Tag Archives: welfare state

Next Comes The “Turbulent Twenties”, by David Stockman

Debt will only take you so far and it looks like global debt is just about out of gas. From David Stockman at peakprosperity.com:

The past 30 years of False Prosperity is over

The coronavirus is now exposing a far more deadly disease: Namely, the poisonous brew of easy money, cheap debt, sweeping financialization and unbridled speculation that has been injected into the American economy by the Fed and Washington politicians.

It has turned Wall Street into a dangerous gambling casino while leaving Main Street buried under mountainous debts, faltering investment in growth and productivity and the hand-to-mouth economics of spending more than you earn.

It has also left the American economy exceedingly vulnerable to external shocks. That’s because 80% of households have no appreciable rainy day funds and businesses have hollowed out their balance sheets and artificially extended their supply chains to the four corners of the earth in order to goose short-run profits and share prices.

However, this unprecedented fragility is becoming evident as public health authorities around the world aggressively move to contain the Covid-19 contagion. This will mean separating workers from their workplaces, consumers from the malls, diners from the restaurants, travelers from the airlines, hotels and resorts and much more like and similar disruptions to the supply-side of the economy.

In short, the world’s supply chains are buckling and freezing-up, thereby causing production and incomes to fall abruptly. In turn, shrunken incomes and cash flows will pull the legs out from under the edifice of debt and speculation that has been piled atop the American economy.

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Trump’s Budget: More Warfare, Slightly Less Welfare, by Ron Paul

Bipartisanship: the Democrats okay funds for the Republicans’ warfare state, the Republicans okay funds for the Democrats’ welfare state. From Ron Paul at ronpaulinstitute.org:

Listening to the howls from Democrats and the applause from Republicans, one would think President Trump’s proposed fiscal year 2021 budget is a radical assault on the welfare state. The truth is the budget contains some minor spending cuts, most of which are not even real cuts. Instead they are reductions in the “projected rate of growth.” This is equivalent of saying you are sticking to your diet because you ate five chocolate chip cookies when you wanted to eat ten.

President Trump’s plan reduces the Education Department’s budget by nearly eight percent, leaving the department with “only” 66.6 billion dollars. Cuts to other departments are similarly small, while reductions in entitlement spending consist mostly of reforms that will not affect most of those dependent on these programs.

President Trump deserves credit for proposing an 11.6 billion dollars cut in funding for the Department of State and the US Agency for International Development (USAID). Foreign aid does little to help impoverished people overseas. Instead, it benefits foreign government officials willing to do the US government’s bidding. The State Department and USAID are extensively involved in US intervention abroad, including efforts to overthrow governments.

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Two Different Americas, by Jacob G. Hornberger

There have been two different Americas, and the big split came in 1913. From Jacob G. Hornberger at fff.org:

There have been two completely different Americas in U.S. history. Let’s examine twelve ways in which they differ.

1. For more than a century after the United States came into existence, there was no income taxation or IRS. People were free to keep everything they earned and decide for themselves what to do with it.

Today, income taxation and the IRS are a core feature of American life. The government essentially owns everyone’s income and decides how much people will be permitted to keep, much as a parent permits his children to have an allowance.

2. No Social Security. Earlier Americans rejected the concept of mandatory charity. People were left free to decide for themselves whether to help out their parents and others.

Today, Social Security is a core feature of American life. The federal government forces younger people to help out seniors by forcibly taking their money from them and giving it to seniors. Social Security is a classic example of a socialist program, one in which the government forcibly takes money from people to whom it belongs and gives it to people to whom it does not belong.

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Black America Before LBJ: How the Welfare State Inadvertently Helped Ruin Black Communities, from ammo.com

People get hooked on getting money they haven’t earned, and it ends up making victims of those from whom the money was taken and those to whom it was given. From ammo.com:

“We waged a war on poverty and poverty won.”

The dust has settled and the evidence is in: The 1960s Great Society and War on Poverty programs of President Lyndon Baines Johnson (LBJ) have been a colossal and giant failure. One might make the argument that social welfare programs are the moral path for a modern government. They cannot, however, make the argument that these are in any way effective at alleviating poverty.

In fact, there is evidence that such aggressive programs might make generational poverty worse. While the notion of a “culture of dependence” is a bit of a cliché in conservative circles, there is evidence that this is indeed the case – that, consciously or not, the welfare state creates a culture where people receive benefits rather than seeking gainful employment or business ownership.

