Friday, June 8, 2012
Reality Is Mugging The Greeks
Not surprisingly, the first thing they’re saying is, “Just tax the Greek people more, especially the rich.” Sound familiar?
But there’s one big problem. It was summed up by Harry Theoharis, a senior official in the Greek Finance Ministry: “After two and a half years of austerity, it’s really a difficult time to bring in revenue. You can’t keep flogging a dead horse.”
This is a fundamental problem with statists. When they think about all the socialist and interventionist projects they want to spend money on, they automatically assume that there is a giant pool of wealth that they can draw upon with taxes and by borrowing.
In the beginning of the welfare-state process, when there is a large amount of wealth in a society, it’s all fun and game for statists. They can tax people to their heart’s content to fund their grandiose projects. Statists assume that the pool of wealth will stay the same or continue growing, allowing the statists to continue plundering and looting it indefinitely.
Gradually, the amount being spent on the welfare state begins exceeding the tax revenues. The statists go ballistic. “People are evading taxes!” they exclaim. “The people are no good tax cheats for trying to keep their money instead of enthusiastically paying taxes to fund our grandiose welfare-state programs.”
So, the statists raise taxes and go after the tax cheats. Ultimately, however, the amount of money spent on the welfare state continues to exceed the amount being brought in by taxes. They start beating a dead horse.
So, that’s when the statists resort to borrowing to cover the amount that spending exceeds tax revenues. Over time, the amount of debt that the government owes keeps growing and growing and growing.
That’s the situation here in the United States. The federal government’s spending on its welfare state and its warfare state far exceeds the amount being collected in taxes. So, to cover the difference, the federal government just keeps borrowing and borrowing and borrowing, adding constantly to its overall indebtedness.
With the debt ceiling, Congress is saying that that’s the maximum amount of debt that the government will be permitted to incur. It is an implicit acknowledgement that the total amount of the debt has reached a danger point. But U.S. statists say, “Oh, no big deal. Just keep raising the debt ceiling. Just keep spending and borrowing.”
But that obviously won’t work in Greece. Why not? Because the amount of the government’s indebtedness is now so large that people realize that the government can’t possibly pay it back. In other words, to pay for all its grandiose programs, the government just kept borrowing and borrowing, to such a point that now no one will lend the government any more money. Hey, who wants to lend money to a deadbeat, especially one that wants to keep spending and borrowing and wants citizens of other countries to pay its bills, debts, and expenses.
U.S. statists say that here in the United States, the Federal Reserve should “solve” the problem by printing the money to “stimulate” the economy. The idea is that once the economy is “stimulated,” businesses will open and expand and hire people who will then pay the taxes to fund the welfare-state, warfare-state way of life. Happy days will be here again for the statists. They won’t have to abolish or reduce any government programs and taxpayers will be covering the whole socialist shebang.
The statist notion, of course, is the epitome of economic inanity. It is based on the notion that a government can spend people rich by simply printing money and artificially expanding the money supply. If that was the case, think how easy it would be for all nations to become wealthy. All they would need to do is buy some good printing presses and start printing new money. Zimbabwe comes to mind.
Since Greece is in the Euro Zone, it lacks the printing presses to satisfy the statist urge to print the nation into prosperity. The Germans, who believe in sound money, refuse to permit the Euro to be inflated and debased just so that the Greeks can continue their welfare-state way of life.
What should the Greeks do? They should do exactly what Americans should do: just admit that the welfare state way of life (and warfare state way of life for Americans) has been a miserable failure and disaster. That means the repeal, not reform, of every single welfare-state program, including old-age assistance, government-provided healthcare and education, farm subsidies, overseas military empire, and all the rest of the welfare-warfare state way of life.
Socialism, empire, and interventionism have been a brutal failure in every sense of the term. They have not only produced a weak, dependent people who cannot imagine life without the dole, they have also led nations down the road to economic impoverishment and financial bankruptcy. Why can’t statists just admit that?
Most important, there is no way to reconcile the socialist-interventionist way of life with the principles of freedom and morality. People have a right to the fruits of their earnings and to decide for themselves what to do with their own money. That’s what genuine freedom is all about.
Reality is mugging the Greeks in the face. With a new debate over the debt ceiling on the horizon here in the United States, reality is doing the same to the American people.