Friday, July 10, 2009

A Cartoon from 1934

Chicago Tribune


Those unwilling to learn the lessons of the past
are condemned to repeat them.

An economic bubble takes an average of two years to correct itself - with one requirement: that the economy is free to make the correction. In the 30s, that correction was stretched to 10 years and even then it was not in the process of correcting itself. It was the war that drafted the unemployed (many to their death) and put the women and old folks to work.

A free economy designs itself to provide whatever the people in the economy need and are willing to work for. It is constantly correcting itself unless the government intervenes and thwarts the corrective process - the mechanism that led to the crash in 1929 and the collapse in 2008 as well as other bubbles between those times. The rational government action is to cut spending, get rid of onerous and irrational regulations, and sell off assets, all in order to lower taxes so that people can use their resources for productive effort. No one, including the individual, the county, the state or the country, can borrow and spend their way out of lost income. The way out is to create and produce some value that one can live on, either directly or through exchange with other people for the things one needs. Political freedom, including economic freedom, is the underlying requirement for this to occur.

Ask yourself: Is this happening now? If not, why not? And the answer is somewhat different than it was in the 30s. Then socialism was an erroneous, but inspired ideal. Its failure was not perceived until the fall of the Berlin Wall whereupon the whole world could see the utter poverty, the imprisoned and tortured people who didn't agree with the system, the starving of millions and the massive waste of resources - all caused by government planning and control. Given that socialism is a failure, what is different now? The motive? Looks like it could be. So, what is the motive now?

Hint: The Greater Good is not the motive. That is the cover, the drapes that soften the window so the unvarnished truth is not realized.

Think about it.

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