THE SAD ROAD TO SOCIALISM
What happens When Private Property is No Longer a Right
"But if the government undertakes to control and to raise wages, and
cannot do it; if the government undertakes to care for all who may be
in want, and cannot do it; if the government undertakes to support all
unemployed workers, and cannot do it; if the government undertakes to
lend interest-free money to all borrowers, and cannot do it; if ....
'The state considers that its purpose is to enlighten, to develop, to
enlarge, to strengthen, to spiritualize, and to sanctify the soul of
the people' -- and if the government cannot do all of these things,
what then? Is it not certain that after every government failure --
which, alas! is more than probable -- there will be an equally
inevitable revolution?"
-Frederic Bastiat, "The Law," June, 1850
It's been more than 150 years since Frederic Bastiat wrote his
treatise, The Law, a small work, challenging the ravages of failing
socialism thrust upon France as a result of the French revolution.
In that unique pamphlet, Bastiat points out that when the law of any
country supports the moral belief systems of a people, defends the
rights of said people and their property, the law is perceived as
being moral; a defense against evil and those who flaunt it as being
immoral. Payment of taxes and civic obligations are perceived as a
virtue and those who flout this as criminals.
However, when the law becomes a source of plunder or pits itself in
opposition to the morals of the people, the people perceive the law to
be immoral and widely despise it. Indeed, in those times, flouting
the law is extolled as virtue.
Another book by contemporary author Hernando Desoto, The Mystery of
Capital: Why Capitalism Triumphs in the West and Fails Everywhere
Else, points out much the same thing, that the security of ownership
of private property guaranteed by law for the lower and middle classes
has been the essential ingredient resulting in the prosperity enjoyed
by many western countries. Without this security, where the state
becomes an impediment to commerce or property ownership, the people
are forced to operate their economies outside of law, which is once
again perceived as evil, rather than a force for good.
In essence, when a government goes from being a protector of private
property to a plunderer of it, it places itself on a course of chaos,
economic ruin and its own ultimate self-destruction.
The Three Steps of Socialism
Socialism is the mechanism which transforms government from its noble
role as a protector into a predator and, since the citizens of our
fine country seem determined to plow through socialism to its bitter
end, we should examine the territory through which these three sad
steps lead. The core result of socialism is the destruction of
private property and wealth.
The events described in this piece are a composite of the ravages of
socialism experienced in other countries. While each country does
experience all the events portrayed, all socialist countries follow
the same miserable path. The U.S. doesn't have to go down this path,
but it seems determines to do so.
We're Off to See the Wizard
One of the great dangers of any government by the people is that
sooner or later their politicians discover they can vote largess from
the public trust. Their first experiment at this bold new adventure
invariably revolves around social programs enacted in the name of
morality and the public good or even solving some current crisis Who
could oppose that? "After all," it will be argued, "don't you care
about people, or the welfare of the country, or the environment?"
The lure of this argument has been absolutely irresistible from the
Roman Empire to the French and Bolshevik revolutions to Socialist
Parties (D) and (R) in the USA today.
Step One - The Moral Argument: A Promise of Something for Nothing
The moral argument that we can finally solve poverty, pain, sickness,
and hunger with "free" money seems just to good to be true. It
usually is but it sells to the public. To fund these allegedly moral
programs, the assets of the gentle citizens must be quietly taxed in
the name of the public good.
Only a few wise and isolated voices warn that this baby dragon they
have just hatched will grow up to be a fire-breathing monster. But
not to fear, the wise voices are generally shouted down by the gentle
politicians, who fiercely demonize protestors as selfish
"whabbledygots" blocking the road to the perfect society. After all,
how could something so noble do anything bad to the country?
At first the rich are the only ones asked to pay more of their "fair
share." In the U.S. income tax originally only affected
upper-bracket individuals. In this early stage, few complain and
everyone seems happy, except for those nagging voices still warning of
dire consequences ahead; the ones the gentle legislators wish would
just shut up. Other than that they have little to fear because the
gentle legislators appear to be heroes placing our feet firmly on the
road to utopia. Soon they promise all the have-nots will have and
those who do have, will have just a little less. After all, as we
said, it's just their "fair share."
Ah but time rumbles onward, and the number of people dependent upon
these programs swells along with the number of "free" government
programs. Free things do sell, and that's what politicians want to
do: sell their programs.
