Divine Right Strikes Again

Americans used to believe that economic success came through luck and pluck.  Luck and Pluck (1869) was the first of a series of dime novels by Horatio Alger about young men who succeeded through hard work.  The series included Sink or Swim (1870), Strong and Steady (1871), Strive and Succeed (1872); you get the idea.

The US Constitution gives you the right to pursue happiness, but our founders recognized that government can't guarantee that everyone would achieve happiness and that it would be wrong for government to try.  There was a time when Americans believed that people should provide for themselves instead of being supported by the government; few people believed that society owed anybody anything.  Public assistance was available, but taking welfare was regarded as shameful; people on welfare kept quiet about it.

This changed in the mid 1960's with the proliferation of organizations dedicated to the idea that receiving other people's tax money in the form of welfare was a "right."  Wikipedia says that the National Welfare Rights Organization (NWRO) "fought for the rights of people, especially women and children, reliant upon government welfare," and says that the group "emphasized women's right to adequate income, regardless of whether they work in a factory or at home raising children."

"Income" used to be a reward that came through hard work.  If you were lucky, you'd get a lot of income; if you weren't lucky, you'd not earn as much; but pluck, that is, hard and persistent work, was a requirement for receiving any income at all.  The NWRO and other groups labored mightily to change the public perception of income from a reward to a right.

The Divine Right Mantra

The mainstream media bang the drum of an "adequate" income being a divine right having nothing to do with whether a person works or not. The New York Times online edition published an article "A Fool's Paradise."  The abstract said:

What we haven't paid close enough attention to is the fact that there haven't been enough good paying jobs to sustain an adequate standard of living.

The article defined the problem thus:

The burden of debt for a typical middle-income family, earning about $45,000 a year, grew by a third in just the few years from 2001 to 2004, according to the Center for American Progress.  The reason for this unsustainable added weight was the rising cost of such items as housing, higher education, health care and transportation at a time when wages grew only slightly or not at all. [emphasis added]

In assigning the title "Fool's Paradise," the Times made the rather obvious point that borrowing by middle class households could not increase forever.

My grandfather grew up on a farm; he knew that if he got in the habit of borrowing money, the bank would eventually own him.  Suppose he had a good harvest and paid the money back, then borrowed money for the next year.  If he had a bad harvest, he couldn't pay and would have to roll over the loan.  If this went on very long, the bank would own the farm.

My grandfather received a proverb from his grandfather:

Use it up.  Wear it out.  Make it do, or do without.

"Doing without" seems to be an obsolete concept.  Middle-class families are in trouble - instead of paying off their credit cards, they rolled the money over to the next month.  Eventually, they couldn't pay.

In pointing this out, the Times is entirely correct, but their solution is about as far from the traditional American solution to dealing with rising costs as it's possible to get.

Instead of proposing the right solution, namely, "do without," the Times said that "work was not enough," meaning that the Times believes that it is not possible for most workers to earn enough to pay for everything they want.  This too is undoubtedly true, but the traditional solution to not being able to afford everything you want was to prioritize and to do without something.

The Times got one concept right:

...it might make sense to get back to basics.  And in the United States, the basic economic component of a sustainable family life is a good job.

That sounds like the Times agrees with Scragged that success should come through luck and pluck, but they don't - not quite.  Instead of advocating the easing of government regulations that make it hard to start new businesses where employees can have "good jobs," the article continues:

Now we need to find the money and the will to put Americans to work rebuilding the nation's deteriorating infrastructure, revitalizing its public school system, creating a new dawn of energy self-sufficiency and rethinking our approach to an economy that remains tilted wildly in favor of the rich.

The New York Times, a card-carrying member of the mainstream media, says that government should finance infrastructure, schools, and new energy sources to create "good jobs."  When the Times says we should "put America to work," they're talking about raising taxes to pay for more government programs.

Government programs can certainly lead to high salaries - Franklin Raines got $20 million for one year of what is now known to be utterly incompetent work at government-sponsored Fannie Mae - but someone has to pay the bills.  Instead of urging people to cut back and live within their incomes, the Times is urging that government maintain their lifestyles by spending tax dollars.

