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Some Thoughts On Government And "Wealth Creation"

Tyler Durden's picture




 

All courtesy of The Privateer author Bill Buckler

The Essence

“What I was looking at was a tussle between two groups of mass-men, one large and poor, the other small and rich. As judged by the standards of a civilised society, neither of them any more meritorious or promising than the other. The object of the tussle was the material gains accruing from control of the State’s machinery. It is easier to seize wealth than to produce it; and as long as the State makes the seizure of wealth a matter of legalised privilege, so long will the squabble for that privilege go on.”

 

Alfred Jay Nock - Memoirs Of A Superfluous Man - 1943

Mr Nock published his memoirs after a lifetime of watching the state enhance and widen its means of making “the seizure of wealth a matter of legalised privilege.” He recognised the process as being exactly what it was far better than the vast majority of his fellow Americans and described it better still. Were he alive today, he would not be surprised at the state of the world. Nor would he be surprised at the degree of gullibility shown by the fact that most people still cling to the hope that the perpetrators of the mess can “fix” it if only the necessary power is invoked. He would, perhaps, be surprised that the entire structure has not yet fallen down around the ears of those who constructed it.

A Declining Power?

Here is a quote from the other “sophisticate” who runs the US financial system. A few days before Mr Bernanke’s speech, Treasury Secretary Tim Geithner was speaking at the Economic Club of Chicago. Among many other things, he said this: “Cutting government investments in education and infrastructure and basic science is not a growth strategy. Cutting deeply into the safety net for low-income Americans is not financially necessary and cannot plausibly help strengthen economic growth.”

Government investment is a contradiction in terms. Since a government produces no real wealth but merely expropriates it from those who do, it has nothing to invest. To buy the concept that government spending is “investment” you must also buy the concepts that taxes are “contributions” and that money created by edict out of thin air is “wealth”. But Mr Geithner goes on to talk about a “growth strategy”. It is true that any move to curtail the government’s ability to expropriate and inflate will curtail “growth”. It will in fact curtail the growth of government, a “strategy” that Mr Geithner does NOT approve.

As for the assertion that cutting into the welfare state is “not financially necessary”, the unasked question is - TO WHOM? Cutting very deeply indeed into the welfare state is a necessary pre-requisite to ANY progress towards genuine prosperity. But again, doing so would curtail the growth of government.

The crowning glory of Mr Geithner’s latest contribution to the debate goes like this: “This strategy is a recipe to make us a declining power.” If the “us” here refers to Mr Geithner, Mr Bernanke, Mr Obama and all the rest, we couldn’t agree more. And the sooner the better!

The Reason For The Fix

By its nature, government intervention in an economy cannot take place to any great extent until the government gains monopoly control over what is used as money in that economy. Next year will see the centennial of the US government putting itself in that position - the Fed was created in 1913. Once the government DOES control the money, the intervention always increases. The size and rapidity of that increase is inversely proportional to the REAL wealth generating capacity of that economy. The more the government (which produces NOTHING) interferes, the less is left over for those who do produce.

The US government passed a law prohibiting its citizens from owning Gold in 1933. Shortly after that, it passed a series of laws which created the US welfare state. By the time Americans were again allowed to own Gold in early1975, the government’s stranglehold on the circulating money was complete. The US Dollar was redeemable in NOTHING. In the meantime, the US welfare state had pushed funded and UNFUNDED government debt into the $US TRILLIONS. In the US and everywhere in the world, we are witnessing a long delayed but always inevitable phenomenon. The welfare state can no longer be sustained by the dwindling wealth-creating capacity of the economy. The jig is up.

 

* * *

And this simple visual addition from Zero Hedge:

Finally, one chart which shows the precise moment when US welfare spending (fell free to check what the biggest "Fiscal Year To Date" expenditure categories are in the Daily Treasury Statement Table 2: Social Security and Medicare/Medicaid) shifted to totally out of control: the date - 1973, and the event was the Nixonian edict ending the gold standard, resulting in the complete break of the linkage between the US Dollar and hard asset backing. The rest is history.

Until that point, there would be consequence for profligate government spending, and the country ran a balanced budget for decades: the key events keeping the size of government in check.

Afterwards, there were no consequences at all, as the US government could run up any deficit it wanted and just issue any amount of meaningless paper (full faith and credit dollar bills via the Fed matched by full faith and credit US "obligations" via the Treasury) it had to.

Which brings us to where we are today, and where the government, now at epic, gargantuan proportions, is being preached as the best thing since sliced bread. Kinda like the Kolhoz.

 

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Sun, 07/15/2012 - 15:07 | 2618012 LULZBank
LULZBank's picture

Fuck the Wealth, WE print MONEY Bitchezz!!!

Sun, 07/15/2012 - 15:25 | 2618085 veyron
veyron's picture

What is wealth?

Sun, 07/15/2012 - 16:00 | 2618181 falak pema
falak pema's picture

marilyn monroe. 

Sun, 07/15/2012 - 16:44 | 2618308 DoChenRollingBearing
DoChenRollingBearing's picture

James Bovard lustily attacks wasteful government as the Editorial Page writer this week at Barron's!  Miss-alloocation of HUGE amounts of capital in programs that not only do not work, but have further unintended consequences.

Peru's currency (the Sol) reached a new record high vs. the buck

Read all about it (and more) at my "Review of Barron's -- Dated 16 July 2012":

http://tinyurl.com/82rggyr

Sun, 07/15/2012 - 18:01 | 2618532 TruthInSunshine
TruthInSunshine's picture

-

 

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

 

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank.

