market always wins out — no matter what you do to try and stop it.

Take the example from ancient Rome.

In 301, Roman emperor Diocletian issued an order called the Edict on Prices, which imposed the death penalty on anyone selling goods for more than the government-mandated price. Merchants could no longer sell their wares at a profit, so they closed up shop or moved to lands which allowed them to sell their goods at a free-market price.

When government mandates prices that are artificially low, it causes a transfer of wealth out of the country. To see evidence of this, simply look at the communist nation of Cuba.

Though Cuba is communist, the difference between socialism and communism is that a socialist society is only about economic monopolies, whereas a communist society is about economic and political monopolies.

Since the communist revolution in Cuba in 1959, the country has seen a progressive economic downturn. Without the influx of money from the Soviet Union to bolster its economic, it has seen class equality achieved — everyone in Cuba (except for the ruling class) is poor.

Here is what Socialism has brought to Cuba:

• Production is run by the government and the labor force is run by the state.


• Capital investment is restricted and requires approval by the government. This ensures a lack of private sector jobs and economic competition.


• The Cuban government sets most prices and rations goods to citizens.


• Any firm wishing to hire a Cuban must pay the Cuban government, which in turn will pay the company’s employee in Cuban pesos.


• Preferential treatment exists for the ruling class of the Communist party, which get luxuries average citizens do not, such as access to transportation, work, housing, university education and better health care.


• Starting in the late 1980s the Soviet subsidies for Cuba’s state-run economy started to dry up. Before the collapse of the Soviet Union, Cuba depended on Moscow for sheltered markets for its exports and substantial aid. The Soviets had been paying above-market prices for Cuban sugar, while providing Cuba with petroleum at below-market prices. The removal of these subsidies sent the Cuban economy into a rapid depression known in Cuba as the Special Period.


• Since 1959 Cuba has experienced slow growth in its Gross Domestic Product relative to other countries that were in a similar situation in the 1950s, stagnant trade, and amassed a significant debt amounting to some $16.62 billion in convertible currency and $15 to $20 billion dollars with Russia


• Cuban citizens themselves have experienced a decrease in their caloric intake and a shortage of housing since 1959.


• For some time now, Cuba has been experiencing a housing shortage because of the state’s failure to keep pace with increasing demand.


• Food is rationed to Cuban citizens and state salaries are failing to meet personal needs of its citizens under the state rationing system chronically plagued with shortages.


• As the variety and amount of rationed goods available declined, Cubans increasingly turned to the black market to obtain basic food, clothing, household, and health amenities.


• There have been mass exoduses of Cuban citizens to the United States in an effort to achieve economic prosperity, causing a decline in productivity, innovation, and wealth creation in Cuba — not to mention a shrinking work-force, which contributes to the government’s failure to meet production demand.

And this is just the most recent example of how a government-run monopoly can wreck the economy. Keep in mind, this all started when Castro had his government seize the wealth and property of his country’s rich and wealthy, and took over the utilities and financial institutions.

Why Wealth Redistribution Is Good for the Rich and Bad for the Poor

Although socialism has long claimed to be for the poor, it has probably done more damage, on net balance, to the poor than to the rich. After all, the rich have enough money to leave the country if they think the socialists are going to do them any serious harm.

Some of our own rich here in the United States have already had their money leave the country, to be sheltered from the higher taxes that limousine liberals say we should all pay (to learn more about this, read our article on how the rich hide their wealth). Meanwhile, the mainstream media give them kudos for their selfless advocacy of higher taxes on higher income people, forgetting that these are not taxes on wealth.

Most of the people in the upper income brackets are not rich and do not have wealth sheltered offshore. They are typically working people who have finally reached their peak earning years after many years of far more modest incomes — and now see much of what they have worked for siphoned off by politicians, to the accompaniment of lofty rhetoric.

The rich have learned to adapt socialist policies to their own benefit. For example, a while back the city of Riviera Beach, Florida, was planning to demolish a working class neighborhood under its power of eminent domain, in order to prepare the way for a marina for yachts, luxury condominiums and an upscale shopping district.

What will the city of Riviera Beach get out of all this? More taxes from higher-income people, enabling local politicians to spend more money on programs to attract votes. Meanwhile the rich get rid of lower-income folks without having to pay them the value of their homes and businesses that will be demolished. As in so many other cases, eminent domain is socialism for the rich.

Theoretically, those whose homes and businesses are demolished will get the “just compensation” to which the Constitution says they are entitled.

In reality, just announcing plans to demolish the homes in an area will immediately demolish part of their market value. Even if homeowners are compensated for whatever value remains when their homes are actually demolished — which can be years later — they have still been had.

For businesses, compensating them for the value of their physical assets — which may or may not include ownership of the place where their businesses are located — does nothing to compensate them for the often much larger value of the clientele they have built up over the years but who are now scattered to the winds by neighborhood demolition.

This game doesn’t work the same way in rich neighborhoods. Not only can the rich hire big-bucks lawyers to fight city hall, why would city hall want to get rid of upscale taxpayers, who are often also big donors to political campaigns?

Remember — in socialism, there is no equality. There is the ruling class, and everyone else. As evidenced in other socialist countries, the ruling class (those who control the monopolies) get special perks and privileges others do not.

In a socialist society, the rich, who can afford to lobby politicians, are usually awarded favorable treatment due to their ability to help finance political campaigns. In exchange, they are not only given preferential treatment, but in most cases, more wealth is transferred to them in the form of political power. This leaves the average working man out in the cold, as he now has no way to achieve success thanks to the anti-competition stance of a socialist government as opposed to the open opportunities of a free market.

How Will Obama’s Tax Policies Redistribute Wealth?

Barack Obama has stated numerous times that he is looking to create “fairness” in America’s economy, which is a socialist ideal. He has even stated that he wants to “share the wealth” by taking money from people who earn it in the form of higher taxes, and giving it to people who don’t. (The “rich guy and the waitress” metaphor he likes to repeat.)

You can see him talk about his socialist-leaning beliefs in these videos:

This makes it obvious that Barack Obama does not see taxation as a means to pay for government works, rather he sees taxes as a socialist system of wealth redistribution.

If you apply Obama’s “fairness” policies to schools, you’ll get a better idea of how this works:

Let’s say your child is studying for an important test. He comes home from school and studies hard and diligently for hours. He learns the material, and when he takes his test, he gets an A+ thanks to his hard work.

But then the teacher goes to him and says “You did great, but Billy and Jack didn’t do so well. They both got D’s on the test. In order to make things fair, we’re going to take away two of your grade points and give it to them, so now you all have C’s.”

Your child cries to you about how he worked so hard to earn an A, while Billy and Jack played video games. You complain to the teacher about it not being “fair,” because your child worked for his grade while the other two didn’t. Your complaints fall on deaf ears, since to the school, their definition of fairness means everyone gets the same grade, while your definition of fairness is that you get what you work for.

Now, your child gives up studying and plays video games all day because he can’t see the point in studying hard when everyone gets the same grade due to the school redistributing them.

If it were your child this happened to, chances are you’d raise holy hell to make sure his hard work got rewarded. But when it comes to other people’s money, most wouldn’t fight for the “fairness” of others keeping more of what they worked hard to earn.

Remember — in America, we aren’t pegged into an income class. If a waitress making $4/hour plus tips wanted to, she could start her own restaurant and make more money. Or she could invest in stocks and get money from the market. Or she could learn a skill and get a better job. Just because that waitress works at a minimum wage job, does not mean she does not have opportunity to advance economically.

Barack Obama’s mantra of being “neighborly” is also flawed. Being neighborly implies you have a choice to be kind to someone in your community. If you like your waitress, you are free to choose to give her more of your hard earned money.

But when the government takes your money, you have no say in who that money is given to. While you work hard every day trying to provide for your family, that money you pay in taxes might be given to an alcoholic on welfare who watches TV all day and neglects his kids. You just never know, because you are not in charge of your money at that point.

The most telling effects that Barack Obama’s “share the wealth” philosophy will have on the economy, however, are the effects on states that already practice his tax the rich, give to the poor policies.

Barack Obama’s Wealth Redistribution In Practice

Despite the federal government’s growing economic dominance, individual states still exercise substantial freedom in pursuing their own economic fortune — or misfortune. As a result, the states provide a laboratory for testing various economic policies.

In this election year, the experience of the states gives us some ability to look at the economic policies of the two presidential candidates in action. If a program is not playing in Peoria, it probably won’t work elsewhere. Americans have voted with their feet by moving to states with greater opportunities, but federal adoption of failed state programs would take away our ability to walk away from bad government.

Growth in jobs, income and population are proof that a state is prospering. But figuring out why one state does well while another struggles requires in-depth analysis. In an effort to explain differences in performance, think tanks have generated state-based economic freedom indices modeled on the World Economic Freedom Index published by The Wall Street Journal and the Heritage Foundation.

