Saturday, December 6, 2008

The Emperor Has No Clothes!

Butler Shaffer is a free man. He has also been called an anarchist. Butler Shaffer earns a living by teaching at a law school, where it is certain he is unlike few if any other law professors on the planet. Why, because he recognizes that the ultimate source of sovereign power is the individual, not the state.

In a recent essay published at Lew Rockwell's site, Butler Shaffer pointed out the intellectual and political bankruptcy of the Republican Party. According to Shaffer, the GOP, the "Grand Old Party," is now on a crusade to create "resistance to Obama's socialist agenda over the next four years," and to "stop Obama's plans to bring socialism to America."

Yet, Shaffer asks, where were the Republicans "when their GOP president, George W. Bush, was engaging in wars that put billions of dollars into the pockets of their corporate friends, and led the same president to state, to members of Congress, that he would declare martial law if they did not pass legislation bestowing hundreds of billions of dollars of largess upon Wall Street banking interests? Is the GOP so hopelessly bankrupt that some of its members must resort to a distinction without meaning that condemns state socialism while ignoring its own contributions to the state-sponsored economic destruction emanating from a Republican White House?" Shaffer asks is the Grand Old Party "henceforth to be known as the "Grasping Omnipotent Plutocracy?"

Shaffer points out the "fundamental distinction" between the mythical "free market" and the currently dominant "business system" is the "socializing the costs of doing business, while privatizing the profits." The Bailouts, projected to eventually cost in the neighborhood of $7.7 trillion are evidence. What makes a large financial institution or auto manufacturer for that matter worthy of a Bailout? This last question is being asked now that the Democrats are getting into the plunder and pillage mode to protect their power base funded in large measure by the precious union contracts that are bankrupting American car companies. What disqualifies individual home owners from a Bailout? Clearly the only meaningful distinction is membership in the Plutocracy.

And what pray tell does this really mean to each of us? Shaffer shows the math is simple. Each of us, every man, woman and child in the United States is now on the hook for about $25,000 in additional debt. Divide the cost of the bailout by the population of the country: $7,700,000,000,000 by 300,000,000 and you'll find The Rainmaker has understated the number a tad. Hopefully you enjoyed the party over the past few months.

The Rainmaker doesn't mean to quibble with Butler Shaffer, in fact we have no disagreement with him at all beyond the fact that he doesn't carry the analysis far enough.

In fact, Butler Shaffer is correct and the Republican Administration's actions are socializing risk while privatizing profit. But, Congressional Democrats have worked hand in glove with the Administration. Now, the same folks who designed and are executing the Bailout for the Bush Administration have been tapped by the incoming Democratic Administration to serve as our economic stewards for the at least the next four years. Clearly there is a consensus in Washington among the Republicrat and Demopublican factions of the Plutocracy to change nothing.

And, the hits just keep on coming. There will eventually be another $3 trillion of debt associated with the current wars. And, beginning in 2010 the Medicare system is cash flow negative, which is a $36.6 trillion problem. Then in 2017 Social Security goes under water at an unfunded cost of $7 trillion. There is also the nontrivial matter of unfunded pension liabilities guaranteed by the government and other miscellaneous obligations that add up to another $600 million. There is also the national debt accumulated over the past fifty or so years, which was about $8 trillion back in July. All those numbers on the entitlements and pensions are according to Fortune Magazine in their special report on the U.S. economy published November 24, 2003.

Thus the real financial fiasco is thought to total at least $55 trillion and, brace yourself, your share is in the neighborhood of $180,000 rather than the mere $25,000 suggested by Butler Shaffer for the fall follies in Washington. And, the politicians aren't done yet.

Neither are you. A few days ago we pointed out that government can't give anything to anyone without eventually taking it from someone else. That someone else is you, your children and your grandchildren. Where will you and each member of your family come up with that $180,000? Many of you will say tax the rich and of course to some degree that will happen, but the rich ways of gaming the system to limit their exposure. Others will say tax the corporations and that will happen. But ultimately those corporate taxes will be passed along to you as higher prices. One way or another the government is coming to your home and your family looking for that money.

The Rainmaker thanks Roger for the following thought provoking observation written by Scottish history professor Alexander Tyler in the late 18th century on the subject of the end of the Athenian Republic:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During these 200 years, those nations always progressed through the following sequence:

1. From bondage to spiritual faith;
2. From spiritual Faith to great courage;
3. From courage to liberty;
4. From liberty to abundance;
5. From abundance to complacency;
6. From complacency to apathy;
7. From apathy to dependence; and,
8. From dependence back into bondage."

If you have any doubts about what is happening in these United States, read "Dependent on DC," by Charlotte Twight.

Can the American Republic be the exception Tyler's theory? That is up to us. Do your really expect to get the change you can believe in from the Obama Administration? If so there is also a bridge you might be interested in buying.

Or, is it perhaps time to follow the example of John Galt and vote with our feet before it is too late?

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