Elections, Welfare, and Money Printers: A Dangerous Combination

Elections, Welfare, and Money Printers: A Dangerous Combination

By: Bucky Dillon

There is almost no easier way, in today’s political climate, to succeed in our current electoral process than to engage in demagoguery, opposition tactics, grievance peddling, and to trot out the notion that government can and should provide ‘free’ services and/or redistribute money for charitable purposes on behalf of the people. It’s easy to see how the idea of expanding or constructing new government agencies to address the social and economic problems of the poor and disadvantaged grants believers a sense of virtue, and the politicians a sense of moral duty.

Of course we the people want to help those less fortunate, and I have no doubt that most politicians begin their careers genuinely wanting to do good. But just as you shouldn’t judge a book by its cover, we should never judge a political agenda by its intentions. We shouldn’t judge a piece of legislation by the benevolent title given to it, or even the rhetoric espoused by those promoting it. We should instead be hyper critical and skeptical of State action. It should be acknowledged that the State is inherently socialist anti-capitalist, as it derives all of it’s utility through it’s attempt to monopolize force, and generates all of its revenue through the threat or implementation of force and coercion. We should always judge a policy by how it is enforced, its results, and our ability to accurately measure these results, as well as their unintended consequences. And because of the very nature of politics and government programs, we should always ask ourselves, what is the legitimate role of government in a free society, and do the policies pushed by politicians, or even by popular demand, fall within that role of government. I would contend that they almost always do not.

I would like to begin with a simple initial premise of self-ownership, private property and personal responsibility. That is, that I am my own property. I am not the property of the United States Congress. That you are your own property, not the property of the United States government. And for better or worse we are responsible for our own choices and outcomes. To violate either of these is to violate the very notion of a free state. After all, you cannot be free if you are not your own property and/or if you are not responsible for yourself.

This premise of self-ownership and personal responsibility are the foundations of the idea of morality and individual autonomy. Murder, rape, slavery, robbery and theft, are all immoral because they violate the premises of private property and self-ownership. Unfortunately, we as a society have been incrementally abandoning or even outright reversing this moral principle when it extends to government policy. A massive portion of the American people has become convinced that it is not only okay but even a moral act to use the gun of government to forcibly take the private property of one American for the purpose of charity towards another American. I say the gun of government because that’s exactly what it is.

The government solves problems one of two ways; by either throwing bullets at the problem or throwing money at the problem. I don’t need to explain how the gun is involved in the first so-called solution. But the second solution is backed by a gun as well. Because the truth is, the government doesn’t have any money, the government only acquires money through taxes, enforced by the threat of violence. Even when the government prints money, it does so with associated debt. Debt that it pays for, by the way, through taxation. If you don’t believe me, play it out. Refuse to pay your taxes. Eventually, if you ignore them long enough, government agents will track you down and physically confront you. If you continue to refuse eventually they will attempt to arrest you, and if you resist arrest, you will discover that yes indeed every government law, every regulation, and every tax is upheld by the threat of gun violence.

If our laws weren’t backed ultimately by the threat of lethal force, then they wouldn’t be laws; they would be suggestions. Mao Zedong was correct when he stated, “枪杆子里面出政权” which translates “Political power grows from the barrel of a gun.” Remember that when you are debating someone who is calling for more government redistribution schemes or more laws or regulations, you don’t get to claim the moral high ground while advocating for state-sponsored gun violence, no matter how “moral” your intentions are.

In 1794, the 3rd Congress of the United States held debates on whether to allocate aid to French refugees in the aftermath of the Haitian Revolution.

James Madison, considered the father of the Constitution, and the 4th President of the United States, argued angrily on the floor of the house in 1794, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” What he meant by this was not that charity was bad, he believed that charity was a very noble personal act, but that it was not the role of government. James Madison also stated in his speech, “The government of the United States is a definite government, confined to specific objects. It is not like state governments, whose powers are more general. Charity is no part of the legislative duty of the government.

