Category Archives: big government

Life before the social welfare state

In 1779, before the advent of the welfare state or even a federal government in the US, when taxes were virtually non-existent, François de Barbé-Marbois wrote: “Begging is unknown in America. There are, in almost all towns, hostels which take in old people or those who are unable to work. As for the unemployed, there are other institutions where care is taken that they lack neither work nor food.” Barbé-Marbois, Our Revolutionary Forefathers 71

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The evil trinity of big government: media, public schools, and government bureaucracy

With Occupy Wall Street in the news, the decline of the American economy and competitiveness, and our growing indebtedness as individuals and a nation, I have been thinking a lot the causes of our current “unequivocal experience.” [Hamilton, Federalist No. 1] Or as Hamilton wrote in Federalist No. 15, “We may indeed with propriety be said to have reached almost the last stage of national humiliation. There is scarcely anything that can wound the pride or degrade the character of an independent nation which we do not experience.”

For those who read this blog, my tweets, or my books, you already know that I firmly believe that all problems in government can be traced to the people. No government can stand long without the support–or lack of opposition–from the people, as Hamilton points out in Federalist No. 21 and Madison in Federalists No. 28 and 44.

The question then is not why the government has grown, but why the people have encouraged or allowed its growth from under ten percent of GDP to over forty percent over the past century.

Quite a while ago I came to the conclusion–and I’m sure I’m not alone in this opinion–that there is an evil trinity promoting big government.

  • The media: The print and television media has long been controlled by the left. Only with the emergence of Fox News and talk radio has the right gotten a voice. The Internet has also helped expanded “alternative” viewpoints. Nevertheless, the left still has a dominant market share among casual listeners/viewers/readers. The media has an innate interest in promoting government. The media’s job is to find a problem or crisis and blow it out of proportions to get ratings. On top of that, a story gets even more traction if there is somebody to blame. Who to blame? Well, you certainly cannot blame your customers, even if they are responsible. So, the media blames big corporations, the government, or foreign nations. If they blame a foreign nation, obviously it is the government’s job to protect us from these foreign attacks. If they blame a big corporation, only the government is large enough and powerful enough to rein them in. If they blame the government, they suggest, promote, or demand that the government do more next time to prevent its own mistakes. (Think about government stimulus, which the media says failed only because it was not big enough.)
  • Public education system: Most Americans received the majority of their education from the public school system. Public schools teach nearly 100% of K-12 students. Even in college, many universities are public with tuition subsidized by the states. On top of that, the federal government subsidizes student loans to private universities, which creates all sorts of market distortions. Public school administrators and teachers alike receive their paychecks from the government. They have chosen to work for government and most of them, by choice or mandate, join the teachers union. These teachers and administrators are brainwashed by unions and government education departments and then brainwash their own students to believe those same ideals. When election time comes, they turn out in droves and convince parents through phone calls (I received one the other day) and PTA activities to vote for their candidates and to approve propositions to increase their funding.
  • Government bureaucracy: Currently, seventeen percent of American jobs are in the government sector. On top of that, as I write in The Path to Tyranny, “these employment figures do not include all the jobs created by the 529 billion dollars worth of contracts given out by the federal government each year, two-thirds of which were for defense programs. As of 2006, government contracts to private defense companies employed an additional 1.4 million people.” Just like the teachers and school administrators above, these people want to keep their jobs and generally believe that they are doing more good than bad for the country.

With such a large percentage of Americans working for the government, either directly or through public schools, with the media’s influence on the American mind, and the public school system’s stranglehold on our children’s education, the left has been able to advance their agenda with little opposition. There should be little doubt as to why government’s size has more than quadrupled in the last hundred years and now eats up almost half of our GDP (with the cost of regulation added on top of that).

A fourth group may possibly be included: welfare recipients. Back in 2009, I wrote about this in The Path to Tyranny, but the situation has worsened since then. Here is what I wrote then:

In the first quarter of 2009, Social Security, Medicare, welfare, and other benefits provided by the government accounted for 16.2 percent of all personal income, a record high. Americans have become dependent on the government, something the Founders did not intend. After paying tens or hundreds of thousands of dollars into Social Security and Medicare, only the very rich would be able forego the benefits promised them. Every election, retirees and people approaching retirement vote for candidates who promise not to touch their retirement or health care programs. This has made fixing the structural problems behind these programs virtually impossible, but it has accomplished the goal of modern liberals and socialists of making Americans dependent on the government.

