Once existing stimulus programs and credit expansion attempts subside, there won’t be much left to pick up the slack. The consumer won’t be able to go back to business as usual unless he goes through a long period of reduced consumption, deleveraging, and savings, a period during which the majority of production and spending inside the US will have to be focused on capital goods, so as to restore a balanced ratio between the production of consumer goods and the production of capital goods.
At the point when these government stimuli wind down, Keynesian clowns will be jumping out of the bushes left and right, and demand that the government take on more debt and spend more money.
I would like to submit this beautiful specimen as further evidence for my theory above:
I further said in that article:
But at some point their mindless tirades will no longer appeal to an overtaxed and overleveraged populace. Their ivory tower nonsense will be way too far detached from simple realities.
The Yahoo finance contributor commenting on the clown above writes:
And even though we have very little to show for all that spending, this PhD in economics from the University of Michigan thinks we have no choice but to spend even more.
… attitudes are changing. People are beginning recognize insane behavior for what it is: Doing the same thing over and over while expecting different outcomes.
Government is aggression. Whoever asks for more government spending in reality asks for one thing and one thing only: more aggression.
Aggression solves no problems. It only aggravates and prolongs them.
I further said in that article I wrote about 2 years ago:
Any temporary recovery we witness now, is likely to be remembered as just that, a temporary phenomenon. All actions taken so far have set the perfect stage for a double dip recession of enormous proportions, the worst possible prolongation of the necessary correction.
Be my guest to compare that prediction with the events as they unfold in the coming years.
One of the most fundamental facts about human action seems to be that no matter what people do, they always need to have a moral justification for their actions. Whatever people do, they need to believe and make others believe that they did what was right, good, just, etc.
The same holds true in the political sphere. Fundamentally, politicians cannot get away with actions unless they can sell them to the people who tolerate their leadership as right, good, just, etc.
Since humans need to describe, communicate, and justify their actions using words, language becomes a popular target for conscious or subconscious manipulation. A good example from Orwell’s 1984 would be “Freedom is Slavery”.
Even today, citizens (conservatives and progressives alike) need such doublespeak in order to make up a justification for the existence of, acceptance of, and obedience to the government, an entity that can only exist due to the initiation of violence of threat thereof against its citizens’ bodies or property, should they not comply.
While the type of language and the types of justifications differ on both sides based on their political tendencies (left vs right), for both of them and in fact for all states around the world there is one core justification that is the basis for all the other ones:
Coercion Equals Voluntary Action.
This is the core logical fallacy that you will often run into when you talk to anybody who tries to morally justify the existence of a government. If a belief system is based upon this idea, then it cannot withstand this shakiness and error at its core, just as valid mathematical or physical theories cannot possibly be based upon the idea that “0=1” or that “up is down”.
How does this fallacy manifest itself at the root of people’s thinking?
Well, whenever you talk to others about the validity and/or necessity of government programs, and you bring up the idea that taxation is the confiscation of one’s property via the initiation of violence or threat thereof, they come up on a pretty clear, simple, yet inconvenient crossroad: They can either accept reality, or continue to delude themselves via the manipulation of language.
If they accept reality, then you have accomplished one of the rare feats in the realm of philosophical education: You have turned on a light switch. These moments are rare, but it is in such moments that you are doing the world a great service.
On the other hand, the more common thing you will likely encounter at that point is that the person you are talking to will do whatever they can to make coercion look like voluntary action. Common arguments are:
“You voluntarily choose taxation because you are staying in this country. If you don’t like it, then you can get out!”
“There is a social contract that we all voluntarily enter into when we are born. Violating it gives the government the right to use violence in defense against your act of aggression!”
“You are being given a choice: Prison or paying taxes. Since you are given this choice, it is all voluntary!”
“It’s just like renting an apartment. When you fail to pay the landlord he has the right to use violence to remove you from his property!”
Voluntary action is by definition an action that is not performed under aggression (=initiation of violence) or the threat thereof. It is thus impossible to cast acts of aggression as voluntary action without committing the most rampant logical fallacy you can possibly commit in the realm of human action.
All these long refuted excuses for tyranny and aggression need not bother us here in particular. In fact, if such thinking wasn’t virtually imprinted onto people’s DNA, the existence of the systems that people around the world tolerate would make little to no sense at all.
What is important is to do your best to communicate these ideas as consistently and as passionately as you can. They are like a gift that’s been withheld from most people for their entire lives. What they choose to do with it once presented, is entirely up to them. A choice, by the way, that is of voluntary nature. :)
Any economic discussion is useless when we don’t look at human action. We can talk all day long about government intervention, business regulation, stimulus packages, bailouts, taxes, deficits, etc. But what do these terms really mean? What do they mean in terms of human actions taken?
