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Submitted by hhoffman on Wed, 23/07/2008 - 22:54.
THE SAD ROAD TO SOCIALISM By John Loeffler July 23, 2008
NewsWithViews.com
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"But if the government undertakes to control and to raise wages, and cannot
do it; if the government undertakes to care for all who may be in want, and
cannot do it; if the government undertakes to support all unemployed
workers, and cannot do it; if the government undertakes to lend
interest-free money to all borrowers, and cannot do it; if .... 'The state
considers that its purpose is to enlighten, to develop, to enlarge, to
strengthen, to spiritualize, and to sanctify the soul of the people' -- and
if the government cannot do all of these things, what then? Is it not
certain that after every government failure -- which, alas! is more than
probable -- there will be an equally inevitable revolution?" --Frederic
Bastiat, "The Law," June, 1850
It's been more than 150 years since Frederic Bastiat wrote his treatise, The
Law, a small work, challenging the ravages of failing socialism thrust upon
France as a result of the French revolution.
In that unique pamphlet, Bastiat points out that when the law of any country
supports the moral belief systems of a people, defends the rights of said
people and their property, the law is perceived as being moral; a defense
against evil and those who flaunt it as being immoral. Payment of taxes and
civic obligations are perceived as a virtue and those who flout this as
criminals.
However, when the law becomes a source of plunder or pits itself in
opposition to the morals of the people, the people perceive the law to be
immoral and widely despise it. Indeed, in those times, flouting the law is
extolled as virtue.
Another book by contemporary author Hernando Desoto, The Mystery of Capital:
Why Capitalism Triumphs in the West and Fails Everywhere Else, points out
much the same thing, that the security of ownership of private property
guaranteed by law for the lower and middle classes has been the essential
ingredient resulting in the prosperity enjoyed by many western countries.
Without this security, where the state becomes an impediment to commerce or
property ownership, the people are forced to operate their economies outside
of law, which is once again perceived as evil, rather than a force for good.
In essence, when a government goes from being a protector of private
property to a plunderer of it, it places itself on a course of chaos,
economic ruin and its own ultimate self-destruction.
The Three Steps of Socialism
Socialism is the mechanism which transforms government from its noble role
as a protector into a predator and, since the citizens of our fine country
seem determined to plow through socialism to its bitter end, we should
examine the territory through which these three sad steps lead. The core
result of socialism is the destruction of private property and wealth.
The events described in this piece are a composite of the ravages of
socialism experienced in other countries. While each country does experience
all the events portrayed, all socialist countries follow the same miserable
path. The U.S. doesn't have to go down this path, but it seems determines to
do so.
We're Off to See the Wizard
One of the great dangers of any government by the people is that sooner or
later their politicians discover they can vote largess from the public
trust. Their first experiment at this bold new adventure invariably revolves
around social programs enacted in the name of morality and the public good
or even solving some current crisis. Who could oppose that? "After all," it
will be argued, "don't you care about people, or the welfare of the country,
or the environment?"
The lure of this argument has been absolutely irresistible from the Roman
Empire to the French and Bolshevik revolutions to Socialist Parties (D) and
(R) in the USA today.
Step One - The Moral Argument: A Promise of Something for Nothing
The moral argument that we can finally solve poverty, pain, sickness, and
hunger with "free" money seems just to good to be true. It usually is but it
sells to the public. To fund these allegedly moral programs, the assets of
the gentle citizens must be quietly taxed in the name of the public good.
Only a few wise and isolated voices warn that this baby dragon they have
just hatched will grow up to be a fire-breathing monster. But not to fear,
the wise voices are generally shouted down by the gentle politicians, who
fiercely demonize protestors as selfish "whabbledygots" blocking the road to
the perfect society. After all, how could something so noble do anything bad
to the country?
At first the rich are the only ones asked to pay more of their "fair share."
In the U.S. income tax originally only affected upper-bracket individuals.
In this early stage, few complain and everyone seems happy, except for those
nagging voices still warning of dire consequences ahead; the ones the gentle
legislators wish would just shut up. Other than that they have little to
fear because the gentle legislators appear to be heroes placing our feet
firmly on the road to utopia. Soon they promise all the have-nots will have
and those who do have, will have just a little less. After all, as we said,
it's just their "fair share."
Ah but time rumbles onward, and the number of people dependent upon these
programs swells along with the number of "free" government programs. Free
things do sell, and that's what politicians want to do: sell their programs.