 

You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

 

You are a den of vipers and thieves.

 

 

— Andrew Jackson (7th US President, when forcing the closure of the Second Bank of the US in 1836 by revoking its charter)

Sun, 07/15/2012 - 18:33 | 2618645 francis_sawyer
francis_sawyer's picture

+ 1^

That gets the francis_sawyer vote as quote post of the year...

Sun, 07/15/2012 - 18:55 | 2618702 Jay Gould Esq.
Jay Gould Esq.'s picture

Outstanding quote.

One wonders what Old Hickory would think of the notion that his portrait is now prominently affixed to a circulating note -- backed by neither gold nor silver -- issued by a central bank with a far greater capacity for ruin than the entity he dissolved over one and one half centuries ago.

A bitter irony indeed.

Mon, 07/16/2012 - 00:48 | 2619396 Raymond K Hessel
Raymond K Hessel's picture

He would make Jesus and the money changers look like a hug-a-thon

Sun, 07/15/2012 - 19:44 | 2618815 blunderdog
blunderdog's picture

An abstracted token for social power.

If you can get hordes people who don't care about you personally to do what you want, you're rich.

If no one out there's going to do anything for you ever, you're poor.

Mon, 07/16/2012 - 02:01 | 2619436 Tom Green Swedish
Tom Green Swedish's picture

Rome failed because of Concern with displaying affluence instead of building wealth. Which basically means, stop keeping up with the Jones'.  You are not cool if you have better stuff.  Buy what you can afford.  If we can't make it we don't need it.  I am probably guilty of this just as much as you probably are, but I am trying real damn hard to change. 

 

Look what happened in Greece.  Everybody was driving around in expensive German cars not giving a damn about anything on top of the World until Bam.  The wolf comes knocking on the door.

 

The reason why America prospered after the Great Depression was people went through so many problems and afterwards they became total savers. The innovation and winning a war helped, but it was going through that difficult time that helped the most.  There was never any question the people of this generation had enough for retirement. With this new crisis we were treated like babies who need the government.   I think another depression would have been helpful.  Embarrass those people a little.  Don't give them a free check and free food.  Make them think and know they are supposed to be working and saving not taking from others hard work.  Help them but, don't give them a free ride.  They will feel better about it.

 

When I go to work all I see is a bunch of lazy people, who are walking on cloud nine because the USA has never experienced hardly any blip.  They work like fools because of this.  I work like a fiend everyday. They take advantage of me, instead of taking advantage of the lesson of my work ethic and integrity.

Sun, 07/15/2012 - 15:12 | 2618038 MillionDollarBoner_
MillionDollarBoner_'s picture

There it goes again!

1971

Dammit!

Sun, 07/15/2012 - 15:17 | 2618061 THX 1178
THX 1178's picture

Richard Nixon, understanding the recognizability and test-of-time standing ability of acronyms like JFK, FDR, and LBJ, once asked people to start calling him "RN".

 

"I'm an RN"   --Richard Milhouse Nixon

Sun, 07/15/2012 - 15:17 | 2618054 WTFx10
WTFx10's picture

A well thought out plan?

Sun, 07/15/2012 - 15:32 | 2618102 disabledvet
disabledvet's picture

Government DO create wealth...but not for you and me. What Government's DON'T do is "pay for themselves" which is why Banking IS Government...and vice versa it would seem. What the USA is not lacking is money. What it IS lacking is "a way to pay for things." In other words since 9/11 it has been the policy of the Federal Government to go hog wild on projects that simply provide no benefit to the American people as a whole...or even in part. The total opposite of the Cold War (as you can see in the chart--what a wonderful economy that was relative to what came before it)--which has massive construction projects "all war related" on the homeland. When the Cold War ended very "discreet interests" (to put it mildly) began pushing the State away from "the Cold War mentality" of trying to solve the problems of "the folks" and towards solving FAR more abstract problems..."over there." The War with Iraq has been the jumping off point and it's been total insanity ever since. I think we've reached the point of "actual reality" right now. Good luck making it all seem "political." From where i'm sitting an EPIC battle between DHS and the Pentagon is underway "on the home front"...the outcome of which will be determined by House Committee's investigating "anti American activities" and total war in the Middle East. This is NOT for the popcorn set folks!

Sun, 07/15/2012 - 16:57 | 2618351 Debugas
Debugas's picture

i can conclude that during cold war US government was helping people to prove capitalism is better than socialism

As soon as socialism died the need for that was gone and here we are today

Sun, 07/15/2012 - 20:57 | 2618939 Sparkey
Sparkey's picture

I've said the same thing myself Debugas, the worst thing which happened to America was "Winning" the cold war, the contest to see who had the best system lost it's reason to exist. The cold war "Enemy", who, I think, never fired a shot in anger, changed their tactics, retreated to their secure base and watched to see what would happen after they left the stage, Gorbachev offered his hand to Pres. Regan and offered to cooperate on environmental and population problems, but he was rebuffed.

Perhaps the former "Enemies" are better psychologists than we are and may have reasoned that the huberistic nature of the nation would eventually lead us into a dark alley where we will not be precieved as representing that "City on the Hill, but something else again, the nations which "Win" wars are those who offer their help to the victims, we are looking like victimizers now, when the rubicon is crossed the former enimiest will offer their assistance to those who precieve themself's as victims. ~ No one can win of course, many have the power to start everything on the downward slide, no one has the power to vanquish the enemy without suffering a fatal blow himself, what will happen next? We wont have long to wait before we find out!

