The US economy under threat from the Democrats' super rich elite

Gerard Jackson
BrookesNews.Com
Monday 15 September 2008

I guess just about every economics faculty teaches that the boom-bust-cycle is an inherent and eradicable part of capitalism and that government spending helps stabilise the economy. Both are wrong. The boom-bust-cycle, as the currency school recognised, is generated by credit expansion emanating from the banking system,. This explodes the fallacy that government spending is vital to keeping the economy on a steady growth path. Nevertheless this fallacy is deeply held, particularly by those who see it as a means to expand government and hence their own power. Yep, I'm talking about Democrats and those professional liars who call themselves the media.

The Republicans greatest error was to subvert their own economic agenda by going on a spending spree. It seems that most of them really believed that allowing spending to rip would make them loved, not realising that politically bigoted journalists and cynical Democrats would damn them as fiscally irresponsible. Republicans only now seem to be waking up to the vital political fact that only increased spending by Democrats is considered 'compassionate'.

Moreover, their reckless spending binge allowed the Democrats to disguise their proposed reckless tax hikes as fiscally responsible. Republicans should ponder why increased spending fuelled by massive tax hikes is supposed to be fiscally responsible while increased spending funded by borrowing is irresponsible. They should get it into their heads that the real problem is never deficits by spending and nothing but spending.

At this point we come to Obama's solution to America's alleged problems: economic and social — higher taxes and more interventionism, the kind of economic idiocy that the economically illiterate Thomas Franks of the Wall Street Journal self-righteously recommends. The first thing to note about taxes is that they divert spending from those who originally earned the money to politicians and bureaucrats. Now I am no anarchist: I do believe government is necessary to maintain civilisation. But like the classical economists I know there is a point where taxation becomes hazardous to a country's economic, political and social welfare. America may have reached that point.

For eight years the media's cohorts of politically bigoted journalists have done everything in their power to con Americans into believing they are on the brink of a Great Depression. I regret to say that these political activists seem to have had considerable success. Most Americans think the economy needs a new direction. But the best direction is one provided by the market, i.e., by the countless decisions made by millions of Americans each hour of each day. The Democrats tell them that they are the ones who can provide the necessary direction. And what does this amount to? More taxes and more regulations. More of the very things that have done so much damage to the American economy.

This is the kind of moronic thinking that has virtually destroyed the expansion of energy production while dissipating massive amounts of capital on ethanol plants, wind power, solar power and any other kind of power that will absorb huge of capital without delivering the goods. Yet millions of Americans have swallowed this interventionist poison. They actually believe that increased taxes on business, savings and investment will raise their standard of living rather than lower it.

They are utterly ignorant of the fact that they owe their standard of living to capital accumulation, without which they would be wearing rags. They are unaware of the fact that the tax hikes the Democrats are fighting for would strike directly at those trying to accumulate wealth while allowing their uber rich pals like George Soros, Peter Lewis, Tim Draper, John Doer, Warren Buffett, Steven Kirsch, Herb and Marion Sandler, etc., to avoid these destructive taxes. (Teresa Heinz Kerry: You pay taxes, I don't).

If the Democrats were genuine about taxing the rich they would impose a wealth tax while ruthlessly eliminating any loopholes. But they won't (thank God) and this is why the uber rich give them millions of dollars. So why doesn't the super rich elite fund Republicans instead of the Democrats? After all, the Republicans are supposed to be the party of low taxes. Actually John Maynard Keynes had part of the answer. It was his wholly admirable opinion that it is far better for a man to tyrannise over his bank account rather than his fellow men.

Moreover, dangerous human proclivities can be canalised into comparatively harmless channels by the existence of opportunities for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandisement. It is better that a man should tyrannise over his bank balance than over his fellow-citizens; and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative. (John Maynard Keynes, The General Theory of Employment, Interest and Money, Macmillan, St Martin’s Press for the Royal Economic Society, 1973, p. 374).