In Jim Cook's Archive


“Socialist practices are now so ingrained in our thinking, so customary, so much a part of our mores, that we take them for granted.”

Leonard Read, 1951

Governments and socialists the world over have had to recognize that when government bureaucrats run corporations, they fail. Their new strategy is to let business stay private, but suck out its marrow with high taxes and micromanage businesses, via regulation, to further their socialist goals. An example would be the abolition of merit through hiring quotas, discrimination suits, racial preferences and so forth.

Despite spending half of all incomes, wages and business profits, governments still cannot make due. Ronald Reagan described the process. “Great as our tax burden is, it has not kept pace with public spending. For decades, we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals…It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government.”

Nevertheless, candidates on the left propose higher taxes and more government giveaways. Anywhere else in the world we would describe these liberals as the socialists they are. Unfortunately, for fiscal conservatives, the current administration spends as recklessly as any liberal. Editor Jeff Jacoby writes of the current President, “He has flooded the government’s books with red ink. And he has embraced new schemes for draining the Treasury….”

The newest socialist scheme is the prescription drug entitlement, a half-trillion annual expansion of the welfare state. To most retirees this sounds like a wonderful advantage. Unfortunately, it’s but one part of the many government schemes that are making our public finances unmanageable and also driving costs into the stratosphere. Robert Prechter points out that prices rise in direct correspondence to the amount of government meddling. “Look at the sectors that keep going up,” he says, “food, housing, education and medical care. The government subsidizes home lending through specially authorized agencies such as Fannie May and Freddie Mac. The government runs most of the educational system, meddles in most private universities and subsidizes student loans. Government has completely distorted the medical profession by subsidizing medical expenses through Medicare and Medicaid and drafting intricate rules for medical coverage offered by insurance companies.”

You may not worry much about these trends. After all, life in the U.S. is good. But, inevitably the comfortable life we take for granted can be lost. According to the greatest economist who ever lived, Ludwig von Mises, “Our whole civilization rests on the fact that men have always succeeded in beating off the attack of the re-distributors. But the idea of re-distribution enjoys great popularity still, even in the industrial countries….. “Interventionism and efforts to introduce Socialism have been working now for some decades to shatter the foundations of the world economic system. We stand on the brink of a precipice which threatens to engulf our civilization…..”

To the masses the catchwords of Socialism sound enticing…. so they will continue to work for Socialism, helping thereby to bring about the inevitable decline of the civilization which the nations of the West have taken thousands of years to build up. And so we must inevitably drift on to chaos and misery, the darkness of barbarism and annihilation.”

Ludwig von Mises also gave us a solution. “Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.”

Our contemporary brand of socialism has one fatal flaw. It’s too expensive. When you try to shower benefits on so many recipients, you eventually must resort to subterfuge. Foremost among those tricks are money and credit expansion. Inevitably, you debase your currency. Years ago philosopher Leonard Read explained exactly what’s going on today. “Inflation makes the extension of socialism possible by providing the financial chaos in which it flourishes. The fact is that socialism and inflation are cause and effect, they feed on each other!”

The welfare state erodes our ethics, our prosperity, our character and our freedom. The economic damage done to date is far worse than anyone believes. In my view, we are on a precarious economic tightrope where any slip will plunge us into a financial crisis. Socialism has brought us to this predicament. A wise man once said, “Truth always emerges and finally prevails supreme in its power over the destiny of mankind, and terrible is the retribution for those who deny, defy, or betray it.”

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