FUNDAMENTAL TRUTH #59: “When the Right partners with business the Left calls it crony capitalism. When they partner with business the Left calls that smart government.” -Old Pithy

Posted by PITHOCRATES - March 29th, 2011

The Right likes Capitalism, the Left likes Marxism

Crony capitalism isn’t capitalism.  At best it’s mercantilism.  At worse it’s autocracy.  But the critics of capitalism haven’t the foggiest clue of what capitalism is.  They think it just exploits the working class.  Like Karl Marx said.  Of course, Karl Marx was wrong.  His philosophy has never worked.  Whereas capitalism, true capitalism, has.  Try to point to a successful Marxist country today.  You can’t do it.  Because when you take from those according to ability and give to those according to need you have everyone trying to show as little ability and as great need as possible.  Put yourself in that position.  Do you want to show some genius and work 12-hour days and see all of your earnings go to people sitting at home collecting state benefits?  Or would you rather not work those 12-hour days, relax at home and collect those state benefits?  If these are your choices, you don’t have to answer.  Because everyone is going to choose to stay at home and collect benefits.  Because no one volunteers to be a slave.

In such a world try to imagine how many cellular towers people would install when no one wants to work.  Not many.  Which means no cell phones, no text messaging, no internet on your mobile device and no sitting in your favorite coffee shop Internet hotspot.  For no one will spend the excruciating time, money and effort to create something while he or she is paid less than those with greater need who do nothing.  In other words, there is no incentive to work hard.  So no one will work hard.  Just like you won’t work hard by working overtime hours for free.  And why won’t you?  Because when you work you sell your time to an employer.  It’s your time.  If no one is paying you for it, you’d rather do something fun.  We all would.  Because it’s our unalienable right to pursue happiness.  Like Thomas Jefferson wrote in the Declaration of Independence.  And pursue it we do.  Because when it comes to our happiness, we’re all Jeffersonians.  Even Alexander Hamilton.  Even though they often saw things differently.

And one of those things was capitalism.  Jefferson didn’t like bankers.  Especially when they were in tight with the government.  Hamilton, on the other hand, liked the bankers.  Because he knew the difference between money and capital.  Assume everyone has a few bucks in their pockets.  What is that going to buy these individuals?  Not much.  Certainly no cellular towers.  But when you pool that money together you get capital.  And capital can buy cellular towers and the other conveniences of modern society.  And this is capitalism.  There’s a little more to it but the point is capitalism provides incentive.  And incentive stimulates innovation.  People take risks, work hard and create great things.  Marxism, on the other hand, provides no incentive for anyone to innovate.  There are no risk takers and people work the bare minimum they can get away with.  And there is nothing great in a Marxist society except misery, hunger and fear.  North Korea and Cuba are about the last of the Marxist societies remaining.  The Soviet Union, Eastern Europe and Mao’s People’s Republic of China are relics of the Cold War.  Now on the ash heap of history.  And all of these countries have/had sealed borders.  People could not leave.  If they tried they often died.  Many still risked it.  Because life was horrible under Marxism.

Jefferson the anti-Capitalist turns to Capitalism

Now whenever you gather money in great big piles you invite corruption.  Especially in government.  Which is what Jefferson feared.  You need money to do things.  And if government had access to great pools of it, they could do a lot of things.  Build armies.  Build navies.  Fight wars.  Grow the size of government.  Increase the size of the federal payroll.  Buy favors.  Sell patronage.  So more and more people became part of a growing, bloated federal government.  Who then had a vested interest in seeing it continue to grow to protect and increase the power and money they had.  All the great cities in the old world (London, Paris, Madrid, etc.) were corrupt.  The bankers were in bed with the politicians.  And the people suffered.  In his beloved France, Jefferson saw firsthand this insidious combination of money and power impoverish and starve the masses.  He saw revolutionary fervor grow in the Jacobin clubs.  And witnessed the outbreak of the French Revolution.  To check the power of the absolute monarchy and instill republican ideals.  And he liked what he saw.

