Wednesday, 5 May 2010

RubinReports: Who Stole the People's Money? The People Did, Sort Of

Who Stole the People's Money? The People Did, Sort Of

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By Barry Rubin

In violent demonstrators that killed three people in Athens, the rioters shouted, “Thieves! Thieves!” as they protested new taxes and government spending cuts. Greece is near bankruptcy and before bailing out the country with their own money, other European countries demand that Greece stop the massive spending that has brought it to this point.

So who are the thieves? The protesters are voicing the old-fashioned, outdated idea that rich and powerful capitalists have taken all the country’s money for themselves.

Yet as early as 1948, George Orwell pointed out that there was only one way to raise working class living standards: “Even if we squeeze the rich out of existence, the mass of the people must either consume less or produce more.”

And that is precisely what happened starting in the 1950s. A proper combination of free enterprise and regulation—a balance which has been lost in recent years—new technology, better ways of organizing production, the development of a strong service sector, education, and other changes created a high level of working class consumption in the West. Many members of the working class also moved upward socially. Western Europe and North America flourished at the highest level of democracy and prosperity known in world history.

Orwell had also pointed out a series of lies the Left told others and itself. One of these was that “the lowering of wages and raising of working hours [must always] be dismissed in advance, whatever the economic situation may be. To suggest that they may be unavoidable is merely to risk being plastered with those labels that we are all terrified of. It is far safer to evade the issue and pretend that we can put everything right by redistributing the existing national income.”

And that is precisely—precisely—what is happening today. In the aftermath of World War Two, everyone in Western Europe had to tighten their belts, even accepting rationing of the most basic commodities, to deal with the emergency and undertake reconstruction. That strategy worked.

Since then, government spending and employment has soared, more and more burdens have been added to the economy, the productive sector has shrunk. The result is unsustainable, and Greece is only the first place where this outcome can no longer be ignored.

Nowhere have I seen made the obvious connection between what’s happening in the West and both the chronic financial problems of many Third World countries and the failure of Communism.

True, the level of corruption in these two types of countries was higher and the level of democracy much lower. But the principal causes were huge unwieldy governments that strangled the society, spending money on unproductive things, and stifling initiative.

In 1871, Thomas Nast drew one of the most famous cartoons in American history, in response to a series of scandals in New York, Under the question, “Who stole the people’s money?” he drew the leaders of the Democratic party political machine pointing at each other and saying, “It was him.”

Today, an equivalent cartoon would have to respond to the question of “Who stole the people’s money?” with the answer: The people did.

Well, in a sense. But we are not back in the nineteenth century, when powerful corporations like Standard Oil and U.S. Steel held monopolies and owned governments. That is why the liberals of the day understood that the government had to be stronger, break up monopolies, help trade unions come into existence to protect workers, and regulate some economic and social matters.

That was, however, a long time ago. The balance has long since shifted too far in the opposite direction.

Today, the problem isn't voracious corporations but rather a voracious government and politicians who try to buy support by promising to pay for everything one can imagine. In Greece, more than one-third of the work force is employed by the government. They generally don't produce revenue, they just absorb it. True, they put their income into the economy as consumers but that also puts up prices and either doesn't add to--or even reduce--income-making exports. And all the local plus EU regulations makes it harder and harder for the private sector to generate a profit, pay taxes, and hire people

The ideas that there can be no limits to government size or power, that the supply of money is endless, that the richer can be squeezed and strangling regulations increased with no effect on productivity are leading to disaster for both freedom and prosperity.

Rather than deal with those realities, however, the Left is using the same tool Orwell mentioned: "those labels that we are all terrified of." Here's how he wrote about it in 1948 (sorry it is so long but it's too good to cut:

"These people have a regular technique of smears and ridicule--a whole specialized vocabulary designed to show that anyone who will not repeat the accepted catch-words is a rather laughable kind of lunatic....If from time to time you express a mild distaste for slave-labor camps or one-candidate elections [in Communist countries], you are either insane or actuated by the worst motives. In the same way, when Henry Wallace [the candidate of the left-wing Progressive Party in 1948] is asked by a newspaper interviewer why he issues falsified versions of his speeches to the press, he replies: `So you are one of these people who are clamoring for war with Russia?' It doesn't answer the question, but it would frighten most people into silence. Or there is the milder kind of ridicule that consists in pretending that a reasoned opinion is indistinguishable from an absurd out-of-date prejudice. If you do not like Communism you are a Red-baiter, a believer in Bolshevik atrocities, the nationalization of women...."

You can update those labels for the ones used during the current age of Political Correctness.

And the answer is the same as the one Orwell gave back in 1948 as well:

[But] after all, what does it matter to be laughed at? The big public, in any case, usually doesn't see the joke, and if you state your principles clearly and stick to them, it is wonderful how people come round to you in the end."

RubinReports: Who Stole the People's Money? The People Did, Sort Of

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