Mon, 07/16/2012 - 02:20 | 2619454 Tom Green Swedish
Tom Green Swedish's picture

The USA didn't even need to do anything to win the Cold War or any war against Communism.  It is an old failed idea, and Communism is always doomed to fail.  It is slowly failing in China. It will fail everywhere else, except in places like North Korea.  We wasted so much time and money on this failed project of defending Capitalism.  The only reason why I presume we turned into a military superpower was because we believe Communists are nutcases, but the simple fact of the matter is they need inputs to survive.  Even if they attack us with Mililtary power it would do no good. They cannot survive on their own.  Look at China, they are taking things from other countries everywhere.  They are taking resources from other countries because they do not have their own.  They are taking jobs because they do not have their own.  They are taking technology and ideas because they do not have their own.  And they are doing this without Military right now.  This is what scares me, they are trying to make it look like they are your friend.  There is no reason to fear China, it will collapse on its own and it has already started to.  Their entire GDP is based upon building infrastructure and taking labor away from other countries.   The people will most likely revolt.

 

But we cannot just sit back and wait for it to collapse we need new policies now. We need a new government.  We need one that thinks in terms of what is going to happen to be on top in the future, not what has worked in the past.  We need radicals.

Mon, 07/16/2012 - 00:49 | 2619398 Raymond K Hessel
Raymond K Hessel's picture

Can you say that in Engrish?

Sun, 07/15/2012 - 15:33 | 2618110 deflator
deflator's picture

 The government picks winners and losers based on race, creed, color, gender, national origin and sexual orientation.  This methodology results in many unintended consequences although the intended consequence of divide and conquer is a successful strategy.

 

 

Sun, 07/15/2012 - 15:49 | 2618150 radicall
radicall's picture

Governments are like guns. Neither "Create" Wealth. But we need both to stay civilized

Sun, 07/15/2012 - 20:19 | 2618862 NidStyles
NidStyles's picture

Civlization means peaceful cooperation. There is nothing peaceful or cooperative about Government. 

Sun, 07/15/2012 - 15:58 | 2618173 LetThemEatRand
LetThemEatRand's picture

Articles like this are such good red meat to the Rand crowd, but such complete and utter bullshit. In a society where we have interstate highways, a space program (which created GPS and myriad other technologies that we all use), a military (that developed nuclear energy among other things), and many other examples, it takes either willful ignorance or intentional deception to claim that government creates nothing.  Government creates by pooling resources.  One can disagree about how much is too much (I for one believe there is WAY too much government), but to simply close your eyes and spout ideology about government creating no value is simply preaching to a friendly choir.

Sun, 07/15/2012 - 16:04 | 2618191 akak
akak's picture

And how many resources were misallocated, and potentially valuable PRIVATE wealth-creating businesses destroyed or killed before they were even born, as a result of those beloved government programs of yours?

As usual for a statist, you refuse to, or are incapable of, seeing the complete picture.

Sun, 07/15/2012 - 16:13 | 2618217 LetThemEatRand
LetThemEatRand's picture

You speak in pure hypotheticals.  I speak of facts and of things that actually exist that were created by the government that this author says creates nothing.  Ergo, this author at the very least is wrong and more likely he is deliberately stating falsehoods in order to support his ideological view.  Show me some facts to support your theory that private enterprise would have created that which government created if government "got out of the way."  Surely there is a country somewhere in the world where this happened and it is not pure fantasy.  So, where would that be?  

Sun, 07/15/2012 - 16:20 | 2618243 Pure Evil
Pure Evil's picture

How much wealth was created with Solyndra, minus the executive bonuses.

Sun, 07/15/2012 - 16:27 | 2618266 LetThemEatRand
LetThemEatRand's picture

So if I list every failed private business that had no government funding would that make free enterprise a failure as a whole, or would it mean that sometimes ventures fail?   You should change your icon to "pure ideology."

Sun, 07/15/2012 - 16:34 | 2618287 Pure Evil
Pure Evil's picture

With over 46 million US Citizenisms using SNAP and EBT, is the government creating wealth or is it creating government dependence?

Sun, 07/15/2012 - 16:43 | 2618306 LetThemEatRand
LetThemEatRand's picture

You simply jump to the conclusion that this is a 100% government problem and not part of the plan of the bankers.  But I digress.  You are I are discussing two different things.  As I said in my post above, I have a lot of criticism about how our government is run.  But to say that government itself as a concept is the problem is to assume a solution that is no solution at all (letting oligarchs run the place).  Government does create things.  This author and many ideologues in politics right now claim otherwise.  Let's discuss facts and real solutions rather than blind ideology.

Sun, 07/15/2012 - 16:58 | 2618355 Tinky
Tinky's picture

I suspect that you are misinterpreting Buckler, and/or he didn't express that point well enough. I believe that he is referring to a more limited definition of "production", and I doubt very much that he is arguing that it would be sensible to abolish government.

He is, of all of those writing publicly or privately (whom I have read), among the very best observers of the economy and its historical underpinnings.

