William E. Simon was a U.S.
Treasury Secretary, a very successful private investor, and author of
a book that was endorsed by two Nobel Prize-winning economists,
Milton Friedman and F. A. Hayek. Friedman called it a “brilliant
and passionate book” that is “a profound analysis of the suicidal
course on which our beloved country is proceeding.”
In 1976, Simon testified
before Congress: “In the case of the federal government, we can
print money to pay for our folly for a time. But we will just
continue to debase our currency, and then we will have a financial
collapse. This is the road we are on today. This is the direction
in which 'humanitarians' are leading us. But there is nothing
'humanitarian' about the panic, the chaos, the riots, the starvation
and death that will ensue. There is nothing 'humanitarian' about the
dictatorship that must inevitably take over as terrified people cry
out for leadership. There is nothing 'humanitarian' about the loss
of freedom. That is why we must be concerned about the cancerous
growth of government and its steady devouring of our citizens'
productive energy. That is why we must be concerned about deficits
and balancing the budget. The issue is not bookkeeping, it is not
accounting. The issue is the liberty of the American people....
“I just wanted to put the
real issue in focus. I can speak to the technicalities, and I will
do so. But they obscure the real issues that face us in the country
today. The problem is deficits, budget balancing, capital
markets—all of these are important. But it is important, I think,
to understand these are just early warning symptoms of a disease that
threatens the very life of our body politic. And if we continue to
move down this same path, that disease will become irreversible, and
our liberty will be lost....I am leaving Washington next January. I
am going home to New Jersey a very frightened man.”
Now, 36 years later, we have
continued down that same path about which Simon was so alarmed. Our
situation has gotten much more precarious, thanks to Obama, but we
haven't yet reached the dire consequences Simon wrote about. But we
will. The great economist Henry Hazlett, in a speech in 1964 on his
70th birthday, said, “If a government resorts to
inflation, that is, creates money in order to cover its budget
deficits or expands credit in order to stimulate business, then no
power on earth, no gimmick, device, trick or even indexation can
prevent its economic consequences.” Hazlett's classic book
Economics in One Lesson, published 66 years ago, is still in
the top twenty in current sales of economic books on Amazon.com. It
continues to outsell Capitalism and Freedom, Milton
Friedman's most popular book, written a quarter century later
by the much better-known economist.
Obama's proposal to increase
taxes for individuals and small businesses that make over $200,000
or, jointly, $250,000 a year makes no economic sense. And it belies
Obama's claim of concern for the middle class, many of whom report
their small-business income on their individual tax returns.
According to the Congress' nonpartisan Joint Committee on Taxation,
3.5 percent of taxpayers with business income in 2013 would fall in
the tax brackets that would rise under the president’s proposal—but
those top earners generate 53 percent of all small-business income!
Federal Reserve data shows
the top 5 percent of households save and invest 40 percent of their
income. Middle income households save very little. Therefore,
raising taxes to redistribute and consume income reduces the pool of
savings for investment that would create economic growth with more
jobs and rising incomes.
Sen. Rand Paul writes
cogently: “Any notion that it matters whom you tax is simply a
parlor game played by the class-warfare crowd. There are only two
repositories of money—the private sector (which efficiently
distributes goods) and the public sector (which doesn't distribute
anything well). No central planner possesses the omniscience to
assign fairness. The only guide to fairness of distribution that I
can imagine is the minute-by minute vote of the most exacting and
direct democracy ever known: the marketplace....Taking more money out
of the private sector is injurious to economic growth....If you want
to stimulate the economy, leave more money in the economy.”
The Obama administration has
argued that government spending stimulates the economy as the money
it spends is, in turn, spent over and over in the private sector.
The administration used a multiplier of 1.5 to justify its stimulus
spending, meaning that a dollar in government spending raises the
gross domestic product by $1.5. In
my new book The Impending Monetary Revolution, the Dollar
and Gold, I point out, “If the multiplier really were larger
than 1.0, the GDP would rise even more than government spending!
