Americans, take heed, a vampire prowls among you. The redistributive policies and out-of-control spending of the current Administration, if it is not already obvious, are threatening an economic bloodletting of the first magnitude. Indeed, the social welfare state, part of the progressive Western experiment in political and economic egalitarianism, is foundering wherever we look, and yet it continues to be endorsed and promoted by an out-of-touch ruling political class. Our leaders—or far too many of them—are clearly in a state of denial, unable to give up a cherished illusion despite a mounting fact attack. Facing up to the truth does not demand profound economic thinking, only a modicum of common sense, which is clearly in short supply. Nor would a bandaid here and a bandaid there stop the bleeding.
Plain common sense tells us that, in the long run, so-called “democratic socialism” doesn’t work for a very simple reason: it must be constantly hiking taxes on a shrinking productive base while awarding exemptions to a constantly growing non-productive class. Canadian author William Gairdner, co-founder of the Civitas think tank, estimates that in the current welfare state only one third of the population constitutes the producing sector; another one third is affiliated with government, either clerically or contractually, and the remaining third consists of government dependents. Thus two thirds of the modern “social democratic” state is dependent for its maintenance on a dwindling minority of economic generators. Worse, Kenneth Minogue of the London School of Economics warns that once the tipping point of 51% of public clientage is reached, decline must inevitably set in.
What we have here is an iron recipe for creeping revenue depletion and societal decay. Wealth-creating and job-producing enterprises either shrivel due to rising costs or locate elsewhere to more favorable cost-effective regions, which leads to growing unemployment. A hyper-inflating bureaucracy—which must be paid for—to administer and distribute an ever-lengthening skein of entitlements and government programs—which must also be paid for—will eventually, as Margaret Thatcher said, run out of other people’s money. We can now see what the welfare state yields, writes Daniel Hannan, a member of the European Parliament: “burgeoning bureaucracy, more spending, higher taxes, slower growth and rising unemployment.”
Ultimately, a society predicated on single-payer medicare, cheap daycare, maternity and paternity leave, shorter work weeks, paid mensual vacations, mandated green energy, early retirement, special interests subsidies, public sycophancy, in short, the contemporary version of bread and circuses, cannot run on fumes. As Hannan points out, America is now imitating the European model, “expanding its government, regulating private commerce, centralizing its jurisdiction, breaking the link between taxation and representation.” The future looks increasingly grim. For when the day comes that the parasite has devoured the host, that is the day the system collapses.
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