“So who will tell the truth – and then act on it?” [Darleen Click]
On both sides of the Atlantic, Barack Obama and George Osborne are locked into the trajectory of killing off The West.
[R]ight here, right now, it matters that Barack Obama and George Osborne are playing small-time strategic games with their toy-town enemies while the unutterable economic truth stares them in the face. (The political leadership of the EU seems to have passed through the looking glass into a world where the rules of economics do not apply, so their statements and actions are beyond analysis.) Mr Obama is locked in an eye-balling contest with a Republican Congress to see who can end up with more ignominy when the United States goes over the fiscal cliff. It is clear now that the president will be quite happy to bring about this apocalypse – which would pull most of the developed world into interminable recession – if he could be sure that it would result in long-term electoral damage to his opponents.
Meanwhile, Mr Osborne takes teeny-tiny steps in the direction which is the only plausible one: little bitty reductions in the welfare programme to “make work pay” which are barely enough to push those who are actually working in the black economy off the unemployment rolls, and fiddly adjustments (almost too small to notice in day-to-day life) to lessen the burden of tax that bears down on people who are scarcely self-sustaining, let alone prosperous. Supposedly from opposite sides of the political divide, the US president and the British Chancellor come to a surprisingly similar conclusion: it is not feasible to speak the truth, let alone act on it. The truth being, as this column has often said, that present levels of public spending and government intervention in the US, Britain and Europe are unsustainable. The proportion of GDP which is now being spent by the governments of what used to be called the “free world” vastly exceeds what it is possible to raise through taxation without destroying any possibility of creating wealth, and therefore requires either an intolerable degree of national debt or the endless printing of progressively more meaningless money – or both. [...]
Having won the Cold War and succeeded in settling the great ideological argument of the 20th century in favour of free-market economics, the nations of the West managed to bankrupt themselves by insisting that they could fund a lukewarm form of socialism with the proceeds of capitalism.
What the West took from its defeat of the East was that it must accept the model of the state as social engineer in order to avert any future threat to freedom. Capitalism would only be tolerated if government distributed its wealth evenly across society. The original concept of social security and welfare provision – that no one should be allowed to sink into destitution or real want – had to be revisited. The new ideal was that there should not be inequalities of wealth.
And, as we have seen over the past few decades, the knowledge that one is entitled to a portion of your working neighbor’s earnings has stripped people of a work ethic, principles of frugality and gratitude. The harder the State has worked to alleviate people of being ashamed to be on the dole (e.g. EBT cards that look like debit cards, naming food stamp programs something trendy like “CalFresh”) the easier it has made it for welfare recipients to have disposable income to indulge in a middle class lifestyle without actually working for it. Ironically, any “shame” associated with the transfer of wealth from the producers to the welfare class is to be imposed on any producer who dares question the entitlement.
This picture of the perfect society – in which disparities of wealth are eradicated and economic equality is maintained through a vastly complex and expensive system of state intervention – has been the explicit goal of the EU virtually since its inception. It had an on-again, off-again history in Britain until it was locked firmly into the political infrastructure by Gordon Brown. More unexpectedly, it has now taken root in the American political culture, where Mr Obama seems determined to exploit it in his blood-curdling contest with the Republicans. Once ensconced, this concept undermines the logic of the free-market economy which funds it.
Capitalism is, by its nature, dynamic: it creates transitory disparities of wealth constantly as it reinvents itself. Fortunes are made and lost and, as old industries are replaced by new, the earnings that they create rise and fall. Punishing those who exceed some momentary average income and artificially subsidising those who fall below it – as well as providing for a universal standard of living which bears no relation to merit or even to need – has now reached the unavoidable, unaffordable end of the line.
So who will tell the truth – and then act on it? Who will say not just that welfare must be cut, but that in future the NHS will need to rely on a system of co-payments? That people will have to provide for their own retirement because the state pension will be frozen? That without a radical reduction in government intervention, the free and prosperous West will have been a brief historical aberration?
Well, in this country, those that have spoken the truth are dismissed as teabaggers, hobbits, hysterics and racists.
This isn’t going to end well.capitalism, fiscal cliff, socialism