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Leading Humanity Out of the Darkness, Part 2


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Ever since it was established, the income tax has constituted an ever-growing assault on income, savings, and capital, which are the keys to a prospering nation, one in which the real standard of living is growing generation after generation.

Here is how this corrupt and sordid process works. All year long, and especially on April 15, people send to the IRS portions of their income, on pain of harassment, liens, garnishments, fines, and imprisonment for failing to do so. All that money, along with all the payroll taxes that people also pay, goes into a giant pool of cash, ready for distribution in the form of both welfare-state and warfare-state largess.

It is a dream come true for statists, especially those working for the government. Here are vast sums of wealth that they haven’t produced but that they now have the power to give away to their cronies, friends, influential and powerful people, and so many others. This welfare-warfare largess goes into the pockets of recipients of Social Security, Medicare, Medicaid, education grants, SBA loans, state and local governments, welfare, food stamps, bailouts, corporate grants, military personnel and contractors, and even to foreign dictators. Of course, lots of the money finds its way back into the pockets of many public officials in the form of bribes, campaign contributions, junkets, and the like.

That giant pool of wealth inevitably attracts lots of people, who end up fighting their hearts out for their “fair share” of the loot. “It’s mine!” “No, it’s mine!” Everyone on the dole, both welfare and warfare, comes to think that his particular share is the most important of all and, therefore, should never be reduced, much less ended.

Even worse, everyone convinces himself that it is his “right” to continue receiving his dole. In the mind of the dole recipient, he’s entitled to a portion of the wealth that has been produced by others and sent to the IRS. That’s what is meant by the term “entitlement.”

Inevitably, the segment of society fighting to get its dirty little hands on the loot gets bigger and bigger. After all, why go through all the trouble of producing wealth when you can simply get it from the government?

Worse yet, the amount the parasitic sector of society ends up demanding invariably exceeds the amount the IRS is seizing. What to do then? Unable to let go of any portion of the dole, the statists will cry, “Tax the rich! Tax the rich!” But the problem is that ultimately even the rich cannot handle the ever-growing burden of the ever-growing welfare state. The sector of the rich starts to cave in on itself, as it has now done in the welfare state of Greece.

Of course, increasing taxes on the middle class remains a possibility. The problem there, though, is that governmental officials know that, historically, over-taxed people in the middle class have a tendency to revolt against higher taxes, a phenomenon that governmental officials have a deep fear of.

That is where borrowing comes into play. To get the excess money that is needed to fund the ever-growing, voracious wants of those receiving largess in the welfare state and the warfare state, U.S. officials simply go out into the capital markets and borrow the money, which they then distribute to those in the parasitic segment. Everyone seems happy in the short term because the ever-growing number of recipients continue receiving their dole, while those who are funding the welfare and warfare aren’t faced with the short-term prospect of paying higher taxes.

Lies about communism

Now, let me digress a minute to talk about statists. Many decades ago, the statists — liberals and conservatives alike — sent some 58,000 men of my generation to their deaths in a stupid, idiotic, immoral war in Southeast Asia, a war that wasn’t even legal, given the lack of the constitutionally required congressional declaration of war.

The war was characterized by a number of lies that U.S. officials told the American people, among the most notable being the one about the Gulf of Tonkin. In order to secure a congressional resolution authorizing the use of force in Vietnam, U.S. officials made up a story in which they falsely said that North Vietnamese military forces had attacked a U.S. military vessel in the Gulf of Tonkin. The story was just plain false — a deliberate lie, but it was one that Congress relied on to issue the requested resolution.

The basic rationale for sacrificing 58,000 American men dealt with communism. U.S. officials said that communism was so bad a way of life that it was important to sacrifice those 58,000 American men to ensure that the South Vietnamese people wouldn’t have to suffer under communism.

Moreover, if the U.S. government didn’t fight the communists in Vietnam, U.S. officials maintained, the “dominoes” would fall all over the world, until the communists finally invaded and occupied the United States, where they would run the IRS, the public schools, and all the other government programs and departments.

Of course, as we all know, the domino theory turned out to be just as false as nearly everything else in the Vietnam War. The U.S. government lost the war, the dominoes did not fall, and the United States was not invaded and conquered by the communists. In other words, those 58,000 American men were sent to their deaths for nothing. Indeed, today the U.S. government is even permitting the American private sector to trade with the Vietnamese communists.

Indeed, some 50 years after sacrificing those 58,000 American men, U.S. officials obviously don’t think that communism is so bad after all — because guess where they ended up going to borrow vast sums of money that they needed to fund their welfare-warfare programs, especially their imperialist adventures in Iraq and Afghanistan.

