Like dying Rome in the time of the last Emperors, America under Barack Obama will enter a steep decline, speeding toward economic disintegration and final collapse.
In order to perceive clearly the road ahead for the United States and world economies, consider the failing Welfare States of Old Europe and Japan. The economies of those nations and the rest of the world from the end of World War II to the present were buoyed up by the greatest engine of economic growth in the world - the free market, free enterprise system of the United States.
America, on the other hand, has no such economic savior propping it up. When economic growth ends under Barack Obama, the growth rates of Old Europe and Japan, anemic as they are now, will of necessity plunge further and turn negative, since these are primarily export-led economies and the American market for their products will have dried up. (The adage is that when America catches a cold, Europe gets pneumonia).
Then, as a feed-back loop, this economic contraction in the failing Welfare States will reflect back on the U.S. economy, which will decline some more, and so on, into an economic death spiral.
By proposing a vast expansion of the welfare state in America, Obama and the Democrats are condemning us to the economic hopelessness of the German, French and Japanese models.
Why this is so is no mystery: It's the inevitable result of the high taxes and generous spending of the Welfare State, which takes money out of the private economy, where it creates jobs, and gives it to the black hole of government, strangling economic growth in the process.
Of course, Old Europe and Japan did have growth at one time. In fact, for 25 years after World War II growth in those nations was referred to as an "economic miracle."
For example, in 1974 unemployment in France was an incredibly low 2.8%. Today, it's 10% and youth unemployment exceeds 20%. Also in 1974, the average French person worked 25 hours per week, one hour more than the average American's 24 hours per week. By the 1990s, the average French work week shrank to 17.5 hours while the average U.S. work week rose to 26 hours.
The reason the French now work one-third fewer hours has to do with escalating taxes. Today, fully 25% of the French work force - that's one out of every four French workers - receives a state salary; 76% of all French between the ages of 15 and 30 hope to work for the state; and public spending accounts for more than 50% of gross domestic product.
In the case of Germany, economic decline is irreversible. The numbers, from the U.S. Census Bureau, tell the story. Between 2000 and 2050, the total German population will shrink by 30%. Again, that's -30%!
Worse, the working age population will decline by 45%, while the over-65 population will grow by 55%. If you were to go to Germany - and all Americans should, to see what your Obama future will look like - you will see a nation that resembles an over-55 retirement community, like Leisure World in California.
Germany, then, is cursed with both a dwindling and an aging population. The reason: The high taxes on young workers to cover generous welfare state benefits diminishes the willingness of young people to marry and have children, because it will be harder to pay for them.
This is an inverted pyramid that's unsustainable, yet can't be fixed. The older beneficiaries of the welfare state won't allow it and the young lack the voting strength to change it. Germany is doomed.
As for Japan, that now-stagnant, once-mighty powerhouse, has lost over 15 years of economic growth. The trouble started with the bursting of its real estate bubble in 1991, which in turn led to a crisis in its banking system. Japan then tried to spend its way to recovery, repaving much of the country as part of a "public works" binge. One economist said Japan "paved everything including the sea," with zero effect.
Obama and the Democrats now appear poised to repeat this history. We've had one "non-stimulating" stimulus package already and a second one being proposed, with Democrats calling for yet more "public works" spending. It sounds alarmingly all too familiar.
Needless to say, Japan also suffers from an irreversible dwindling and aging population.
THE ROAD AHEAD
To understand clearly why an Obama presidency will sound the death knell of the United States, consider the following.
Obama proposes to "cut" taxes for 95% of working families while raising taxes on the remaining 5%, who the Democrats refer to as the "rich."
Both parts of this proposal are dishonest and misleading.
First, Obama will NOT increase taxes on the "rich;" he will increase taxes on high-income earners, which is a different thing entirely. "Rich" means wealthy, that is, those with high net worth, which is a balance sheet test, not an income test.
Bill Gates, George Soros, John and Theresa HEINZ Kerry, etc. are "rich." A single mother starting a small business in New York or San Francisco and sending several children to college, who is earning $250,000 a year is not "rich" by any stretch of the imagination.
Why is this distinction so important?
