Tuesday, October 18, 2011

Something In The Air?

Richard North over at EUReferendum regularly asks the same question about our leaders: "why should we not rise up and slaughter them." It's a good question, though a tad melodramatic. So I was a bit surprised to read similar sentiments on the normally interesting but sober Cato Institute web site:
The real villains are those in the political class who pandered to the voter by promising more in benefits to be paid for by others — "the evil rich." But if the rich people are taxed too much, they opt out by moving or no longer being rich, and then the tax revenues fail to keep up with the increases in spending until finally, the debt burden slowly sinks the ship. This is precisely what is going on in the United States and most European countries at the moment.

As more and more people lose their jobs, the demand for government payments grows, making the situation worse and worse. The U.S. government is spending roughly 40 percent more than it is taking in. President Obama and others are demanding higher taxes on the "rich" — more correctly known as job creators — to pay for more government benefits. The self-delusion of the political class goes on, and the numbers get worse. Notice that the president, when arguing that his "jobs" bill is going to increase jobs, quotes the same economists who also said his "stimulus" would keep unemployment under 8 percent, rather than referring to those economists who were correct in saying it would fail. The president's assertion that by increasing the taxes on the rich he will be able to "pay" for all his new spending is fantasy, or worse.

The simple fact is that the amount of explicit and implicit debt that the United States and other governments have incurred cannot and will not be paid back in full. The political class will try to cure the debt mess with inflation, price controls, tax increases and confiscation, but it will only make things worse. Greece is only the first canary to die. As more and more jobs and homes are destroyed by the debt crisis, the ranks of the revolutionaries will grow until, finally, the new "peasants" realize that the rich are gone and it is the political class that is responsible for the mess.
Perhaps there's something in the air after all...

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