Vampire Economics

The administration refuses to give up a cherished illusion -- despite a mounting fact attack.

Americans, take heed, a vampire prowls among you. The redistributive policies and out-of-control spending of the current Administration, if it is not already obvious, are threatening an economic bloodletting of the first magnitude. Indeed, the social welfare state, part of the progressive Western experiment in political and economic egalitarianism, is foundering wherever we look, and yet it continues to be endorsed and promoted by an out-of-touch ruling political class. Our leaders—or far too many of them—are clearly in a state of denial, unable to give up a cherished illusion despite a mounting fact attack. Facing up to the truth does not demand profound economic thinking, only a modicum of common sense, which is clearly in short supply. Nor would a bandaid here and a bandaid there stop the bleeding.

Plain common sense tells us that, in the long run, so-called “democratic socialism” doesn’t work for a very simple reason: it must be constantly hiking taxes on a shrinking productive base while awarding exemptions to a constantly growing non-productive class. Canadian author William Gairdner, co-founder of the Civitas think tank, estimates that in the current welfare state only one third of the population constitutes the producing sector; another one third is affiliated with government, either clerically or contractually, and the remaining third consists of government dependents. Thus two thirds of the modern “social democratic” state is dependent for its maintenance on a dwindling minority of economic generators. Worse, Kenneth Minogue of the London School of Economics warns that once the tipping point of 51% of public clientage is reached, decline must inevitably set in.

What we have here is an iron recipe for creeping revenue depletion and societal decay. Wealth-creating and job-producing enterprises either shrivel due to rising costs or locate elsewhere to more favorable cost-effective regions, which leads to growing unemployment. A hyper-inflating bureaucracy—which must be paid for—to administer and distribute an ever-lengthening skein of entitlements and government programs—which must also be paid for—will eventually, as Margaret Thatcher said, run out of other people’s money. We can now see what the welfare state yields, writes Daniel Hannan, a member of the European Parliament: “burgeoning bureaucracy, more spending, higher taxes, slower growth and rising unemployment.”

Ultimately, a society predicated on single-payer medicare, cheap daycare, maternity and paternity leave, shorter work weeks, paid mensual vacations, mandated green energy, early retirement, special interests subsidies, public sycophancy, in short, the contemporary version of bread and circuses, cannot run on fumes. As Hannan points out, America is now imitating the European model, “expanding its government, regulating private commerce, centralizing its jurisdiction, breaking the link between taxation and representation.” The future looks increasingly grim. For when the day comes that the parasite has devoured the host, that is the day the system collapses.

This is an incontestable fact that history has proven time and time again, and is proving once more in Greece, Ireland, Portugal, Spain and Italy, in innumerable third world countries, and currently in the United States under the stewardship of Barack Obama who has come to complete a long-running agenda. A country in which nearly half the population pays no taxes and the other half must pony up the wherewithal to keep it going, in which industry is hampered by stifling regulations and high excises, and in which economic viability depends upon increased borrowing and printing fiat money, is a country careening toward insolvency.

For the money to sustain such extravagance must come from somewhere, but today in the U.S. it is coming from somewhere else and from nowhere—or in concrete terms, from China and from “Quantitative Easing,” i.e., a perpetual-motion printing press. If the process continues indefinitely, the result cannot be anything else than debt foreclosure, rampant inflation, and finally ruin. And as we have seen, a significant portion of the EU is also on the verge of fiscal implosion. The vampire economics of the welfare state guarantees a foreordained conclusion. When the raptor runs out of blood, it dies—along with the bodies that supplied it.

A stake must be driven through the heart of the economic predator, aka the “social democratic” polity, if the fiscal hemorrhage is to be plugged. Thinkers like Marx and Keynes, read skeptically, that is, sous rature, or “under erasure,” as philosopher Martin Heidegger first put it, have much to tell us about how not to proceed. Their policies are anathema to the health of the nation. Similarly, fiscal mandarins like Nobelist Paul Krugman and Chairman of the Federal Reserve Ben Bernanke believe that if you have already spent six or seven hundred billions in stimulus money without the slightest effect, the answer is to spend another six or seven hundred billions. The treasury must be drained for the ostensible benefit of the majority in an ongoing phlebotomy of vital fluid regardless of consequences. But obviously, the majority serves only as a pretext. The primary beneficiaries are the creatures of the night who live in their sumptuous castles at the expense of their once-vital prey. They are immune to the laws that govern the natural world—except, of course, that they need to feed.

Let us hope that the sunlight of disclosure will flood the intellectual crypt in which current policy is formulated and pursued, before it is too late. The “social democratic” state must wither and turn to ash if people are to live dignified and productive lives. We are led to the conclusion that the pre-eminent authority to be consulted on the subject of existential vitality, of menace and survival, is not Marx or Keynes or Krugman or Bernanke. It is none other than Bram Stoker.