Because high-earners are the engines of economic growth and for the new jobs that result. For national economic survival, the risk-takers make all the difference, that is, the entrepreneurs, inventors, innovators and, most especially, the small business people who make our economy go and grow, and who create most of the new jobs in America. Yet it's precisely those people, who give the American economy its particular dynamism, whom Obama wants to tax.
The folly of taxing the producers means that they will have less money to create more jobs, raise the pay of employees, and set aside money to avoid laying off people during an economic downturn. A Democrat, the late president John F. Kennedy, said that raising tax rates "will never produce enough revenues to balance the budget, nor enough jobs" to put Americans back to work.
Of course, Obama's threat to America's economic survival doesn't end there.
Obama next claims that he will "cut" taxes for 95% of working families. This is a corruption of language. Since 38% of Americans currently pay no income tax, by definition, they cannot receive a "tax cut."
Obama gets around this by simply redefining the meaning of "tax cut." For these people who have no taxes to "cut," the Obama Democrats will issue a "tax credit" which is "refundable;" that is, government will write them a check, AKA welfare.
Abraham Lincoln once famously asked, "If we call a dog's tail a leg, how many legs does a dog have?" The answer, of course, is four. Calling a dog's tail a leg doesn't make it so. Calling an increase in spending a "tax cut" doesn't make it so.
Obama's program will take more people off the tax roll, thereby increasing the percentage of those paying no income tax from a dangerous 38% to a terrifying 48%. We are approaching the tipping point where 51% of the population can plunder the other 49%; that is, there will be more people riding in the wagon than pulling it.
At that point, the expansion of government spending will become an epidemic. Another Democrat, the late Senator Daniel Patrick Mahoney, described this approach as "more government and less growth; extrapolated, these curves lead to a condition of no growth and total government."
This threat to our national and economic survival will develop very quickly under an Obama administration, because there are other destructive consequences of Obama's plan. One of the most important of these is inflation.
Inflation, at one time, was considered solely a monetary phenomenon, that is, it was defined as in increase in the general price level caused by an increase in the supply of money and credit, unsupported by a corresponding increase in the production of goods and services. The popular rendition was " too much money chasing too few goods." Then a new Behemoth, the modern Welfare State, appeared on the world stage in the 20th century, and another factor gained significance: government spending.
Even if the monetary authority, which in the United States is the Federal Reserve Bank, keeps steady control of the money supply, inflation in a Welfare State will still increase and erode purchasing power.
The way the process works is as follows. The term inflation applies only to the private sector of the economy, that is, to market goods and services: Cars, houses, food, insurance, etc. The market or private sector is the only domain where economic calculation is possible, through the price system; hence, the only domain where inflation is measurable.
In the public, or government sector, on the other hand, economic calculation is impossible. You cannot go to Washington, D.C. or your state capital or City Hall and purchase $50 worth of government.
When workers in the private sector produce market goods, they're paid for their labor with money which they then use to buy other market goods, produced in turn by other workers. Note that in reality, while money is involved, the transaction fundamentally is a bartering process: market goods are being traded for other market goods. Money is simply the medium of exchange; the veil behind which real exchange takes place.
Now government employees enter the picture, that is to say, the members of the bureaucracy who administer the Welfare State. They have also been paid with money, but they produced no market goods to contribute to society. They use their income to buy market goods and services produced by others, but there's no real production on their side of the exchange. The exchange is unequal; they reap the reward of other producers' efforts but give nothing back in return (except bureaucracy, of course).
Next, factor in the dependents of the Welfare State, who are the recipients of government transfer payments. They also produce no market goods to contribute to society, but they consume huge quantities of the production of others. What you have then is an enormous imbalance in exchange, with too much money (with no real production backing it) chasing too few goods.
Since Obama intends a further vast expansion of the bureaucratic class and the dependent class, in order to put together a permanent electoral majority, look for hyper-spending, hyper-inflation and increased taxes on the middle class.
Obama, then, will give us the worst of all possible worlds: Economic stagnation and inflation; that is, stagflation, the '70s nightmare associated with Jimmy Carter. Obama will be Jimmy Carter's second term. It's doubtful that the United States will survive it.