The U.S., Greece and other spendthrift countries wouldn't be going
broke—they 'd be getting richer the more they spent! The reality
is that the multiplier is always less than 1.0. The money that is
spent over and over in the private sector from the government
programs is always less than the cost of the programs.” My book
cites plenty of scientific research to support this. Moreover, “the
research by Barro and Redlick found that if government spending is
funded by taxes, the multiplier is minus 1.1. In other words,
if government raises taxes by $100, the economy will shrink by
$110.”
My book also points out:
“Obama has learned nothing from the tax cuts by presidents Ronald
Reagan and John Kennedy. In both cases, reductions in tax rates
resulted in increased tax revenue for the government. When Reagan
became president, he reduced the top marginal income tax rate to 28%
from 70%, but when he left office, tax revenues had almost doubled.
During this same period, the inflation rate fell to 4% from 13%,
unemployment dropped to 5.3% from 7.5%, 17 million new jobs were
created, and the longest peacetime boom in our history was underway.
When Reagan took office in 1981, the top one percent of income
earners paid 17.58% of all federal income taxes. Twenty-five years
later, in 2005, that one percent paid 39.38% of all income taxes
despite being taxed at a lower rate.
“In the 1960s President
Kennedy cut the highest income tax rate to 70% from 91% with a
similar result.” In 1962 President Kennedy said, “It is a
paradoxical truth that tax rates are too high and tax revenues are
too low and the soundest way to raise the revenues in the long run is
to cut the rates now.”
Why then is Obama so fixated
on raising taxes for the top earners? The answer must lie somewhere
beyond the economics, because the economics of what he proposes are
so dreadful. All the taxes he proposes to collect from people making
over $200,000 (or $250,000 jointly) would run the government for only
eight days! How would he finance running the government the other
357 days? He is silent.
Dinesh D'Souza has a 25-year
career as an author, scholar and former college president. He is the
narrator, director and co-author of the movie “2016: Obama's
America,” which is based on his earlier book The Roots of
Obama's Rage. In both the book
and the movie, D'Souza significantly points out that Obama's memoir
Dreams from my father is
not titled “Dreams of my
father.” Rather, it is “Dreams from
my father”—which means he has his father's dreams.
His father wrote a paper
“Problems with our Socialism” that advocates 100% taxation of the
rich. His mother was a communist sympathizer. Obama says, “The
values she taught me continue to be my touchstone when it comes to
how I go about the world of politics.” D'Souza says, “I would
not normally hold Obama accountable for the views of either his
father or his mother had he not written a book detailing how
influential his father and also to some degree his mother have been
on him. So I'm simply following Obama's story."
In RADICAL-IN-CHIEF:
Barrack Obama and the Untold Story of American Socialism, author
Stanley Kurtz documents —with over a thousand references—Obama's
socialist past, his lies, and the socialist character of his
administration. He writes: “Obama has made a concerted effort to
hide his socialist convictions from the voters who put him in office.
Had the American people known the truth, Obama would never have
risen to the U.S. Senate, much less the presidency....In sum, the
fears of Obama's harshest critics are justified. The president of
the United States is a socialist.”
Kurtz says “the favorite
strategies of community organizers are designed to push the country
into socialism before the public can figure out what's happened.”
Obama seeks to “transform America” by undermining capitalism
through ever-expanding government controls and a metastasizing public
sector.
A key element in Obama's
plan to redistribute other people's wealth is the destruction of
property rights. It assumes wealth belongs to society collectively,
rather to individuals who have earned it through their labor in
production and trade. It is to compel public acceptance of this
collectivist doctrine that Obama is so insistent upon raising taxes
on the rich. For if the rich have no right to their wealth,
then neither does anyone else. Then all wealth belongs to the
collective, and society collectively—that is, through
government—will decide everything for everybody. Natural rights
to life, liberty and property will be superseded by tens of thousand
of laws and regulations administered by tens of thousands of
bureaucrats and inspectors who tell people what they can or must buy
or sell, manufacture, ingest, dispose of and in what manner, as well as how much of their earnings they are allowed to keep and how much they must turn over to the collective.