With the backdrop of history, two men (and their followers) pulled America in two directions.  The Hamiltonians wanted to model America after the British Empire.  Rich and powerful.  Jefferson envisioned a nation of citizen farmers.  Simple farmers toiling the land.  Free from the corruption of the banks and the merchants.  With limited government.  Working with a modest federal budget.  Without any debt.  Of course, this all went out the window with the Louisiana Purchase.  When he needed a big whopping pile of money.  And a little extraconstitutional authority as well.  Sort of like a European monarch.  Which he took.  And thanks to a little thing called capitalism, the British and Dutch put together some creative financing for the French and the Americans.  They paid cash to France in exchange for the American bonds they just underwrote.  Some would say it was a bit hypocritical considering his attacks against Hamilton, but the U.S. profited very well from that purchase.  The point being is that even an ardent anti-capitalist like Jefferson had to turn to capitalism to close this deal.  Because there was no other way a young and poor nation could ever come up with that kind of money without borrowing it.

But all politicians aren’t like Thomas Jefferson.  In fact, shortly after the Founding Father generation, government began to grow.  There were political favors.  Pandering.  And corruption.  As the quality of the politician declined more unscrupulous people were attracted to government.  A growing nation needed to grow.  It needed to build things.   Armies.  Navies.  Forts.  Government buildings.  Post offices.  Canals.  Railroads.  As the nation grew it collected more taxes.  It soon had a lot of money to buy these things.  And issuing contracts for these things could be a very lucrative endeavor.  For the unscrupulous politician.  Who would only contract with those who made it worth his while.  The unscrupulous businessman.

Buying and Selling Favors for Personal Gain

This is crony capitalism.  The joining of business and government in backroom deals.  This isn’t laissez-faire capitalism.  This is the buying and selling of favors for personal gain.  And this is what many people think capitalism is.  Especially those critics on the Left.  Who think in zero-sum terms.  The only way some people can have more money is if other people have less.  Some people are lucky.  Some just aren’t.  Ability and ambition have nothing to do with it.  It’s all based on who you know.  And when money and power is concentrated in too few hands, it shuts out others from the market place.  And that’s just not nice.  Good people will be unable to make other and more important things.  So unless someone smart steps in and coordinates this economic activity, that activity will be inefficient.  It will build the wrong things.  And the wealth will accumulate in the wrong hands.

These politicians want to partner with business to make the right things.  By the right people.  The things they want to see built.  And not the things they don’t like.  A good example of this today is the electric car.  And the internal combustion engine.  They love one.  And despise the other.  They put in policies to increase the cost of gasoline-powered cars.  And the cost of gasoline.  And provide subsidies to electric car companies to help them build cars no one wants to buy.  And subsidies to consumers to reduce the price on electric cars.  So they’ll buy something they don’t want.

Currently, there is no market for the electric car.  People are buying it now for one of two reasons.  Because of the subsidies.  Or the smugness.  Yet companies are building these cars.  Why?  Well, they’re not doing it to lose money.  They’re making money.  Somehow.  But it isn’t in the market place.  And if it isn’t the market place, it can mean only one thing.  They are getting some sweet federal subsidies to build these cars no one wants.  And this just isn’t capitalism.  It’s another example of crony capitalism.

The Left hates Shareholders, not Corporations

The Left attacks the Right for being the party of the big corporations.  They’re nothing but a bunch of crooks.  The corporations.  And the Republicans.  Republicans pander to the corporations.  They want to deregulate their industries.  While consumer safety suffers.  As does the environment.  And they want to cut their taxes.  Paid for by tax hikes on the poor and working class.  To those on the Left the business corporation is evil incarnate.  Unless they want to partner with them.  And build things together.  Then they’re okay.

The Left hates corporations.  Yet it’s always the left that favors corporatism.  The partnering of business and government.  Like in Mussolini’s fascist Italy.  Or outright nationalization of the corporation.  A complete takeover by the government. Like in Hugo Chavez‘s Venezuela.  It apparently isn’t the corporations per se they hate.  It’s the shareholders.  They have no problem with these corporations making obscene profits.  As long as the politicians can share in these profits.

So there you have it.  The difference between crony capitalism and smart government.  It all depends on the amount of money flowing into the government’s coffers.  If the shareholders keep the full return on their investment then the business and Republicans are practicing crony capitalism.  If the shareholders share their return on their investment with the Democrats, then that’s smart government partnering with business.

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The Rise and Fall of Liberalism – A Study in Deviousness

Posted by PITHOCRATES - December 5th, 2010

The Young and Ignorant are a Key Liberal Demographic

America is a center-right country.  In fact, the liberal left is a minority of the population.  They sound bigger than they are because their minority are in very strategic parts of the population. 