As the programs swell, they become unwieldy, requiring large bloated
bureaucracies to administer them to ward off the inevitable fraud and
corruption, consuming an ever greater part of the tax booty and servicing
less to the originally intended recipients. In order to control the chaos of
a large group of people cueing up to get something for nothing, large
volumes of laws and regulations have to be written to control who gets what
and where and when and who the givers and who the takers are. Now, the
bureaucrats who administer these programs are also dependent on them for
their livelihoods. This entrenches the program and assures its progression
to Stage Two.
The Magic Dragon Isn't Cute Anymore
Somewhere along the line, the gentle legislators discover that their baby
dragon has grown and it's snarling at them a lot. It wants much food. They're
not controlling it; it's controlling them. However, in order to retain their
prestigious position, ever-increasing sources must be found to feed their
growing rapacious raptor.
The food source (tax burden) shifts rapidly downward into the middle class,
as the gentle politicians coo that only the rich are being soaked.
Concomitant with the increase of taxation, the miracle of hidden taxation
through monetary inflation is discovered as central banks print more and
more money to allow the good times to continue over and above what direct
taxation will allow.
This process of monetary inflation results in debasement of the currency,
causing the citizens to work harder and harder and run faster and faster to
keep up with the loss of their currency's value and the concomitant rise of
prices. It's slow at first but accelerates along an insidious exponential
path. Ultimately it destroys everything the middle class works for.
Additional reptilian food sources called "revenue streams" are created. More
fees, fines, "mitigation payments" and permits are required to do almost
anything, driving the cost of doing everything upwards. Coupled with this is
a bewildering array of regulation and laws making the business of life more
and more difficult to accomplish. Big businesses can absorb this but the
middle class ultimately buckles under the strain. The dragon is never
satisfied.
Stage 2: Silent War Between Government and Its Citizens
At some point, the unwashed masses suspect their politicians aren't really
gentle any more much less benevolent. This is where a silent war between
government and people erupts. It's a blurry transition through never-never
land when the politicians still claim to be gentle but the people sense that
they have gone from being protectors of the public good and private property
to a plunderers of it; from morality to immorality.
The "Bastiat" transition doesn't take place all at once but, one by one,
members of the working class realize they're toiling like mad and getting no
where. What they do make is confiscated in taxes or destroyed in inflation.
They have little left over and their life's savings are being destroyed
while the politicians tell them all is just fine, creating cognitive
dissonance between the hardship workers experience and the good times the
politicians promise.
But those friends of the dragon on the dole still insist the dragon's
intentions are moral, even if its methods are not. As tax rates push ever
higher into confiscatory ranges, self-preservation kicks in and the people
take defensive action against what they no longer perceive as moral duty but
legally-sanctioned plunder. They do this at the same time they pretend the
gentle politicians are correct even though they know better.
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The rich catch on and move their assets offshore and sometimes themselves
out of the reach of the dragon; they expatriate. They have the means to
structure their finances in such as way as preserve wealth. Besides, the
politicians are frequently among this class so they aren't about to let the
dragon loose on themselves.
Unfortunately, the middle class doesn't have this option, so it fights the
dragon by engaging in evasive maneuvers. Citizens cheat on taxes, and seek
to conceal taxable assets. Whenever possible transactions are shielded from
the ever-prying eyes of the hungry dragon.
As the ravages of taxation and inflation eat out the middle class's
substance, a vibrant underground economy springs up, utilizing barter, cash,
foreign currencies, precious metals or other means to conceal taxable
activity. Regulatory laws are flouted as people try to "see what they can
get away with." Often times this underground economy has an organized crime
component vis a vis the former Soviet Union.
The second half of Stage Two of the war kicks into gear as the dragon
responds to the rising opposition and imposes a growing panoply of laws and
regulations with increasing fines, penalties and prison sentences. To block
the rampant flouting of law, the dragon wants to monitor everything the
citizens do in order to assure that plunder shall be paid, all in the name
of the rule of law, public order and morality. Civil rights break down, all
in the name of morality and public security.
Every once in a while the beleaguered middle class pleads with the gentle
politicians to fix the problem, unaware that it was the gentle politicians,
who created it all in the first place. But politicians are more than happy
to be seen as dragon slayers, and create a series of scapegoats for the
problem, transferring blame for the mess and enacting a new series of
programs to supposedly fix the problem. In reality, they just delay the
pain, put the dragon on steroids and making the problem far worse.
The war is not without casualties. As it becomes ever more difficult for
small businesses to function in the poisoned atmosphere of taxes, fees,
fines, regulations and prosecutions, more of the middle class throws up its
hands and goes elsewhere or becomes part of the the dependent poor. Small
business goes out of business or operates illegally. As inflation devours
life savings, people are wiped out. Retirees have a difficult time getting
on as their lifetime achievements are destroyed. Most of the middle class
slides inexorably down the slope into poverty.