This approach has been tried
before on a smaller scale. Obama is 400 years behind the times. He
has failed to learn the lesson of the Pilgrims who landed at Plymouth
Rock in 1620. Half of them died the first year. Though the Indians
helped them survive, the colonists were chronically short of food,
and their numbers continued to dwindle.
Under the Mayflower Compact,
which governed the colony, “all profits and benefits that are got
by trade, working, fishing or any other means” were community
property in the “common stock” of the colony. And “all such
persons as are of this colony are to have their meat, drink, apparel
and all provisions out of this common stock.” People were required
to put in everything they could—they were forbidden from growing
their own food—and to take out only what they needed. It was a
policy of “from each according to his ability, to each according to
his need,” centuries before Karl Marx seduced millions of people
with those words.
The communal system was such
a failure that in the spring of 1623 the Pilgrims feared they would
not survive another poor harvest. “So they began to think,” wrote
the colony's governor William Bradford, “how they might raise as
much corn as they could, and obtain a better crop than they had done,
that they might not still thus languish in misery. At length, after
much debate of things, the Governor (with the advice of the chiefest
among them) gave way that they should set corn every man for his own
particular, and in that regard trust to themselves....And so assigned
to every family a parcel of land.....This had very good success; for
it made all hands very industrious, so as much more corn was planted
then otherwise would have been by any other means the Governor or any
other could use, and saved him a great deal of trouble, and gave far
better content.”
Far from making the people
“happy and flourishing,” the communal system, wrote Bradford,
“was found to breed confusion and discontent, and retard much
employment that would have been to their benefit and comfort.” Not
surprisingly,“young men that were able and fit did repine
[complain] that they should spend their time and strength to work for
other men's wives and children, without recompense. The strong, or
men of parts, had no more division of food, clothes, etc. than he
that was weak and not able to do a quarter the other could; this was
thought injustice. The aged and graver men to be ranked and equalized
in labor, and food, clothes, etc. with the meaner and younger sort,
thought it some indignity and disrespect unto them.”
Under the circumstances,
there was little incentive to produce food. Severe whippings were
tried to induce greater production, but they did little more than
increase discontent.
The social disharmony, along
with the food shortages, disappeared once the concept of private
property was introduced and people could keep whatever they produced,
or trade it away as they saw fit. In 1647 Bradford was able to write
“any general want or famine hath not been amongst them since to
this day.” Such was the success of the new system that in 1624 the
colonists began to export corn, trading it for beaver pelts, other
furs, and meat.
In 1624 the Pilgrims took a
further step in property rights. The system of assigning land “to
every man for his own particular” had certainly increased the
production of corn, but the assignment was drawn by lot yearly. Thus
there was not much incentive for making improvements to one's tillage
when someone else might draw that land next year. The men requested
of the Governor “to have some portion of the land given them for
continuance, and not by yearly lot....Which being well considered,
their request was granted.”
Jamestown, the first
permanent English colony in America, established in Virginia in 1607,
had an experience similar to the Pilgrims at Plymouth. Early years of
starvation were followed by converting to a system of property rights
and a free market, which brought abundance. Under collectivism, less
than half of every shipload of settlers survived the first twelve
months at Jamestown. Most of the work was done by only one-fifth of
the men, to whom the socialist system gave the same rations as to the
others. During the winter 1609-10, called “The Starving Time,”
the population fell from 500 to 60.
But when Jamestown converted
to a free market, there was “plenty of food, which every man by his
own industry may easily and doth procure,” wrote the colony
secretary Ralph Hamor in 1614. Under the previous system, he said,
“we reaped not so much corn from the labors of thirty men as three
men have done for themselves now.”
We should not underestimate
the significance of the experiences at Plymouth and Jamestown.