As the programs swell, they become unwieldy, requiring large bloated
bureaucracies to administer them to ward off the inevitable fraud and
corruption, consuming an ever greater part of the tax booty and
servicing less to the originally intended recipients. In order to
control the chaos of a large group of people cueing up to get
something for nothing, large volumes of laws and regulations have to
be written to control who gets what and where and when and who the
givers and who the takers are. Now, the bureaucrats who administer
these programs are also dependent on them for their livelihoods. This
entrenches the program and assures its progression to Stage Two.
The Magic Dragon Isn't Cute Anymore
Somewhere along the line, the gentle legislators discover that their
baby dragon has grown and it's snarling at them a lot. It wants much
food. They're not controlling it; it's controlling them. However, in
order to retain their prestigious position, ever-increasing sources
must be found to feed their growing rapacious raptor.
The food source (tax burden) shifts rapidly downward into the middle
class, as the gentle politicians coo that only the rich are being
soaked. Concomitant with the increase of taxation, the miracle of
hidden taxation through monetary inflation is discovered as central
banks print more and more money to allow the good times to continue
over and above what direct taxation will allow.
This process of monetary inflation results in debasement of the
currency, causing the citizens to work harder and harder and run
faster and faster to keep up with the loss of their currency's value
and the concomitant rise of prices. It's slow at first but
accelerates along an insidious exponential path. Ultimately it
destroys everything the middle class works for.
Additional reptilian food sources called "revenue streams" are
created. More fees, fines, "mitigation payments" and permits are
required to do almost anything, driving the cost of doing everything
upwards. Coupled with this is a bewildering array of regulation and
laws making the business of life more and more difficult to
accomplish. Big businesses can absorb this but the middle class
ultimately buckles under the strain. The dragon is never satisfied.
Stage 2: Silent War Between Government and Its Citizens
At some point, the unwashed masses suspect their politicians aren't
really gentle any more much less benevolent. This is where a silent
war between government and people erupts. It's a blurry transition
through never-never land when the politicians still claim to be gentle
but the people sense that they have gone from being protectors of the
public good and private property to a plunderers of it; from morality
to immorality.
The "Bastiat" transition doesn't take place all at once but, one by
one, members of the working class realize they're toiling like mad and
getting no where. What they do make is confiscated in taxes or
destroyed in inflation. They have little left over and their life's
savings are being destroyed while the politicians tell them all is
just fine, creating cognitive dissonance between the hardship workers
experience and the good times the politicians promise.
But those friends of the dragon on the dole still insist the dragon's
intentions are moral, even if its methods are not. As tax rates push
ever higher into confiscatory ranges, self-preservation kicks in and
the people take defensive action against what they no longer perceive
as moral duty but legally-sanctioned plunder. They do this at the
same time they pretend the gentle politicians are correct even though
they know better.
The rich catch on and move their assets offshore and sometimes
themselves out of the reach of the dragon; they expatriate. They have
the means to structure their finances in such as way as preserve
wealth. Besides, the politicians are frequently among this class so
they aren't about to let the dragon loose on themselves.
Unfortunately, the middle class doesn't have this option, so it fights
the dragon by engaging in evasive maneuvers. Citizens cheat on taxes,
and seek to conceal taxable assets. Whenever possible transactions
are shielded from the ever-prying eyes of the hungry dragon.
As the ravages of taxation and inflation eat out the middle class's
substance, a vibrant underground economy springs up, utilizing barter,
cash, foreign currencies, precious metals or other means to conceal
taxable activity. Regulatory laws are flouted as people try to "see
what they can get away with." Often times this underground economy
has an organized crime component vis a vis the former Soviet Union.
The second half of Stage Two of the war kicks into gear as the dragon
responds to the rising opposition and imposes a growing panoply of
laws and regulations with increasing fines, penalties and prison
sentences. To block the rampant flouting of law, the dragon wants to
monitor everything the citizens do in order to assure that plunder
shall be paid, all in the name of the rule of law, public order and
morality. Civil rights break down, all in the name of morality and
public security.
Every once in a while the beleaguered middle class pleads with the
gentle politicians to fix the problem, unaware that it was the gentle
politicians, who created it all in the first place. But politicians
are more than happy to be seen as dragon slayers, and create a series
of scapegoats for the problem, transferring blame for the mess and
enacting a new series of programs to supposedly fix the problem. In
reality, they just delay the pain, put the dragon on steroids and
making the problem far worse.
The war is not without casualties. As it becomes ever more difficult
for small businesses to function in the poisoned atmosphere of taxes,
fees, fines, regulations and prosecutions, more of the middle class
throws up its hands and goes elsewhere or becomes part of the the
dependent poor. Small business goes out of business or operates
illegally. As inflation devours life savings, people are wiped out.