Liberals include college professors (who hide from reality on college campuses where they teach the young and ignorant).  College students (the young and ignorant).  The mainstream media (who spread the liberal propaganda, giving it legitimacy).  Celebrities (who laugh at and belittle conservatives).  The poor and government-dependent (who live in fear of losing their Big Government benefits).  The blue-blood rich (who feel guilty for inheriting their money).  Unions (who seek government protection to get better wage and benefit packages than the majority of American workers).  Government workers (high-pay and benefit-heavy work for the unemployable). 

Taken together you’re looking at about 20% of the population.  But thanks to college professors, the media and celebrities, they seem like they’re everywhere.  Especially to the young and ignorant.  Who typically vote Democrat until they get a real job.

From FDR to JFK to LBJ

The key to liberal success has been the ability to deceive.  They have to lie about who they are.  Because their numbers have been dwindling since the New Deal (see Liberalism: An Autopsy by R. Emmett Tyrrell Jr. posted 12/4/2010 on The Wall Street Journal).

In the tumultuous history of postwar American liberalism, there has been a slow but steady decline of which liberals have been steadfastly oblivious. The heirs of the New Deal are down to around 20% of the electorate, according to recent Gallup polls. Conservatives account for 42% of the vote, and in the recent election the independents, the second most numerous group at 29% of the electorate, broke the conservatives’ way. They were alarmed by the deficit. They will be alarmed for a long time.

The key to winning elections, then, is lying to independents.  For if the independents didn’t vote, Conservatives would never lose an election.  And if there is one thing liberals are good at, it’s lying.  Which is how they win elections.

Liberalism’s decline might appear, at first glance, to have begun with the 1961 inauguration of President John F. Kennedy—when historians noted the first glimmerings of what was to become liberalism’s distinctive trait, overreach. Kennedy’s soaring oratory was infectious and admirable and even impressed a later generation of conservatives. But it was a bit dishonest. There never was a missile gap with the Soviet Union, as he claimed, or any other cause for histrionics. On the domestic side, the oratory set in motion President Lyndon Johnson’s catastrophic War on Poverty.

The Big Government of FDR had failed.  The necessity of war stopped most of the New Deal nonsense.  Big Government released their oppressive hold on business to let them do what they do best.  Pure, unfettered capitalism.  And the Arsenal of Democracy won World War II.

After the Great Depression, World War II, and a couple of standoffs in the new Cold War, Ike wanted to let America be normal again.  To enjoy life a little.  Instead of facing Armageddon time and time again.  Ike had no illusions of grandeur.  Nothing to prove.  No ego to stroke.  America paid a hefty price to win World War II.  It was time to enjoy a peace dividend.

JFK’s stirring language represented a break with the Burkean understanding of President Dwight Eisenhower. Ike, whether he articulated it or not, wanted to put the Great Depression and the dangerous confrontations of the early Cold War period behind us. He wanted to return to normalcy. Yet Kennedy’s inaugural put America on a different path, one that led to the Cuban missile crisis and ultimately to Vietnam. It fixed America’s stance in the world, and with that stance we were on the road to Iraq and Afghanistan. Domestically it set us on the path to a behemoth big government.

The Ike years were good years.  Prosperous years.  Happy years.  Everything a liberal hates.  Because there’s nothing for government to fix.  So to trick people into thinking things are bad and need to improve, you need to do 2 things.  You need to lie.  And you need good oratory.  And JFK did both well.

Never let a Good Crisis go to Waste

The country changed in the 1960s.  And liberals reached far.  Too far.  Conservatives pushed back.

LBJ’s Great Society caused even some liberals to warn against the “unintended consequences” of government programs. These were to be the first new recruits to modern conservatism. Jeane Kirkpatrick, Irving Kristol and, for a time, Daniel Patrick Moynihan, were in Kristol’s words liberals “who were mugged by reality.” The radicals were seeking refuge from reality in a self-regarding fantasy. Only a crisis in the leadership of President Richard Nixon, Watergate, allowed them to hide from the American electorate their fantastic delusions.

Few shared the liberals’ vision for America.  Even in the 1960s.  Other than the hippies on college campuses, the ‘silent majority’ was still conservative.  But liberals are devious.  And they never let a good crisis go to waste.  They had two big ones during the Nixon administration.  Vietnam.  And Watergate.

Liberals and Ronald Reagan both Campaigned as Ronald Reagan to win Elections

The problem with liberalism?  It’s sort of like that question ‘why climb Mt. Everest?’  Because it’s there.  Liberals want to amass power and control things.  To tax and spend.  And when you get right down to it, it’s not a popular political platform.  We want to tax and spend because we want to tax and spend.  There are no lofty philosophical ideals.  No charismatic liberal leaders advancing the cause of tax and spend.  Instead, liberalism is a vacuous abyss hidden by lies and doublespeak.

