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REAGAN
RENAISSANCE OR
A dose of tough minded self-defense, entrepreneurial ingenuity and capitalism, all boldly inspired by Ronald Reagan, allowed the United States to engineer the defeat of a Soviet Union crippled by socialism and unable to successfully compete with a more capitalistic economy. The disintegration of the Soviet Union provided proof that pure socialism, the product of fantasy and wishful thinking, is an unworkable economic model and that government planning is a formula for failure. Tragically, the United States, itself now crippled by socialism, could face a similar fate. As a student of President Reagan's speeches and his conservative viewpoints, I believe that I have found a straightforward workable solution to deal with America's problematic enchantment with socialism and the economic malaise that it has caused. The major parts of this solution were themes often repeated by President Reagan in his speeches. With only modest modification, President Reagan's themes have been supplemented by expanding on several ideas put forth by Newt Gingrich. Given the magnitude and complexity of the problem, the solution is surprisingly simple and one that can be readily implemented. Why Today's Americans Can't Save Politicians promising a utopian paradise through the use of government to redistribute the income and wealth generated by working Americans have brought us to the brink of economic disaster. Regardless of whether their promises were motivated by their own selfish political desires to purchase their own re-elections or were made with "good" intentions, the end results are the same. Americans are now trapped in a vicious downward economic spiral that can only be broken by ending all socialistic programs over the course of the next few years except for Social Security which will require a longer period of phase-out. Social Security must also be ended, but fairness dictates that Social Security voluntarily be phased out over several generations instead of being phased out over the one to five years recommended for the other socialistic programs. There are no redeeming economic benefits to socialism. The world's best economists from the Von Mises school, have consistently warned us of the dangers posed by socialism. Socialism and capitalism are incompatible. Capitalism depends on savings. Savings can then be invested to increase productivity. Higher productivity increases income, which in turn supports additional savings as well as a growth in consumption. Socialism is a failed economic model and can only exist in a country as long as previously saved capital is available to be cannibalized or as long as there are enough remaining entrepreneurs and capitalists to parasitize. Socialism universally fails because the incentives are wrong. Socialism inhibits savings, rewards sloth and subsidizes failure. The few numbers of people that are actually benefited are more than offset by the many who succumb to the temptation of taking the easy or "free" money. Socialism does not teach people how to fish; it schools them in parasitizing other fishermen. In doing so, every welfare program ends up harming the very people it is designed to help. Any short term humanitarian benefits of socialism are completely superceded by the long term over consumption and dependence it fosters. In spite of common misperceptions, there are no net humanitarian benefits that can be gained from socialism. Not only does socialism invariably end up harming the very groups of people it was intended to help, socialism eventually destroys the middle class in the process. Taxes paid by the middle class, the source of the parasitic transfer payments, bleed away the middle class's ability to save. Worse, these same taxes completely prevent lower wage earners from being able to save anything at all. In contrast, unleashing American workers and entrepreneurs by freeing them from the government imposed burdens of socialism would allow Americans to save and invest in themselves to increase the wealth and standards of living for all Americans. Through continuous savings and the miracle of compounding, every American cannot only be independent, but eventually rich. Socialism in the United States was the creation of politicians who sought to perpetuate their own re-elections. Seventy years of socialism sponsored by the Democratic Party has spawned a Democratic political party that has nothing else to offer and a feckless Republican party that has not only not provided the opposition needed to prevent the growth of socialism, but also a party where some Republicans have become part of the problem. In short, politicians from both major political parties either sponsor socialism or indirectly sanction it by their lack of effective opposition. Socialism has become pervasive throughout government, dominating the federal, state, and even local government budgets. Every household in America is affected. Seventy years of socialism have led to a United States where two out of every three households get a transfer payment as an incentive to vote for socialism-sponsoring politicians and every household and every business is taxed to support the insane monstrosity that socialism has become. How bad is it?
