Obama’s election was supposed to transform America, at least in his mind.
This country’s first socialist president strode into office confident that he would remake this country. Fortunately for the country, the timing of his election was twenty, if not fifty, years too late. Socialism has failed in its pure form wherever it has been tried. Now it has failed in its modified form. While much of the world realizes this, President Obama is either ignorant or has more sinister plans for the country.
In the 1920s, Ludwig von Mises demonstrated via economic reasoning why socialism could not work. His argument was that without market prices, there was no way to properly allocate resources. About ten years later, Friedrich Hayek supported Mises’ conclusion from a different angle. He approached it as a “knowledge problem” and argued that no central authority, regardless of how intelligent, could possess enough information to make proper and efficient decisions for tens of millions of people and businesses.
History validated the theory of the two Austrian economists. Russia, China, Eastern Europe, Cuba, and North Korea produced inevitable the misery, poverty, and brutality. The two countries that continue the system are amongst the poorest countries in the world, held together only by totalitarian rule and outside economic support.
With the recognition that socialism did not work, “do-gooders” changed their efforts to a system that would be part capitalism and part socialism. They believed that capitalism could be used for resource allocation while the “caring nature” of socialism could ensure equitable distribution of wealth. President Clinton expressed interest in what was then referred to as a “third-way.” Western Europe had adopted this approach decades earlier.
Interestingly, Mises argued that a “third way” could not work, either. In the 1940s, Mises demonstrated that one intervention begets additional interventions. A so-called mixed system is nothing more than capitalism with interventionism imposed. Mises showed that any such system eventually degenerates into full-fledged socialism. In a collection of essays entitled “Planning for Freedom,” Mises concluded:
There is no other alternative to totalitarian slavery than liberty. There is no other planning for freedom and general welfare than to let the market system work. There is no other means to attain full employment, rising real wage rates and a high standard of living for the common man than private initiative and free enterprise.
The countries of Western Europe have, as Mises predicted, deteriorated into social welfare states likely never imagined or intended at their inceptions. As full-blown socialism approached, these countries became insolvent. Soon all will be forced to either dismantle their welfare states or incur sovereign defaults. The U.S., while never formally adopting either socialism or the mixed system, drifted into the mixed system by gradually adopting many socialist programs. As a result, the U.S. faces the same future of insolvency as its European counterparts.
In terms of history, the mixed system dates back only to Bismarck in the 1880s. It was initiated in a few countries in the first quarter of the twentieth century. Its widespread acceptance occurred after World War II, when several countries chose not to return to the decentralized economies that existed prior to the war. England was the prime example. Industries nationalized for the war effort remained nationalized after the war. England rapidly devolved into a third-rate economy as a result. Prime Minister Thatcher reversed the decline by re-privatizing most of these industries.
It took only about fifty to seventy years for the mixed systems to fail. That is literally a moment in terms of history. Many people are still reluctant to admit that socialism is a failure despite the theoretical warnings and the actual failures themselves. With socialists, it is never the system and always the people that are the cause of failure. “If only we had better leaders.” As Hayek and Mises pointed out, it has nothing to do with leadership. There is a fatal flaw in the concept.
As a result of attempting to extend the socialist myth, governments and their populations are now burdened with debt, much of which will never be paid. We are on the verge of a worldwide depression that will hit as governments run out of resources. It is likely that politicians will continue to play the game of “extend and pretend.” But we have reached Ms. Thatcher’s end-point: “The problem with socialism is that you run out of other people’s money.”
How ironic that President Obama’s first major achievement was ObamaCare. In May, Greece was ordered to privatize its health care system. This month, it was reported that England was going to overhaul their health care system. England was frequently referenced as a model of affordable, efficient health care by ObamaCare advocates. Apparently, the English government and its people view it differently.
These instances are not one-time events. Nor will they be limited to health care. The welfare states of Europe will soon be dismantled in part or whole. So too will the entitlement programs in the U.S. The laws of economics and physics are immutable. They are above legislation. Countries do not have the resources necessary to honor their commitments, period!
Our Founding Fathers, without using the term socialism, designed a Constitution to protect against such incoherent schemes. Over time, the Constitution was vitiated by “living document” interpretations, penumbras, and other nonsense. Now, the U.S. stands on the precipice of failure just as Western Europe. It is insolvent, and there are no other alternatives than to default or dismantle.
The world is at a very dangerous inflection point. We are about to enter a depression. Politicians are not going to back away from socialism willingly. They and large numbers of other beneficiaries will do whatever they can to retain the status quo. Despite the unequivocal failure of the modern welfare state, it is unlikely to disappear quietly. The status quo is always difficult to change. It becomes especially so in desperate economic times and for people who believe they are entitled to be taken care of by others.
The welfare state is headed for the dustbin of history. That is certain because it is no longer sustainable. The critical question is what will replace it. As Mises pointed out, there are only two alternatives: freedom or totalitarianism. There is no middle ground. There is no political compromise that can bridge this gap.