Retirees have a difficult time getting on as their lifetime
achievements are destroyed. Most of the middle class slides
inexorably down the slope into poverty.
There is a moral consequence as scandals erupt in the politico and
monied classes. Disrespect of law is common. In the free-for-all,
everyone is in it for himself and no one can afford to obey the law.
Jails swell with those unfortunate enough to get caught. As more
complex laws are steadily passed, finally all citizens become
law-breakers.
This enables the dragon to seek pretexts for seizing the assets of
citizens. Businesses are nationalized. Wage and price controls are
instituted. Property ownership is forcibly transferred from those who
oppose the dragon to those who support it. Retirement plans are
brought under the "protection" of government and their owners left
with government-issued IOUs. Assets are seized on the mere allegation
of criminal activity. Indeed, law enforcement agencies encourage
their members to plunder. They even make arrangements with organized
crime at times. The list of plunder-and-defend possibilities is
astounding.
In an effort to stem the hemorrhage, the middle class starts throwing
out the rascal politicians, only to elect another group of rascals.
This has little effect, since the dragon is now a self-existing
monster that doesn't require gentle politicians. By this stage it's
clear: Small and middle class businesses, ranchers and farmers all
know who the enemy is: the dragon. There is no illusion that the
politicians are gentle or acting in their best interests.
As the security of property ownership declines, investments flee and
the economic environment becomes unstable, no one wants to invest
where earnings will be heavily taxed, or even the possibility of
direct confiscation on the allegation of having violated a plethora of
unknowable, unobservable laws. Doing business is just too dangerous.
As doing business becomes dangerous, investments die, jobs go out of
existence, increasing the pain of the working lower and middle
classes. Small business is always the primary creator of employment
and it is the most abused. In the end, the rich are never soaked, the
middle class is destroyed and the poor discover that there is no free
lunch.
Stage Three: Dies Irae: A Day of Wrath and Mourning
Ultimately the dragon cannot keep its promises. This last stage is
where events turn nasty and chaotic. It is a dangerous time. It is a
time no country should ever wish to reach.
Politicians are perceived as ravenous wolves. Blame and
finger-pointing frenzies among politicians erupt to deflect
responsibility for the chaos they have caused as they attempt to hold
onto their privileged status.
Faith in government dissolves along with faith in the currency.
Widespread flouting of law is common and tax payments quit. If it
gets bad enough, crime flourishes, both organized and random. The
domestic economy collapses into a depression and the currency just
collapses.
By this time there are several violently outraged groups of people:
the first group consists of those who have been dependent on the
dragon for their free programs, and once the dragon reneges on its
promises to provide these, they are outraged at the violation of their
imagined rights to a free lunch. This group can include pensioners
who paid the dragon money but discover the dragon spent it all before
they retired.
The second group is the middle class, who have been beaten to death to
feed the dragon and his cronies. They have lost all their livelihood
and property. This is the point where many revolutions occur.
Sometimes the revolutions are non-bloody and occur only at the voting
booths; sometimes they are bloody and violent. It is a dangerous time
because the chaos caused by the breakdown of economic and political
order coupled with the collapse of morality often requires brute force
to restore order, and brute force is the fertile ground for dictators
and the destruction of rights.
One of the great ironies of history is that those who started the mess
and benefited greatly from it are rarely ever called to pay for the
crimes and carnage they caused.
Finally the dragon dies.
Conclusion
No country trapped in socialism goes through all the events described
above, which is a composite of past histories. It can turn itself at
any time providing it is prepared to discipline itself the undergo the
pain required to get off the public dole, much like coming off an
addiction. Few societies ever want to face that, so they condemn
themselves to all three stages. And the longer they wait to enact the
necessary changes, the worse the pain becomes.
* From currency, to energy to property rights, issues today are clouded
with so much static and partisan bickering that the average person has
little real comprehension of what is happening. Frequently Democrats
and Republicans blame each other when often they're both responsible
and fiddle while Rome burns.
America is truly at an economic and moral crossroad, having already
started into Stage Two of the sad road to socialism. Whether or not
we plow through all three stages remains to be seen. It takes great
moral courage to prevent this but politicians tend to be neither moral
or courageous.
Thus it is up to what actions are moral, legal and necessary to see
us, our families and friends safely through the tempest. But as a ray
of hope, it is here where Americans in times past have always shown
themselves most noble.
Thanks goes to John Loeffler for the above article. |