Sun, 07/15/2012 - 17:14 | 2618391 LetThemEatRand
LetThemEatRand's picture

So let's take one example -- the interstate highway system.  Government created the interstate higihway system by taxing private individuals and corporations, and pooling the money to fund a project of such vast expense and make it possible.  It also used its power of eminent domain to take the land (landowners were paid, again with money generated by taxes) where the roadways were built.  American commerce exploded due to the highway system that made transportation of goods and services much easier.  Not only new private commerce but real wealth were created.   Show me how anyone could read the article above and conclude that the author accepts that premise.  Here is a quote from the article to the contrary:  "government investment is a contradiction in terms. Since a government produces no real wealth but merely expropriates it from those who do, it has nothing to invest. To buy the concept that government spending is “investment” you must also buy the concepts that taxes are “contributions” and that money created by edict out of thin air is “wealth”.

Sun, 07/15/2012 - 17:22 | 2618412 Tinky
Tinky's picture

There's a lot to unpack there. As some might reasonably argue, cherrypicking an example such as the highway system misrepresents the overall result of government "investment". If one were to include the funding for military misadventures, the picture would look quite different.

While Buckler may be conflating issues in your quote above, it's also hard to argue that he is wrong on taxes or money creation in their current forms.

Sun, 07/15/2012 - 17:31 | 2618432 LetThemEatRand
LetThemEatRand's picture

I happen to agree quite strongly that the truth is somewhere in the middle.   The current police state government that is destroying our nation's wealth through inflation, cronyism, and endless wars must be stopped.  But I also strongly believe that the answer is not to eliminate the public/private model that made the U.S. a roaring success.   I would like to see the American system fixed, not thrown on the junk pile of history in favor of an ideology that the free markets can do no wrong.

Sun, 07/15/2012 - 18:16 | 2618582 Tinky
Tinky's picture

agree completely

Sun, 07/15/2012 - 18:22 | 2618593 lizzy36
lizzy36's picture

Couldn't agree more with every single one of your comments.

If one doesn't want any government, no taxation and to worship at the alter of the "free market", one should look to Somalia for inspiration.

Sun, 07/15/2012 - 20:24 | 2618874 NidStyles
NidStyles's picture

Yay! Another ignorant person that worships the word of the Media. SOmalia was peaceful before the UN and the US got involved.

Sun, 07/15/2012 - 20:42 | 2618909 Dburn
Dburn's picture

"Yay! Another ignorant person that worships the word of the Media. Somalia was peaceful before the UN and the US got involved."

Lets talk about blind ignorance. People were starving to death over there. Genocide was being committed.There was nothing peaceful about that place. Go ahead asshole, look  at the 1991 civil war that broke out. No one here wanted to go over there until it got so fucking bad it looked like Rwanda on Steroids and that happened 3 years later because no one wanted to get involved after Somalia.

There are just as many idiots on the left and on the right who only listen to people who agree with their world view. You assholes are a special breed though. Screaming about govt letting private industry have a free hand to exploit slave labor in foreign countries while telling us how great it would be without govt is just a fucking hoot if people weren't suffering from the very private industry you worship. Go find a banker to blow. They love drooling douchebags like you.

Mon, 07/16/2012 - 00:07 | 2619349 Anusocracy
Anusocracy's picture

You're full of shit. Somalia's a victim of Western Powers interfering with them.

Somalia's problem is the same as other countries in the region: they are resisting hegemony. The colonial powers screwed them over, and, as usual, the US is screwing them over now. They want to be left alone. They don't want the same shit system we have. They're not stupid like you are.

 

Xeer, pronounced [?e?r], is the polycentric legal system of Somalia. Under this system, elders serve as judges and help mediate cases using precedents.[1] It is an example of how customary law works within a stateless society and closely resembles the natural law principle.[2] Several scholars have noted that even though Xeer may be centuries old, it has the potential to serve as the legal system of a modern, well-functioning economy.[3][4][5]

According to one report, the Somali nation did not begin with the common use of the Somali language by the clans, but rather with the collective observance of Xeer. Xeer is thus referred to as being both the father and child of the Somali nation. An analogous phenomenon is said to have occurred among the neighboring Oromo nation, which is now under Ethiopian rule.[4]

Under Xeer, there is no authority that dictates what the law should be. The law is instead discovered by judges as they determine the best way to resolve a dispute. As such, the Somali nation by tradition is a stateless society; that is, Somalis have never accepted the authority of any central government, their own or any other.[4] Under Xeer law, Somalia forms a kritarchy and conforms in many respects to natural law. The lack of a central governing authority means that there is a slight variation in the interpretation of Xeer amongst different communities. The laws that are widely accepted are called xeer guud and those particular to a specific community are referred to as xeer tolnimo.[6]

As with law systems in Western states, the Xeer legal system also demands a certain amount of specialization of different functions within the legal framework. Thus, one can find odayal (judges), xeer boggeyaal (jurists), guurtiyaal (detectives), garxajiyaal (attorneys), murkhaatiyal (witnesses) and waranle (police officers) to enforce the law.[6]

http://en.wikipedia.org/wiki/Xeer

Mon, 07/16/2012 - 12:35 | 2620576 Offthebeach
Offthebeach's picture

You don't get to a police state overnight. You have to tend it and grow it in so many ways, and shape the character of the people. You ha e done your part. You shouldn't quibble over this or that of a authoritarian state. It loves you and is your shepherd and you are its lamb.

Sun, 07/15/2012 - 22:36 | 2619154 mjk0259
mjk0259's picture

Likewise vaccinations, communications satellites, nationwide network of gas and oil pipelines, cell phone standards, internet, electrical grid, standards for electrical power, Hoover Dam and many others generating cheap power for decades.

Sun, 07/15/2012 - 23:39 | 2619308 Anusocracy
Anusocracy's picture

The freeways are responsible for the suburban cancer spreading acrossed the country.

