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True capitalistic economies depend on savings to grow economic output. Savings are invested in capital equipment and/or training to increase productivity. Rising productivity leads to higher incomes which will support not only even larger savings, but also greater consumption. Greater productivity and competition inevitably lead to lower prices. Everybody benefits and everyone shares the progressively rising standard of living. Capitalism is a self perpetuating virtuous circle. In contrast, socialism encourages sloth, subsidizes failure and destroys capital through consumption. Capital destruction means falling productivity which leads to lower savings, slower or negative income growth, rising debt to fund both consumption and capital spending, and inevitably lower or falling levels in the standard of living and a slower growth of net wealth or even declining net worth. Socialism is a vicious cycle leading inevitably toward self destruction as predicted by Ludwig Von Mises and to a lesser extent by Ronald Reagan. The two graphs below show some of the effects of seventy years of socialism on the US.
As recently as 1980, the United States was the world's largest creditor; now we are the largest debtor. For the first time in fifty years the IRS has just reported two consecutive years of declines in total individual incomes for 2001 and 2002. Incomplete data for 2003 and 2004 indicate that wage increases are lagging inflation. Remember the headlines about the economic miracle of the nineties? Do the graphs above and the one below look like an economic miracle? Enron accounting? Or an economy in an advanced stage of socialistic decline?
Serious bleeding cannot be controlled with band-aids; major hemorrhaging of red ink requires a tourniquet. The Federal Reserve act, passed in 1913 was a pre-requisite for inflation. Since socialism funds consumption instead of savings and investment, escalating government debt, rising taxes and inflation become the only cash flow fountains that can be used to fund socialism. The next two graphs are thumbnail summaries that provide an explanation of the first three graphs.
As bad as the picture painted by these graphs is, Gokhale-Smetters tells us that even under the most optimistic models the growth of liabilities over the next forty years will exceed the growth of liabilities reflected in the charts above.
Ending socialism will not be easy. At the very least it will take a major political debate. Political debates begin at the grass roots or from the top of the heap. Logic says that the existing demographics and the time required virtually precludes this from being a grass roots effort. Hands down, the best debating platform in the US is the "bully pulpit." It is going to take leadership if we are to end socialism in the US before socialism ends the United States. It is going to take the kind of skillful use of the bully pulpit shown by Ronald Reagan. And it is going to take the kind of skillful Congressional leadership shown by Newt Gingrich's Contract with America. Where are we to find another Ronald Reagan when our conservative icons have been self destructing? If there is another Ronald Reagan out there, why hasn't he, she, or they come forward? There are three major deterrents to seeking elected public office. First, the private life of office seekers becomes fair game for public consumption. This is something that must simply be accepted. There is nothing that is going to change or prevent this from happening. Second, professional politicians are the problem. The cure will take a citizen willing to become a statesman for a limited time. We are looking for some one willing to make a sacrifice, not a career move. The third factor, campaign fund raising, is what dramatically reduces the number of citizens willing to become statesmen. It is the second and third factors, that I believe I know how to change. How many willing citizen statesmen might come forward if they knew they would never have to engage in campaign fund raising, but would have all of the funding they required in order to campaign effectively and successfully? If there are other potential Ronald Reagans out there, how many are deterred from seeking public office because of the onerous burden of perpetual campaign fund raising and what must be done to raise the funds? Professional politicians accept that this goes with their career turf; citizen-would-be-statesmen do not. How many are not elected because inadequate fund raising kept them from getting their message out? Could we elect enough conservatives to public office and maybe find another or even dozens of Ronald Reagana if a conservative independent group could be guaranteed of raising $600 million of campaign cash every two years that is over and above the cash raised by the Republican Party? This conservative independent group would provide this money to suitable conservative citizens willing to serve, but who were not willing to engage in campaign fund raising. Would Republican incumbents become more conservative if they knew they could be faced with a more conservative primary opponent that is better financed than they are? How many professional politicians would uphold a new Contract with Congress in each of our upcoming elections if faced with these facts? How many professional politicians that refused to accept new Contracts could be defeated and replaced by citizen-statesmen who would gladly embrace these ideas? I am suggesting that there is a way to reliably raise at least $2.4 billion dollars between now and 2012. This is money that is over and above what is raised by the Republican Party. This money would be raised outside the Republican Party and would not be under any control or subject to any influence by the Republican Party. If this money were to be spent electing Constitutional conservatives based on a series of Contracts with Congress, how much could we change America and how quickly. Our supported candidates would be seeking office at every local, state, and national level. This is not intended to be a new political party. Consider it more as a conservative extension of the Republican Party designed to shift the Republicans toward the Constitution. And we would be looking to entice conservative splinter parties or candidates back toward a much more conservative Republican Party. If we are to end socialism, our goal is to elect conservatives and to defeat socialists regardless of their party labels. If we could find one or more Reagan-like statesmen willing to serve, could we elect them and hold the campaign and bully pulpit debates needed to educate enough Americans about the difference between freedom and socialism? Could men made from the same mold as Ronald Reagan and cut from the cloth as the Founders explain to the American people the consequences of continuing socialism? Could such men convince enough Americans that the correct choice is freedom? Could men like Ronald Reagan or the Founders convince the American people that freedom is the tool that they need "to make the most of their lives", if we could just get government off their backs and out of their way? Could our Reagan Wing candidates convince the American people that ordinary citizens can manage "matters like health care and retirement security," far better and far more reliably than government? This series is about finding, funding, and electing Constitutional conservatives, and in particular about identifying and electing candidates exactly like Ronald Reagan and the Founders. |
The Comptroller of the Currency is already on record as saying that it is
not possible to grow the economy sufficiently to fund the unfunded and
growing liabilities projected by Gokhale-Smetters. History tells us that
unsustainable trends end. The Greeks, the Founding Fathers, Austrian
economists, and history all tell us that democracies end in bankruptcy or
hyperinflation whenever the public learns to vote themselves benefits from
the public treasury. The graphs above should be convincing evidence to
anyone that socialism is going to bankrupt the United States or our
government is going to be forced to destroy our currency. Ending socialism
is the only way to avoid these tragedies. Gokhale-Smetters answered the
vital question, "How long do we have before the US is likely to collapse?"
Between Gokhale-Smetters and the preceding graphs we have four elections
(2006, 2008, 2010 and 2012) to apply a tourniquet and effectively put the
socialism Genie back in the bottle.