Michael E. Newton's Blog, page 12

Occupy Wall Street: A return to the chaos of ancient Greece and Rome

In Occupy Wall Street: The Return of Shays' Rebellion, I wrote about how the Occupy Wall Street protesters, like the participants in Shays' Rebellion, demand debt relief or forgiveness. But I must point out that this demand for debt relief predates the United States by at least a couple of thousand years.

The ancient Greek and ancient Roman historians and philosophers warned against debt relief and those who demand it.

About 2,300 years ago, Plato warned the ancient Greeks:

And is it not true that in like manner a leader of the people who, getting control of a docile mob, does not withhold his hand from the shedding of tribal blood, but by the customary unjust accusations brings a citizen into court and assassinates him, blotting out a human life, and with unhallowed tongue and lips that have tasted kindred blood, banishes and slays and hints at the abolition of debts and the partition of lands.

In ancient Rome, Cicero warned:

And what is the meaning of an abolition of debts, except that you buy a farm with my money; that you have the farm, and I have not my money?

They say that those who learn history are doomed to repeat it. With the return of the demand for debt relief, we clearly have neglecting our study of history.

– Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society's Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.

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Occupy Wall Street: The Return of Shays' Rebellion

One of the demands by the Occupy Wall Street protestors is student loan relief. According to a report by CNBC:

It may be hard to pin down exactly what the Occupy Wall Street protesters want, but one of the sources of their frustration seems clear. Many of the demonstrators are drowning in student debt.

[...]

One proposed list of demands for the Occupy Wall Street movement includes "free college tuition" and "immediate across the board forgiveness" of student debt. While neither demand may be very realistic, the student debt problem is very real.

[...]

Of course, if some of the protesters get their way, with free tuition and debt forgiveness, the problem might go away. Rose Swidden, the agriculture student-turned-protester, acknowledges the demands may be far-fetched, but said it is worth a try.

"Sometimes if you shoot for the moon, you land in the stars."

This is not the first time the United States has seen these demands for debt relief. The same demand was made 225 years ago during Shays' Rebellion. As I describe in Angry Mobs and Founding Fathers:

Daniel Shays was one such army veteran disappointed by how the government treated veterans. Shays, who returned to farming after the war, was also angered by how creditors treated farmers who had borrowed money. As delegates from five states met in Annapolis in 1786 to try to fix some of the defects of the Articles of Confederation, Daniel Shays led a rebellion of 1,200 men against the Massachusetts government.

General Henry Knox wrote to George Washington explaining the objectives of Shays and his followers: "Their creed is, that the property of the United States has been protected from the confiscation of Britain by the joint exertions of all, and therefore ought to be the common property of all; and he that attempts opposition to this creed, is an enemy to equity and justice, and ought to be swept off the face of the earth… They are determined to annihilate all debts, public and private, and have agrarian laws, which are easily effected by the means of unfunded paper money, which shall be a tender in all cases whatever."

While Shays' Rebellion was put down quite easily, it could have easily led to civil war (from Angry Mobs and Founding Fathers):

Shays' Rebellion was put down in January 1787 by a well-armed force of 4,400 men. Alexander Hamilton noted how close America came to civil war: "Who can determine what might have been the issue of her late convulsions, if the malcontents had been headed by a Caesar or by a Cromwell?"

In fact, although the rebellion itself was stopped and no Caesar or Cromwell emerged, the story did not end there (from Angry Mobs and Founding Fathers):

The rebels were pardoned and they succeeded in elections the following year. The new legislature passed the debt relief that the rebels demanded.

Shays' Rebellion was all about debt relief, which is a major demand of the Occupy Wall Street protests.

We surely should heed the words of General Henry Knox and Alexander Hamilton and swear off this idea of debt forgiveness. Debt forgiveness is nothing more than stealing from a large number of people to satisfy the demand of a small but vocal minority.

– Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society's Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.

Is religion an issue in the presidential election?

Certain people are trying to bring religion into the race to be the Republican nominee for President. Reuters reports:

Republican presidential contenders Herman Cain and Michele Bachmann refused on Sunday to wade into a controversy over a Texas pastor's comments about rival Mitt Romney's Mormon faith.

I love this quote from Herman Cain:

"I am not running for theologian in chief," Cain, a former pizza executive who is rising fast in polls, said on CNN's "State of the Union" show when asked about the views of Dallas pastor Robert Jeffress.

As for this Robert Jeffress, you have to laugh at this comment:

"Absolutely, Mormonism is a false religion," he told Reuters. "It was invented 1800 years after the establishment of Christianity."