After all society is nothing but a sequence of different actions taken by humans, every second of the day. Economics is nothing but an analysis of a very specific subset of those actions, namely those that are motivated by or lead to changes in the moneyprices of goods.
A government is nothing but a group of people that uses aggression to take money from other individuals on a periodical basis and promises protection in return.
Business regulation, in these people’s minds, really means that that same group of people hires individuals and purchases guns in order to force others to comply with orders decreed. If the subjects fail to comply, they will be fined, if the fine is not forthcoming, letters will be sent, if the letters are not answered, armed thugs will arrive and and force them to hand over the requested fine.
If the thugs are still met with non-compliance, they will kidnap their victims and order that they be prosecuted and thrown in jail, the laws being such that they will be prosecuted and thrown in jail. If those same people dare to raise a gun to defend themselves and their property against this intrusion, they will be shot.
The stimulus package is nothing but a debt that is taken on on behalf of the taxpayers, and then spent on things that benefit the contractors and individuals who receive the money first. This is happening in an environment where the majority of people is in too much debt already.
But taking on more debt is not going to get anybody out of this predicament. It is not some lofty, imaginary government that ultimately owes the money, it is the taxpayer whose tax payments will be used to repay the debt in the future. That same taxpayer who is already underwater and has spent too much of his money already. But how is that tax money taken from the taxpayer. Well, just read what I wrote one paragraph above and substitute “tax” for “fine”.
Every single government policy will always lead you back to these basic facts. When a government official says “we need to do xyz”, he really means “our armed gunmen need to extort money from individuals so we can do xyz”, there is simply no way around this.
The politicians in power of course don’t have much of an incentive to talk about their policies in those terms. If they did, they would immediately reveal the cruel, unethical, mafia-style character of every single one of their actions.
Some people will try and make the argument “but the majority agreed to it”. So what? What does that mean? Since when is the majority right? Heck, the majority elected Hitler into office! The fact that the majority agreed/consented with something does not in the slightest make that thing right.
If the majority of people in your house agreed that it was just to take your money via aggression, would you say that that makes this a just undertaking? Is in not rather oppression of a minority? What if all the people on your block agreed that it was appropriate to steal your property and you are the only one objecting? Does that give them the right to do so?? What if all inhabitants of your town or city were to come together and declare it just to take your money or your home from you, and threatened you with kidnapping and throwing you behind bars if you dared to resist. What if every single person in the country joined the mob and declared it just to take your possessions? Does that make it just? Is it not rather the exact opposite, a monstrous injustice, a mass crime on a colossal scale?
Then those who run out of arguments to support the validity of the state will tell you that after all, you are getting something in return from those who use aggression to obtain your property. But how ridiculous is this? Why would they ever give you more in return than what they took from you, without infringing on someone else’s rights in precisely the same way. All the odds are against the idea that money handed over to a bureaucratic institution will be utilized in your best interest, it is impossible to evade The Trouble With Bureaucracy.
Furthermore, even if they did give back precisely what you were forced to hand over, what in the world would the purpose of this exercise be, other than a gigantic waste of time and resources? On top of that, how do they even know what to give back? Did they ever ask you? Were you presented with a menu to choose from? What if you don’t want the things they claim to be giving you, what if you don’t think they are worth even a fraction of the money you handed over? But does anyone give you the choice?
But let’s play along with this fantasy and assume they do give you something you specifically asked for in return. What if it has flaws? What if it doesn’t work in a way that caters to your needs? Does anybody ask you for feedback on how specifically to improve the good that was provided to you … you know, all that stuff that private businesses do, so long as they are not subsidized or bailed out by … *sigh* … the government? But notice how I am having to make the most ridiculous of assumptions in order to try to find a slight justification for the existence of the state. And yet, it is still impossible to find one that even remotely makes sense.
Then they will bring up the argument that you chose by voting. OK, let’s assume that fantasy was true, and Barack Obama presented every single good he is going to provide in return for your tax money. (The argument fails there already but I am trying to be as open as possible to all the boring justifications people will come up with again and again.) Then that immediately begs the question: What if you are one out of the 80% of the population who did not vote for him? Surely the person advancing the argument that you made a choice by voting can’t deny that in that case you did NOT vote for the choices presented and should not be obliged to hand over your property at gunpoint.
When confronting people who have unlimited faith in the validity of government with those facts, one will likely always be confronted with rolling eyes, aggravated temper, ridicule, name calling, and other immature reactions. But there is one thing that you will never encounter: A reasoned refutation of the facts presented.
Ethics, Human Nature, and Government are crucial concepts that need to be understood. So long as they are not, people will continue to be surprised about all the governmentally induced failures that will have been, from my point of view, as predictable as ever.
And finally, a nice clip that supports the point I am making above: