The Poverty of Nations

Before penning The Communist Manifesto, Karl Marx wrote, “All that exists deserves to perish.” Never one to mince words, Marx made clear that his aim was to foment a world revolution that would bring capitalism to its knees.  To be replaced with what, he did not specify.

Why so many seemingly intelligent leftists would invest such energy into collapsing the economy with the sheer faith that something better will rise phoenix-like out of the ashes is an enigma. A moment’s reflection leads one to conclude that the military might of the nation-state could easily crush any “worker’s revolution” – not that “the workers” would ever run an economy under any socialist regime – and the end result of destroying capitalism would be the formation of some kind of global hyper-statism.

So the reason why a multitude of states around the world, including our own, would make Marx its chief economic adviser, and engage in an orgy of economic self-immolation requires some explication.

In his masterwork Das Kapital, Marx would adapt and distort Ricardian economics to form one of the most persuasive polemics on political economy in human history.  And a polemic is exactly what it is, despite its scientific veneer.  The magnum opus assumes many controversial points, such as the primacy of the proletariat as a revolutionary force, now considered intellectually obsolete.  Since Lenin, naked paternalism rules the day among the socialist vanguard.  Intellectual arrogance is incompatible with explicit materialist philosophy.

While today’s Democratic Party denies being driven by Marxist ideology, it is undeniable that the rhetoric of Marxism has permeated the left and is driving the Democrats’ agenda and actions.  The lingering vestiges of overt Marxism in the guise of class warfare and wealth redistribution have been supplemented and veiled by a “neomarxism” or a re-imagining of Marxism for the peculiar conditions of the American experience.

The new marxism makes up for the proven shortcomings of the old economic Marxism by painting the socialist agenda in an abstruse ethical palette of banal truisms like “it’s nice to share” and “we’re all in it together!” that flood the culture from kindergarten through upper academia.

The harnessing of these truisms in the form of “critical theory” – dozens of leftist pet causes, from radical environmentalism to racial “justice” – both leads to dangerous factional strife, as well as the general diffusion of threat perception among the majority, who do not always recognize that these groups are all bound together in the common cause of Marxist revolution.  Those who are blind to the fact that we are swimming in an ocean of cultural marxism are the proverbial fish that do not know they are wet.

What remains is an exposition of the state of our political economy, laid bare so that even those eyes most clouded by cultural marxism can appreciate that we are pursuing self-destruction by socialism. Indeed, nearly every single economic and fiscal policy of the United States is bent towards intentional impoverishment; a truly dangerous weakening of our ability to defend ourselves from enemies without, and from economic collapse and civil discord within.

While classical Ricardian economics holds that economic progress comes from the simultaneous increase in the productive use of land, labor, and capital, holding scientific progress constant, we find that the Democratic Party is opposed to the employment of all factors of production, including the increase in scientific progress.  It shall be easier from this point on to provide a brief overview, so that the reader can expand the argument.  Assuredly, there are far more examples available than can be covered in a brief article.

According to USDA statistics, the United States has a total land area of about 2.3 billion acres. While many national parks are beloved by Americans, the scale of acreage being consumed by parks and recreation, which falls under the category “special uses,” now rivals that of “cropland,” standing at 297 million (13.1%) and 442 million acres (19.5%), respectively. Another category of agricultural use, “grassland pasture and range land,” at 587 million acres (25.9%), is difficult to adjudge in terms of how productive this land is being employed. It is an interesting note that when Woodrow Wilson established the National Park Service, he was supported by the radicalized Sierra Club, and opposed by the Forest Service on the grounds it might endanger the timber industry. Even more appreciable today is the inexplicable restriction of oil drilling, and particularly at the desolate ANWR site in Alaska, which is claimed to be an invaluable wildlife reserve.

The wasteful practice of ethanol subsidies, a product manufactured only to sate the demand of radical environmentalists to placate the weather gods, further illuminates how America is wasting its land. America has been the leading producer of ethanol since 2005, and according to cited public information, employs some 25 million acres growing corn for ethanol production. As we can see from USDA statistics above, that is nearly 10% of all cropland. A roughly ten percent increase in U.S. food prices dependent on corn production may not seem like much to the majority of Americans, but it has surely been a contributing factor to world food price inflation, which had such a dramatic effect in fomenting revolutions overseas.

