Dear Friends,
It seems to me the root of all the sovereign debt problems, in the World, ever… can be traced back to one thing; spending more income. You would think this is so obvious that it would be the topic of conversation. However, people hotly debate where to find new sources of revenue, they call for more taxation on vilified factions of society, in the name of “fairness” while all the time… avoiding the real argument. It is like a husband and wife who argue. They are on the same side, but fight to the bitter end… while their marriage slips into divorce.
If a government is set up, such that, it’s incentives are to spend more money than it takes in, is unlikely to balance it’s budget, no matter the revenue stream… or river. We have seen this over and over in human economic history. From City States that bankrupted themselves due to incessant wars, the tulip bubble at the dawn of capitalism, through the Argentine monetary hyperinflation crisis… to now, with the European debt crisis and the soon to be American debt crisis. The simple fact is, government, with this set of incentives, cannot be fiscally sound. It is impossible.
Like I said in an earlier blog, even if space aliens landed and gave our collective governments a trillion dollars a day to spend on social programs, the resulting debt would dwarf any ability to pay it back. Because of the incentives that our Elite have set up. They have inculcated in society, the false notion, that the roof can support the foundation. Resulting in a greater rise in demand for government services than could possibly be provided for.
Having the people supported by their government is like a house that’s foundation is supported by it’s roof. That should seem obvious. A house that could do such a thing would be wonderful indeed. But, as we have seen over and over in the annuls of human economic history, socialism fails every time. It fails because it defies basic economics just as our house would defy physics.
The fundamental answer is not to seek stronger structural supports for our house. They come at cost of liberty. A house supported by it’s roof must be strongly constructed with no room for any slack. If there were any slack even the slightest wind would impose impossibly powerful forces on the structure. Just as a society that is largely supported by the government must have few liberties else at the first challenge people will flood the streets calling for change. The result is; the house collapses.
It is an attractive notion.. to have a society where no one has to work. Everyone gets a check from the government. Would you like to be idle? To live like mold. Have the motivation of mold and the charisma of mold. Not to denigrate mold that much I like the benefits of penicillin. To many idleness is attractive. We all seek leisure. But leisure is a means not an end. To believe it is an end is to loose focus on the truth of life. We exist to some end, a life of hedonism and leisure is a denial of that basic end… therefore that basic truth.
Because no end is achieved by absolute leisure except decrepitude. Ends are achieved by action. Perhaps as Lau Tzu said, through passionless action or as Christ said, empathetically loving action, no matter the end, it requires action. Action being the opposite of leisure. Not to say that there is no place for leisure. Nothing could be further from the truth. Moses ordered, the Jews must have a day in seven, for leisure. It is needed for the Human psyche but not as an end in itself…. anymore than penicillin, taken daily, would help prevent anything.
All these things lead inexorably to impel government to be profligate with the public purse. The spurious notion that leisure is the highest good should be shown as the sophistry it is. It leads to the insanity that a society can be supported by it’s government. When nothing could be further from the truth. Reality is stark and unforgiving. We all live in the real world but the Elite live in a fanciful world of fanciful make believe. They can build their hypothetical houses/governments, so tight, that they must be sound… and soundly stifling.
It all boils down to this, the incentives in society are set up wrong, the societal myth of hard work leading to riches, has been supplanted with a sophist notion, the house analogy, and this leads to the pernicious incentive for government to spend more than it takes in… no matter how much it takes in.
Now that we have found the tap root… should we chop it out, or should we fertilize it and water it?
Sincerely
John