Property rights and free markets were truly revolutionary and
fundamental to capitalism. Without them, all the wealth, progress and
human betterment that followed could not have occurred. According to
Sartell Prentice, “In England, meanwhile, farming 'in common'
continued to be the general practice for another hundred years. Not
until the second decade of the seventeen hundreds did 'setting crops
for their particular' begin to be slowly accepted in England—and
decades were to pass before the new practice became sufficiently
widespread to provide an adequate food supply for the population.”
There is no shortage of
people who want a political system that gives them the fruits of
other men's labors, as at Plymouth and Jamestown. And there is an
abundance of politicians willing to accommodate them at the expense
of other men's property. The result is repetition of the collectivist
systems (socialism, fascism) that have failed in the past, and no end
to the discontent and resentment they engender. But people can be
seduced to try them again and again by lofty idealistic statements,
eloquent messages of hope, and promises that can never be kept. All
of which allow the covetousness of other people's property—whether
for personal gain or altruistic, collectivist aims—to masquerade
under noble-sounding phrases.
Once he was president, Obama
came up with a health plan that would require everyone to buy health
insurance—as though people's money was not theirs by right but,
rather, was part of the “common stock” of community property, to
be allocated by the leader for the collective good! And, just as at
Plymouth, people who did not cooperate would be punished—not by
severe whippings as was done there, but by the more civilized penalty
of seizing their property (money) through fines if they refused to
buy health insurance.
Contrast the government
inflicting pain and penalty to force compliance compared to the
benefit and satisfaction—even happiness—from market transactions,
which people undertake without force or penalty in order to enhance
their lives and are far more effective than socialistic
distributions. Obama said, "We are fundamentally
transforming the United States of America." He is indeed, wiping
out the fundamental principles that allowed America to prosper.
Obama claimed, "This
is our moment, this is our time to turn the page on the policies of
the past, to offer a new direction." Yes, he is “turning the
page on the policies” of property rights and free markets. But the
direction he is offering is not new but old. It is the ancient system
of four centuries ago, before property rights, those basic rights
which are still denied in varying degrees in many countries that have
never discovered free-market capitalism, much less embraced it—and
whose standard of living reflects that fact.
"Generations
from now,” Obama said, “we will be able to look back and tell our
children that this was our time." Yes, and they will be the
worse for it—and damn you for it!
Many supporters of Obama say
he is not a socialist because he does not advocate government
ownership of the means of production, and they deride those who claim
otherwise. But it is the defenders of Obama who fail to understand
the historical meaning of socialism. For example, as I point out in
my new book The Impending Monetary Revolution, the Dollar and
Gold, the 1926 Webster's New International Dictionary of the
English Language (unabridged) defined socialism as “A political
and economic theory of social reorganization, the essential feature
of which is governmental control of economic activities, to the end
that competition shall give way to cooperation and the opportunities
of life and the rewards of labor shall be equitably
apportioned....—opp. to individualism.” (Italics in the
original). Notice there is no mention of government ownership, only
“government control of economic activities.” That includes
regulation.
After the abject failures of government
ownership of production under communism, the advocates of socialism
have attempted to distance themselves from those failures. Instead
of government ownership, they strive to achieve the same end by
regulation. In practice, there is no difference between the two.
They are not opposites but twin forms of collectivism, both opposed
to free markets and individual rights—including property rights. The collectivist twin of socialism is
today better described as fascism. That term was coined by Benito
Mussolini in 1919 and described his political movement which put him
in power in Italy in 1922.
Barron's Business Dictionary
says fascism involves “private economic ownership under rigid
government control.” The New Dictionary of Cultural Literacy
says, “Although both communism and fascism are forms of
totalitarianism, fascism does not demand ownership of the means of
production.”
The failures of socialist systems under
the label of communism are well known, but few people today realize
that Adoph Hitler's government was another failure of socialism. The
word “Nazi” was short for National Socialist Workers Party of
Germany, which was fascist like Mussolini's regime. Both governments
exercised extensive controls—even provided state funding to failing
private enterprises—but did not nationalize them.
They controlled them without acquiring them.