The conservatives, on the other hand, have a philosophical basis.  They are proud to quote previous conservatives.  And try to continue their work.  The best liberals can do are to point to Karl Marx’s socialism (i.e., Marxism) or the Soviet Union’s communism.  And being that this ideology (Marxism/communism) has killed more people than any other ideology in history, they offer little political capital for someone wanting to expand government power.

Conservatives have had Edmund Burke and the Founding Fathers as their cynosures. Sometimes they have provided discipline; sometimes conservatives have followed their own star. The problem for liberals is they have been denied a cynosure. Some had looked to the British Fabian Socialists and some to Karl Marx, but since the late 1940s liberals became coy about their intellectual mentors.

And because liberals have no political philosophy people want, they lie about who they are.  They run as conservatives during elections.  Bill Clinton.  Barack Obama.  They campaigned on a center-right platform.  Sometimes even quoting Ronald Reagan.  But once they won the election, they swung hard to the left.  They governed as liberals.  The electorate felt betrayed.  And at the first opportunity (i.e., the first midterm election in their administrations) their parties lost power in Congress.  Rejecting, once again, their Big Government tax and spend policies.

In 1992, after 12 years of conservatives in the White House, Bill Clinton beat George Herbert Walker Bush. Yet he too ran as a moderate. Once in office he tried to push a big government agenda and was trounced in the midterm election.

The rest of Clinton’s presidency was defined by his pronouncement that “The era of big government is over.” The Reagan revolution was secured. In 2000, Clinton’s vice president lost to the governor of Texas despite prosperity and peace. George W. Bush won the midterms in 2002. Then came the Republicans’ wilderness years in 2006 and 2008—but not conservatism’s. Conservatives remained more popular than liberals by about a 2-1 margin.

A Crisis and a Moderate Republican Candidate help Liberals win Elections

George W. Bush served two terms.  His popularity soared after 9/11.  So the liberals went to work.  All through his second term, they hammered away at the economy.  They said it was worse since the Great Depression.  (Of course, unemployment now under Obama is about twice the rate it was under Bush.  But things are better now.  Remember that lying thing about liberalism?)

And then they had a crisis.  A great big, beautiful crisis.  The Left was just ecstatic.  Their policy of putting people into houses they couldn’t afford triggered the subprime mortgage crisis.  When a Republican was in office.  It just didn’t get better than this.

The media went into overdrive by endorsing the moderate McCain for the Republican candidate.  It leveled the playing field.  Instead of choosing between conservatism and liberalism, the choice was between two moderates.  And the Left was able to hide Obama’s liberal past and radical associations to fool the moderate and Independent voters.  Obama won.  He swung hard to the left.  And loss the midterm election.  Because America is a center-right country.

Conservatism has steadily spread through the country since its larval days in the 1950s, and the reason is that the vast majority of Americans favor free enterprise and personal liberty. Note the tea party movement. The Republicans just took the House of Representatives by over 60 seats and gained six seats in the Senate. The social democrat in the White House has been routed.

Over the past two years the Democrats showed their true colors. Faced with an entitlement crisis, they rang up trillion dollar deficits. We now face an entitlement crisis and a budget crisis—and liberals have no answer for it beyond tax and spend. They still have support in the media, but even here they are faced with opposition from Fox News, talk radio and the Internet.

America is a Center-Right Country

The only way a liberal wins an election in a center-right country is by deception.  That’s why they pray on the young and ignorant.  It starts in the public school system.  And continues in our colleges.  The young are seduced.  By our educational system.  The mainstream media.  And the celebrity left.

It’s a tenuous coalition.  At best 20% of the population.  But that 20% is sometimes enough to fool the moderates and the independents who haven’t been lied to yet.  And this is nothing against the moderates and independents.  The Left are just good liars.

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LESSONS LEARNED #13: “If you were to live under the socialist maxim ‘from each according to his ability to each according to his need’ you would find yourself surrounded by needy people with no ability.” -Old Pithy

Posted by PITHOCRATES - May 13th, 2010

KEY TO CIVILIZATION growth is the food supply.  Food surpluses in particular.  Before dependable food surpluses, life was short, harsh and miserable.  Especially for women.  When they weren’t working in the fields they were giving birth and raising children.  High infant mortality rates, though, inhibited population growth.  Most of the children women gave birth to didn’t survive to adulthood.  So there was a constant state of child rearing.  But few children survived to help with the business of family life.

