Thursday, March 23, 2006

Why Growth Will Never Stop

Commentary by Martin Kelly
May 3, 2004

Frosty Wooldridge’s polemics against growth in the Washington Dispatch are always informative, if not downright alarming. However, it’s unfortunate to say that the two principal causes of the unrestricted growth he berates are now so embedded in the structure of government that it will never stop, and they are the direct responsibility of the disengagement of political elites of both parties from the people they are paid to serve. They are the direct result of the social revolution affected by the liberals and the economic revolution affected by pseudo-conservatives and corporatists. The effect of these two revolutions has been to create a synergy of socialism, greed and special interests so enmeshed that it cannot be unwoven without catastrophic consequences for the body politic, and will in all likelihood not simply aid but also assist the continuation of mass immigration for the foreseeable future.

Every country that enacts a Social Security law signs its own death warrant. Not that having Social Security is a bad thing per se- it is simply that its cost places two great burdens on the citizens in whose name it is enacted. Firstly, at all times and under all circumstances it must be paid for. To speak of a ‘fund’ in these circumstances is disingenuous – if it is payable, it, must be paid immediately. It would be bad politics to make a remedy available and then make those entitled to the remedy wait 20 years to build up a relief fund for themselves. Secondly, it must continue to be paid for. It must be administered, so bureaucrats will need to be hired. Bureaucrats, once hired, are extremely difficult to remove, they need to be paid and provided with a solid pension backed up by the taxpayer. Therefore, the costs of government grow.
The outsourcing of government is not an answer. If a private contractor is carrying out a function of government at lowest cost it is still a function of government. What happens in this case is an accounting trick to provide a short-term electoral advantage to the party with the White Rabbit in its hat. The function of government has become its own maintenance, and the Medicare Bill is the classic example of government doing what it wants with other people’s money for no reason other than to curry favour with a preferred demographic.

The prevailing corporate culture of the 1980’s was one of wild, absolutely reckless consumption. This continued even after 9/11, when in order to stimulate the economy, the President told the nation, effectively, to go shopping. He did not say, ‘Invest in the T-bill’ or provide any other solution. It was simply because he couldn’t, for there was nothing else for him to work with.

The bulk of America’s debt is now held overseas, with the Red Chinese near top of the list of creditors. So dependent is the entire western world on what the Chinese produce that it has created a crisis in the world steel market, with the price at its highest level for 30 years. They consume one-third of the world’s steel output. Where Carnegie and Schwab and Morgan led, the Chinese follow.

What does this mean for growth? Commentators speak of illegal immigrants only in terms of how they consume resources in the form of healthcare, education and water. The socialists’ long game on illegals is to get them legal ASAP, so they can become taxpayers in order to fund their Congressional pensions. The corporatists long game is that the sooner they are legal they will become consumers, providing more fuel to the insatiable, rapacious financial engine that sees ‘best value’ as its creed, and whose holy texts are stock reports.

Cui bono from all this? If you’re a 1980’s era investor who made it through 2000 in one piece, you’re doing just fine. If you’re a preferred demographic, you’re doing just fine. If you’re a pensioner aristocrat from the ‘60’s who’s now claiming the fruits of the society you wanted to undermine, you’re doing just fine. If you’re middle class, you’re not. Nobody cares for you or your concerns, only what and how much you consume and if your taxes are in on time. The fuel of the system you inherited is people. Only more and more people can sustain a government with a structure like that of America today. Not the sort of people you want to grow naturally, like children, but fully-gown consumers and taxpayers.

The answer is to downsize government, which can only be done by cutting funding and killing programs, not by accounting tricks. The answer is to take back control of the economy, by perhaps seeking a smaller return on investments that you are sure will lead to a job being created in America, best of all an American manufacturing job. The answer is, once again, the sad return of Ellis Island, which helped ensure that TB was not widely imported.

Does either candidate have the stomach for such a radical program? Thought not.