Free Markets, Free People

Daily Archives: July 12, 2012

We’re gonna ride this puppy down in flames

It’s no secret that my optimism well has about run dry. Signs like this don’t make the level rise any. Read the whole thing. Go on. I’ll wait.

You see here’s the thing: I’ve been writing about how close we are to and economic and currency meltdown, but not a lot about societal meltdown. But troubling signs are there, too. There’s a fundamental and growing lack of respect for the government. Not because we’re bad people, but because we recognize the growing divergence between what the government does and what common sense tells us.

So, as the linked article points out, we engage in an endless list of violations. It’s estimated that in perhaps in the course of a day, and almost certainly in the course of a week, all of us commit some act that, statutorily, makes us criminals. The range of government powers, and the scope of activities they cover, make it almost possible to obey the law in it’s entirety. We know this, and we know, just as surely, that there is something wrong about it at a very basic level. And we respond to that knowledge.

It’s not civil disobedience that I’m talking about. It’s the opposite: Civil disobedience is meant to be noticed. It is a price paid in the hope of creating social change. What I’m talking about is not based on hope; in fact, it has given up much hope on social change. It thinks the government is a colossal amoeba twitching mindlessly in response to tiny pinpricks of pain from an endless army of micro-brained interest groups. The point is not to teach the amoeba nor to guide it, but simply to stay away from the lethal stupidity of its pseudopods.

The amoeba does not get smarter but it does get hungrier and bigger. On the other hand, we get smarter. More and more of our life takes place outside of the amoeba’s reach: in the privacy of our own homes, or in capital accounts in other nations, or in the fastest growing amoeba avoidance zone ever created, cyberspace. We revolt decision by decision, transaction by transaction, because we believe deep down that most of what government tells us to do is at bottom illegitimate.

In other words, in a thousand small ways, an increasing number of us are learning the power of "no". We just haven’t started acting on it seriously yet. And, of course, it’s not all of us. There are still a fair number of people whose faith in the government to be everyone’s mommy and daddy would be touching, if it weren’t so frightening. But a lot of people are waking up to the fact that the government, in matter both large and small, is increasingly incompetent.

Now we might never act on the increasing size and scope of government, if we felt we were getting some value out of it. If it could keep the trains running on time, we might think we’d gotten a fair trade-off, or, at least, enough of us would that society would keep humming along in a fairly stable trajectory. Sadly, it’s increasingly obvious that ever-larger government not only can’t keep the trains running on time, it actively prevents them from doing so.

Nowhere is this more clear than in the economy, and the government’s response to an increasingly irrational monetary and fiscal policy.

After World War II, the debt:GDP ratio stood at 128%, approximately 24% higher than it is now.  How did we reduce that debt? First, the entirety of wartime regulation was eliminated practically overnight. Rationing, wage and price controls, industrial production controls, confiscatory business and personal taxes…all gone. And, in the three years after the war, government spending was cut by half.

That would be impossible today, of course. Social Security and Medicare alone make up more than half of government spending. Unless we gut entitlements—along with everything else—we will never have a balanced budget again. This is especially true when you consider that, though debt service is just under 6% of the Federal Budget today, that’s only true because we have artificially low interest rates. If interest rates return to the 1996 levels, then over 20% of the budget will have go to debt service payments alone…a percentage that will steadily increase as the amount of debt increases. That means 80%+ of the federal budget will be Social Security, Medicare, and interest payments on the debt.

Today, the Treasury announced that the June fiscal deficit was $904 Billion for the year so far. So, we’re going to have another $1 trillion deficit this year. Just like last year. Just like next year. And as far as the eye can see.

It doesn’t take any advanced math to see what’s going to happen. We’re going to default on our debt. Or, considering that, according to today’s announcement of the money supply, by next week, there’ll be $10 Trillion in M2 floating around out there, we’ll simply monetize it through inflation, which amounts to the same thing. But we’re clearly not going to restrain spending, which means we are years, if not months, from an economic and monetary collapse.

It shouldn’t come as a surprise to anyone when it comes. Anyone who can do simple math has the capability to see it coming. Anyone with common sense can see what we have to do to avoid it. Everyone knows that maintaining a reasonable fiscal policy and sound currency are two of the government’s primary domestic responsibilities, and everyone know that they simply aren’t doing it, and, worse, seem incapable of ever doing it again.

The excuses for not cutting government are innumerable. We can’t eliminate the Department of Education, or our children will become stumbling morons. We can’t cut Social Security, or seniors will be eating Alpo. We can’t cut the Department of the Environment, or we’ll die choking in the stinking gasses of industrial effluvia. We can’t cut Defense, or foreigners will walk openly on the streets of Washington. We can’t cut the DEA, or we’ll all be jumping out of windows from some sort of of acid-fueled illusion that we can fly over the pretty colors we smell. We can’t, in short, cut anything, because every penny of it is vital and necessary, and without it, we’ll be reduced to just a lucky few who flee from the zombie hordes inhabiting the stark, post-apocalyptic landscape brought on by smaller government. Assuming, of course, that anyone can "flee" with the acute diabetes they’ve acquired by lugging along an extra couple of hundred pounds they’ve gained from unrestricted access to 64-ounce Big Gulps.

So, not only are we gonna ride this puppy down in flames, anyone with any sense already knows that we’re gonna do it, if we stay on the current path.