Regardless of which side of the issue you are on, the battle will be bitter and likely last a decade or more. Economically, everyone will be hurt, including many of the “well-off.” Whether our moral and ethical code is strong enough to get through this together is moot. We are not like our ancestors in the sense of their strong commitment to community, responsibility, forbearance, and integrity. We are the pampered generation, entitled to gratification now and willing to cut corners to get it.
In many ways, this problem is more serious than that faced by our Founding Fathers. After all, King George had little control over their lives or fortunes. Yet these principled men risked both rather than accept even a little bit of tyranny. Theirs was a fight of principle; ours is one of survival. The fight is made more important when it is coupled with a depression. We know what monsters rose to power during the last depression and their effect on the world.
We will either get liberty or totalitarianism. There is no middle ground. For me, the choice is clear and was stated by Patrick Henry more than two centuries ago: “Give me liberty or give me death.”
I am willing to sacrifice just as much as our Founding Fathers did so that my grandchildren and their grandchildren can live in the same country I grew up in. I hope enough others feel the same.
Monty Pelerin blogs at www.economicnoise.com.
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Obama’s Point of No Return
Aug 19
Posted by admin in Commentary, Opinion | No Comments
by J.R. Dunn
Such moments are obvious in retrospect, though not always at the time. With Richard Nixon, it was the “eighteen-minute gap.” An oval office tape recording turned over to Judge John Sirica, who was overseeing the investigation of the Watergate incident, turned out to have a lengthy period of silence smack dab in the middle of a conversation between Nixon and chief of staff H.R. Haldeman. The White House claimed that Rose Mary Woods, the president’s secretary, had inadvertently hit the wrong button for those eighteen minutes. This might well have been true, but in light of Nixon’s long reputation as Tricky Dick, it sounded like the cock-and-bull story to end them all. Nixon had been holding his own in the Watergate battle up to that point. The voting public viewed the uproar with bemusement rather than indignation. But the tape gap finished him. In less than a year, he was forced into resignation.
For Jimmy Carter, it was the “malaise speech” of July 15, 1979, in which he attempted to shuffle the blame for his tepid performance as president from his own administration onto the shoulders of the American people. Carter claimed that a national “crisis of confidence” (he never actually used the word “malaise”) made it impossible for him to adequately grapple with the country’s problems. It was America’s fault, not Jimmy Carter’s. The public reaction was open disgust and the abject collapse of any support for the Carter presidency.
With Obama, we have an abundance of riches: the multiple vacations, the legal harassment of the state of Arizona on behalf of illegals, the clownish response to the Gulf oil blowout. But when historians come to select the moment when Obama went over the edge of the world, I think they’ll find the great Iftar mosque speech of August 13, 2010 hard to beat.
During a White House dinner celebrating Ramadan the president found it appropriate to come out in favor of religious freedom. Not in support of Christians being attacked by janjaweed gunmen, or Bahais tormented by Iranian mullahs, or Jews being stalked by assassins, or even American citizens being told that they cannot pray in public, but in favor of a shadowy foreign foundation with suspicious financing and disturbing Jihadi connections that wishes to build some kind of victory monument congruent to the site of the 9/11 massacre.
With Obama, suspicions have involved his status as an American. The foreign parentage, the registration in an Indonesian school noting him as a Muslim, the uproar over the birth certificate, aroused misgivings that, despite media scorn heaped upon those noting them, he has never quite been able to put to rest. As of last weekend, his opportunities to do so are ended. Impressions trump arguments, and for most of the country, Obama will, from here on in, be a strange and untrustworthy figure — a man who does not understand what Ground Zero means to America, who utilizes American law and custom to support foreign interests, who speaks to strangers more clearly than to his own.
Nothing either Nixon or Carter did enabled them to recover from their faux pas. Even as the tape gap story broke, Nixon was supervising a massive airlift of supplies and ammunition to Israel, which was involved in life-or-death struggle against massive Arab attack in the Yom Kippur War. It gained him nothing, scarcely earning a mention amid all the public speculation about Watergate. Less than three months after the Carter speech, Iranian “students” (actually professional revolutionaries under the control of the Ayatollah Khomeini) sacked the American embassy in Tehran, taking nearly a hundred American hostages. I can attest that I was not alone in thinking, “Great — and we’ve got Mr. Malaise is charge.” The year-and a-half-long hostage crisis, climaxed by the disastrous Eagle Claw rescue mission, hastened the collapse of the worst presidency of the later 20th century.
The past two years are the best Obama will ever see. The real crises of his presidency are still to come, and are easily visible as they move toward us — Iran, terrorism, the economy, the collapse of the national health care system hastened by his own policies. He will meet them under a cloud of his own making, attempting to overcome them as a president who takes endless vacations, who will not defend his country’s borders, who sat out the Gulf oil crisis, who overlooks the sacrifices of his own countrymen in favor of dubious foreign figures.
The tide has gone out for Barack Obama. It is all epilogue from here on in.
Tags: failure, obama, president