The last example in this far-from-exhaustive list is American home-ownership.  Without rehashing the entire run-up to the 2008 housing crisis, well-covered elsewhere, the end result of massive government intervention in the housing market using governmental arms Freddie Mae and Freddie Mac, now downgraded investments bleeding red ink on the order of trillions, is a depressed housing sector that is the lynchpin to the American dream.  Houses by far tend to be the single most valuable asset owned by American families, and are leveraged to debt-finance other assets.  In other words, for millions of families, real estate is the asset that leads to accumulation of numerous other assets. As the real estate market goes, so goes the American dream.

Far be it for me to seek to deprive immigrants a chance at economic freedom in America. But the flood of illegal immigration to the United States has been accompanied by numerous additions to the welfare roles, making so-called entitlement programs as enticing an attraction as blue-collar jobs. Though illegal immigrants are not technically eligible for many federal programs, they are eligible for public education and other benefits.  According to the Center for Immigration Studies, “On average, the costs that illegal households impose on federal coffers are less than half that of other households, but their tax payments are only one-fourth that of other households.” Therefore, the relatively cheaper illegal labor comes at the cost of taking more taxes out of the system than are put in.   One need not support either illegal immigration, or the welfare state, to appreciate that more money should stay in people’s pockets, instead of being used to subsidize illegal immigration. In addition to supporting themselves, a standard many Americans would likewise fail, immigrants should be made to at least acknowledge the laws and customs of the nation they are immigrating to, which requires learning the language and basic civics.If you import millions from the Third World without acculturating them, you are essentially importing the Third World along with them.

Though unionization in the United States has been traditionally considered weak compared with other industrialized nations, the reason is that there has been less demand for unions.  Corporations often offer the same or better benefit packages than unions offer, and without the strong-arming.  In addition, Americans get similar “union” benefits simply by virtue of being born a citizen in the form of federal entitlements; one might say that the entire country has been force unionized.  These points aside, there is still enough unionization to do significantly impede growth in the economy.  According to The Heritage Foundation, unionization tends to have negative effects on the economy, including higher levels of unemployment.

Self-evidently, the key to the “capitalist” economic system is capital. While capital extends beyond the concept of money to include other financial assets, all property is denominated in currency. There is perhaps no more readily visible indicator to assess the degradation of our economic system in the progressive era than the devaluation of the dollar. Although it would be simplistic to equate  increases in the money supply since the establishment of the Federal Reserve to dollar devaluation, since there has been corresponding increases in value-added to the economy through technological innovation, the purchasing power of the dollar has declined 95% since 1913. This has led to immense financial pressure on households and the unleashing of negative socio-economic forces beyond the scope of this article to compass. Suffice it to say, Lord Keynes recognized the revolutionary impact of “debauching the currency,” citing Lenin:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,”, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

And debauching the currency is precisely what our central bank is doing; so much so that the U.S. dollar just recently fell against the Swiss franc more than it had in the prior forty years.  The dollar’s continuing deterioration, an increase in capital without a corresponding increase in production, is causing negative ripple effects throughout the entire global monetary regime.

The underestimation of the wealth-generating effect of new technology plagues classical political economy. And indeed, from a traditional analytical standpoint, the United States’ economic demise may have happened decades ago if it were not for the sudden, spontaneous rise of information technology.

The 1990s were driven by advances in computers and telecommunications. Despite the bubble bursting at the end of the decade, the American economy, and the world economy by extension, continues to reap benefits from scientific breakthroughs. A visible marker of our economy’s transfer from an industrial to an information economy was reached with Apple’s temporary surpassing of Exxon Mobil as America’s most valuable publicly traded company.

The Internet, or to borrow the old phrase “cyberspace,” has opened up new frontiers that were neither foreseen by paleomarxists nor by their intellectual progeny. Conservatives must seize the opportunity provided by nascent technology to counter hostile statist and left-wing narratives in order to win the hearts and minds of the public at large if they seek to have a greater say in the nation’s future.

Adam Smith is said to have written to his friend after Britain’s lost Battle at Saratoga that, “Be assured my young friend, there is a great deal of ruin in a nation.” But when all the force of state is bent against its own destruction, doing all that is fundamentally opposed to the creation of wealth and its own national success, how long can the ruin be sustained?

The conflagrations that have erupted around the globe due to economic duress are bound to reach American shores, and conservatives and “tea party” activists are already being scapegoated for various social and economic ills. They must have simple, well-reasoned arguments ready at hand in order to avoid being cast as the villains.

If we do not return to our national formula for success while it is still recognizable for the majority of Americans, our economy will be altered into a poor doppelganger of all the failed socialist experiments riddled throughout modern history.  We will go from the world’s engine of wealth generation to a sharer in global poverty. We will become an equal in a world of scoundrels, if not their supplicant.


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