You got it! Afraid to tax the rich and the middle class in America to fund the voracious wants of the dependent class, they turned to the Chinese communists to borrow the money. That would be the Chinese communist regime that delivered much of the weaponry that killed a large number of those 58,000 American men in the Vietnam War.

How much more morally despicable and hypocritical can you get than that?

Well, unless you turn to what the statists do when they find defenseless refugees, including women and children, on the high seas who have escaped from the communist tyranny in Cuba. Under the guise of immigration control, U.S. officials, in both liberal and conservative administrations, attack them with water cannon, kidnap them, and forcibly repatriate them into communist tyranny. Meanwhile, U.S. officials refuse to lift their 50-year-old embargo on Cuba because they say that it’s necessary to combat communism.

The government’s debt

Today, some of us know what U.S. officials are gearing up to do with the massive debt they have accumulated and which they continue to accumulate. That’s where the Federal Reserve, which operates in tandem with the IRS to fund both the welfare state and the warfare state, comes into play.

Right now, each American citizen is potentially on the hook for about $40,000, which is “his share” of the national debt that the government has incurred. For a family of four, including two toddlers, that means $160,000. Imagine that the IRS came to your door and demanded payment of “your share,” seizing your home and your checking, savings, and retirement accounts, and garnishing your wages and other income. I imagine most people wouldn’t be too happy about that, and federal officials know that.

Oh, and by the way, everybody’s portion of the national debt increases as each second goes by. This year alone, the U.S. government is planning to spend $1.4 trillion more than what it is bringing in with taxes. Federal officials are on the most massive government spending spree in history, and they’re charging it to a credit card that is drawn on the account of every American, and there is no limit to how much they can charge.

What they plan to do is what they’ve done since the inception of the Federal Reserve: simply print up the money and pay off their debt in debased dollars. They’re already cranking up the printing presses to pull it off. It’s what they’ve done, decade after decade, to fund the ever-voracious wants of those in both the welfare state and the warfare state.

It’s actually a beautiful scheme, one used by public officials throughout history. You see, public officials know that the average person is never going to blame government officials for inflation. Instead, he’s going to blame people in the private sector who are raising their prices in response to the increasing amounts of paper money that the government is flooding into the market to pay off its debts, as well as to fund more welfare-warfare expenditures.

Inflation and China

Suppose a one-question survey were conducted of the American people, asking what they believe is the cause of inflation. My hunch is that 97 percent of them would answer, “Well, that’s an easy one. Inflation is caused by the grocery-store owner, the service-station owner, the department stores, the corporations, and the oil companies. Their greed causes them to seek excess profits, which is why they raise their prices.”

It wouldn’t even remotely occur to such people that the government — or, more precisely, the government’s central bank, the Federal Reserve — is behind the rising prices. Indeed, they also wouldn’t have any idea why the dimes, quarters, and half-dollars that people carry in their pockets are no longer predominantly composed of silver, as they were before the Fed’s inflationary practices drove them out of circulation.

To digress once again, this ignorance regarding inflation is an example of a prime reason that governments everywhere consider it so important to control the education of the children of a nation. They know that if they can mold the mind of child into accepting and embracing statism, the child is likely to maintain that mindset through his entire adulthood until the day he dies. In fact, that’s what a big battle in Texas is all about right now: liberal statists are battling conservative statists over whose statist positions will be included in the social studies textbooks that are used not only in the public (i.e., government) schools of Texas but also in those of most other states.

There’s just one big problem, however, with the Federal Reserve’s plan to print the money: Unlike the average American, the Chinese communists know exactly what the Federal Reserve is planning to do. And they have made it very clear to U.S. officials that such misconduct will not be tolerated. Their position has been “We lent you dollars, and we expect to be repaid in full-value dollars. We will not permit you to default on your debts to us by paying us back in debased, depreciated, freshly printed paper money.”

Thus, a massive collision is looming on the horizon, one whose consequences no one can predict. But my hunch is that the American people are going to rue the day they permitted their public officials to borrow the money — and especially all the borrowing from the Chinese communists — to fund their welfare state and warfare state, including the imperial enterprises in Iraq and Afghanistan.

So we have this perfect storm that poses a massive threat to the freedom and well-being of the American people, a storm consisting of both the welfare state and the warfare state.

We cannot ignore, however, another government program at the center of this perfect storm, a program that has proven to be a favorite of both liberal and conservative statists: the war on drugs.

Part 1 | Part 2 | Part 3 | Part 4

This article originally appeared in the July 2010 edition of Freedom Daily.

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    Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.