Sunday, March 3, 2013

The U.S. as a Third World Nation

One of my friends taught in Mexico City for two years. He said there as a tiny minority of those who were unbelievably wealthy, a miniscule middle-class,and everyone else was poverty-stricken. He said he saw a girl who wore a new outfit to school every day; all the kids were chauffeured to school; some had three houses: one in Mexico, one in France, and one in Vail.

I also know a Filipina who told me there are basically two economic classes in her country: the rich rich and the poor poor. There isn’t much of a middle-class. How did this sad state of affairs come about? How else – the rich rich have gained control of the State and use it to enrich themselves and impoverish everyone else. This is what always happens. It’s human nature.

It’s what happened in the former Soviet Union and currently in the Middle East (the members of the House of Saud – what a joke, because there’s no such thing as Arab "royalty" – are bazillionaires, while the populace is mostly poor and unemployed). It has always happened in the past. The example I generally use is Galilee of Jesus’ time, in which two-thirds of the people were poor because the Romans and the upper-class Pharisees used the State to tax everyone into poverty.

Under the free market two-thirds of the people are middle-class. When there isn’t a free market, two-thirds of the people are dirt-poor, and a very small minority (those who have gained control of the State) are Scrooge McDuck-rich. That is what the Third World is: a handful of billionaires and everyone living in shacks.

In the Philippines, there is so much poverty that there has sprung up child prostitution to service wealthy pedophiles from other countries. The prostitutes are both boys and girls. The Philippine government looks the other way. Drug abuse is rampant, because the users are without hope.

The Filipina used to live in a gated community with armed guards at the entrance. That’s starting to sound familiar even in America.

What do these other countries have to do with America? They show that America isn’t immune to the diseases of the Third World. Here’s an example: the mean average tax burden in the US is 40 percent of a person’s income. The economist Walter Williams said when you factor in everything else – such as the fact the citizens pay 100 percent of the Social Security tax, since businesses pass their taxes onto their customers – then the tax burden is in reality 50 percent. Someone making $40,000 a year is actually making $20,000.

When you take into account the fact the dollar, because of government-caused inflation, has lost 98 percent of its value in the last 100 years, plus all of the job-destroying regulation of the economy, plus’s entirely possible the U.S. could turn into a Third-World country. It might take another 20 years, but it could happen.

My paternal grandfather dropped out of school in the eighth-grade. He spent his life installing wooden-strip floors and finishing them. His wife did some sewing part-time in their home. They raised nine kids and lived a middle-class existence.

This is now impossible in the United States.

How did my grandfather do this? Because taxes and regulations and inflation were a fraction of what they are now.

My father’s first brand-new car was a 1967 VW Bug. It costs $1600. He dropped out of high school and opened up his own construction company. He made $10,000 a year, which put him right in the middle of the middle-class. The car costs 16 percent of his yearly income. A cheap car today costs $10,000. The mean average salary is $40,000. The car is now 25 percent of a person’s yearly income, not 16 percent.

My parents’ home – solidly middle-class – costs $12,000 in 1968. A little over one year of my father’s salary. Today, the average home costs $120,000. Three year’s income. While today’s homes are somewhat larger than the ones in 1968, they’re not ten times larger (and if you want to see what houses really cost, look at an amortization table and figure the interest).

The price of a house now cost ten times more than it did a little over 30 years ago. If mean average income had kept pace, people would now be making $100,000 a year.

It’s not the free market that is doing these things. It’s the State. Taxes. Regulations. Inflation. Deficits.

I read an interesting newspaper article a few months ago, in which it was found the overwhelming majority of those arrested for failing to pay parking tickets didn’t pay because they couldn’t afford to. They were poor people. I see them all the time, driving their hubcap-less, 30-year-old cars with cracked windshields.

The economy’s pretty good if you have a degree or two in STEM. But if you don’t, you’re generally falling further and further behind every year. Not because of the free market, but because the State, every year, raises taxes a little bit more, regulates a little bit more, reduces the value of the money and savings through inflation just a little bit more...

It’s not "the rich get richer and the poor get poorer" under the free market. It happens when corrupt, sleazy people – like the lawyers who sued tobacco firms solely to transfer hundreds of millions of dollars of smokers’ money into their own pockets – use the State to make themselves rich and everyone else poor.

If my grandfather and my father were young and working today, they wouldn’t be middle-class. They’d be poor. Probably permanently. Why can’t you have a middle-class existence driving a taxi anymore? What’s wrong with being a trash collector? Someone has to do it. Is life about nothing more than working 55 hours a week just to make ends met, because the State seems to think people are nothing more than sheep to be sheared? When’s the last time a tax-money parasite politician took a cut in pay?

You don’t have to leave the U.S. to find the Third World. It’s already here. If you want to see it among white people, go look at your typical trailer court. If you want to see it among blacks and Hispanics, go look at the inner cities. What do most of them have in common? The State has destroyed the high-paying jobs that were available for them in the past, and now sucks up a lot of what money they have. Then many of them go on welfare, which degrades them even further.

There is an old story about boiling a frog. You don’t put the water on boil and dump the frog in. He’ll jump out. What you do is put the frog in the water, then start to heat it up. Soon the frog is cooked before he knows it. Unfortunately, this is how human nature works. If things get slowly worse every year, people began to think it’s normal.

In several years, it’s entirely possible the U.S. will consist of a small minority of very rich people – say, corrupt politicians and their equally corrupt friends – and most everyone else will be living in cheap houses, apartments and trailers.

The State expands, and Civilization recedes. It’s an unalterable law of nature.


Terry Lennox said...

Really, the rich impoverished everyone else? They evolved from apes the way the rest of us did, in the primordial state of restrained and tasteful affluence that characterizes the whole history of mankind prior to the catastrophic advent of modern capital formation?

No. They just never stopped being poor. They were always poor. The middle class isn't the natural state of mankind. It's a rare freakish anomaly, confined to Europeans, and some kinds of Asians.

Incidentally, one of the environmental (non-HBD) requirements for the formation of a middle class is significant capital formation in private hands. It's not sufficient, but it is necessary. What we're seeing in the West right now is the decay of other equally necessary conditions.

Don't worry about the rich. The rich you will always have with you. Getting morally outraged about it is like getting upset about entropy. Try and stop it. Once in a great while they serve a useful function in improving conditions for people like you and me. At other times, at least they tend to have an interest in stability.

Kill them off, and what do you get? New ones, infinitely more clumsy, angrier, dumber, and with infinitely more to prove. The American revolution is no more the default case of revolutions than white picket fence suburbia is the default case of nomadic pastoralists.

Unknown said...

I'm talking about the super-wealthy using the State to enrich themselves at the expense of everyone else, nothing else. Read the article next time.