Thursday, July 9, 2009
What Ails America
As America teeters over the edge of the precipice, staring into the deep Abyss about to swallow her up, pundits across the nation have taken up the subject of just how it was that we have arrived at this juncture, a bit like the proverbial "life flashing before their eyes." I've documented a lot of my thoughts on these pages related to this topic, but I thought I'd do my best to summarize them here. Man As God More than any other statement, I think these three words summarize just where things went wrong. For whatever reason, sometime near the beginning of the 20th century, a fever swept across the West that had long been suppressed. Rule of Law (capital L) had been the rule of most Western governments more so than at any time in history, but no more. Man elevated himself to his own throne and made himself his own God. Seeing himself as his own supreme being, he wrote his own law, and and elevated the State as Man as God's agent on earth. This he called Democracy. Man as God, Democracy, and the State became the new Trinity of America. The new Trinity destroyed America. Capitalism is Dead Capitalism is not dying. It is dead. It has been for quite some time. Man as God destroyed it. He slowly strangled it. With it died the soul of the nation. To understand just how this happened, we must not lose sight of one of the most fundamental fact of economics: that people enter into markets with goods to trade in order to satisfy their own needs. Money has not yet entered into the equation at this level. Once it does, it becomes tempting to lose sight of this crucial fact, which is precisely what Man as God has done, and as a result has enslaved himself to the social system that Man as God creates: fascism. But more on that later. When men enter into the marketplace with goods to exchange, they do it with the expectation of receiving goods of higher value to themselves than their own goods are valued by themselves. This is true whether their goods consist of actual physical goods, or as labor. In either case, exchange is desired. But to do this, their goods must be of value to other economic actors as consumers, just as they are looking for goods of value to themselves as consumers. Economic actors benefit through trade by serving other consumers well. If they produce goods which other consumers do not desire, they will return home from the marketplace with the same goods they had when they arrived, not having their needs met. This is consumer sovereignty, and it is a crucial concept. When the consumer is sovereign, each of us as individual economic actors gets to "vote" in a very individualized manner which products and services are desired in the marketplace. That is, the economy as a whole functions to serve the needs of consumers. Enter money. Money is used as a universal medium of exchange. That is, any economic actor may exchange his product for money, and money for the product of others. This facilitates trade and economic calculation dramatically. For the purposes here, it is important to understand a few things: money serves to facilitate exchange, it serves as a "measurement unit," and, as such, it serves as a "means of account." The Power of Money Money is a powerful thing indeed, and power over money is an awesome thing. For quite a long time, gold was money, and as the supply of gold does not fall under the power of any one person or organization, power over money was limited. It functioned in a relatively honest and unbiased manner. One dollar in 1814 would buy virtually the same amount of basic goods as one dollar in 1914. Unfortunately, near the beginning of the 20th century, America entrusted far greater power over money to the State, in the form of the Federal Reserve Banking System, America's central bank. All of that changed. In addition, America entered into several wars, including two World Wars, and began a tremendous expansion of government. This greatly increased the State's expenditure as a consumer of goods in the marketplace. It also greatly increased the State's ability to interfere in the marketplace. Both effects, and others, have destroyed consumer sovereignty. The State arbitrarily transfers purchasing power from one actor to another through welfarism, both corporate and individual. The State controls what products individual Americans may have access to. The State influences purchasing decisions through subsidy and tax. The State itself consumes a vast swath of what the market produces. The connection between production and consumption has been severed. The State has created the rift and jumped into the breach. The economy no longer exists to serve consumers as consumers. It exists to serve the State, which has usurped the consumer. As the Primary Consumer, the Regulator of the Market, and the Allocator of What May Be Had, State has become the sovereign of the marketplace. State sovereignty has replaced consumer sovereignty. By controlling consumption, the State has assumed control of the means of production. This is fascism. All this has been done through Democracy, at the behest of Man as God. Thus, producers labor to serve fascist government if they desire to receive a portion of the goods of the marketplace, and voters vote with ballot boxes instead of their wallets to determine what producers will produce. Most consumers have no desire to own aircraft carriers, nuclear weapons, or smart bombs. Yet a very large fraction of our economy is devoted to producing weapons of war. The same could be said for a swath of other "products." Our efforts no longer go to serving our fellow man. They serve the State. It should not surprise anyone that America has grown to become a perverse caricature and an outright mockery of its former ideals. Americans are no longer sovereign. The State is. Total Loss We lament much of what we have lost in the process. But we fail to ask the question: who needs them? Who needs family when you have the State? Your children will be taken care of until adulthood by the State. Mommy can go to work, to serve her new God, just like Daddy. The family doesn't need her. It does not need him, either. Why not divorce? The State is there to help. Parents do not need their children in old age; they have Social Security. And children do not need their aged parents, for their inheritance goes to pay the State. Who needs the Church when you have the State? Values are law, just as Man as God has written; we no longer need moral direction or discipline. Charity comes from State now. Meaning comes from State now. Our Truths are as True as we would like them to be, and if they are not, Democracy can change them. Scientific experts, trained by the state, tell us all we need to know. The mysteries of the world have been revealed, haven't they? After all, We are Gods. We Know. Who needs God for that matter? We have the State, and we have Ourselves. Who needs God when you have America? Capitalism did not destroy American culture. Mostly-capitalist America had strong families, strong churches, and strong communities. Mostly-uncapitalist America does not. Judgement is Coming We left our discussion of money far behind. It is time to return. When the State has control of money, it destroys the economy, and it destroys money itself. I have discussed this many times before, but I will sketch again briefly how this works. The State is perpetually biased towards monetary expansion, which is to say, the creation of more money, or inflation. Most people think that this results in generalized increases in prices across all markets. This is wrong. This is not a difficult concept to understand, but it is not obvious if you have not been told. I said before that money serves as a unit of measurement and of account, and makes possible rational economic calculation. Changing the supply of money undermines these properties of money. It is much like an engineer drafting a complex piece of machinery with a ruler over a long period of time, with the difference that every night after he goes home, someone comes and switches out his ruler with one that has ever-so-slightly smaller units. He never notices, and continues drafting his design piece by piece. But at the end, he will not have a working piece of machinery; it will have been distorted all out of proportion. Likewise our economy, more complex than any piece of machinery ever designed, develops all out of proportion as the unit of account is altered. Our accounts also fail to balance, as the banking community has recently discovered. It is as if we are balancing our checkbooks without knowing basic math, then demanding a refund of the bank when our accounts don't match theirs. The refund isn't there. The economy is a shambles. At one time, fairly honest money, gold money, kept these kinds of things from getting too far out of hand. Dishonest money, fiat money, was designed specifically to let these things happen. Man as God may make a mockery of his money and of his accounting, but the real God will not be mocked. His accounts always balance. Conclusion It should not surprise anyone to look out the window and see an America that is not to one's liking. Your opinion, frankly, no longer matters, and neither does anyone else's. The State, and only the State, matters at this juncture. But Man as God's plans will eventually come to ruin, because his plans are not God's plans. Capitalism did not kill America. Capitalism was slain along with America, Church, and family by the same beast, the State, which displaces and devours all when not kept in check. Pagan cults of state are common. They always collapse in dramatic form, and generally take human lives with them. This has happened many times throughout history, and it will surely happen again. This collapse is a global collapse of a global fiat money system. Cities will burn. Nations will shatter. The process has already started. It is going to be a bumpy ride. But perhaps there is hope in the rebuilding.