 

By the way, the limited access road was a private invention.

Sun, 07/15/2012 - 17:03 | 2618369 Pure Evil
Pure Evil's picture

What a douchebag, 46 million on government food assistance is considered blind ideology.

And for all the blowhard ideology you've been spewing since you've appeared on ZH, exactly what solutions have you been espousing?

Exactly what is the governments' plan on bringing back millions of middle class jobs when the government has been encouraging corporations to move jobs overseas through over regulation and the signing of Free Trade Agreements.

So, how much wealth was created when Obama shut down the Keystone pipeline or has been doing his best to kill the coal industry.

I guess we'll all have to hope that Obamacare will provide enough jobs through the systematic extermination of millions of baby boomers as they come before death panels. Like TSA agents someone will have to be hired to put bullets in the back of their heads or shove them into the crematoriums.

Mon, 07/16/2012 - 12:17 | 2620498 Offthebeach
Offthebeach's picture

How's Slum Clearance, Model C_ities, Urban Renewal, Urban Development doing? I haven't been to Detroit,Gary, Albany, Newark, E SR. Lewis. They must be Paradise. Free concerts in the Parks, science centers everywhere, workers in bassinets homes .... You know, after trillions spent.

Sun, 07/15/2012 - 16:23 | 2618254 akak
akak's picture

The never-ending parade of your failures of the intellect is an entertainment embarrassment of riches.

Sun, 07/15/2012 - 16:27 | 2618269 LetThemEatRand
LetThemEatRand's picture

So basically you are rubber and I am glue?  When you have no merit left to discuss, simply insult the person who challenges your childish ideology.  Nicely done.

Sun, 07/15/2012 - 16:50 | 2618327 Pure Evil
Pure Evil's picture

With the government signing Free Trade Agreements then sitting back and watching while US Citizenism jobs are outsourced to China, Mexico, India, Vietnam and other far flung corners of the globe, how exactly is this creating wealth for US Taxpaying Citizenism?

Exactly how does government create wealth for US Citizensim by allowing corporations to import workers under the H1B visa scam to replace US Citizenism taxpayer, now non-taxpayer, but now receiver of SNAP and EBT.

While Wall Street continues to receive bailouts from D.C. in the from of TARP, QE, Twist, and access to the Fed window, please explain exactly how this creates wealth for US Citizensim?

It looks more like the government is robbing current and future Peters (US Citizenism Taxpayer) to pay Paul (Wall Street scumbag insiders and Corporate douchbag CEO's that send American jobs overseas).

Sun, 07/15/2012 - 17:07 | 2618377 LetThemEatRand
LetThemEatRand's picture

So now you are mad that the government isn't stopping private corporations from gutting our economy by off-shoring?  So you want more government?  Wow, you really don't even know what you believe in, do you?

Sun, 07/15/2012 - 20:26 | 2618878 NidStyles
NidStyles's picture

You are using numerous fallacie to prop up your worship of statism here. I find it amusing. Rand was a bitch BTW, and generally we don't like her either. I would take one of her disciples over a raging statist any day though. 

Sun, 07/15/2012 - 22:23 | 2619128 Overfed
Overfed's picture

The government has set up a system that reward corp.'s offshoring efforts. What do you think NAFTA, GATT, and so on do?

What do you think has been the net result of the repeal of Glass-Steagal?

Mon, 07/16/2012 - 00:33 | 2619378 StychoKiller
StychoKiller's picture

Your beloved Big Brother is supplying all the tax incentives that make off-shoring economical.  Check yer premises.

Mon, 07/16/2012 - 00:54 | 2619403 Raymond K Hessel
Raymond K Hessel's picture

WTF is US Citizenism?

Sounds lie Koch Bris shite to me.

Sun, 07/15/2012 - 16:51 | 2618334 MrTouchdown
MrTouchdown's picture

Space travel, for example. The gov't threw up its hands and quit on it, while private business is moving it forward. It started out private (Werner von Braun's hobby), but gov't came in and took it over. Many of the other things you attribute to gov't were originally private ventures as well. Roads, railroads, police forces, fire fighters, hospitals, welfare programs - all private originally. Those products (like GPS) that you claim were made by gov't - they were created by contractors, which are private businesses that work for gov't, and would have been created even if gov't wasn't the signer of the checks.

 

You don't find it at all strange that the biggest bully with a gun always ends up with the most essential projects? How naiive. Or willfully blind. Or rather, perhaps you're benefiting from that gun now?

Sun, 07/15/2012 - 17:05 | 2618374 LetThemEatRand
LetThemEatRand's picture

Of course private individuals and companies did the work.  My whole point is that government funding (the dreaded collectivism) made it possible.  Now private companies are picking up the mantle in many of these things as it should be.  The public/private partnership works well.  Our country became very wealthy using this model.  Now show me a country that got rich with pure private investment in such things.  Can you name a single one?

P.S.  I am a small business owner and I do not derive any income or other benefit from the government.  I just happen to see beyond my own nose.

Sun, 07/15/2012 - 17:18 | 2618405 Pure Evil
Pure Evil's picture

You may be able to see beyond your nose, but the only thing else on the horizon is your colon.

Sun, 07/15/2012 - 17:23 | 2618415 LetThemEatRand
LetThemEatRand's picture

Another thoughtful argument reflecting your intellect.  Bravo.

Sun, 07/15/2012 - 17:25 | 2618417 Pure Evil
Pure Evil's picture

At least you appreciate metaphorical cynical satire.

