Tuesday, November 26, 2013

Western Economies Continue to Stagnate

All quiet on the western front.  The US and Europe are going nowhere economically and the future doesn't look any brighter than the present.  The middle ages was a period of history where the world was economically dead in the water.  We're there again.....and for similar reasons.

Governments make the big decisions now, not individuals.  By and large, the body politic in US and Europe believe in big government solutions.  The health care debacle in the US is not unusual, just more obvious.  Usually, the citizen assumes that his bad experiences with his government are unique.  But bad experiences are not unique, they are ubiquitious.

Removing the economic incentives for performance means economic stagnation.  Government does not provide marginal incentives for performance.  In fact, government provides mainly incentives to cover up poor performance with almost no reverence for honesty and little or no concern for the truth.

China and the Asian periphery are just about the only places in the world today still experiencing economic progress.  Whether that will continue will depend upon unleashing the individual strengths of their countrymen.  If they leave it to government, these countries will falter just as the West has done.

Ironically, when a society becomes wealthy, it turns inward and begins to destroy the inner qualities that led to its economic success.  This is often true of families as well as countries.  It seems a natural human tendency.  It is no accident that the forefront of leftist political movements are populated with the children of the super affluent-- Obama Bin Laden is probably the most famous example.

Joseph Schumpeter was the first economist of note to realize that capitalism breeds its own destroyers and that wealth breeds contempt for what created the wealth.  The current American tide of opinion that makes financial success a criminal activity is an example of what Schumpeter foresaw in the 1930s in his famous book "Capitalism, Socialism, and Democracy."

Schumpeter noted that there was a natural tendency for the children of the affluent to resent their forebearers who created the wealth that they are born into.  In part, this is the expression of a guilt syndrome that permeates the inheriting classes.  These folks seek to expatiate their guilt by pushing government mandates that purport to outlaw poverty and other things that such folks see as a blight on their world view.  Joining up with academics and bureaucrats, these wealth inheritors, with time on their hands, dream up prisons to put average folks in -- prisons like Obamacare, Social Security, Medicare, Medicaid.

This is why elite schools, filled with children of the idle rich, are populated with extreme leftists, both on the faculty and among the student body.  These are all folks riding at the top of the stage coach, who peer, with their noses in the air, at the folks trying to cling to the stage coach.  At less elite colleges, you see less of this arrogant nonsense, both among faculty and among the student body.

So, don't expect economic progress in the Western world.  It will take a revolution in thinking to dispel the myth that government is the ticket to prosperity.  When calls for growth replace calls for redistribution, then real progress has a chance.....but not until then.

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