Lessons from Squanto

Governments across the planet will go to any length to meddle in the lives and private affairs of their citizens.  This is what our experiences and observations have shown.  What gives?

For one, politicians have an aversion to freedom and liberty.  They want to control your behavior, choices, and decisions.  What’s more, they want to use your money to do so.

Here in the United States, bureaucrats, flush with authority, will stand in the way of a fellow who’s striving to find his own way by his own means.  Licenses, permits, fees, employer identification numbers, state board of equalization registrations, workers compensation insurance…you name it.  All this – and more – are needed prior to hanging out your shingle and making your first sale.

Many cities in the land of the free require school kids to get a permit just to operate a lemonade stand.  And don’t even think of opening an auto shop, let alone a medical practice.  You’ll spend your first year’s profits getting your hazardous materials business plan approved by the fire department.  What a waste of time and resources so you can store a couple tanks of oil and gas and keep a couple waste drums to put the dirty rags in.  Does all this rigmarole make you safer?

After that, your time will be spent keeping up the requisite documentation and reporting.  Actually acquiring and serving customers will be secondary.  Then, after paying federal, state, and local taxes, you’ll be left with less money than if you’d just kept your day job.  Why bother with the risk if there’s no reward?

Perpetuating Mistakes

Certainly, some government programs were initiated with well-meaning intentions.  Food stamps, for instance, are issued so people can buy food so they can eat.  Isn’t that a good thing?  On surface, the answer is yes.  But below the surface unintended consequences simmer.

By making more and more people dependent on the government for their daily bread, the government is, in effect, crippling them.  The assistance, in many cases, does more harm than good.  It completely snuffs out a person’s aspirations.  Some may even put their ingenuity to the task of gaming the system.

You see, nothing demoralizes a person like being dependent upon the benevolence of the state.  Yet once someone has slipped onto the receiving end of its disbursements, breaking free is exceedingly difficult.  To do so, a dependent must go from being comfortably poor to being uncomfortably poor.

“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime,” goes the English proverb.

Politicians, unfortunately, have missed the wisdom of this axiom entirely.  Instead, like most of their plans, they’ve set up programs that make people indefinitely reliant.  Moreover, they don’t give a lick that their schemes are giant money sucks with few redeeming qualities.

Up and down, in and out of the economy these programs go.  Entire industries, like defense contractors, are fully dependent upon the government’s cheese.  Other promised transfer payments, like social security and Medicare, are fully entrenched into the fabric of society.

This is why it’s impossible to cut the federal budget, even if many of these programs are mistakes.  It doesn’t matter if the nation can afford them or not.  Politically, these mistakes cannot be undone.  They must be perpetuated.

Lessons from Squanto

Over the last decade the federal debt has increased from $9 trillion to over $20 trillion.  That’s more than double in just 10 years.  Where has this debt based money gone?  Where has it been spent?

A good part of it has been frittered away paying for social transfer payment programs.  An abundance of it has collected in and around Washington and Wall Street.  Whatever else, the Pentagon has pumped out to its preferred contractors.

What will happen when the federal government tacks on another $11 trillion over the next decade?  What if they double the debt again, taking it to $40 trillion?  We don’t know, exactly.  But there’s a good chance we’ll all find out.

In the meantime, one thing is certain.  A day of reckoning always arrives at the worst possible time.  But, in this case, the approaching day of reckoning will be especially difficult.

The federal government’s balance sheet has been larded up with massive amounts of debt.  This debt is needed to fund programs that several generations of Americans have become wholly reliant upon.  These people expect that these programs will support them until the day they die.

What will happen when the debt charade breaks down and these dependents are cutoff from their expected payments?  What sort of madness will prevail when half the populace realizes in unison that they’ve been snookered?

Indeed, there will be an ugly shock and a painful adjustment.  Given the scope and complexity of the impending break down this could go on for decades.  However, those with the will and desire to pick up the pieces and make something of them will be greatly rewarded.

Remember, the Pilgrims didn’t receive monthly government checks when the Mayflower first landed at Plymouth Rock.  So, too, Squanto didn’t show up at the first Thanksgiving feast with a bucket of extra crispy KFC purchased using a government issued EBT card.  Rather, Squanto taught the Pilgrims how to sow and fertilize native crops and trade furs with other native tribes, and they reaped the fruits of their labors for a lifetime.

The point is, the day will come when government dependent industries and recipients of government transfer payments, including FDR’s promised social security, will be abandoned.  Thus, taking steps today to ensure your financial independence from the state is of grave importance.

Sincerely,

MN Gordon
for Economic Prism

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