The Obama "Tax Cut" Scam

This is precisely what Mr. Obama advocates when he speaks of "tax cuts."  The Wall Street Journal reports:

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year.

The only way people who don't pay income taxes now can receive a tax cut is for the government to pay them a "negative income tax."  Having government give money to people when they don't work for the government used to be called "welfare."

Mr. Obama knows that explicitly increasing welfare won't sell in a close election.  He's calling his plan to fulfill the Times' call to help working people handle their debts by increasing welfare payments a "tax cut" instead.

Like the Times, Mr. Obama seems to feel that a middle class lifestyle is a divine right.  Or, even if it isn't quite a divine right, enough people expect the government to take care of them that he can win an election by promising to give them other people's money.

More Divine Rights

The Times carries the theme of divine right yet further in an article "Scrimping on Medical Care" which says:

For the first time in at least a decade, American consumers are ordering fewer prescription drugs than the year before, according to an analysis by IMS Health, a research firm. Although the decline is modest - less than 1 percent for the first eight months of this year compared with the same period a year ago - and several factors may be at play, many experts believe that people in financial difficulty are choosing to forgo medications in order to pay for other necessities.

The Times forgets that doctors get paid money to prescribe drugs; doctors don't get paid anything when people who aren't sick don't feel that they need drugs.  We've pointed out that when medical care is free, demand goes through the roof; there's no limit to the amount of health care that people can want.

It's possible that people are economizing on drugs, but there's another reason drug use might go down - several very expensive drugs such as Vioxx have recently been found to be either harmful or ineffective and have been taken off the market.  Taking expensive drugs off the market can't help but reduce drug spending.

There is a more fundamental reason why prescription purchases would go down - people are rebelling against taking drugs.  Instead of just popping pills and expecting miracles, people are exercising, watching their diet, and in general taking better care of themselves.  Millions of people subscribe to on-line services or magazines that advise against taking medications.  People don't trust doctors and question the taking of drugs at every opportunity.

We should be celebrating Americans being more accountable for their health, yet the Times insists that the only reason drug spending would go down is for people to be unable to afford drugs they need.

Suppose that the Times' premise is correct and that people, in fact, can't afford drugs that might benefit them.  Are we as a society prepared to say that it's the government's responsibility to provide all the drugs from which any citizen might benefit?

If we decide that it is the government's responsibility, need it be the federal government?

The Times seems to be saying that a) Americans have a divine right to receive unlimited quantities of any and all medicines that might benefit them, b) doctors have a divine right to earn money by prescribing these drugs, and c) supplying those drugs is a federal responsibility.

Divine Right Isn't Divine

The difficulty with assuming that all Americans have a divine right to receive unlimited medicines and all the trappings of a middle class lifestyle whether they work or not is that we don't have enough taxpayers to pay for it all.

Obama's plan will mean that 44%, or nearly half, of all tax filers would either pay no income tax or get money from the government as "negative income tax."  What additional fraction of voters are government employees who want taxes to go up so that the government has more money to spend on them?  We've shown how government employees lobby incessantly for more government programs and more rules to make people have to come to them for permission to do this or that; we all know how fast bureaucrats can run up government costs.

It's bad enough to have government employees lobbying for more spending.  It's quite another to have more than half the tax filers receiving more money from the government than they pay.  Won't all these voters have a strong temptation to lobby for more welfare, particularly when they can call it "tax cuts" instead?

Over the weekend, a very telling recording came to light, in which Barack Obama was interviewed by a local Chicago radio station in 2001.  The entire recording can be found online, but read Barack Obama's own words on this subject:

...As radical as I think people tried to characterize the Warren Court, it wasn't that radical. It didn't break free from the essential constraints that were placed by the Founding Fathers in the Constitution - at least as it's been interpreted, and Warren Court interpreted it in the same way, that generally the Constitution is a charter of negative liberties: [It] says what the states can't do to you, says what the federal government can't do to you, but it doesn't say what the federal government or the state government must do on your behalf. [emphasis added]

It could not be more clear that Obama truly believes that there are many "rights" which ought to be included at the Constitutional level regarding things which, as he said, "the federal government or the state government must do on your behalf."