Nevertheless, I do not include these welfare/benefit recipients because they are people from all walks of life who do not represent a singular group. Though they certainly skew elections and public sentiment, there is no way to infiltrate, attack, and convince them as a group; we can only do so as individuals. The other three are institutions influencing government; this one is a loose collection of individuals. The left uses the apparatus of the left within the media, public education, and government bureaucracy to influence others. In contrast, those dependent on government are a symptom of big government more than a cause, though they certainly seek to maintain their benefits and this makes shrinking government more difficult. But these people do not necessarily promote big government. In fact, many oppose government’s actions to increase welfare because it may threaten their own benefits. Thus, welfare/benefit recipients are not including among my evil trinity.

Topic to be continued…

The status quo results in socialism

Is America heading toward socialism? Is President Obama taking us there? Will the tea party save us?

I think the first question that must be asked is: What will happen if American does nothing? Forget about all the proposals for new government spending. Forget about tax policy for a second. What will happen if America simply maintains the status quo, without growing or reducing the size of government?

According to the Congressional Budget Office’s 2011 Long-Term Budget Outlook, the federal government will consume 34.1 to 75.9 percent of GDP in 2085. The lower number is called “The Extended-Baseline Scenario” while the higher number is “The Alternative Fiscal Scenario,” which includes the extension of the tax cuts set to expire, rising debt levels, and “spiraling interest payments.”

Add in current state and local spending, subtracting out governmental transfers, (that assumes state and local government do not grow, as they have done for the last 100 years) government at all levels will consume 49.7  to 91.5 percent of GDP in 2085.

Even with the CBO’s optimistic forecast, government will account for half of all economic activity. Currently, government accounts for about 40.9 percent of our economy. But the pessimistic outlook from the CBO has the government controlling nearly all of the economy. We will be fully socialist!

Unfortunately, I lean toward the more pessimistic outlook. And I’m not alone. The CBO writes:

Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.

Looking at the accompanying spreadsheet, the CBO has unemployment falling to an average of 8.4% next year, then falling to 7.6% in 2013, 6.8% in 2014, 5.9% in 2015, 5.3% in 2016, 5.2% in 2019, 5.1% in 2026, and 5.0% in 2030 where it stays forever. Oh really? They really expect unemployment to average 5.0% from 2016 to 2085? Has the United States or any country ever had sustained low unemployment uninterrupted by recession for 70 consecutive years? I don’t think so!

Certainly, the Baseline Scenario is too optimistic. This means that even with no new government programs, government will account for well over half of all economic activity by 2085. In this Alternative Scenario, the CBO estimates that government at all level would consume nearly all of economic output.

Socialism is in our future if we do not change. Doing nothing–merely blocking new government programs–is not enough. We must undo the damage that has already been done and fix the government programs that are already eating up a growing percentage of our national production.

– Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society’s Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.

Repeating history: The future of Greece, Europe, and the United States.

I’m rereading The Path to Tyranny to prepare it for a second printing and came across this section about Germany in the late 1920s and early 1930s (before the Nazis took over) very relevant for today:

The country’s economic problems worsened and the government approached bankruptcy. To reduce the budget deficit, the government raised unemployment insurance premiums, increased duties on wheat and barley, reduced pension and unemployment benefits, and cut the salaries of civil servants. The Social Democratic Party’s popularity declined even more when these measures pushed up unemployment even further and weakened the already fragile banking system. The government was trapped in a no-win situation. It cut back on spending to avoid bankruptcy, but this increased hardship on the people and reduced the government’s popularity. On the other hand, the government could have continued providing welfare to the people, but this would likely have forced Germany to default on its debt, which would have resulted in massive inflation and a flight of capital out of the country. The German government’s large deficits, which were the result of the economic depression combined with Germany’s already semi-socialist economy, forced Germany to decide between two equally bad choices. The resulting economic and political crisis was inevitable, regardless of what the government chose to do.

Are we in the same no-win situation today? If governments cut back on spending, this reverse-stimulus will hurt the economy and the removal of economic support will certainly increase the pain for many poor people. However, if the government continues with its deficit spending, bankruptcy will eventually occur, first in Greece which already has debt to GDP of 173%, but eventually in most if not all Western countries.

Liberals trying to convince you there is a free lunch in government.

