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THE ROAD TO RUIN
By James R. Cook
Get ready for capitalism and the free market to get pummeled with bad publicity as the economy continues its downward slide. The left wing will raise the roof over a worsening economy. The steady drumbeat of anti-market propaganda will likely give liberals a political edge in Washington, but as usual, they’ve got it wrong. In many important areas we don’t have a free market.
Take money. We have a central bank that controls the issuance of money (and credit). There’s no competition. Try to start your own currency and you’ll soon be in a jail cell. This monopoly on money becomes a tool for politicians to pay the bills for ever-expanding social programs and military escapades. It’s called inflating. If government spends too much, they cover the deficit by printing or creating new money.
Without inflating, social programs can’t expand. Thus the creation of new money became an indispensable ingredient to the goals of populist politicians. Easy money aids the spread of socialism. Inflating and socialism go hand in hand – you can’t have one without the other. The left in this country has an open-ended commitment to supporting the rapidly growing underclass. Helping the poor, the homeless, the disenfranchised has become a huge growth industry, providing scores of jobs and growing political muscle. Call it the poverty business. Unfortunately, it doesn’t curb poverty, it makes poverty worse.
Government spending subsidizes poverty. It’s a big part of the budget. Whatever you subsidize you get more of; more homeless, more crime, more drug addiction, more babies and more dysfunction. When we pay for our runaway social spending by creating new money to pay the bills, we water down the value of our money. Eventually it’s the road to depression, hyperinflation and national ruin.
The underclass (of every race) costs the nation an astronomical sum of money. It used to be that a public defender was a part-time duty in most communities. Now there are scores of these lawyers on city and county payrolls earning in the high five figures. Facilities for incarceration, prison and jail guards, probation officers, judges and court employees all have exploded in number. Two million children now have parents in prison.
The underclass was cemented into place years ago with the advent of the dole. Since then a blizzard of social programs including public housing, food stamps, welfare payments, medical care, heating bill payments, homeowner grants and a dizzying number of lesser programs have been introduced to ease their struggle and keep them uninterested in personal achievement. As a byproduct, 25 million children live in homes without fathers. These dads have turned support of their children over to the government.
Nothing on earth damages people more than giving them money they didn’t earn. We have evolved out of economic strife. Economic challenges and financial struggles make us what we are. Remove the demand to make your own way and behavioral pathologies soon set in. I recently got a solicitation from a charity that helps American Indians. They claimed the rate of alcoholism on Midwest reservations was 90%. After a century of government assistance, the human condition on the reservation is worse than anything that ever existed on the planet. Have we learned anything from converting these once highly self-sufficient people into helplessness? Not at all. Social sympathy still runs amuck. Liberals remain oh so compassionate, especially when spending money that isn’t their own.
At least five drug-related murders have occurred this year at one prominent northern Minnesota reservation. It’s a carbon copy of what’s going on in the city. Liberals and their programs are the absolute worst medicine for these people. For example, the left insists that children stay with their parents, no matter what. Adoption is virtually prohibited. But children should be taken away from prostitutes, drug addicts, severe alcoholics, abusers and criminals. The shocking truth is the majority of underclass kids would be much better off elsewhere. But that would diminish the welfare culture, and business is good. The left always credits themselves for their compassion. Yet they are the cause of the misery they are so compassionate about.
Now it’s crunch time. Tax revenues are falling and will dry up further. That means liberals in Washington will soon be stumping for an increase in federal taxes. States are already raising taxes. Meanwhile, the costs of big government poverty programs and most especially Medicare and Medicaid are going through the roof. These social schemes must either be pared down or government revenues must be increased. This year the Department of Health and Human Services will spend $450 billion while defense costs $350 billion. Both of these (and most other agencies) will have to be cut dramatically in the future. But no matter how much they whittle away, they won’t be able to catch up with falling tax revenues. The worst is yet to come. A shrinking economy along with massive debt defaults will put the kibosh on government spending. Even the liberals will discover that the U.S.A. cannot borrow or inflate enough to pay for all of its social programs, subsidies, guarantees and obligations.
The worsening recession will eventually put the liberals into power in Washington. They will cut the military and raise taxes but it won’t be enough. The unfolding economic and financial disaster will not spare the government. Today corporations struggle to raise money in the bond market. Tomorrow the government will struggle. It will not be wise to count on the government for your sustenance.
Today’s anemic capital investment by business means weak corporate profits tomorrow. Big corporate layoffs are just around the corner. This rise in unemployment guarantees sharply reduced consumer spending. That infers a slowing economy and a plunging stock market. A dramatically lower Dow will break down the last vestiges of intractable bullishness as belief in an inevitable recovery withers. The fourth quarter of 2002 will show zero to negative growth. Because of the vast debt load, a slowing economy with negative growth of two to three percent can capsize over-indebted corporations, maxed out consumers, leveraged homeowners and every other category of debtors. The dreaded credit crunch may soon be upon us. Social sympathy will butt heads with bankruptcy.