Contemporary Contradictions Part 1
“Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.” -Ayn Rand, Atlas Shrugged, New York: Random House, 1957
Our current state of economic affairs is replete with contradictions. The Nobel Laureate Paul Krugman repeatedly states the reason the government stimuli have not yet produced the desired effect is because the government is spending too little! President Obama continues to tell us the economy is recovering while his various departments are re-writing the formulas to calculate unemployment data in such a way the numbers appear to support his claim. The American people know what an economic recovery should look like and they are simply not seeing it!
Let us assume Ayn Rand is correct in saying there are contradictions. Could Krugman, a diehard Keynesian, have mistaken premises? Could Keynes be incorrect about the economic value of government spending? Could Nancy Pelosi be wrong about her belief that the best way to stimulate an economy is by extending unemployment benefits? Could President Obama be blowing hot air when he claims the economy is recovering because of his interference rather than suffering as a direct result of government intervention?
The seminal work of Keynes, General Theory of Employment, Interest, and Money first published in 1936, has been thoroughly debunked by Henry Hazlitt in The Failure of the New Economics”: An Analysis of the Keynesian Fallacies (Ludwig Von Mises Institue, 2007). Hazlitt tells his readers that everything original in Keynes’ work is incorrect and everything that is correct is not original! How could so many fallacies become the foundation of mainstream economics today? The answer is simple. Keynes promoted government spending as the economic panacea while condemning savings, hoarding money as he called it, as being antithetical to economic growth. In short, politicians saw a way to dramatically increase their personal power by applying Keynes’ principles by focusing on the short term benefits rather than considering the real long term costs of their initiatives – who is to care when they will most likely be retired when the payment for their acts comes due in the future? Keynes preferred government spending to stimulate the economy; and that spending was even better if it could be financed by borrowing rather than direct taxation.
Academics find Keynes appealing because if they promote his philosophy they are in line for a near endless supply of government grant dollars for finding new justifications to support increased government spending. Students find Keynesian ideals appealing because they can be hired by governments to add academic credibility to the politician’s claim that more spending is needed. The Keynesians win at the expense of the taxpayers who are ultimately on the hook to pay the bills whether the Keynesian ideas are correct or incorrect!
I feel compelled to point to the fact that no nation since 1936 has a proven economic record of borrowing and spending more to get out of debt and experience economic growth. Historical evidence is all to the contrary; when nations moved away from Keynesian ideals and reduced their dependence on borrowing and profligate spending, a stronger economy resulted. Those who embrace Keynesian ideals refute those facts by saying, as Krugman did, the failure was caused by too little government spending! How convenient to counter a fact with an allegation that cannot be proven!
We should all apply what knowledge we have about how the real world works based on our personal economic experiences. We know that taking what has been earned from some to provide support of others is an injustice; some are losers and some are winners with no individual control over the outcome. We know we cannot perpetually spend more money than we earn without experiencing devastating consequences; why do some think that governments can? We know that money is earned by working and producing something rather than created out of thin air; why do some people think that the government printing press is a viable solution? We know that the price paid for labor must be based on the productivity of the worker that provides that labor; why do some people think that government can and should dictate a minimum wage? We know that a market system that includes real sellers and real buyers will determine the correct price and quantity for a good or service; why do some people believe that unelected bureaucrats can be a better judge of fair prices and correct quantities than the market economy? We know that a market system determines winners and losers based on meeting or not meeting consumer demands; why do some people think that government officials should “pick” winners and losers based on whether or not they supported a particular political campaign or ideal?
Our current state of economic affairs is replete with contradictions. The Nobel Laureate Paul Krugman repeatedly states the reason the government stimuli have not yet produced the desired effect is because the government is spending too little! President Obama continues to tell us the economy is recovering while his various departments are re-writing the formulas to calculate unemployment data in such a way the numbers appear to support his claim. The American people know what an economic recovery should look like and they are simply not seeing it!
Let us assume Ayn Rand is correct in saying there are contradictions. Could Krugman, a diehard Keynesian, have mistaken premises? Could Keynes be incorrect about the economic value of government spending? Could Nancy Pelosi be wrong about her belief that the best way to stimulate an economy is by extending unemployment benefits? Could President Obama be blowing hot air when he claims the economy is recovering because of his interference rather than suffering as a direct result of government intervention?
