A Washington Post poll reveals that most Americans doubt whether John McCain or Barack Obama will be able to “fix the ailing economy” or “improve the healthcare system.”
The problem with Americans is that they fail to understand that the federal government is the cause, not the cure, for the ailing economy, the healthcare system, and a host of other problems facing our nation. No matter which crisis we focus on — the drug war, Medicare, Medicaid, Social Security, terrorism, Iraq, Afghanistan, war on immigrants, the dollar, the Federal Reserve, and many more — anyone who looks to McCain or Obama to fix it is on a fool’s errand. No one can make socialism, interventionism, and empire work, a principle Americans must finally confront if they want to have a strong, growing, prosperous economy.
Why are Americans having a difficult time making ends meet? The problem does not go back just a few years. It goes back decades. Ever since the advent of the New Deal in the 1930s, government’s expenditures, both for welfare and warfare, have continued to grow.
All that money has come out of the pockets of the American people, either through taxes or inflation (i.e., simply printing the money to pay for the government expenses.) It’s not a coincidence that government coins no longer contain gold or silver in them but instead are now made of base metals. That’s what comes with ever-growing government spending financed by inflation.
It is impossible to measure the damage that all that confiscation of income and capital has had on the standard of living of the American people. Contrary to what Americans are taught from the first grade on up, the key to rising standards of living lies with savings, not consumption. When people save, those savings are loaned by banks to businesses for the purpose of purchasing machinery and tools. That equipment, in turn, makes workers more productive. More productivity means higher income for the business, which means higher wages paid to employees.
Without savings, businesses cannot acquire capital. Without increases in capital, wages for workers cannot rise. Growing wages depend on growing productivity. That’s why employees and owners have a joint interest in the success of the operation.
What would life be like had the United States not adopted a socialistic welfare state, a regulated society, and an overseas military empire and instead had continued to embrace the free-market, limited-government philosophy that our American ancestors had embraced? It boggles the mind to imagine how high the American standard of living would be today if all that confiscated capital had remained in people’s hands.
Imagine if just 10 years ago the income tax had been abolished, as libertarians have long called for. How much money would you have in the bank? Consider a family that has paid an average of $20,000 per year in income taxes. That would mean $200,000 in the bank plus interest. That’s a lot of money to pay for education, healthcare, home loans, and vacations.
Imagine if 10 years ago Medicare and Medicaid had been abolished. Healthcare costs would not be soaring and doctors would not be leaving the profession in droves.
Decade after decade, government spending and federal regulation has continued to soar, with Americans being encouraged by government officials and mainstream economists to spend, spend, spend. Today, most everyone is having a difficult time making ends meet. Hardly anyone is able to save money. It might well be that the welfare-state and the warfare-state chickens are all coming home to roost at the same time.
In the past when Americans have looked to a new president to “fix the economy,” hope sprung eternal that the president would be able to make the welfare-warfare state work successfully. As people grow despondent over whether McCain or Obama will be able to make such magic succeed, we can only hope that Americans will begin reflecting on the real solution for an ailing economy: rejecting both the welfare state and the warfare state in favor of the free-market, limited-government way of life embraced by our ancestors.