The Competitiveness Index created by the American Legislative Exchange Council (ALEC) identifies “16 policy variables that have a proven impact on the migration of capital — both investment capital and human capital — into and out of states.” Its analysis shows that “generally speaking, states that spend less, especially on income transfer programs, and states that tax less, particularly on productive activities such as working or investing, experience higher growth rates than states that tax and spend more.”

Ranking states by domestic migration, per-capita income growth and employment growth, ALEC found that from 1996 through 2006, Texas, Florida and Arizona were the three most successful states. Illinois, Ohio and Michigan were the three least successful.

The rewards for success were huge. Texas gained 1.7 million net new jobs, Florida gained 1.4 million and Arizona gained 600,000. While the U.S. average job growth percentage was 9.9%, Texas, Florida and Arizona had job growth of 18.5%, 21.4% and 28.9%, respectively.

Remarkably, a third of all the jobs in the U.S. in the last 10 years were created in these three states. While the population of the three highest-performing states grew twice as fast as the national average, per-capita real income still grew by $6,563 or 21.4% in Texas, Florida and Arizona. That’s a $26,252 increase for a typical family of four.

By comparison, Illinois gained only 122,000 jobs, Ohio lost 62,900 and Michigan lost 318,000. Population growth in Michigan, Ohio and Illinois was only 4.2%, a third the national average, and real income per capita rose by only $3,466, just 58% of the national average. Workers in the three least successful states had to contend with a quarter-million fewer jobs rather than taking their pick of the 3.7 million new jobs that were available in the three fastest-growing states.

In Michigan, the average family of four had to make ends meet without an extra $8,672 had their state matched the real income growth of the three most successful states. Families in Michigan, Ohio and Illinois struggled not because they didn’t work hard enough, long enough or smart enough. They struggled because too many of their elected leaders represented special interests rather than their interests.

What explains this relative performance over the last 10 years? The simple answer is that governance, taxes and regulatory policy matter. The playing field among the states was not flat. Business conditions were better in the successful states than in the lagging ones. Capital and labor gravitated to where the burdens were smaller and the opportunities greater.

It costs state taxpayers far less to succeed than to fail. In the three most successful states, state spending averaged $5,519 per capita. In the three least successful states, state spending averaged $6,484 per capita. Per capita taxes were $7,063 versus $8,342.

There also appears to be a clear difference between union interests and the worker interests. Texas, Florida and Arizona are right-to-work states, while Michigan, Ohio and Illinois are not. Michigan, Ohio and Illinois impose significantly higher minimum wages than Texas, Florida and Arizona. Yet with all the proclaimed benefits of unionism and higher minimum wages, Texas, Florida and Arizona workers saw their real income grow more than twice as fast as workers in Michigan, Ohio and Illinois.

Incredibly, the business climate in Michigan is now so unfavorable that it has overwhelmed the considerable comparative advantage in auto production that Michigan spent a century building up. No one should let Michigan politicians blame their problems solely on the decline of the U.S. auto industry. Yes, Michigan lost 83,000 auto manufacturing jobs during the past decade and a half, but more than 91,000 new auto manufacturing jobs sprung up in Alabama, Tennessee, Kentucky, Georgia, North Carolina, South Carolina, Virginia and Texas.

So what do the state laboratories tell us about the potential success of the economic programs presented by Barack Obama and John McCain?

John McCain will lower taxes. Barack Obama will raise them, especially on small businesses. To understand why, you need to know something about the “infamous” top 1% of income tax filers: In order to avoid high corporate tax rates and the double taxation of dividends, small business owners have increasingly filed as individuals rather than corporations. When Democrats talk about soaking the rich, it isn’t the Rockefellers they’re talking about; it’s the companies where most Americans work. Three out of four individual income tax filers in the top 1% are, in fact, small businesses.

In the name of taxing the rich, Barack Obama would raise the marginal tax rates to over 50% on millions of small businesses that provide 75% of all new jobs in America. Investors and corporations will also pay higher taxes under the Obama program, but, as the Michigan-Ohio-Illinois experience painfully demonstrates, workers ultimately pay for higher taxes in lower wages and fewer jobs.

Barack Obama would spend all the savings from walking out of Iraq to expand the government. John McCain would reserve all the savings from our success in Iraq to shrink the deficit, as part of a credible and internally consistent program to balance the budget by the end of his first term. Barack Obama’s program offers no hope, or even a promise, of ever achieving a balanced budget.