Mon, 07/16/2012 - 07:46 | 2619641 PoorByChoice
PoorByChoice's picture

Oh come on Rand, it was quite funny!

Big government has always required big or rapidly expanding private enterprise first else how can it build up?

Sun, 07/15/2012 - 22:25 | 2619134 Overfed
Overfed's picture

Yeah, those for-profit corporate owned prisons are great! /s

Sun, 07/15/2012 - 23:26 | 2619279 MrTouchdown
MrTouchdown's picture

You appear to be making the assumption that these things could only be done at the behest of gov't. In the case of roads, railroads, hospitals, space exploration, welfare, and (why not toss another on the pile?) internet - these things were already happening and then gov't came in and monopolized it. You seem to think that prior to gov't involvement these things were not happening. They were.

Our country got rich at the time of these things, but in the beginning of many of these things, it also was the only industrial powerhouse that wasn't currently rebuilding from having the bejesus bombed out of it (via the 30 years war, Nepoleonic wars, WWI and WWII). The coincidence of public/private partnership and our wealth generation could just be correlation - not causation as you make the case for.

The last "country" that I can think of that had an opportunity to engage in pure private investment (without the interferance of gov't) was in a patch of desert near Lebanon between the first and second Crusades. The area became a trade hub between east and west and made a ton of money. Muslims were marrying Christians. The local European lords left it alone and the Turks left it alone so as to not ruin a good thing. It was truly unique for the region. 

Then more European lords came with the intent to steal and control it all (causing the second crusade) and ruined it for everybody. Kind of like the gov't taking over the internet, or railroad building, or welfare, or healthcare, or many other such projects. Perhaps the reason it is so hard to find an example of pure private investment is because gov't sees the immediate gains every time it's tried and latches on like a tick to a fat dog - causing lyme disease and the premature death of the dog.

Sun, 07/15/2012 - 20:31 | 2618879 Dburn
Dburn's picture

You went a tad too far with that Space travel. Get back behind the line. There is no fricking way that private industry would have ever gone to the Moon. from 1961-1969. The fact is that Govt is paying the tab for private industry right now to supply the space stations it already built. You still have to have 200G to maybe , one of these days , go 30 minutes into near space. Russia makes a pretty penny from our govt to put our astronauts into space and those from other countries who could have never developed a space program like we have today?

GPS? Please give me a break. That depends solely on the massive govt investment in the early mistakes that would have eaten private companies alive. They finally got enough satellites in space. Yes many of the satellites are now privately financed but ask them if they would trust their 300M investments to a couple of young outfits to shoot into space that makes all of GPS possible. Making the electronics to make it work down here was again a govt contractor.

Lets bifurcate private business from a privatized business. Private business has to raise capital from private sources and depends on private capital and income to make sales . A privatized business is nothing more than crony capitalism. It has a simple test too. Would the company survive one week if all taxpayer  financing and business stopped. It's a real simple test. Try it before opening your mouth about hallucinations you have over Ayn Rand and  private markets ability to muster the resources that may only pay back on a macro basis too many people not just a few over decades instead of  a few quarters.

The space program started in the 50s with German Rocket Scientists stolen from Germany. It took billions in today's dollars just to get a unmanned rocket to orbit and control the orbit. Start right now listing any and all  single private ventures that has invested well over 100-200B and still doesn't have a pay off (besides Microsofts endless acquisitions of companies that will be immediately "accretive to income". Never before has a private company invested so much in 10 years and gotten so little. They have written most of the investments off.!) Go ahead. No one is holding their breath.

There is absolutely nothing worse in any kind of society as ideological purists. You have absolutely no data to show that there is no need for Govt. If your so anxious for it, why not move to Somalia.

Wed, 07/18/2012 - 00:41 | 2627044 MrTouchdown
MrTouchdown's picture

Your name-calling belies your lack of faith in your own ideology. I'll just number your paragraphs and answer that way.

   1. 200G is nothing. Branson spends that per day on blow. You imply that nobody wanted to go to space prior to the gov't deciding "we gonna do it" - that is patently false. The only reason we weren't already in space is because the gov't didn't allow research into the kind of rocketry that could get the job done - except as a defense contractor. Even today, that is super-highly restricted.

    2. Private companies don't make the mistakes that gov't funded projects do. Even if they did - the potential for that tech is good enough that there would always be more investors to "try again". Anyhow, by your own admission in #1 - it would cost about 200G to put a satellite in low orbit via private means.

   3. Gov't has to raise capital from private sources too. Have you ever read ZeroHedge? If the company can't make a profit, then it has a crappy business model. If it has a crappy model, but the product has backers that are interested in it, then a competitor will make a better business model. Just because gov't picked the company with a crappy model, doesn't mean there wasn't a good one out there. Ask a military vet what they think about the gear they're given - you'll be told something about "lowest bidder".

  4.  The space program began with Werner von Braun - we just stole him in the 50's after WWII. The Germans used him in that war to make the V2 and before that his eternal dream was to go to the moon and that's why he researched rocketry his whole life. Again - gov't took over a private industry full of promise and then claimed its discovery. As to the second part - what's wrong with failure? Only gov't insists that the first try will be the last. With private business, the next business will build upon what was found out by the last one that failed. This is why private enterprise is so much more efficient and works so much better - it builds on past successes AND failures. Were the space race allowed to private industry sooner we may never have had a Challenger accident.