On the contrary, Amendment 5 of the constitution, which specifies the rights of the accused, states that the government shall not seize private property for public use. If that right exists even for those accused of federal crimes, in my mind it thus applies to the broader American people as well. I see no reason why legally earned money is not to be considered “private property.” If your money is not private property then no laws regarding private property apply and we might as well toss out our entire legal system.

Amendment 10 of the Constitution states that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the States respectively, or to the people.”

This so far is to say that according to the founders and the documented framework for the federal government, foreign aid, charity, and redistribution schemes as a matter of federal government policy are immoral and unconstitutional. If a free society believes in a welfare cause, charities exist, and many of them can be counted as a tax deduction. To give charity willingly from your own pocket is a great and noble act, to mandate charity by the force of government gun from your neighbor is contemptible. Regardless of the morality of a cause, to achieve it through force of robbery is nonetheless immoral. If a stranger trespassed into your home and helped himself to your belongings, would it then be moral simply because he was hungry or unemployed? Of course not. But yet everyday we hear people argue that utilizing the government to commit the same act of robbery is not only not immoral, but a compassionate position to take. They even go as far as to claim that if you disagree with the State’s use of threats and force to redistribute wealth, that YOU are immoral. We even hear arguments that ‘we’ should have ‘rights’ to the labor of others. The clever use of collective words like ‘we’, ‘society’, ‘the people’ and the conflation of positive and negative “rights” are used to morally obscure the political reality. In a free and voluntary society, governments are instituted with the consent of the governed to protect the natural ‘negative’ rights of the individual from tyranny, and it does not, cannot grant ‘positive’ rights. And of course ambitious politicians are eager to adopt the narrative that anyone who opposes their acquisition of redistributive authority is therefore greedy and a profane violator of civil rights. The obscured political reality is that the only way a government can grant one person the “right” to the product or service of another is to grant the government the ability violate the principles self-ownership and private property by drafting its constituents into servitude and/or by robbing the money of one to contract the labor of another and to the full-time government bureaucracy which administers it. Put simply, you cannot have individual rights to property and from coercion and also have rights to the property and labor of others in a free and fair society.

It has always astonished me to hear socialists use the concept of “for-profit” to attribute an inherent corruption against private enterprise, and suggest that government agencies should be constructed in place of private enterprise and charity. As if politicians and bureaucrats are not on a payroll, or constantly using their monopoly of legal violence to pass weaponized regulations to financially benefit their lobbyists, or to monopolize an industry themselves. It violates almost every tenant of commonsense to imply that the people who work for the government are inherently public servants devoid of personal greed. Simply put, if people cannot be trusted with freedom, then why exactly should they be trusted with the power to direct and control the tax dollars of other people or the gun of government. One notable problem is the financial incentives of our media, politicians, particularly the leaders of groups that are lagging, and even the government agencies themselves. There are tremendous opportunities for profits and social clout that incentivizes grievance peddling, however, little money to be made by actually solving the problems they condemn. In order to maintain relevance, they must exaggerate the problem, they must never acknowledge that they themselves may not be a viable solution, nor should they ever actually solve the problem. To ever admit that something is actually hardly a problem, that politicians or government programs aren’t an effective way to solve the problem, or to admit that the problem has been solved, would effectively put them out of business. This is why government programs have been likened to the closest thing we have to immortal entities. The agencies themselves will ALWAYS utilize their influence to justify their government funding and stymy their competition. There are endless examples of this. Did you know that the illegalization of cannabis was primarily driven by the Federal Bureau of Narcotics trying to maintain relevance and justify their budget after the failure of alcohol prohibition, in collusion with Randolf Hearst, a media giant who saw free-market cannabis farming as a threat to his investment in wood pulp paper? Do you think the billions in potential vaccine profit for the pharmaceutical companies, and their massive allocations of dollars into political and media lobbying has had any impact on how natural immunity and alternative therapeutics for the treatment of Covid has been portrayed by politicians and the press? Just take a cursory glance at the rate at which regulations, entitlement programs and “welfare” agencies have expanded and compare them to the rate at which they have declared victory, fired all of their employees and then shut down. You may notice a startling trend.