The thing is: it’s no longer just some whacko fringe or criminal class who are turning into everyday scofflaws, it’s the middle class. The very people we depend upon for stability in society are the people who are now realizing that "society" is increasingly turning into a confidence game played to promote the interests of the politically powerful and their clients at the expense of the middle class. The people who aren’t rich enough to insulate themselves from the vagaries of fortune, but who are rich enough to have something to lose are supposed to be the stolid citizens, the defenders of the status quo. Increasingly, they aren’t.

So, the interesting question then becomes, what response will we see to the sort of entirely foreseeable and preventable collapse that is coming from a middle class that increasingly knows the government is a huge pile of fail? And how will they respond to the bleats of the not inconsiderable portion of their fellow citizens who will blame it not on government, but on "rootless cosmopolitans", "the 1%", "banksters", et al., and demand an even more powerful government to "fix" the problem?

Here’s another interesting question. Social Security and Medicare are about the only benefits the middle class has left. It’s almost the last thing they can expect to get back from all the money they’ve poured into the system their whole lives. How will they respond when you tell them that we can’t afford those entitlements anymore, and the only way to fix the fiscal disaster we’re facing is to take away the only skin they’ve got left in the game? What do they do when the advantages they receive from government are outweighed by the burden government puts on them?

Those are questions that really bear thinking on. Because if you lose the middle class, then their response to a crisis may not be to repair and reform the existing edifice in an attempt to return to status quo ante. Instead, it may be to simply burn the whole thing down, and start rebuilding something else from scratch. After all, when you’ve got nothing left to lose…what’ve you got to lose? What happens if the middle class are turned into revolutionaries?

Somebody may want to start figuring that out.

~
Dale Franks
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Quote of the Day: WTF edition

Henry Blodget of Business Insider entitles his anti-Romney piece:

Sorry, Mitt Romney, You Can’t Be Chairman, CEO, And President Of A Company And Not Be Responsible For What It Does…

Really?  Since when did that become true?

After all, according to our current President and the left, everything the last 4 years has been Bush’s fault.  Or ATMs.  Or tsunamis.  Or Europe.  Or …

Forward.

~McQ

Twitter: @McQandO

Economic Statistics for 12 Jul 12

The following statistics were released today on the state of the US economy:

Initial jobless claims fell 26,000 to 350,000 last week, mainly due to seasonal distortions in the Auto Industry. The 4-week moving average fell to 376,500. Continuing claims fell to 3.304 million.

Import prices for June followed May’s 1.0% decline by falling -1.7%, with a year-over-year rate of -2.1%. Export prices fell -2.7%, with a year-over-year rate of -2.6%.

The Bloomberg Consumer Comfort Index remained unchanged at 37.5 in the latest week.

~
Dale Franks
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Health care is still not a “right”

Yesterday, as the Republican controlled House of Representatives voted for the 30th time to repeal ObamaCare, Nancy Pelosi said:

“We put forth a vision for the middle class to make health care a right, not a privilege for all Americans. Today, as they have done more than 30 times this Congress, Republicans will vote to take away that right.”

Pelosi, among many of our legislators and politicians in general, displays a level of ignorance about rights and privileges that seems pretty basic to me.  Governments don’t grant rights, they grant privileges no matter how hard they try to characterize what they do as a “right”.

A right, to be a right, must be inherent.  It is something you have even before government shows up.  The right to life.  The right to liberty.  As our founders identified these rights, they’re “inalienable”.

The best government can do, and the true foundation of a just government, is the acknowledge and protect our inherent rights. I.e government should exist to protect those rights.

Real rights are passive. They don’t require the assets, time, labor or commitment of others to enable their execution.    Health care, of course, is a perfect example of a pseudo“right” which requires all of that.

Anything that government can give you (remember, we had the inherent rights I talk about before government existed and we formed the government to acknowledge and protect them – see founding documents) is not a “right.”  And when government has to use it’s coercive power to “enable” these pseudo “rights” as it has in this health insurance debacle, it isn’t a right.

There is no right to health care. Period.  There never has been.  You have no inherent right to demand someone else use their skills, time and assets to service your health.  You certainly have the right to negotiate and reach a voluntary agreement (see liberty) with health care providers based on a mutual exchange of value (see property).  But “right” – no.

And besides, what Pelosi et al really cranked out was a requirement to buy health insurance via the coercive taxing authority of government.  It no more guarantees health care as a right than the previous system.  You still have to find a health care provider to accept your insurance and agree to treat you.  In fact, it’s even tough to characterize the ObamaCare monstrosity as a government granted “privilege”.

Back to the point – this fundamental ignorance about rights and privileges, however, is at the root of many of our problems.  For decades we’ve allowed government to get away with calling things it grants “rights” to the point that the concept of rights is so muddled that most people don’t understand them at all and have fallen for the government line.

Falling for that line helps enable horrific legislation like ObamaCare because it gives it cover, a veneer of "good” the proponents use to push their agenda.  Who wouldn’t be for something that’s a “right”?

My point:  Don’t let them misuse the word.  Call people and politicians who do this out.  Make them substantiate their claim of a right and when they can’t point out what is really going on.  They’re talking about a privilege established by government coercion.  That’s not freedom.  That’s not liberty, two things you have a right to expect and something these privileges usually curtail.

It’s time to take back the political language.  And there’s no better place to start with the understanding that government’s don’t and can’t grant rights.

~McQ

Twitter: @McQandO