  5.  You have no evidence to prove that there is no need for cancer. Do you see how stupid that is? You can't prove a negative. You knock Somalia, but it grew faster than us last year and the year before. That, despite being in a 3-way war with the UN and the Muslim Brotherhood. Pretty good for a people that still burns wood and dried dung to cook their food.

Sun, 07/15/2012 - 23:31 | 2619294 Anusocracy
Anusocracy's picture

After WW2, Hong Kong was poor compared to Great Britain. The Brits kept the HK government small and unobtrusive.

 

A decade or so ago, the per capita income of HK surpassed Great Britain's.

Mon, 07/16/2012 - 12:22 | 2620520 Offthebeach
Offthebeach's picture

Ditto post war Germany. Run by Austrian economists. Told Galbraith to get lost. He went to India and supported their central planning.Marxists

Sun, 07/15/2012 - 19:12 | 2618751 TWSceptic
TWSceptic's picture

Where would we have been without government? Ever asked yourself that? What if everything government has done, would have been done better (and earlier). What don't we have because of it?

 

But forget those difficult questions. Let's focus on the things government has done right, like for example... well.. no , maybe... hm no. Sorry.

Sun, 07/15/2012 - 22:59 | 2619225 maximin thrax
maximin thrax's picture

...it takes either willful ignorance or intentional deception to claim that government creates nothing.

Government doesn't create WEALTH. Converting dirt trails into turnpikes and making rivers navigatable comes after people have figured out how to make a living without them, producing the tax revenue to make the improvements.

It can create an interstate system, for example, using somebody else's wealth that might make that taxpayer more wealthy, but that system has no value unless private enterprise is poised to take advantage. Prior to the interstates, people conducted commerce with existing transportation systems to generate the very wealth required to improve future transport.

And in selecting the interstate routes, government picks winners and losers, as interconnected cities get bigger while those left out lose business to the winning cities. Yet people in declining towns that missed out on the improved movement of people and freight must still pay federal taxes. So there's not necessarily a net improvement from government "investment."

If goverment wants to set us all up with wind and solar power, it will freeze out coal, gas and nuclear. You can say of the all-green energy system, "Look at what government can do that we would not have attempted alone," as if something of value was created.  Shutting down coal in favor of championing solar, for example, will only triple or quadrouple the cost of energy, which no matter how you look at it diminishes wealth overall. Only by getting out of the picking of winners and losers can all viable energy generation options be pursued, and the resultant net increase in available energy add to the wealth of the nation.

Sun, 07/15/2012 - 16:36 | 2618292 orangegeek
orangegeek's picture

When the down market hits, these politicians will have a lot to answer to.  And no government master plan is going to be able to artificially turn this around.

 

http://bullandbearmash.com/index/sp-500/weekly/

 

Sun, 07/15/2012 - 16:53 | 2618339 Debugas
Debugas's picture

the government does produce some very useful and important things

to say the government produces nothing is a lie

Sun, 07/15/2012 - 17:14 | 2618393 Pure Evil
Pure Evil's picture

Yes, the government produces poverty. Just ask the Cubans or the North Koreans. And, in another four years of Obama, we can ask US Citizenism.

Sun, 07/15/2012 - 23:04 | 2619235 maximin thrax
maximin thrax's picture

And slaves. Lots of slaves. Anyone whose production is enjoyed by somebody else without compensation is a slave. Government redistributionism is institutionalized slavery.

If you aren't poor, you are a slave. And if you aren't a slave, you must be poor. Not a happy choice between the two.

Sun, 07/15/2012 - 17:15 | 2618399 JR
JR's picture

“The crowning glory of Mr Geithner’s latest contribution to the debate goes like this: ‘This strategy is a recipe to make us a declining power.’ If the ‘us’ here refers to Mr Geithner, Mr Bernanke, Mr Obama and all the rest, we couldn’t agree more. And the sooner the better! ... The welfare state can no longer be sustained by the dwindling wealth-creating capacity of the economy. The jig is up.”—Bill Buckler

Another Great! Buckler post.

Mr. Geithner et al. drive a horse that can’t win. Geithner’s idea is to get people in the harness, working all the time just to make their banker payments. But the horse is balking; unless people get a more just system than they have now, without the banker cartel riding parasite while holding the whip hand of fiat money manipulation over their backs, they won’t support the system.

“It has been said that at the time of man’s first written records, the use of silver as money was a tradition so ancient that no man could recall a time when it had not served as money. For close to six thousand years, silver provided the framework for the monetary systems of the world…  Increased trade and commerce afforded by the white metal, in turn, led to wealth, power and influence being amassed into a given region. Primarily, it was silver, the money of everyday commerce, which led to the rise of every great empire. This has been true right through to our present era….

“While it can be accepted that great empires were built on the integrity and availability of their silver money, it is undeniable that they have all fallen upon the abandonment of the same…. The very nations that were made great and prosperous trading centers through the use of silver money, are today massive debtor nations.” – Philip Judge, historian

Sun, 07/15/2012 - 18:28 | 2618608 Cadavre
Cadavre's picture

Wealth is FINITE. IT HAS NEVER, IS NEVER , AND WILL NEVER EVER BE ANY MORE OR LESS THAN IT EVER HAS BEEN. And any bods be thinking otherwise should immediately contact me about the profit potential in an exciting new product, "Instant Water" (just add water!), franchise. Availability is limited and on a first come basis.

Wealth can be transfered, like wealth transferred to Apple when the innovation and aesthetic purity offered by the iPhone caused Nokia and Blackberry customers to swith. THe iPhone didn't create wealth, it just earned a bigger pipe, for the time being, in the rivers formed by the wealth (re)cycle.

