This is NOT a failure of capitalism

Some contend that the economic malaise we are experiencing is a failure of capitalism. How can that be so when we do not have true laissez-faire capitalism in this nation? What we have is closer to European style socialism with touches of communism and fascism. The essence of capitalism is the individual being responsible for himself.

Just to name a few violations of capitalism:

1. Social Security
2. Minimum wage or any other price control such as rent control
3. Government welfare programs such as AFDC or its successors

With governmental welfare programs a dependency on others is encouraged and we experience a mentality of entitlement by the recipients. The result is a poorer society overall.

WHAT I’VE LEARNED FROM TWO BOOKS I’VE RECENTLY READ

The two books are:
• The 5000 Year Leap by W. Cleon Skousen
• Democracy–the God that Failed by Hans Hermann Hoppe
These books explain our Constitution and often cite the founders of this nation. From their explanations one can only conclude that that the laissez-faire capitalism that the founders had in mind has been entirely ignored by the presidents and congresses practically since the ink was barely dry on that old parchment-paper on which the constitution was written. Instead of capitalism we’ve gone ever more into socialism, even socialism with touches of Communism and Fascism.

With capitalism society as a whole prospers and grows, while with socialism society as a whole withers and collapses. Look at the utter failure of the former USSR and the withering state of Cuba. From Skousen we find that ten or more great societies have collapsed because the citizens have expected their government ever more and more (socialism). Even on this continent in the early seventeenth century socialism failed when it was tried in Jamestown, Virginia where no private property was allowed. It was so bad that Captain John Smith wrote: “In Virginia, a plaine Souldier that can use a Pick-axe and spade is better five Knights.”

If we do not return to laissez-faire, our fate will surely be that of Cuba, the former USSR, or the former East Germany and I do not recall any attempts of people attempting to escape into these areas, but rather many occurences of people attempting to escape from them.

Read the US Constitution and tell me wher is the authority to operate a public utility such as the TVA, or where is the authority of the Federal government to be involved in any way in education, just to name two abuses.

National Bankruptcy??

How does a nation go bankrupt? Has it ever happened?

These are questions which every American should be concerned about. When I hear the other day that the national indebtedness a few year hence would be nine trillion dollars instead of the earlier estimated seven trillion dollars, I wanted to tear out my hair.

You can bet the farm that something will snap.

One possibility is a hyperinflation like the Weimar Republic in Germany experienced in the early part of the twentieth century. In 1914 one American dollar fetched 4.21 marks. By the beginning of December in 1923 a dollar would exchange for 4.2 trillion marks. In less than a decade the mark had sunk to one trillionth of its former value. The winners were those who had large debts because they were repaid with cheaper marks and the losers were the pensioners and others who held monetary assets based on the mark. The hyperinflation continued until the Germans replaced the old mark with the rentenmark at a rate of one billion to one on November 15, 1923.

Could something happen like this in America? I don’t know, but why don’t you google the word AMERO.

A Vow

I made a vow the other week. I made a vow to never again vote for an incumbent for federal office, regardless of any party affiliation. While the current slugs in congress are arguing about placing all of us in a socialized medical care system, they are proposing to keep their gold plated medical system for themselves – at our expense no less. Talk about Machiavellian hubris! The time has come, in fact it is past due, that the Washington “elites” are returned to the dog pile they have created and are creating for the rest of us.

They propose some form of nationalized medical care but surely they are aware of the dismal results it has had in Canada, England, Sweden, and other nations where it prevails. It is expensive and produces long queues for diagnosis and treatment - frequently with fatal consequences.

They do not consider the desires and needs of those who work in the medical community and only focus on the patient’s side of the situation. So as in Canada, young people will be discouraged from entering medicine as a profession or leave the practice prematurely.

Social Security and Medicare/Medicaid are bankrupting the nation and causing the currency to become more worthless with each passing day. Such Ponzi schemes as these dwarf that of Bernie Madoff.

To truly fix medical care what needs to be done is eliminate Medicare/Medicaid and reform the tort laws to be a “loser pays” system like England’s or Australia’s, or at least put a severe cap on nonmonetary “pain and suffering” damages as has been done in Texas. Then they must open the markets for medical insurance by permitting interstate sales and permitting insurance policy customization along the lines of not requiring maternity coverage which is totally unneeded by a woman past menopause.

The government cannot even operate the post office efficiently and you expect them to operate an insurance program or a medical system efficiently; surely you must be joking or you are very naive and foolish!

Did He Say That?

I can’t believe I heard the president on television yesterday say what he said. He was speaking about the high cost of drugs, and suggested that the patents on drugs be reduced from twenty years to seven years so that the generics could reach the market sooner. Either the president has not taken Economics 101 or he was speaking from notes a staff member wrote who did not know the first thing about economics.

Think about it. What would happen if the patent period were reduced?