It’s interesting to note, that the industries with the highest level of government intervention, such as housing, education and healthcare, are decried as corrupt and inefficient failures of Free-Market Capitalism or monopolies, and the popular liberal solutions always amount to more government intervention, often to the extent of establishing a government-run monopoly. Every year more of these agencies manifest and year after year these agencies grow larger and cost the taxpayers more. All the while the cries of systemic failure and the calls for larger and more commanding government programs seem to be getting louder and more commonplace. Somehow people have forgotten that greed and corruption is a human vice, and those “greedy and self-interested” people who make up the pinnacles of private enterprise have the same moral failing and temptations as those who make up the political apparatus. That the people who make up these government agencies have their own profit incentives. With one notable difference, in a free-market capitalist system the “profit motive” utilizes the inherent greed and self-interest of people to serve and solve the problems of others by engaging in the production and exchange process.

Free-market Capitalism fosters a culture of personal responsibility, entrepreneurship and innovation. In the political-socialist system, profit is achieved by expanding the government’s ability to confiscate and redistribute the products and services of others, by the threat of state-sponsored violence.

The Political-Socialist means to profit is by backroom deals, demagoguery, and force. And fosters a culture of grievance, division, dependency, and tyranny.

The Political Finance Scam

How politicians campaign on a platform of financial maleficence and get away away with it

Setting aside the constitutionality of federal entitlement and welfare spending. And setting aside the implicit tyranny in the notion that people have a ‘positive right’ to the labor of someone else. There exists a serious problem when you combine these three features of the current American political structure; Representative government, welfare programs, and the ability of politicians to spend beyond their means by selling treasury bonds for money printed out of nothing and lent to the government with interest. As with every policy proposal, we must look at the incentive structures, the disincentive structures, and the accountability of those who might utilize the policy, or narrative, to corrupt ends.

The public ignorance and political incentives are what makes the scam so dangerous and effective. Everybody wants more welfare for themselves and easy access to money, and politicians get tremendous traction promising these things. Politicians can deliver on these promises without the negative personal political ramifications of direct and pre-emptive taxation to pay for these public benefits by getting a loan from a central bank. The government does this by selling government treasury bonds (IOUs) to the Federal reserve central bank for money printed out of nothing or simply typed into a computer, and borrowed to the government with interest. But this increase in the money supply results in inflation, which equally devalues the value of the money, and amounts to an indirect tax via the increase in the price of all products and the devaluation of incomes and savings. Unfortunately, because the vast majority of people don’t understand how our money works and the attention span of the public is so short, by the time inflation kicks in several months or even years down the road, the politicians responsible for the policies that resulted in the government deficits are able to obfuscate responsibility and avoid the public scrutiny. Furthermore, because the reception of entitlement spending and welfare benefits is so direct and recognizable, but the costs are so indirect and elusive these policies are often incredibly popular. Mustering the political will to restrict or abolish them is synonymous with political suicide, even when they are inefficient and unsustainable. Even though the costs of the entitlement spending are always greater than the value of the benefits themselves. After all, the money is borrowed with interest on the debt, and the politicians and government employees that allocate these benefits pay themselves, and pay themselves well, with a portion of the money.

Money like any other commodity follows the rule of supply and demand, even if the money is artificially introduced into the economy through inflation or via welfare distributions, so it affects other changes in the economy more broadly irrespectively to an increase in actual productivity. This means that wages, housing costs, and other aspects of the economy begin to raise prices to accommodate wide utilization of the public benefits and inflation, the public dependency on these public benefits and their effectiveness diminishes as the economies where these policies are implemented naturally try to achieve an equilibrium. But without any actual expansion of economic productivity, it is impossible. The effectiveness of the public benefits diminishes with time and the political will to expand entitlement programs and introduce more grows. This positive feedback loop between unsustainable government spending deficits, particularly on welfare programs, combined with central banking schemes, are the primary driving forces on the slippery slope to a plutocratic society in which the people are dependent on a government that is, in turn, beholden to the money powers that finance them.