Malnutrition and famine were common.  Feudalism provided a precarious balance between life and death.  For centuries the common people (i.e., peasants) eked out survival on their landlord’s manor.  The lord owned the land.  The peasants worked it.  Most of the bounty went to their lord.  But they kept what they grew on a small strip of land for themselves.  Just enough for subsistence.

But England changed all that.  By 1750, her agricultural output was second to none.  Private property.  Free market economy.  Capitalism.  Increased productivity.  Specialization.  These all combined to provide incentive.  Incentive produced food surpluses.  Food surpluses produced profits.  Reinvested profits improved farm yields.  This produced more profit.  And the cycle continued.  In less than a century feudalism would disappear from England.  There, you either worked land you owned or were paid wages to work land owned by others.  People began to live longer and healthier lives. 

The British Empire ruled the civilized world in the 19th century.  Representative government.  Abolition of slavery.  Free trade.  The Industrial Revolution.  These things, and others, gave them wealth, power and moral authority.  A lot of good came from this island kingdom.  Including the United States.  They weren’t perfect.  There was a learning curve.  But the modern capitalistic economy which they gave us liberated the masses.  It let us do what we wanted to do, not just what we had to do.  In particular, women, who could do more than just raise families and work in the fields.  One day, she could even become prime minister of Great Britain.

FOOD SURPLUSES BEGET industrialization.  Food surpluses beget everything, really.  Food surpluses release human capital to do everything else we do besides farming.  England was at the van of this modernization.  Others followed.  In time. 

Russia abolished serfdom (i.e., feudalism) in 1861.  Industrially backwards at the time, this liberty awakened a dormant human capital.  They followed the English model.  In time, with the advent of steamship and rail transportation, Russian grain competed with other European producers.

Joseph Stalin, looking to jump ahead in the industrialization process, implemented collective farming in the late 1920s.  He turned away from the English model.  The government became land owners.  It was feudalism on a grand scale.  Large collective farms would produce vast food surpluses that could feed industrial cities.  And there would still be surpluses left over to export to raise capital to build these industrial cities.  At least, that was the plan.

With less incentive came less productivity.  What land the former serfs had come to own was lost to the state.  The state took so much of the harvest that there was little food left for those who labored to grow it.  And the price the state paid for their crops was less than it was before collectivization.  The ‘free’ serfs were earning less and working more.  They didn’t like it.  And chose not to participate.  Collectivization became forced collectivization. 

Deportations, terror, murder and famine followed.  Perhaps more than 5 million starved to death during the famine of 1931 and 1932.  Others were to follow.

Forced collective farming produced famines elsewhere.  In China, during Mao Zedong’s Great Leap Forward, forced collectivization produced even greater famine deaths.  Historians estimate that 20-30 million, maybe more, starved to death in the famine of 1959–62.  Though hard numbers aren’t available, North Korea suffered a devastating famine in the late 1990s that claimed millions.  But in the West, in the 20th century, famine was unheard of.  When the United States suffered during the great Dust Bowl of the 1930s, there was no corresponding famine despite the loss of productive farmland.

WITH INDIVIDUAL LIBERTY comes incentive.  With incentive comes productivity.  A small island nation of free land owners could produce grain to feed themselves with surplus left over for export.  Nations with great fertile tracts farmed by forced collectivization led to famine.  Slaves have little incentive other than to subsist.  The collective good means little to them when they are starving.  They continue to sacrifice.  And continue to suffer.  Even if they do produce a few more bushels of grain.  So if the suffering is the same, what is the incentive to work harder?

As individual liberty declines, those in power tend to exploit those they rule.  In the name of the state.  Or the common good.  This is easy to see when it results in famine or revolution.  Not easy to hide those things.  But it is a little more difficult to see when the results are more benign.  Longer unemployment benefits, for example.  I mean, those are pretty nice.  Hard to see the downside in them.  As it is in other benefits these rulers give us.  So we are seduced as they whisper these sweet nothings in our ears.  And soon we willingly cede our liberty.  A little at a time.