Tokens of wealth can be created, like Central Bank Notes, But that just dilutes the the value of the finite wealth that we're told, though not yet tungsten assured, that represent shares in the glob of "real wealth".

Wealth may not even be something that can be converted to asset. At best it is someone exchanging tokens they converted from their store of "time", for something someone else converted from their store of time.

The intangible hierarchy:
Power

  Time

     Money

TOur very famous political civil service employed CSPAN cast, meaning the prez, the congress and judiciary cannot create wealth. Noone can. And it supposed to be immoral to counterfeit "wealth tokens", like sovereigns. But they're doing it anyway. They're diluting sovereigns and transferring truckloads of them to their buds in the banker mafia. For get the bailout. Seventy seven percent of the Morgues net revenues comes from us, yeah "us", in the form of IRS transfers as subsidies and grants. GE, in 2010, report 26 Billion in profits. Got 5 Billion is cash transfers from the IRS, bumping profits to 31 Billion. More than half of GE's employees are not in the US. GE is in China with a truckload of patents belonging to "us". Do you really think the Chinese will loan the C-SPAN Jesters a trillion bucjs without any "real collater". That full faith and credit scam prayer ain't some the Chines indulge in.

If uninsured risk were treated as a cost, Wall Street would be insolvent. Of course, and most of the time, uninsured risk is insured, albeit by bevies of tiers of nests of other un-collateralized derivatives.

The coumterfeited wealth has priced up the market, fer sure, to the extent that even our comedic mild mannered establishment and shameless equity-carny barking lapdogs at CNBC, although not indexed as sourced on CNBC, that the FED's print is responsible for 50% of the so-called equity market. (an overly enthusiastic anlysis if anyone be asking).

Me-self - still trying to understand how a barely half EUR cent gain to the USD had the pit believing g*d was shagging them to glory, again, on Friday.

Wealth is finite. Nobody creates it - they just get bigger flows of existing wealth from the eternal wealth (re)cycle! Take away the dividend and a stock, with exception of voting privileges, and you got a derivative - a very diluted un-asset - a peice of paper - a marker - a bet someone will eventually buy it before you loose your ass on it. And voting? What Voting? Does anyone know anyone with enough shares of anything to affect the outcome of a shareholder meeting?. The board owns, or has proxy to, 99.99% of the stock, so nobody you any of us hang with has enouogh shares in anything to affect any outcome, anytime, anywhere.

But- but at least you exercised your f*cking, and always "fruitless" rights, as a share holder. You jacked off and pretended you got laid.

Our political gadflies, though, having always, and more so now and more than ever and ever desperately straining that one last reach for "the" mythical gold ring - like something a bottom feeding big box church going "consumer" would do, They really think some big bad assed white beard in the Sky Mall will "protect" them from the consequences of their weakness. Great way for beef cow in the last tango chute to feel just before the "hammer" smushes-up their blissfully waiting foramen magnum THey will go as the grea=ts that preceded them, fer instance, like when Mussolini was so elegantly dismissed from the duties of office.

All a congressional investigation does is amend the exisisting bribe agreements congress has with witnesses.

The specter of having one's familial headstones be pilgrimage urinals should not be as remote to some as it is.

Keep it wet!

 

Sun, 07/15/2012 - 19:48 | 2618819 deflator
deflator's picture

Bravo!

 It took me a long "time" as in painfully learning hard lessons to figure out the "time" component.

 Clearly, as it were, "timing" is everything.

Sun, 07/15/2012 - 18:33 | 2618646 Dr. Sandi
Dr. Sandi's picture

 

“...It is easier to seize wealth than to produce it; and as long as the State makes the seizure of wealth a matter of legalised privilege, so long will the squabble for that privilege go on.”

It is only easier to sieze wealth for as long as wealth is being produced. When the desire for and means of wealth creation has all but disappeared through ongoing seizure, the State itself will disappear.

As little kids like myself ask on a long, boring journey...

"Are we there yet?"

Sun, 07/15/2012 - 20:20 | 2618865 Snakeeyes
Snakeeyes's picture

The Fed and Federal government already specialize in wealth redistrbution. Look at the housing market!!!!!!!!!!!!!!!!

http://confoundedinterest.wordpress.com/2012/07/14/is-the-housing-bust-over-or-in-purgatory/

Mon, 07/16/2012 - 02:33 | 2619466 Tom Green Swedish
Tom Green Swedish's picture

I am sorry but we are technically fucked.  Look at the president.  He's a socialist with no track record.  This is who the people vote for to implement policies in this country.  What a bunch of fools.  No Hope left.

Tue, 07/17/2012 - 03:39 | 2623361 silverdragon
silverdragon's picture

Good government is good government and some countries are actually well run. Australia, Hong Kong, New Zealand, Singapore, throw in a couple of Scandinavian/Norther European countries and a couple more Central European countries.  There is lots of room for improvement but overall they are run better than the other 90%.

The problem with the US is both political parties are grossly incompetent. They spend money they don't have. To fix the US it requires an honest person to come along, slash military spending, slash welfare spending and fix the tax system. Get a little surplus going pay down the debts etc.

Aint gunna happen though as there isn't an honest person in government.

 

Tue, 08/14/2012 - 03:14 | 2703125 Financialpolicy
Financialpolicy's picture

One of the first ways of beginning that process would be to repeal all of the anti-opportunity legislation that has been foisted on the American people in the past few years.

 

Thanks
financialpolicycouncil.org Team
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