The fact that so many successful politicians are such shameless
liars is not only a reflection on them, it is also a reflection on
us. When the people want the impossible, only liars can satisfy
them, and only in the short run. The current outbreaks of riots in
Europe show what happens when the truth catches up with both the
politicians and the people in the long run.
Among the biggest lies of the welfare states on both sides of
the Atlantic is the notion that the government can supply the
people with things they want but cannot afford. Since the
government gets its resources from the people, if the people as a
whole cannot afford something, neither can the government.
There is, of course, the perennial fallacy that the government
can simply raise taxes on “the rich” and use that additional
revenue to pay for things that most people cannot afford. What is
amazing is the implicit assumption that “the rich” are all such
complete fools that they will do nothing to prevent their money
from being taxed away. History shows otherwise.
After the Constitution of the United States was amended to
permit a federal income tax, in 1916, the number of people
reporting taxable incomes of $300,000 a year or more fell from well
over a thousand to fewer than three hundred by 1921.
Were the rich all getting poorer? Not at all. They were
investing huge sums of money in tax-exempt securities. The amount
of money invested in tax-exempt securities was larger than the
federal budget, and nearly half as large as the national debt.
This was not unique to the United States or to that era. After
the British government raised their income tax on the top income
earners in 2010, they discovered that they collected less tax
revenue than before. Other countries have had similar experiences.
Apparently the rich are not all fools, after all.
In today’s globalized world economy, the rich can simply invest
their money in countries where tax rates are lower.
So, if you cannot rely on “the rich” to pick up the slack, what
can you rely on? Lies.
Nothing is easier for a politician than promising government
benefits that cannot be delivered. Pensions such as Social Security
are perfect for this role. The promises that are made are for money
to be paid many years from now — and somebody else will be in
power then, left with the job of figuring out what to say and do
when the money runs out and the riots start.
There are all sorts of ways of postponing the day of reckoning.
The government can refuse to pay what it costs to get things done.
Cutting what doctors are paid for treating Medicare patients is one
obvious example.
That of course leads some doctors to refuse to take on new
Medicare patients. But this process takes time to really make its
full impact felt — and elections are held in the short run. This
is another growing problem that can be left for someone else to try
to cope with in future years.
Increasing amounts of paperwork for doctors in welfare states
with government-run medical care, and reduced payments to those
doctors, in order to stave off the day of bankruptcy, mean that the
medical profession is likely to attract fewer of the brightest
young people who have other occupations available to them — paying
more money and having fewer hassles. But this too is a long-run
problem — and elections are still held in the short run.
Eventually, all these long-run problems can catch up with the
wonderful-sounding lies that are the lifeblood of welfare state
politics. But there can be a lot of elections between now and
eventually — and those who are good at political lies can win a
lot of those elections.
As the day of reckoning approaches, there are a number of ways
of seeming to overcome the crisis. If the government is running out
of money, it can print more money. That does not make the country
any richer, but it quietly transfers part of the value of existing
money from people’s savings and income to the government, whose
newly printed money is worth just as much as the money that people
worked for and saved.
Printing more money means inflation — and inflation is a quiet
lie, by which a government can keep its promises on paper, but with
money worth much less than when the promises were made.
Is it so surprising voters with unrealistic hopes elect
politicians who lie about being able to fulfill those hopes?
COPYRIGHT 2012 CREATORS.COM