Umm, Christianity came about 1300 years after Judaism. Does that automatically make Christianity a false religion? I don't think so!

Besides, Article VI of the Constitution clearly states:

No religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.

So unless a candidate for office proposes establishing one religion over another, religion is not an issue. And since no candidate so far has suggested doing so, let's drop this ridiculous idea and debate the real difficult issues in front of us.

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The status quo results in socialism

Is America heading toward socialism? Is President Obama taking us there? Will the tea party save us?

I think the first question that must be asked is: What will happen if American does nothing? Forget about all the proposals for new government spending. Forget about tax policy for a second. What will happen if America simply maintains the status quo, without growing or reducing the size of government?

According to the Congressional Budget Office's 2011 Long-Term Budget Outlook, the federal government will consume 34.1 to 75.9 percent of GDP in 2085. The lower number is called "The Extended-Baseline Scenario" while the higher number is "The Alternative Fiscal Scenario," which includes the extension of the tax cuts set to expire, rising debt levels, and "spiraling interest payments."

Add in current state and local spending, subtracting out governmental transfers, (that assumes state and local government do not grow, as they have done for the last 100 years) government at all levels will consume 49.7  to 91.5 percent of GDP in 2085.

Even with the CBO's optimistic forecast, government will account for half of all economic activity. Currently, government accounts for about 40.9 percent of our economy. But the pessimistic outlook from the CBO has the government controlling nearly all of the economy. We will be fully socialist!

Unfortunately, I lean toward the more pessimistic outlook. And I'm not alone. The CBO writes:

Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation's underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.

Looking at the accompanying spreadsheet, the CBO has unemployment falling to an average of 8.4% next year, then falling to 7.6% in 2013, 6.8% in 2014, 5.9% in 2015, 5.3% in 2016, 5.2% in 2019, 5.1% in 2026, and 5.0% in 2030 where it stays forever. Oh really? They really expect unemployment to average 5.0% from 2016 to 2085? Has the United States or any country ever had sustained low unemployment uninterrupted by recession for 70 consecutive years? I don't think so!

Certainly, the Baseline Scenario is too optimistic. This means that even with no new government programs, government will account for well over half of all economic activity by 2085. In this Alternative Scenario, the CBO estimates that government at all level would consume nearly all of economic output.

Socialism is in our future if we do not change. Doing nothing–merely blocking new government programs–is not enough. We must undo the damage that has already been done and fix the government programs that are already eating up a growing percentage of our national production.

– Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society's Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.

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Repeating history: The future of Greece, Europe, and the United States.

I'm rereading The Path to Tyranny to prepare it for a second printing and came across this section about Germany in the late 1920s and early 1930s (before the Nazis took over) very relevant for today:

The country's economic problems worsened and the government approached bankruptcy. To reduce the budget deficit, the government raised unemployment insurance premiums, increased duties on wheat and barley, reduced pension and unemployment benefits, and cut the salaries of civil servants. The Social Democratic Party's popularity declined even more when these measures pushed up unemployment even further and weakened the already fragile banking system. The government was trapped in a no-win situation. It cut back on spending to avoid bankruptcy, but this increased hardship on the people and reduced the government's popularity. On the other hand, the government could have continued providing welfare to the people, but this would likely have forced Germany to default on its debt, which would have resulted in massive inflation and a flight of capital out of the country. The German government's large deficits, which were the result of the economic depression combined with Germany's already semi-socialist economy, forced Germany to decide between two equally bad choices. The resulting economic and political crisis was inevitable, regardless of what the government chose to do.

Are we in the same no-win situation today? If governments cut back on spending, this reverse-stimulus will hurt the economy and the removal of economic support will certainly increase the pain for many poor people. However, if the government continues with its deficit spending, bankruptcy will eventually occur, first in Greece which already has debt to GDP of 173%, but eventually in most if not all Western countries.

Related post:  The Founding Fathers Solve Our Debt Crisis

Bloomberg versus Jefferson: the role of government.

New York City Mayor Michael Bloomberg speaking to the UN General Assembly:

To halt the worldwide epidemic of non-communicable diseases, governments at all levels must make healthy solutions the default social option. That is ultimately government's highest duty.

Thomas Jefferson in the Declaration of Independence:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men…

So is it government's highest duty to make healthy solutions the default social option? Or are governments instituted among Men to secure our unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness?

I think I'll let you decide who which speaker is correct.