A Problem of Incentives

Politicians, Welfare programs and the road to despotism.

Almost no example better represents how political and financial interests can hijack and pervert “compassionate” intentions than the way they have been able to transform the civil rights movements into a welfare industrial complex that utilizes “social justice” narratives to enrich themselves while failing to accomplish any of the stated goals of the programs themselves. BTW anytime you add a modifier to the word justice, you are detracting from the definition of justice. Justice is all-encompassing and needs no modification.

Many of those who are calling for an increase in welfare spending and programs point to the socio-economic disparities in black communities as compared to white communities today. They decry these circumstances as a legacy of slavery and evidence of systemic racism today. Failing schools, overwhelming crime rates, low homeownership rates, black-white income gaps, and a lack of community investment. And while there must certainly be residual economic and psychological remnants of evil government programs and broad cultural American racism, this leaves out a critical chapter in American history, and the legacy of the liberal welfare state.

In stark contrast to the narratives trotted out by those seeking political clout by mining history for disparities and discrimination in search of grievances that they can cash in on today. Black economic progress did not start, nor was accelerated by the passage of the civil rights act nor the great society act. In the twenty years prior to the 1960s, the black poverty rate had fallen 40 points, from 87% to 47%. One of the fastest rates of economic growth anywhere in the world. In the 20 years following the 1960s, the black poverty rate continued to fall 18%, only half the pace to which it had already been falling. Prior to the 1960s, black Americans were making astonishing socio-economic gains in terms of black educational advancement, blacks entering the skilled professions, black home-ownership rates, the diminishment of black-white income gaps.

Some will say that this trend coincides with a larger trend of American economic expansion in the ’40s and ’50s which slowed down in the ’60s and therefore is not legitimate evidence against the effectiveness of the welfare programs. And while yes, in the aftermath of WW2 Europe was in ashes, their economies were in shambles, and China was still a collection of power disputes between regional warlords. These factors made the U.S. the de-facto manufacturing powerhouse of the world. And of course, the Bretton Woods agreement in 1944 made the American Federal reserve note the world reserve currency. All of these facts are indeed true, we require a multi-variable analysis that does a better job of accounting for all of the variables that influence economic trends. But this dismissal of the nefarious consequences of the wide utilization of liberal anti-poverty programs is undermined by comparing these results to the results of communities all around the world and in various decades where similar policies have been implemented with similar results, regardless of racial or ethnic circumstances. Such as England, where similar welfare programs have been implemented in white neighborhoods, which have produced almost the exact same results, including a drastic increase in single motherhood, government dependency, crime, and “gang culture” despite the lack of a racial component.

And it goes beyond simple economics, the results of 70 years of unmitigated liberal policies can be read in so many other ways. Crime, gang culture, economic abandonment, political corruption, drug addiction, the school drop-out rate, and worst of all the disintegration of the family unit.

And since 1971, when Nixon “temporarily” decoupled the dollar from the gold standard, in which federal reserve notes needed to be redeemable in gold, the accountability of those closest to the printing press has never been weaker. And the incentives to engage in rampant government spending has never been stronger. After all, the welfare campaign has always been among the most reliable political cons in history. The politicians hand out money and welfare benefits flamboyantly to their preferred constituents, and pay for it quietly with the money of others. Sometime through taxation of others, or fees on commerce. Often through the black magic of borrowing and inflation, which is the indirect tax or rising in prices, the diminishment of savings and the real value of wages, and transfer of wealth from the lower-classes to those with hard assets and the politicians and bankers closest to the printing press.

Although the common sloganeering of the left amounts to calls of compassion, in practice the incentives are instead a reality of dependency. The more people are dependent on welfare handouts, the more reliably politicians can rely on votes for an ever-expanding welfare state and political control.  

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