Does this include medical care?  Food?  Housing?  A job that pays a living wage?  He doesn't say so we don't know what's included in his list of "rights," but what we do know without a doubt is that whatever those new "rights" might be, they involve government "doing something," and whatever government does must be paid for by your tax dollars.

Those Who Ignore the Lessons Of History are Condemned to Repeat Them

We don't have to wonder how this will turn out because history shows us.  In the later years of the Roman Empire, voters demanded ever-increasing amounts of welfare and entertainment from the government.

As the government spent more and more money on welfare, there was less money available to maintain the military and Rome fell to invaders. We can already see this effect: Rep. Barney Frank, the chairman of the House Financial Services committee, called last week for a 25% cut in military spending.  This while we are actively involved in two wars and have at least another two that may light off at any time!

In the short term, we're likely to see individuals with the potential to earn high wages leaving for other countries.  The more high-income people either leave or decide it's not worth their while to work hard when all their money goes for taxes, the worse the situation becomes for the remaining taxpayers.

Voting for Benefits

We don't have to go all the way back to Rome to see how voters who vote themselves their own benefits destroy democracy; we can look at France.  When Henry Randall was writing his Life of Thomas Jefferson in the 1850's, he sent a copy to Thomas Macaulay, a distinguished British author and Member of Parliament.  Part of Lord Macaulay's reply of May 23, 1857, was printed in American Heritage, February 1974, p 104:

Dear Sir,

... I have long been convinced that institutions purely democratic must, sooner or later, destroy liberty, or civilization, or both.  In Europe, where the population is dense, the effect of such institutions would be almost instantaneous.

What happened lately in France is an example.  In 1848 [after the French revolution - ed] a pure democracy was established there.  During a short time there was reason to expect a general spoliation, a national bankruptcy, a new partition of the soil, a maximum of prices, a ruinous load of taxation laid on the rich for the purpose of supporting the poor in idleness.

Such a system would, in twenty years, have made France as poor and barbarous as the France of the Carloviangians.  Happily, the danger was averted; and now there is a despotism [under Napoleon III - ed], a silent tribune, an enslaved press.  Liberty is gone, but civilization has been saved.

I have not the smallest doubt that if we had a purely democratic government here the effect would be the same.  Either the poor would plunder the rich, and civilization would perish; or order and prosperity would be saved by a strong military government, and liberty would perish.

You may think that your country enjoys an exemption from these evils. I will frankly own to you that I am of a very different opinion.  Your fate I believe to be certain, though it is deferred by a physical cause.  As long as you have a boundless extent of fertile and unoccupied land, your laboring population will be far more at ease than the laboring population of the Old World, and, while that is the case, the Jefferson politics may continue to exist without causing any fatal calamity.

But the time will come when New England will be as thickly peopled as Old England.  Wages will be as low, and will fluctuate as much with you as with us.  You will have your Manchesters and Birminghams, and in those Manchesters and Birminghams [Detroit, Newark, Watts - ed] hundreds of thousands of artisans [UAW members - ed] will assuredly be sometimes out of work.

Then your institutions will be fairly brought to the test.  Distress everywhere makes the laborer mutinous and discontented, and inclines him to listen with eagerness to agitators who tell him that it is a monstrous iniquity that one man should have a million, while another cannot get a full meal.  In bad years there is plenty of grumbling here, and sometimes a little rioting.  But it matters little.  For here the sufferers are not the rulers.  The supreme power is in the hands of a class, numerous indeed, but select; of an educated class; of a class which is, and knows itself to be, deeply interested in the security of property and the maintenance of order.  Accordingly, the malcontents are firmly yet gently restrained.

The bad time is got over without robbing the wealthy to relieve the indigent.  The springs of national prosperity soon being to flow again: work is plentiful, wages rise, and all is tranquility and cheerfulness.

I have seen England pass three or four times through such critical seasons as I have described.  Through such seasons the United States will have to pass in the course of the next century, if not of this. How will you pass through them?  I heartily wish you a good deliverance.