Liberals trying to convince you there is a free lunch in government.

Over at Marketwatch, Rex Nutting lists "The 10 best things government has done for us":

Protecting our freedoms
Giving away the land
Educating everybody
Helping us retire with dignity
Improving public health
Building our transportation networks
Investing in communications
Building our energy supply
Inventing the future
Defeating totalitarianism

Yet, Nutting writes that "everyone knows that the government can do a lot to create the right conditions for prosperity" and "Our democratic government — along with you, me and our ancestors — created the conditions that have allowed private citizens and companies to build a great nation." But many of these are simply government handouts–redistribution of wealth–not the creation of conditions.

Did we really want the government to give away land? (I write about this very issue in Angry Mobs and Founding Fathers.) Funny, now the government takes land away from private individuals instead of giving it to them.

And why should the government invest in the future, building our energy supply, invest in communications, build our transportation networks (I also write about this  in Angry Mobs and Founding Fathers), etc.? Aren't those the domain of private enterprise?

But why shouldn't the government provide these free goods and services to us? Yes, I said FREE! Because the author, Rex Nutting, not once mentions taxes. He fails to mention that the resources used by the government to do these things took resources away from the private economy, which would have made use of them to provide the same or different goods and services to us.

Thus, Mr. Nutting provides us with just half the picture, and a distorted half at that.

Barack Obama versus King Solomon. Who do you believe?

In today's speech to the United Nations, President Barack Obama stated:

Something is happening in our world. The way things have been is not the way they will be.

More than 3,000 years ago, King Solomon wrote the exact opposite (Ecclesiastes 1:9):

What has been will be again, what has been done will be done again; there is nothing new under the sun.

Hmm… Which one of these great men should I believe?

Phoenix mayor skipped 9/11 event because 9/11 is too political. Too political for patriotism? Too political to do his job representing Phoenix?

AZCentral reports:

Phoenix Mayor Phil Gordon decided to act more like a typical American and less like a politician on Sunday when he skipped a 9/11 memorial event, leaving a City Council member as a pinch hitter.

Gordon said he decided to ponder the ramifications of 9/11 on his own rather than giving yet another speech at the Never Forget 9/11 Memorial Walk and Celebration event.

9/11 has become too politicized, Gordon said, and didn't think that one more or one less speech about 9/11 made by a politician would make much of difference.

"It didn't feel right to me," Gordon said.

For those who don't know, Phil Gordon will be replaced by a new mayor following an election in November. Because of term limits, Gordon could not run again.

So how would the mayor's attendance be political? The mayor could have represented Phoenix with absolutely no political agenda because he is not running for political office at the moment.

Even if Mayor Gordon feels better memorializing 9/11 in his own way, as the representative of the nation's sixth largest city, it is his job to represent his city and his constituents. Gordon's non-attendance reminds me of what I won't be missing come his departure.

Government monopoly on good deeds

The war on charity, which I've written about here and here, continues. This time, the politicians are not fighting against money-based charity, but against good deeds by the public. Just last week, one good Samaritan was ticketed for directing traffic when a traffic light went out and the police failed to act:

When a major traffic light in the area went out Thursday morning, Alan Ehrlich took matters into his own hands, directing traffic at Fair Oaks and Huntington avenues.

"I grabbed a bright orange shirt that I have and a couple of orange safety flags. I took it upon myself to help get motorists through that intersection faster," said Ehrlich.

Before Ehrlich stepped in, traffic was backed up for more than a mile and it took more than 30 minutes to get through the busy intersection.

Ehrlich said the Sept. 8 incident wasn't the first and that the light goes out regularly.

"It was just kind of chaos of cars . . . there were stop signs up. But people were challenging each other to get through the intersection," said Richard Gerrish who works at an office located at the intersection.

Gerrish said Ehrlich cleared up the mess in 10 minutes. After 15 minutes, South Pasadena police say they finally received a call about their newest traffic officer.

Police responded to the scene and told Ehrlich to stop and issued him a ticket, but never stepped into direct traffic themselves.

"I don't know if this ticket is $50 or $400 dollars. It's a small price to pay for the greater good," Ehrlich said.

Alan Ehrlich should be given a medal for helping his community. He should receive the key to city for service to his city. Instead, Mr. Ehrlich receives a fine from the city.

On this tenth anniversary of 9/11–when we memorialize the victims and heroes of that day–in a small way, Mr. Ehrlich is an American hero as well. And the residents of South Pasadena are victims of their government's incompetence and hunger for power.