Products of the Past

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You know what else is a product of the past? Solar panel manufacturing in Massachusetts. The state gave Evergreen Solar at least $45 million in subsidies. “Green” technologies got help from the federal government too – in the form of tax breaks. But last week, the company said it was moving its manufacturing business to…China!

*** And guess what else is a product of the past – Paul Krugman. The New York Times columnist tries to explain the division in US politics as a split between Republicans, who want less government and more liberty, and Democrats, who want more government and more fairness.

Yeah, yeah…

In Krugman’s simpleminded world…it is a struggle between good and evil…smart and dumb…progress and backsliding. He sees the democrats as the good guys. The republicans are bad guys.

Such a simpleton’s world must be a comfort. You don’t really have to do much thinking. Everything is black. Or it is white.

Too bad for Krugman, but most of the world is actually gray. If the republicans were so squarely in favor of limited government and liberty, how come they didn’t actually cut government spending when they had the chance? They ran the show for years. And during those years government spending went up faster than it did under the democrats.

A look back over the last 100 years finds trends that go way beyond republican or democratic administrations. Almost every year, the reach of the federal government expanded. More people were covered by more programs…with more debt and spending obligations pushed farther into the foggy future. Now, according to Prof. Laurence Kotlikoff, the full measure of that unfunded, largely off-the-books, debt is over $200 trillion – making the US government, effectively, insolvent. And that didn’t get there just because of democrats.

Nor will electing a republican make it go away.

And guess what else. If you look at the situation here in France, you see much the same thing. The cultural references are different. The debaters use different words and different concepts. There are no republicans…no democrats. And yet…except for the fact that France no longer has imperial aspirations…the situation is much the same. The government has promised everything to everybody.

Look…according to our new Daily Reckoning theme…political parties, voting, the blah, blah of partisan debates…as well as Paul Krugman…

…they are all almost irrelevant…all “products of the past”…

…relics…emblems…icons…symbols…

…full of sound and fury, but signifying nothing.

The real trends are bigger than that. What is at stake here is a model of government that began with Otto von Bismarck. It is a model in which the state supposedly serves the interests of the citizens. (Under the previous model, there were no citizens…just subjects who owed a duty of obedience to the sovereign…and in exchange received protection.) In Bismarck’s model, citizens give up a portion of their output…and stand ready to protect the state with their lives. In return, the state gives them the right to participate (through elections etc)…provides protection from foreign states and domestic outlaws…and makes sure that their physical needs are taken care of.

This model seems to be headed for bankruptcy. The big question is: when the state is unable to provide the benefits it has promised…what will happen? Will the masses accept less? Or will they revolt? Or will a new model evolve…peacefully?

Stay tuned.

Regards,

Bill Bonner.
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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4 Comments on "Products of the Past"

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Philip Proust
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Bill Bonner mischaracterises what Paul Krugman has written in order to criticise it. The divide in US politics according to Krugman is between (a) those who want to maintain and improve welfare state provisions and (b) those who want to dismantle social welfare in the spirit of social Darwinism. In Australia we think it is fair enough that the unemployed, the poor elderly, the sick and the systematically disadvantaged should get some basic protection from government. For those on the right in the US, this kind of thinking does not apply. They want to remove even more of the weak… Read more »
Ron Jones
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That’s an interesting mischaracterisation of the right vs left argument in America. Anyone who has been paying attention knows that the truly violent rhetoric comes from the left. The ideological adherents to consolidation, collectivisation, “social justice” and other such nonsense, are the most likely to engage in violent antisocial speech and behaviour. The republicans and the democrats are virtually indistinguishable from one another. Sure, they may quibble over spending priorities. But some things are beyond debate: First and foremost, the unitary central state is supreme above all. Second, all ‘patriotic’ americans owe their allegiance to said state, to be expressed… Read more »
Philip Proust
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All you have done Ron is state the social Darwinist case, which is supported in the main by the Republican party; but you can’t claim that that there are not those – liberals like Krugman – who oppose your kind of politics. Those who think like you are the right; those who wish to preserve and expand protection for the needy are on the left. It is also apparent from what you write that there is no moral basis to your view. You think that those who are too ill, old and poor to look after themselves should be deserted;… Read more »
Pat Scott
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Smoke and mirrors. The people are all looking at the smoke and the mirrors and not seeing the elephant. Cancer cells slink around in an otherwise healthy body and subvert healthy cells into cancerous ones. They, too, are unseen until the day that symptoms are recognised and the cancer is proclaimed. By then, it may be too late. Termites also work secretly in the dark until the house starts falling apart. So, is it an elephant? Is it a cancer cell? Is it a termite? Or, is it a …Giant International Corporation? Let’s call them GICs, for short. Never before… Read more »
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