This is not a moral or even a value judgment against the people engaged in such a culture. Again, the claim is not that people “choose to be on welfare,” but simply that social welfare programs incentivize poverty, which has an impact on communities that has nothing to do with individual intent.

We are now over 50 years into the development of the Great Society and the War on Poverty. It is time to take stock in these programs from an objective and evidence-based perspective. When one does that, it is not only clear that the programs have been a failure, but also that they have disproportionately impacted the black community in the United States. The current state of dysfunction in the black community (astronomically high crime rates, very low rates of home ownership and single motherhood as the norm) are not the natural state of the black community in the United States, but closely tied to the role that social welfare programs play. Or as Dr. Thomas Sowell stated:

“If we wanted to be serious about evidence, we might compare where blacks stood a hundred years after the end of slavery with where they stood after 30 years of the liberal welfare state. In other words, we could compare hard evidence on “the legacy of slavery” with hard evidence on the legacy of liberals.”

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Will the Twenties Roar? by Karen Kwiatkowski

Payback is hell, as they say, and it looks like the Twenties are going to be a decade of payback. From Karen Kwiatkowski at lewrockwell.com:

In terms of ignoring reality, FOMO -YOLO’ing and flimflamming our collective way into the future, I think not.  Those times have passed. Certainly they have for the US government and its extensive population of dependents.

This may be cause to celebrate for the 10% of the population who won’t notice, and will likely celebrate, the end of government jobs, government pensions or social security, deprivation of a government-subsidized health care service, lack of a government-income supplements, collapsed government contractors, or the elimination of a regulatory and counterfeiting state that has created whole industries out of nothing, industries that currently support millions of American families.

The leftward momentum of the entire cadre of Democrat candidates seeking the US Presidency this year doesn’t reflect a mass desire to make the US a socialist country.  The US is already a socialist country.  Friendly fascism is the name of the game, if we can believe Bertram Gross, Sinclair Lewis, or our own eyes. The 2020 candidates, announced and unannounced, aim primarily to hold these socialist gains in the face of what promises to be a very frightening decade for the 90 Percenters.

Donald Trump, in 2016 and presumably in 2020, speaks to the same sentiments the anti-Trump field emotes today, sentiments of maintaining life and economics largely as they are. Rather than politicians reaching for the stars, asking that the ship of state be guided into a brighter future, we see a display of white knuckles angrily gripping the present, with a few bones thrown to restoring some of the better memories of the past. There is no imaginable future for the US that does not contain short-term tragedy for the majority of the population, and all the candidates all know this.

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The Welfare State is Tearing Sweden Apart, by Jon Nylander

A country can’t survive open-door immigration and a wide-open welfare state; it’s overrun by freeloaders. From Jon Nylander at mises.org:

The Swedish Welfare State and Multiculturalism

Swedes do not toil under a Communist yoke. We are thankfully a market oriented society, and particularly in rural areas, Swedes are ruggedly individualistic and responsible citizens. But we do have an enormous welfare state with which to contend — and it poisons our nation much in the same manner that full blown communism would; if perhaps not to the same degree. Doubtlessly; it sets the stage for some rather dystopian developments, both in terms of its steady consumption of productive capabilities — but also in its toxic effects on our culture. On top of this, Sweden has accepted a considerable amount of immigrants (to put it mildly) from cultures that differ wildly from the Swedish. In this text I will take a look at the welfare state through the prism of Sweden’s current multicultural challenge.

First and foremost, is multiculturalism a good thing? When multiculturalism emerges through voluntary interactions it is apparently valuable — otherwise it would not occur in a free society as it so often does. Again: in the marketplace there is, over time, the beautiful possibility that the identity of the tribe expands by including, assimilating and adapting to previously unknown things. Adaptation and cultural appropriation by means of voluntary associations cannot be a bad thing! But in such a situation; isn’t multiculturalism a misnomer? I would rather call it an emergent convergence towards a shared culture, in a pace that participants set. All in all: a desirable thing, especially compared to the alternatives.

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How Fascism Comes to America, by Doug Casey

How does fascism come to America? Gradually, and then rapidly. From Doug Casey at internationalman.com:

I think there are really only two good reasons for having a significant amount of money: To maintain a high standard of living and to ensure your personal freedom. There are other, lesser reasons, of course, including: to prove you can do it, to compensate for failings in other things, to impress others, to leave a legacy, to help perpetuate your genes, or maybe because you just can’t think of something better to do with your time.