WITH THE RISE of individual liberty, there was a corresponding decline in the ruling elite thanks to representative government.  Great Britain gave this gift to us and the United States took it to incredible heights.  The oppressed everywhere immigrated to the United States to feed a growing industrial demand.  Being new, we did not know all the affects of industrialization.  When the bad things came to light, we addressed them.  Great Britain, for example, was one of the first to protect women and children from the worse of industrial society.  Still, working conditions could be harsh.  As could life in the industrial cities.  Poverty.  Filth.  Disease.  And it was the wretched state of life in these slums that gave birth to a new school of thought on industrialization. 

In 1844 Friedrich Engels wrote The Condition of the English Working-Class to expose life in these slums.  He would collaborate 4 years later with Karl Marx on a treatise called The Communist Manifesto.  And from this Marxism, Communism, socialism, collectivism, etc., would follow.  As economic systems go, these would all prove to be failures.  But the essence of them lives on.  State planning.

You see, it was capitalism that gave us the industrial slums.  And that was good propaganda for a ruling elite looking to rule again.  So they whispered sweet nothings into our ears.  They talked about a Social Utopia.  From each according to his ability to each according to his need.  Fair taxation (i.e., only the ‘rich’ pay taxes).  Social safety nets (paid for by taxes of the rich).  Shorter workdays.  Longer paid vacations.  More government benefits.  A burgeoning welfare state.  Free stuff for everyone.  Again, paid for by taxing the rich who have exploited the working class.

What evolved was the elimination of the middle class.  You had the evil rich (and the middle class were, for all intents and purposes, rich because they didn’t need government help) whose wealth the government taxed away.  And the poor.  The poor who the government would now take care of.  If elected.  And they were.  They seduced a great many people with their utopian vision.  Even in the West. 

Great Britain and the United States would fall to this seductress, too, thanks to the Great Depression.  It was capitalism that gave us the Great Depression, after all.  The greed of the money people.  And so these great nations declined from greatness.  They became welfare states, too.  They had short respites during the 1980s.  Margaret Thatcher helped rejuvenate Great Britain.  Ronald Reagan, the United States.  But the ruling elite whispered more sweet nothings in our ears and the decline continues.

In 2010, our appetite for state benefits appears to be insatiable.  And we may have run out of wealth to tax away to pay for it.  California is on the brink of bankruptcy.  New Jersey elected a governor who proposed draconian spending cuts to stave off bankruptcy.  Other ‘blue’ states (i.e., states who vote Democrat) are also in trouble.  Underfunded pension obligations.  Demands of teacher unions.  Of government worker unions.  Everyone is there with their hand out.  None of them are willing to sacrifice for the common good.  No, they expect others to do the sacrificing.

THE OBAMA ADMINISTRATION has increased federal spending to such record levels that Communist China is concerned about our fiscal/monetary policies.  As they should be; they hold a lot of our debt.  The federal government has ‘bailed out’ private industry and taken de facto control.  They have created a healthcare entitlement that will cost more than a trillion dollars.  More spending is coming.  And it is all for the greater good.  They are vilifying those who are not poor, taxing away what wealth they can from them and giving it to the poor.  When about half the electorate doesn’t pay any income taxes, there is little opposition to raising taxes on those who do.  For if the ‘rich’ complain, the government vilifies them.

Where will it all end?  It is difficult to say.  How will it end?  Badly.  We can look at Europe who we seem to be emulating.  They’re further down The Road to Serfdom than we are.  With the excessive government spending, there will have to be greater government revenue (i.e., taxes).  Previous methods of taxation may prove insufficient.  Hello value added tax (VAT).  It’s all the rage in Europe.  It’s a multiple tax.  At every stage of production, government is there.  Taxing.  From the raw materials to the final assembly, government is there at every stage.  Taxing.  VATs will increase government revenue.  But they will also make every day life more expensive.  VATs increase the sales price of everything you buy.  And you pay it again at checkout.  It’s everywhere.  Everything will cost more.  From manicures to lattes to toilet paper to tampons.  And this is a tax everyone pays.  Even the poor.  It is a regressive tax.  The rich will pay more, but the poor will feel it more.  This hidden tax will take a larger portion of what little the poor has.

But how bad can it really get?  In 2010, I guess the answer would be to look at Greece to see what happens when a country can no longer sustain her welfare state.  And the people aren’t all that keen on losing the government benefits they’ve grown accustomed to.  It isn’t pretty.  But when you start down that road (from each according to his ability to each according to his need), the taking and giving always get bigger.  It never gets smaller.  And when you reach a critical point, government just can’t sustain it any longer.  And it crashes.  Like in Greece.

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