Art Cashin On The New Normal's New Populism: 165 Million As State Dependents?

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Some must read observations on the dangerous path down which American society is headed.

Via UBS Financial Services

A Somewhat Ominous Op-Ed Recalls A Manufactured Ominous Quote – An op-ed in Forbes last week by Bill Wilson is causing some buzz in Wall Street watering holes. Its title is "165 Million Americans Are Dependents of the State: Is Tyranny Next?" Here's a bit of the essay:

Is America descending into a dependency state, where the majority uses its voting power to demand government services from taxpayers?

 

New research from Ranking Member of the Senate Budget Committee Jeff Sessions (R-AL) reveals that this reality may already be here, with more than 107 million Americans on some form of means-tested government welfare.

 

Add to that 46 million seniors collecting Medicare (subtracting out about 10 million on Supplemental Security Income, Medicaid, and other senior-eligible programs already included in Sessions’ means-tested chart) and 22 million government employees at the federal, state, and local level — and suddenly, over 165 million people, a clear majority of the 308 million Americans counted by the U.S. Census Bureau in 2010, are at least partially dependents of the state.

 

Since President Obama took office in 2009, eligibility for Medicaid, food stamps, the earned income tax credit, the making work pay tax credit, and unemployment benefits has increased by roughly 10 million. …….

 

But it’s even worse than that. In fact, most voting-age Americans do not pay income taxes — approximately 50.6 percent.

 

That includes 53.91 million Americans who pay nothing in income taxes, and another 64.7 million who get refunds in excess of what was owed. That’s 118.61 million out of 234.6 million Americans 18 years and older, based on data compiled by the Joint Committee on Taxation and the U.S. Census Bureau.

 

The U.S. Constitution was designed to protect against such an outcome. The Founders did not want a democracy, which tends to be problematic because of the failure of minority rights to be defended against an arrogant or authoritarian majority. So, instead, the Founders created a republic.

 

In Federalist No. 10, James Madison wrote that in democracies, “governments are too unstable, [and] the public good is disregarded in the conflicts of rival parties, and that measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority.”

 

Madison prescribed “curing the mischiefs of faction”, including a tyranny of the majority, by “controlling its effects”. Madison warned that “a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction.”

 

So, the “majority, having such coexistent passion or interest, must be rendered, by their number and local situation, unable to concert and carry into effect schemes of oppression.” But how?

 

Instead of everyone gathering on a hill and voting on laws, the scheme of representation was established, wherein we elect our representatives to make decisions. Also, having a large, geographically wide republic and constitutional limits on the powers of government, complete with two branches of legislature, was supposed to prevent a tyranny of the majority from ever appearing.

 

Or at least, as Madison put it, such factors would “make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens”. …..

The concept of a majority living off a minority, almost naturally, has resurfaced that old quote, an election year chestnut, attributed to Alexander Tytler. Here's what I wrote on the quote a few years ago.

The “New Populism” Makes A Manufactured Quote Very Apt And Timely – On this day back in 2003, we pondered a fascinating quote. It was said to be from a book titled “The Decline and Fall of the Athenian Republic” by a professor of history at Edinburgh University. His name was said to be Alexander Fraser Tytler. Most fascinating (to me) was that the book was said to have been published in 1776 just as the American Republic was being born.

 

Here is the quote:

 

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world's great civilizations before they decline has been 200 years. These nations have progressed in this sequence: From bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to  apathy; from apathy to dependency; from dependency back again to bondage."

 

Our research suggests that the quote was “manufactured” at a far more recent date. Nonetheless, the quote seems especially appropriate in today’s political atmosphere. Let us hope its conclusion does not turn out to be appropriate.

We expect that you, and we, shall hear more and more of Tytler and, hopefully, Madison, as our politicians toy with making this a class warfare election. God save the Republic!