But I’ll put aside those lesser motives, which I tend to view as psychological foibles. Basically, money gives you the freedom to do what you’d like – and when, how, and with whom you prefer to do it. Money allows you to have things and do things and can even assist you to be something you want to be. Unfortunately, money is a chimera in today’s world and will wind up savaging billions in the years to come.

As you know, I believe we’re well into what I call The Greater Depression. A lot of people believe we’re in a recovery now; I think, from a long-term point of view, that is total nonsense. We’re just in the eye of the hurricane and will soon be moving into the other side of the storm. But it will be far more severe than what we saw in 2008 and 2009 and will last quite a while – perhaps for many years, depending on how stupidly the government acts.

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The Welfare Generation: 51.7% Kids in 2017 Lived in Households Getting Govt Assistance, by Terence P. Jeffrey

How many of those 51.7 % of kids do you think will grow up to be anti-government? From Terence P. Jeffrey at cnsnews.com:

The Census Bureau has released new data that strengthens the case for calling the current generation of American children “The Welfare Generation.”

Among American residents under 18 years of age in 2017, according to the Census Bureau, 51.7 percent lived in households in which one or more persons received benefits from a means-tested government program.

That was down slightly from the 52.1 percent of Americans under 18 in 2016who lived in households receiving means-tested government assistance. (Also, because this new Census Bureau estimate is for 2017, it predates the significant economic and job growth the United States has seen in 2018).

But in each of the last five years on record (2013 through 2017), according to the Census Bureau, at least 51 percent of Americans under 18 have lived in households receiving means-tested government assistance.

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“Freedom from Want” is Slavery for All, by James Bovard

It is a logical impossibility that we can all have our “basic needs” provided by someone else. Governments redistribute; they don’t produce. Everything they give to someone they take from someone else. From James Bovard at mises.org:

Freedom from want” is one of the most frequently invoked notions of freedom in our time. However, it is a bogus freedom that politicians and socialists offer to lull people into accepting policies that destroy true freedom. Freedom from want has been most loudly advocated in this century by those who favored removing almost all limits from government power.

For example, Sidney and Beatrice Webb, two of the founders of British socialism and authors of The Soviet Union: A New Civilization?, asserted in 1936: “Personal freedom means, in effect, the power of the individual to buy sufficient food, shelter and clothing.”1

The Webbs did not specify how many millions of people government should be permitted to kill in the name of “freedom from want.” But during Stalin’s bloodiest decade, they asserted that for government economic planning to succeed, “public discussion must be suspended between the promulgation of the decision and the accomplishment of the task” and that any criticisms of the master plan should be treated as “an act of disloyalty, or even of treachery.”2

For government to be able to liberate people with food and clothing, it must have the power to execute anyone who criticizes the official economic plan. After visiting the Ukraine, the Webbs endorsed Stalin’s war on the kulaks (the least impoverished peasants), commenting that “it must be recognized that the liquidation of the individual capitalist in agriculture had necessarily to be faced if the required increase of output was to be obtained.”

(Output plummeted.)

Equating liberty with satisfactory living standards became far more common as the twentieth century went on. “Real freedom means good wages, short hours, security in employment, good homes, opportunity for leisure and recreation with family and friends,” wrote Sir Oswald Mosley, the most prominent British supporter of Nazi Germany, in his 1936 book, Fascism.3

To continue reading: “Freedom from Want” is Slavery for All

Running on Empty, by Robert Gore

They dote on their progeny, then bury them alive.

Across the land, public pension and medical funds teeter on the brink of insolvency. You can ignore pending problems until you can’t. For those who prize clarity and realistic thinking, these impossible to ignore crises should be welcomed. They focus attention on an inescapable fact: the world lacks the unencumbered assets and productive capacity to redeem the promises that have been made against them. Somebody’s going to get stiffed.

With war on everyone’s minds, public pension and medical funds delineate inevitable battles lines: governments versus taxpayers, the unproductive versus the productive, the aging versus the young. Those wars are liable to be far more consequential than the ones everyone worries about in places like the Middle East and North Korea.

Nothing calls attention to the absurdity riddling the public pension system quite like the $76,000 monthly pension drawn by Joseph Robertson, an eye surgeon who retired as president of the Oregon Health and Science University last fall.

In the good old days, government employment meant low pay, but job security and a decent pension. Now such sinecures means wages in excess of those paid in the private sector plus pensions that are far more munificent…and job security. For a lucky few like Doctor Robertson, their pensions are a triple 7 jackpot. Oregon calculates pensions based not just on recipients’ government salaries, but what they receive on any non-government gigs they had going on the side. Robertson’s pension is based on his remuneration as university president and what he made operating on eyeballs.