But my reason and my wish are at war, and I cannot help foreboding the worst.  It is quite plain that your government will never be able to restrain a distressed and discontented majority.  For with you the majority is the government, and has the rich, who are always a minority, absolutely at its mercy.

The day will come when, in the state of New York, a multitude of people, none of whom has had more than half a breakfast, or expects to have more than half a dinner, will choose a legislature.  Is it possible to doubt what sort of a legislature will be chosen?  On one side is a statesman preaching patience, respect for vested rights, strict observance of public faith.  On the other is a demagogue ranting about the tyranny of capitalists and usurers, and asking why anybody should be permitted to drink champagne and to ride in a carriage, while thousands of honest folks are in want of necessaries.

Which of the two candidates is likely to be preferred by a working-man who hears his children cry for more bread?  I seriously apprehend that you will, in some such season of adversity as I have described, do things which will prevent prosperity from returning; that you will act like people who should in a year of scarcity, devour all the seed-corn, and thus make the next a year not of scarcity, but of absolute famine.  There will be, I fear, spoliation.

The spoliation will increase the distress.  The distress will produce fresh spoliation.  There is nothing to stop you.  Your constitution is all sail and no anchor.  As I said before, when a society has entered on this downward progress, either civilization or liberty must perish.

Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your republic will be as fearfully plundered and laid waste by barbarians in the 20th century as the Roman Empire was in the fifth; with this difference, that the Huns and Vandals who ravaged the Roman Empire came from without, and that your Huns and Vandals will have been engendered within your own country by your own institutions...

I have the honor to be, dear sir, your faithful servant, HB Macaulay

Lord Macaulay didn't bother to discuss the disaster brought to Europe when Napoleon seized power in France; everybody knew about that.

England nearly met the fate predicted by Lord Macaulay.  When Margaret Thatcher became Prime Minister of England in 1975, the economy was moribund, the government owned most large businesses, and unions controlled most work places.  As Time reports, however, "[as] champion of free minds and markets, she helped topple the welfare state and make the world safer for capitalism."

Lord Macaulay did not believe that voters could be intelligent enough to realize that unions and government-controlled businesses were bad for the economy as a whole.  American voters elected Ronald Reagan president, but there has been another generation of pro-liberal propaganda since then.  It's not clear that American voters are smart enough or accurately-educated enough at this point to see the dangers in the coming election.

Lord Macaulay was correct in predicting that wages would fall when our cities become crowded; we had our Great Depression in the 1930's.  True to Lord Macaulay's prediction, government took a great deal of wealth from better-off people and gave it to the poor.  Taxes were raised, banks were regulated to "keep it from happening again," government paid for "make-work" WPA jobs on roads, dams, and public buildings as the Times suggests we do today, and the economy stalled.

Although liberals like to claim that the welfare projects of the "New Deal" led to economic recovery, economists are generally in agreement that the policies of the New Deal, combined with ill-advised tariff and tax hikes under Hoover, actually caused the Great Depression to be Great rather than merely a severe recession.  Government intervention led to a decade of economic stagnation which was ended only by the economic build-up of World War II; full recovery didn't really take place until the 1950s thanks to the wealth that flowed from technological innovation and industrialization that followed the war.

Lord Macaulay could not have known how the industrial revolution would increase the wealth available to pay blue-collar workers in Detroit $100,000 per year for tightening left nuts as cars come down the assembly line, but our economic expansion has slowed as regulations proliferated, bureaucracy increased, and education declined.

We are once again entering a period of economic turmoil and unemployment such as Lord Macaulay described, this time brought about by ill-advised government meddling in the home mortgage market.  People want their toys and fear for their mortgages and credit card bills, not for their next meal, but the political effect is the same.

We have a candidate promising to distribute "negative income taxes" to help the poor in the name of fairness.  Lord Macaulay warned that there can be no stopping the spoliation of the working classes in favor of the idle once such a government takes power, and we'll end up either with no civilization or with no liberty.

Fortunately for our talented, hard-working minority, the Chinese are receptive to good ideas.  Our talented folk and our skills are beginning to trickle offshore.