Barack Obama would stimulate the economy by increasing federal spending. John McCain would stimulate the economy by cutting the corporate tax rate. Barack Obama would expand unionism by denying workers the right to a secret ballot on the decision to form a union, and would dramatically increase the minimum wage. Barack Obama would also expand the role of government in the economy, and stop reforms in areas like tort abuse.

The states have already tested the McCain and Obama programs, and the results are clear. We now face a national choice to determine if everything that has failed the families of Michigan, Ohio and Illinois will be imposed on a grander scale across the nation. In an appropriate twist of fate, Michigan and Ohio, the two states that have suffered the most from the policies that Barack Obama proposes, have it within their power not only to reverse their own misfortunes but to spare the nation from a similar fate.

~~~

The majority of Americans are dependent on the federal government for their health care, education, income, or retirement — at the same time the number of taxpayers paying for these benefits is rapidly shrinking. How can any free nation survive when a majority of its citizens, now dependent on government services, no longer have the incentive to restrain the growth of government? As we all know, over the last 50 years, American attitudes have shifted from cherishing self-sufficiency and personal responsibility to craving cradle-to-grave security 'guaranteed' by government. The result is that increasing numbers of Americans are dependent on government for their income, careers, health care, education, and other essentials. Government benefits — once concentrated on 'the needy' — now extend into middle- and upper-middle-class households, even as more and more Americans see their income tax liabilities decrease. Today, the majority of Americans can vote themselves more generous government benefits at little or no cost to themselves. As a result, most have little fiscal incentive to restrain the continued growth of Big Government and the entitlements it dangles before them. - Jim DeMint, The Coming Crisis, May 8, 2001

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. - Justice Litle, Is America’s Economic Recovery on the Whole Based on a Rotten Sham?, Daily Markets, April 20, 2010

If one understands that socialism is not a share-the-wealth programme, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs. Communism or, more accurately, socialism is not a movement of the downtrodden masses, but of the economic elite. - Gary Allen, None Dare Call It Conspiracy, Concord Press, 1971

The movement toward public sector unionism and collective bargaining began in the late 1950's. Its proponents ought to be forgiven for their failure to foresee just how harmful it would be to our nation's governmental institutions. They had no empirical evidence on which to base their ideas. Now, almost forty years later, the politicians who insist on perpetuating the compulsory public sector collective bargaining laws that have given public sector unions disproportionate power in determining the size, cost and quality of public services are less easily forgiven. The record is clear. It is an unmitigated disaster. But, politicians are, after all, politicians and the laws that gave public sector unions so much influence on government decisions have also made them into very powerful political forces throughout the country. Fortunately, there is a new mood sweeping the country and the public is not content to allow politicians to maintain business as usual with special interests. Already, in small ways all across the country, public sector union power is being successfully challenged. But, Rome was neither built nor burnt in a day. There is a long way to go to restore the proper balance between the public interest and the interests of public employees. - David Denholm, Beyond Public Sector Unionism: A Better Way, Public Service Research Foundation, October 1994

The problem we face now is that our “Capitalism” is corrupt and only serves the Elite. Those with the political connections get bailed out of their failure and spread the cost among those who were prudent or worse, those that succeeded. In reality we have a two tiered system in which most of America gets the failure of Capitalism and the Elite get the Socialism of being bailed out on our backs. In essence we privatize profits and socialize loses. This creates a moral hazard where those that are alleviated of the risk of failure, take more and more risk, in search of greater profits. This ultimately leads to a crisis which, is where we are today. - Silver Shield, The Two Coming American Revolutions, Dont-Tread-On.me, March 25, 2011

Time appears to be running out, with dire changes having already begun. Who knows, maybe there is only a year or two remaining of relative freedom of movement before the controllers reveal their deep affinity with the dark side by setting up what seems to be their planned world dictatorship, world government, and world currency. They have learned how to manufacture crises and disasters, such as 9/11, as a means of seizing more power. The signs that they are springing the trap will be the increased bureaucratization of all aspects of life, wartime measures like rationing and transportation checkpoints, centralization of financial institutions, control of populations through un- and under-employment, elimination of freedom of speech on the internet, and continued growth of computerized systems containing personal identifying information. As has happened before, the majority of people will likely be so sick of the rising tide of chaos, which the controllers have helped engineer, that they will willingly trade their autonomy for the shackles of totalitarian order. - Richard C. Cook, The Time of Testing Is Here, richardccook.com, May 24, 2010

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