A couple of things would happen, both of which would be bad. What is the purpose of the patent and copyright laws? Do they not serve an economic purpose of encouraging innovation and inventiveness by providing an economic incentive? So innovation and inventiveness would be less encouraged, and the development of new drugs would for diseases would not be so much encouraged. I saw an example of this lack of economic encouragement a few years after the fall of the Berlin wall. I was at an airport bar in England sitting next to a couple of German businessmen and asked one of them how the reunification of Germany was proceeding. One of the men said that it was a bit rough. Their laws required that the pay workers from the East the same as workers from the West. But whereas the Western workers had progressed over forty some year to the use of computer controlled and automated machine tools, the Easters workers were still accustomed to the hand controlled machine tools of four decades earlier. Their technology had not advanced because there was no profit motive in the state controlled Eastern economy. Their productivity was lower and great expense was incurred in retraining the Eastern workers.

Secondly, if the patent period was reduced and a new drug was invented, the drug company would have to sell the drug for much more during the patent period to recover the development costs. Three times the price, assuming constant value dollars would at least be necessary. But you could double that to cover the burden of inflation. And double it again because the higher price reduces sales, What you would end up with is then one of two consequences:
1. No new drug at all, because it is uneconomical to develop.
2. Drugs that are ten, twelve, or more times or more costly while they are protected by patent.
What is really called for is a patent period of much more than twenty years, say forty, fifty, or even a hundred years of patent protection.

You Can’t Push a String

Any thinking person should realize that this nation has serious problems ahead. Between the current federal debt and the underfunded entitlements of Social Security and Medicare place this nation in the position that my grandchildren’s share of the national indebtedness is about $130,000 before they even enter the workforce. Another way to look at it is they will have a mortgage on a house but no house when they are just getting started.

I do not think that any reasonable person could not see that some combination of events will occur in the near future, none of which will be very attractive. Among these events are: a very high rate of taxation, a severe devaluation of the currency, or possibly even a rebellion; and we’ve already seen the embryo of a rebellion in the recent tea parties and heated congressional town hall meetings.

Now if we’re to have a nanny state where the government is going to take care of everyone as a parent does a small child, we need a responsible parent, not an irresponsible parent; one that can say, “No, Johnny, you can’t have that, we can’t afford it.”

Comments on Socialism

Although the word “socialism” did not enter the lexicon until the first quarter of the 19^th century, it was practiced long before that even on this continent. In 1607 an early English settlement was Jamestown in Virginia. No private property was allowed and as a consequence there soon appeared to be two kinds of men, those who could not work and those who would not so that Captain John Smith wrote, “In Virginia a plaine Souldier that can use a Pick-axe and spade, is better that five Knights.” The preceding is from The Oxford History of the American People by Samuel Eliot Morison, published by The Oxford University Press in 1965 on page 50.

Socialism didn’t work then, it does not work now. You only need to look around at the miserable conditions of people in the failed states of the USSR, or Cuba and much of Europe, Asia and even South America. One must realize that simple socialism, communism, fascism, and Nazism are all variations on the same political theme that tend toward absolute state control or tyranny.

That the people of this nation should return it to the place where the founding fathers placed it is long overdue, for as Thomas Jefferson said, “Government big enough to supply everything you need is big enough to take everything you have ... The course of history shows that as a government grows, liberty decreases.”

The nation was pretty well off until the beginning of the twentieth century when Teddy Roosevelt vowed to take all the power he could and it has been a downhill slide ever since. Just examine some recent history such as the Supreme Court decision in Kelo v. New London, CT in 2005 involving the use of eminent domain to transfer land from one private owner to another to further economic development. It outraged very many people regardless of political stripe. Or consider the more recent situation where the Supreme Court did not hear the case involving the takeover of the automobile companies when the Obama administration placed the interests of the labor unions above the rightful and lawful interests of the bond holders who would normally have first call upon any company assets in liquidation. The ownership of property is a fundamental tenet of capitalism and if such ownership is denied by the state, social chaos will ensue and we will be less well off as a result.

Some of the elements of socialism that have come to be accepted so that we don’t even consider them socialism:

· Social Security – the return you get is less than you would have from a bank and many other nations have already privatized their public pension systems, the first being Chile some thirty years ago where the workers now retire relatively well off.

· Medicare and Medicaid – Ponzi schemes that are bankrupting us and selling our children into a life of slavery to the tax collector.

· Public schools – are often ineffective and costly. Statistics indicate that generally our children lag those in other nations after about the sixth grade with the gap becoming wider each year the child is in the public school. There are exceptions, especially in the more affluent areas where the folks agree to tax themselves more and pay more attention their child’s education.

· Price controls and minimum wages – these distort the economy and lead to violent corrections as we are now experiencing in 2009. While not technically socialism, they are primary ways the state interferes with laissez-faire capitalism. If a man agrees to work for another for $5 an hour why should the government insist it be $6 an hour when they are not the employer or the employee? Doesn’t make sense to me.

In the words of Earl Pitts: “WAKE UP AMERICA.” You are on a fast sled going downhill, jump off now before you crash!