And if these pictures are not bad enough; it is going to get much worse:
The sad truth and reality is that the combined net present values of the unfunded liabilities of Social Security and Medicare as projected by Gokhale and Smetters already equal or exceed the estimated total private net worth of the United States. When you consider that the United States has had net negative cash flows for the past several years and the fact that liabilities equal or exceed assets, without counterfeiting, the United States would be forced into bankruptcy. There is only one way government will be able to meet the cash demands for Medicare and Social Security:
The politicians that sponsored socialism knew that the public would not tolerate the high taxes actually needed to pay for the "benefits" promised to their constituents. The Federal Reserve Act of 1913 made it possible for politicians to print the large quantities of paper dollars that represented the difference between the taxes collected and the benefits paid to constituents. The dollar lost 95% of it purchasing power between 1913 and 2000. Every taxpayer who believes that government will be limited as to how high taxes can be raised is allowing themselves to be deluded regarding just how malignant inflation is going to be in the years ahead. Every Social Security and Medicare prospective beneficiary is deluding themselves if they believe they are actually going to have adequate health care and adequate retirement income if they are going to be dependent on government in the years ahead. It is not realistically possible, economically possible or politically possible to pay the benefits promised under Social Security and Medicare to the boomers upon their retirements. Successor generations will simply not stand for it. Politicians will print even more dollars and more bonds. How much longer can people continue to be fooled into believing that pieces of paper covered in either green or red ink are worth trading for valuable goods and services when the paper becomes worth less each and every day that passes? "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power." -Alan Greenspan, appearing before the Senate Banking Committee on Feb. 15, 2005, in response to Democratic Senator Jack Reed of Rhode Island on the topic of funding Social Security. The stock market mania that ended in 2000 and the echo manias in stocks, bonds and real estate that are on the verge of ending now are testament as to how powerful delusions can be and how long they can last. Socialism is just such a delusion. And because of the sins of professional politicians, socialism is a delusion cast in the concrete of law. If Americans have not recognized socialism for the evil delusion that it represents and begun to take action to eliminate these socialistic programs before 2012 when the boomers start to become eligible for Medicare, no one should be surprised if some states consider secession by 2016. Few nations have ever survived sovereign default. No nation has ever survived hyperinflation. Depending on the number of Americans favoring secession, the possibility of a rapid disintegration of the United States, much like that of the Soviet Union, should not be ruled out. Overcoming The Opposition To Ending Socialism Socialism is nothing more than legally sanctioned plunder and a form of involuntary servitude. In an honest Court, socialism is clearly unconstitutional, but current courts will not be the means of ending socialism. Socialism will have to be ended politically. As the instigators of socialism, Democrats will not be part of the solution; Democrats will be most of the opposition, and will likely constitute the only recalcitrant opposition. Democrats will have to be defeated; no compromises; defeated! Democrats are not going to be defeated en masse by third parties; only Republicans can provide a substantive defeat of the Democrats. Most Republicans in office are professional politicians and some (many?) are likely to resist ideas involving the abolition of socialism. Motivating Republicans to abolish socialism will mean replacing reluctant Republicans with Statesmen. Statesmen capable of defeating socialist-leaning Republicans, will have to be recruited, trained and financed. The person most suited to this task is Rush Limbaugh. The first defeat of a left-leaning Republican by one of our Statesmen will be a landmark event. It will strengthen the resolve of every incumbent Republican who is considering whether to join our fight for freedom and serve notice on those that are weak in the knees. Potential, but undecided Statesmen on the sidelines will now be eager to enlist in this effort. Conservative third parties that splintered away from the Republicans will return and provide additional conservative candidates to our pool of Statesmen, what I propose to call the Reagan Wing of the Republican Party. Nothing breeds success like success. It is simply not possible to overstate the importance of recruiting Rush Limbaugh to lead this effort. There are several reasons why Rush is the person most suited to lead this effort. First and foremost would be his ability to tap into a large source of funding (his listening audience) that is completely independent of the Republican Party. There is a second potential funding pool, roughly half the size of the first pool, that only Rush can create. Together, these two funding units could provide at least $600 million in every Congressional election. The GOP would be reluctant to finance the defeat of any Republican, and particularly the defeat of an incumbent. Make no mistake, current office holders will be reluctant to embrace the abolition of socialism making it a necessity that some (more than a few?) incumbents will have to be defeated. A large source of independent campaign funding controlled by Rush that could be used to fund Statesmen to defeat weak Republicans when added together with Rush's daily commentary to endorse selected candidates would constitute a powerful Sword of Damocles to move the entire Republican Party substantially to the right. No one can create this funding pool as easily as Rush can. Once the funding sources are established, then Rush would have enormous independent leverage over the entire Republican Party. Rush's somewhat tongue in cheek, Limbaugh Institute for Advanced Conservative Studies could quickly be organized into a real institution to recruit, train and finance our Statesmen to become members of the Reagan Wing of the Republican Party. A substantially more conservative Republican Party could mount a coordinated attack, what I call the Great Debate, against any remaining socialists in the Republican Party while at the same time mounting an all out frontal assault against the Democrats. The details of this plan and other commentary can be found in the Reagan Renaissance series at Financial Sense Online. In particular, I would recommend the following articles from the series:
Click here to send Rush an email that asks him to please lead the Reagan Renaissance. A Special Thanks ~ to Michael Hodges and The Grandfather Economic Report for charts in today's article. Author's
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