Over at Marketwatch, Rex Nutting lists “The 10 best things government has done for us“:

  1. Protecting our freedoms
  2. Giving away the land
  3. Educating everybody
  4. Helping us retire with dignity
  5. Improving public health
  6. Building our transportation networks
  7. Investing in communications
  8. Building our energy supply
  9. Inventing the future
  10. Defeating totalitarianism

Yet, Nutting writes that “everyone knows that the government can do a lot to create the right conditions for prosperity” and “Our democratic government — along with you, me and our ancestors — created the conditions that have allowed private citizens and companies to build a great nation.” But many of these are simply government handouts–redistribution of wealth–not the creation of conditions.

Did we really want the government to give away land? (I write about this very issue in Angry Mobs and Founding Fathers.) Funny, now the government takes land away from private individuals instead of giving it to them.

And why should the government invest in the future, building our energy supply, invest in communications, build our transportation networks (I also write about this  in Angry Mobs and Founding Fathers), etc.? Aren’t those the domain of private enterprise?

But why shouldn’t the government provide these free goods and services to us? Yes, I said FREE! Because the author, Rex Nutting, not once mentions taxes. He fails to mention that the resources used by the government to do these things took resources away from the private economy, which would have made use of them to provide the same or different goods and services to us.

Thus, Mr. Nutting provides us with just half the picture, and a distorted half at that.

What Would James Madison Say About Our Legal Code?

The only thing that has grown faster than the national debt is the number of laws and regulations with which a bloated federal government has burdened its beleaguered citizenry.

The Obamacare bill ran 2,471 pages long, not including the thousands more pages of regulations (created by unelected bureaucrats) that come along with the new law.  The recent Dodd-Frank financial reform bill was 2,323 pages long.  Each year the federal government adds about 80,000 pages to the Federal Register. The tax code alone is over 70,000 pages long.

What would the Founding Fathers say about this?

Read the whole thing at What Would the Founders Think?

Usurping the Constitution to avoid default?

A number of political pundits, legal experts, and even government officials argue that President Barack Obama should use the 14th Amendment to circumvent the debt ceiling and avoid default. The New York Times reports:

A few days ago, former President Bill Clinton identified a constitutional escape hatch should President Obama and Congress fail to come to terms on a deficit reduction plan before the government hits its borrowing ceiling.

He pointed to an obscure provision in the 14th Amendment, saying he would unilaterally invoke it “without hesitation” to raise the debt ceiling, “and force the courts to stop me.”

On Friday, Mr. Obama rejected the idea, though not in categorical terms.

“I have talked to my lawyers,” Mr. Obama said. “They are not persuaded that that is a winning argument.”

Despite President Obama’s resistance to this idea, some House Democrats are pushing it. Politico reports:

Rep. James Clyburn and a group of House Democrats are urging President Barack Obama to invoke the 14th Amendment to raise the debt ceiling if Congress can’t come up with a satisfactory plan before the Tuesday deadline.

Clyburn, the third-ranking House Democrat, said Wednesday that if the president is delivered a bill to raise the debt ceiling for only a short period of time, he should instead veto it and turn to the phrase in the Constitution that says the validity of the U.S. government’s debt “shall not be questioned.”

According to the New York Times article, “Jack M. Balkin, a law professor at Yale” argues:

“This is largely a political question,” he said. “It is unlikely courts would decide these questions.”

“At the point at which the economy is melting down, who cares what the Supreme Court is going to say?” Professor Balkin said. “It’s the president’s duty to save the Republic.”

Similarly, Eugene Robinson writes at the Washington Post:

It seems to me that definitive action — unilateral, if necessary — to prevent the nation from suffering obvious, imminent, grievous harm is one of the duties any president must perform. Perhaps the most important duty.

This seems all too familiar because it comes straight out of history. In ancient Rome, Sulla was given dictatorial power to restore the republic. By violating Rome’s constitution, Sulla and the Senators that gave him power established a precedent that enabled Julius Caesar to become dictator for life and destroy the republic. Similarly, men like Benito Mussolini and Adolf Hitler also rose to power and expanded their control under the guise of saving the nation.

The Founding Fathers, being students of history, knew that extra-constitutional actions would only undermine the republic in the name of restoring it. As George Washington explained in his farewell address:

If, in the opinion of the people, the distribution or modification of the constitutional powers be in any particular wrong, let it be corrected by an amendment in the way which the Constitution designates. But let there be no change by usurpation; for though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed.

— Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society’s Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July and is now available in stores.