   |
|||
Beyond the Welfare StateSam Mathid Hugo Salinas Price has posed the question: ‘After the Welfare State, what?’. To say that it was an excellent question is an understatement. It is the most important question of our time. Governments in the 20th century owed their very existence to the public perception that they had the crucial job of ensuring the smooth running of the economy and redistributing the resultant prosperity. The concept that an economy was rightfully controlled by governments was logically extended to the equally fallacious idea that government had a right to as much of the monetary proceeds of that economy as they could respectably get their hands on. China is a clear and current example of the sort of thinking that believes government control of an economy is vital to its good operation. It is commonly claimed that the booming Chinese economy of the last ten years was caused by the policies of then leader Deng Xiaoping who famously freed up external and internal trade. That has enough kinship with the truth to be acceptable on a superficial inspection. It is not the truth however. The Chinese government did not create the booming economy, what it did was it ceased to hinder, distort and stop it with quite as many policies and regulations. It finally got out of the way a bit and allowed an increase in the natural state of affairs of free people the world over… production and trade leading to prosperity. Prosperity is inversely proportional to regulation. The more regulation the less prosperity. The less regulation the more prosperity. That is a self evident truth for anyone with the eyes to see. This situation is not of course restricted to China. Governments cannot cause prosperity. They can only hinder it less or more by removing or increasing their regulatory economic roadblocks. To suggest that removing regulation is laudable is akin to suggesting that a poisoner should be lauded for lowering the dose to his desperately ill victim. It is an improved state of affairs, and certainly better than increasing the dose, but hardy anything to applaud. The current intrusive rush of the US government into the economy is a recipe for disaster. It is how one knows that this crisis is going to become an awful lot worse. It is sad to remember that this is precisely what a clear majority of Americans voted for at the last presidential elections. Obama is being true to his word. Maybe his lowered approval rating is because people didn’t expect that of a politician. Obama is the most truthful president that the US has had since Reagan. Does America have ‘change it can believe in’. Absolutely yes… the poisoner is increasing the dose, just as he promised. Bush promised to lessen the dose and acted quite to the contrary. Did Obama ever promise to free up the markets? Hardly. He promised greater government involvement and that is precisely what he is delivering. Along with that comes less prosperity. As prosperity is at a very low base already he is simply quickening the pace at which the US is marching toward poverty. Every single penny that governments spend makes people poorer. Governments can create neither jobs nor wealth, they can only destroy them. The pertinent question is how much job and wealth destruction can a society bear before it collapses under the weight of government? Therein lies the story and history of civilizations. It may be appropriate to precede the question ‘After the Welfare State, what? by: ‘What allowed the Welfare State in the first place?’. The answer is government issued paper money. Once governments had the monopoly and ability to print paper money they had the ability to buy electoral allegiance. “He who has his thumb on the purse has the power.”- Otto Von Bismarck (creator of the modern welfare state) 21st May, 1869 For 4,500 years the world advanced using gold (and silver) as money. For the last 300 years we have used paper representations of money with ever more damaging consequences. Each generation has suffered one or more periods of impoverishment. The end game of the Great Monetary Crisis will see the Welfare State discredited throughout the world. Governments’ promises and cast iron guarantees will all be for nought. The value of paper monies will reach the inevitable zero, utterly destroying the world’s middle classes in the process. The world is on the path back to a gold standard (www.goldstandardinstitute.com). Whether or not people want it or understand it or believe it is irrelevant. The collapse of the latest experiment in government issued paper ‘money’ is into its last decade. This time the problem is global and terminal. The unprecedented, subsequent loss of confidence in any governments issued paper will be total. When we are back on a gold standard then the question ‘After the Welfare State, what?’ will be answered. The gold standard ensures that governments do not have enough money to indulge in much regulatory mischief. To go one step further, maybe the ideal scenario is that after the Welfare State will be the Impecunious State… a state that has been separated from control of the money supply. Just as in a more enlightened time Thomas Jefferson proposed a “wall of separation” between state and church, so we now need a wall of separation between state and money. Over a period of three hundred years it has been conclusively proved that governments cannot be trusted with such responsibility. ### Jan 30, 2010 © Sam Mathid 2006-2010 321gold Ltd |