The seminal work of Keynes, General Theory of Employment, Interest, and Money first published in 1936, has been thoroughly debunked by Henry Hazlitt in The Failure of the New Economics”: An Analysis of the Keynesian Fallacies (Ludwig Von Mises Institue, 2007). Hazlitt tells his readers that everything original in Keynes’ work is incorrect and everything that is correct is not original! How could so many fallacies become the foundation of mainstream economics today? The answer is simple. Keynes promoted government spending as the economic panacea while condemning savings, hoarding money as he called it, as being antithetical to economic growth. In short, politicians saw a way to dramatically increase their personal power by applying Keynes’ principles by focusing on the short term benefits rather than considering the real long term costs of their initiatives – who is to care when they will most likely be retired when the payment for their acts comes due in the future? Keynes preferred government spending to stimulate the economy; and that spending was even better if it could be financed by borrowing rather than direct taxation.
Academics find Keynes appealing because if they promote his philosophy they are in line for a near endless supply of government grant dollars for finding new justifications to support increased government spending. Students find Keynesian ideals appealing because they can be hired by governments to add academic credibility to the politician’s claim that more spending is needed. The Keynesians win at the expense of the taxpayers who are ultimately on the hook to pay the bills whether the Keynesian ideas are correct or incorrect!
I feel compelled to point to the fact that no nation since 1936 has a proven economic record of borrowing and spending more to get out of debt and experience economic growth. Historical evidence is all to the contrary; when nations moved away from Keynesian ideals and reduced their dependence on borrowing and profligate spending, a stronger economy resulted. Those who embrace Keynesian ideals refute those facts by saying, as Krugman did, the failure was caused by too little government spending! How convenient to counter a fact with an allegation that cannot be proven!
We should all apply what knowledge we have about how the real world works based on our personal economic experiences. We know that taking what has been earned from some to provide support of others is an injustice; some are losers and some are winners with no individual control over the outcome. We know we cannot perpetually spend more money than we earn without experiencing devastating consequences; why do some think that governments can? We know that money is earned by working and producing something rather than created out of thin air; why do some people think that the government printing press is a viable solution? We know that the price paid for labor must be based on the productivity of the worker that provides that labor; why do some people think that government can and should dictate a minimum wage? We know that a market system that includes real sellers and real buyers will determine the correct price and quantity for a good or service; why do some people believe that unelected bureaucrats can be a better judge of fair prices and correct quantities than the market economy? We know that a market system determines winners and losers based on meeting or not meeting consumer demands; why do some people think that government officials should “pick” winners and losers based on whether or not they supported a particular political campaign or ideal?
It is long past time for thinking people to assess what lies before them in the light of truth. Government intervention in the market economy is costly in terms of dollars, jobs, and scarce resources being used inefficiently. The transfer of wealth from earners to government bureaucracies with a trickle-down of the after-expense-remaining dollars ultimately funding a program the government uses to reward its friends or pay those who voted for the “proper” candidates is a shameful way to divide our populace. A government that serves itself at the expense of the people is a far cry from the government Lincoln saw as being of, for, and by the people!
Those politicians who proclaim the power of a democratic government are lying out loud to an uneducated and apathetic almost majority public. The only thing “democratic” about our government is the election process; the governing process is purely representative. The question to be answered is who do those elected officials represent? Do they represent the people who elected them or do they represent the special interest groups who “own” them? It has been said the best place to hide something is in plain sight. Our politicians are hiding their allegiances in plain sight and too many Americans, perhaps almost half of us, are not interested in seeing the truth; they are content with the benefits bestowed upon them by a corrupt political system and could care less about how those government benefits are funded.
The entire political system is truly a “House of Cards” that cannot endure much longer without breaking down. May God have mercy on us when the borrow-and-spend game comes to its logical conclusion; our economy based on worthless dollars will collapse. People who are depending on an accumulation of dollars will be like the last person standing in musical chairs when the music stops. Those with desired items such as food, clothing, gold, silver, or ammunition will not trade those items for worthless dollars but only for other goods they desire. A private barter system will replace our government monetary system and, sadly, most people will have nothing to barter. Economically speaking, it will be step back into the 19th century when our nation was expanding into the sparsely populated frontier; more than 100 years of progress negated by political corruption and avarice.
If there was ever a time to be a saver, it is now. Save things that will hold their value like precious metals, including ammunition and firearms. Prepare a survival plan that includes putting distance between you and centers of population. Learn to survive and then educate your family members and loved ones in basic survival skills.