There is a moral consequence as scandals erupt in the politico and monied
classes. Disrespect of law is common. In the free-for-all, everyone is in it
for himself and no one can afford to obey the law. Jails swell with those
unfortunate enough to get caught. As more complex laws are steadily passed,
finally all citizens become law-breakers.
This enables the dragon to seek pretexts for seizing the assets of citizens.
Businesses are nationalized. Wage and price controls are instituted.
Property ownership is forcibly transferred from those who oppose the dragon
to those who support it. Retirement plans are brought under the "protection"
of government and their owners left with government-issued IOUs. Assets are
seized on the mere allegation of criminal activity. Indeed, law enforcement
agencies encourage their members to plunder. They even make arrangements
with organized crime at times. The list of plunder-and-defend possibilities
is astounding.
In an effort to stem the hemorrhage, the middle class starts throwing out
the rascal politicians, only to elect another group of rascals. This has
little effect, since the dragon is now a self-existing monster that doesn't
require gentle politicians. By this stage it's clear: Small and middle class
businesses, ranchers and farmers all know who the enemy is: the dragon.
There is no illusion that the politicians are gentle or acting in their best
interests.
As the security of property ownership declines, investments flee and the
economic environment becomes unstable, no one wants to invest where earnings
will be heavily taxed, or even the possibility of direct confiscation on the
allegation of having violated a plethora of unknowable, unobservable laws.
Doing business is just too dangerous.
As doing business becomes dangerous, investments die, jobs go out of
existence, increasing the pain of the working lower and middle classes.
Small business is always the primary creator of employment and it is the
most abused. In the end, the rich are never soaked, the middle class is
destroyed and the poor discover that there is no free lunch.
Stage Three: Dies Irae: A Day of Wrath and Mourning
Ultimately the dragon cannot keep its promises. This last stage is where
events turn nasty and chaotic. It is a dangerous time. It is a time no
country should ever wish to reach.
Politicians are perceived as ravenous wolves. Blame and finger-pointing
frenzies among politicians erupt to deflect responsibility for the chaos
they have caused as they attempt to hold onto their privileged status.
Faith in government dissolves along with faith in the currency. Widespread
flouting of law is common and tax payments quit. If it gets bad enough,
crime flourishes, both organized and random. The domestic economy collapses
into a depression and the currency just collapses.
By this time there are several violently outraged groups of people: the
first group consists of those who have been dependent on the dragon for
their free programs, and once the dragon reneges on its promises to provide
these, they are outraged at the violation of their imagined rights to a free
lunch. This group can include pensioners who paid the dragon money but
discover the dragon spent it all before they retired.
The second group is the middle class, who have been beaten to death to feed
the dragon and his cronies. They have lost all their livelihood and
property. This is the point where many revolutions occur. Sometimes the
revolutions are non-bloody and occur only at the voting booths; sometimes
they are bloody and violent. It is a dangerous time because the chaos caused
by the breakdown of economic and political order coupled with the collapse
of morality often requires brute force to restore order, and brute force is
the fertile ground for dictators and the destruction of rights.
One of the great ironies of history is that those who started the mess and
benefitted greatly from it are rarely ever called to pay for the crimes and
carnage they caused.
Finally the dragon dies.
Conclusion
No country trapped in socialism goes through all the events described above,
which is a composite of past histories. It can turn itself at any time
providing it is prepared to discipline itself the undergo the pain required
to get off the public dole, much like coming off an addiction. Few societies
ever want to face that, so they condemn themselves to all three stages. And
the longer they wait to enact the necessary changes, the worse the pain
becomes.
From currency, to energy to property rights, issues today are clouded with
so much static and partisan bickering that the average person has little
real comprehension of what is happening. Frequently Democrats and
Republicans blame each other when often they're both responsible and fiddle
while Rome burns.
America is truly at an economic and moral crossroad, having already started
into Stage Two of the sad road to socialism. Whether or not we plow through
all three stages remains to be seen. It takes great moral courage to prevent
this but politicians tend to be neither moral or courageous.
Thus it is up to what actions are moral, legal and necessary to see us, our
families and friends safely through the tempest. But as a ray of hope, it is
here where Americans in times past have always shown themselves most noble.
© 2008 John Loeffler - All Rights Reserved
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As a 40-year broadcast news veteran, John Loeffler is host of the
nationally-syndicated news program Steel on Steel, which can be heard
atwww.steelonsteel.com. Steel on Steel monitors geopolitics, religious and
worldview issues, as well as early-warning intelligence on global trends.
E-Mail: john@steelonsteel.com
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