Products of the Past


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”…


…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.


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.
Bill Bonner

Latest posts by Bill Bonner (see all)



  1. 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 safety net that is already in place. Taxes should be lowered for the rich and services for the needy should be done away with, they say.

    Bill Bonner is obviously entitled to advocate the same rightist policies for Australia, but he cannot pretend that the ‘morality’ of greed and incivility that it is built on can be defended along moral grounds. Remember that the right – which includes a substantial fraction of the Democratic Party – in the US is quite blase about one million Americans dying of gun-related incidents since September 11, and is aghast that any curbs on gun ownership might be applied. The idea that gun ownership allows people to defend themselves looks rather shaky when this death toll is considered. Profit and its maximisation at all costs is the principle that drives the right wing of American politics and this is a relatively recent development.

    Here is a quotation from Paul Krugman’s piece to support my contention.

    “One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.

    The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.”

    Philip Proust
    January 18, 2011
  2. 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 by an eagerness to “pay one’s fair share” in order to maintain a free society in the richest, most powerful government …err country (I meant country!)… in the history of the world.

    Additionally, all children must worshipfully recite the loyalty oath… that prayerful paean to the unitary central state, penned long ago by radical socialist Francis Bellamy.

    And though one thinks of republicans when the subject of military adventurism arises… in the 20th century, democrats took us to war far more often. And now that the boy king is in office, democrats no longer mention Iraq or Afghanistan, or the mothers’ sons who die there on a daily basis. Put simply, no one must question the old lie “Dulce et Decorum est Pro patria mori.”

    In the end, the “right/left” paradigm is a lie. Democrats and republicans are nothing more than the left and right halves of a giant bird of prey, feasting upon the wealth of its subjects.

    If we truly wanted to improve the lot of the Citizenry we must accept that no single government can effectively or fairly rule over 304+ million wildly diverse subjects. It’s time to radically decentralise. Further, government should cease and desist all subsidies to countries, corporations, and individuals. “Nobody gets anything!”

    Only then, can Liberty and creativity enable men to best take care of themselves and their loved ones.

    This is a idea worth fighting for… and we did, once upon a time.

  3. 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; you think that if you lose your job no state entity should help you and your family; and presumably, if you cannot afford it, your children should receive no education either. I presume also that if corporations want to sell guns to people who want to buy them then that’s fine too; who cares that the cost is a million dead in ten years? (But why not let them purchase bombs as well? This is a logical extension of the extremist liberty argument. There are plenty of anti-government fanatics who would appreciate arms of that explosive potency to fulfill their anti-government fantasies, so why not let them buy?)

    In terms of what used to be known as the West, the US right is now pretty much on its own in openly espousing this radical view of yours – and the Republicans, though the Conservatives in the UK are taking this route by stealth and will suffer hugely in electoral terms when their project becomes apparent. There remains in Western Europe, Canada and Australasia a commitment to a civilised society, where we look after those who are unable to adequately fend for themselves. Interestingly, the right wants the US to join countries like China, India and Russia where there is no adequate safety net.

    Philip Proust
    January 18, 2011
  4. 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 in human history have there been such enormous organisations, so wide-spread, so loaded with money and resources, so powerful and pervasive.

    As long as there have been politicians, there have been Lobbyists trying to subvert the politicians with gifts, donations, weasel words and kickbacks, and bend them to the will of the GICs. There have never been so many Lobbyists before, spread into every country of the world. The newest tactic by Lobbyists is to get themselves appointed to Boards and Planning Committees. ‘Welcome, wolves and foxes, join us on the planning committee for this luxurious hen house.’

    You can find an informative break-down of the biggest GICs and how they use their power in the January/February 2011 issue of New Internationalist, No. 439.

    I hope that members of the American Tea Party and other right-wing groups have been informed about the way they have been manipulated by David Koch and are feeling a little uneasy about it. We all should feel very uneasy.

    Bill Bonner suggests,
    “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?”

    I would say this model of democracy in the current form is pretty good. The big problem (blow the smoke away and put on your sunglasses) is that the cancer called GIC has infiltrated it. Every part of democracy is being subverted and twisted to meet the ends of the GICs. They want to keep selling lots of cigarettes and pharmaceuticals and let the banks run rampant. They move mountains to enact legislation that suits them, not the citizens of the democracy. Like the termites and the cancer cells, they don’t care if the house falls down or the body dies, they just move on somewhere else.

    Here are three paragraphs from NI:
    “The corporate takeover of democracy is not just a paranoid nightmare of conspiracy theorists.

    “It affects all of us at every level of our lives. The food we eat, the medicine we use, the air we breathe, the wars fought in our name, how our natural resources are used, the temperature of our planet, how we spend our money and how our money is spent for us by those who control the public purse.

    “At the same time governments and corporations know more about us and our habits than ever before and can use that information to their benefit.”

    What can we do about it? First, inform ourselves. Support good investigative journalists and organisations that try to reveal the causes of the problems.

    We can try to influence politicians (become lobbyists) to claw back some of the power that the GICs have acquired. Sadly, this is a minefield: the GICs have wrapped themselves in protective legislation and will defend themselves to the dying gasp. In other words, it may already be too late.


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