This is what happens when actuarial tables and actual rates of return are discarded in favor of the political power of public employees and their unions, promises that can’t be kept, and taxpayers picking up the tab who have no idea what the final bill will be. Public pension and medical crises bring into sharp relief the writing on the wall: Governments Can’t Deliver.

As Charles Hugh Smith recently noted, public retirement and medical liabilities are increasing so fast that no amount of tax increases can keep up. Long before a 100 percent tax rate turns taxpayers into slaves, raising tax rates becomes counterproductive, yielding less, not more, revenues. One of the nifty things about the public pension and medical crisis is that it’s local. As such, it’s offering real world demonstrations that when local jurisdictions raise rates to fund their pensions, productive people leave.

The poster child is Illinois. The state on down to its smallest political subdivisions—like the town of Harvey—are buried beneath underfunded pensions. Illinois’ courts have ruled pensions are inviolable, which leaves governments facing insolvency with only two options: raise taxes and cut spending.

Harvey was ordered by a court to fund its firefighters’ pension fund, which is only 22 percent funded. The town’s property tax rate is six times the average rate in nearby Indiana, and Harvey is still coming up short. The state is garnishing its tax revenues, and the town has announced 40 public safety employees will be laid off. Why would anyone paying taxes in Harvey stick around for a future of ever-increasing taxes and ever-diminishing public services?

Many don’t, and Harvey and other localities in Illinois, including Chicago, are losing people. Out-migration statistics in Illinois, California, New Jersey, Connecticut, New York, and other net-loser states don’t capture the full scope of the problem. If one productive person moves out while one unproductive person moves in and starts living off state largess, there’s been no net out-migration, but the state suffers a loss (obvious to everyone except those fools and charlatans who will plump for an open-arms and open-wallet approach right up until bankruptcy).

Out-migration will get worse for net-loser states as the federal tax limitations on the deductibility of state and local taxes (SALT) kicks in. SALT has been capped at $10,000. After that, the wealthy have to pay the full measure of their high-tax states’ income, property, and sales taxes. The migration is gathering steam. It already costs twice as much to rent self-moving truck services from high-tax Los Angeles to low-tax Dallas as vice versa, and that spread will only widen.

State and local governments, their employees, and those on the dole can’t stop the productive from voting with their feet. The number who leave the US, however, is still a trickle. The federal government’s old age and medical funding problems, orders of magnitude greater than states’ and municipalities’, are no longer looming; they’ve arrived. The government could seal the borders to lock in the productive, but it wouldn’t prevent the slow-motion, but accelerating, catastrophe now underway.

The federal government’s ability to issue virtually unlimited debt and the Federal Reserve debt monetization machine mask the rot, but only create problems far larger than the ones they putatively solve. Low interest rates have destroyed state and local funds’ ability to achieve fairly safe returns, forcing them out on the risk curve to meet their rate of return targets, which are way too high. Underfunded as they are now, bear markets in stocks and bonds would obliterate them.

Encouraged by central bank debt promotion policies, individual, corporate, local, state, and federal debt has reached new records. While low interest rates have ameliorated the debt service burden, even they can’t stymie the toll debt is taking on the economy. Look no farther than real annual GDP growth, which hasn’t hit 3 percent since Bush Jr. was in office. Less growth means less tax revenues, which only exacerbates funding problems.

The older generation is pinning its retirement hopes on a younger generation confronted with huge debt, perpetually rising taxes, a shrinking economy, and dwindling opportunity. That’s not like hoping you can draw to an inside straight, it’s going all in, exchanging your hand for five new cards, and hoping you draw four aces. Good luck with that.

Oldsters like to complain that the youngsters are too preoccupied with gadgets and social media. They wish that were true. The youngsters are already questioning their impending debt servitude. The more perceptive are homing in on their parents’ generation’s self-granted benefits and unrivaled profligacy. You don’t have to search too far on the internet and social media to see the awakening.

Doting parents and grandparents who post their darlings’ every precocious moment and wouldn’t dream of letting them walk a block to school by themselves have no compunction about burying them alive under welfare and warfare state IOUs. In a world riven with conflict, the easiest war to predict is the intergenerational one.

It’s not strictly accurate to say that the state and local public pension and medical funds’ crisis is the canary in the coal mine. It is but one in an aviary of canaries. The fund canary is in extremis and may well be the first to expire; the others will certainly follow. Picture the horror as the adult canaries and their fledglings wage mortal combat for those last few molecules of oxygen.

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