Why We Are Demoralized

Dig Deep and think about it, is it you? or, the environment we are in? Consider this.

The short story is that aside from inflation, we are further and further behind with the money in our pockets and we do not know why. Raises at work are not what they used to be. Healthcare costs more. Everything keeps changing but all stays the same or gets worse. Why? It has to do with the way the government is running our economy.

Before you stop reading, understand this. It is NOT “whose” government is running the economy. This problem has to do with the “economic system” one government after another has followed without question. Sometimes compounding mistakes previous governments have made.

To make the distinction easier to understand, I will use the parable from Paul Pilzer’s book “Unlimited Wealth.” A story I heard at a lecture by Brian Wesbury. The first man who made sense to me on the basics of how the economy is supposed to work with a balanced budget and why it no longer does.

“Imagine we live on an island, there are 10 of us. Every day we wake up and we catch two fish and we go to bed. You need two fish to live every day. That is subsistence living. If you don’t get the two fish you have to rely on your neighbors to share. The GDP of the island is 20 fish a day mostly.

Let’s imagine that two of the people on the island invent a boat and a net. They take their boat and their net, they go 500 yards offshore, they cast the net, and they catch 20 fish. It’s a miracle. They bring their 20 fish to shore. What happens? The other 8 people are now freed-up from the chore of catching fish. They can do other things. Some want to be farmers, builders, others want to work the fish for the rest, or fix the boat and the net. People are free to provide and service the others’ needs. Now the subsistence living is elevated because for dinner they can have fish, corn, bread in exchange for the labor they do on the island for others. The islanders have created wealth, they have plenty.

They have invented something that raises the productivity of others, while keeping a balanced budget. Now all have the ability to demand new supply, or learn how to fish with a boat and net. This in turn creates more wealth. People have time to think and plan their lives.

However, the story does not have to end this way. How else can it end? The other eight do not have a boat. They are standing around on the beach and it so happens that Bernie Sanders is one of those eight. He starts giving speeches, he tells all these people on the beach that this is not fair. We can only catch two fish a day, they catch 20. The income used to be equal 1:1, now they are up by 10:1, this is not fair. This is what we will do, we are going to raise the taxes by 80% for anybody who uses a boat! The boat comes back in, it’s got 20 fish on it. Bernie and his crew threaten the people on the boat with the tax, or any other threats that work, and the people on shore take 16 fish. They give two to all the other eight people.

Now no one is better off, they are all still subsisting. What they did by taxation, or other means, results in the net “stealing” the benefits of the new invention, no one is better off. That is not all, it gets worse than that because over time, the boat people will not be able to fix their boat and net. They also go back to catch 2 fish a day. Others that became dependent on the boat, won’t be able to catch their fish. Despair sets-in. Furthermore, others with good ideas will not work on them, people with new ideas will keep them to themselves. What is the purpose of working hard if you will not be better off? Everybody is selfish. Let them go fish.

This alternate parable is applicable to the U.S. today. People and corporations are being selfish and keep asking for the government to do more. Eventually, like in Germany in the 1920s, we will have to end up fishing for ourselves as the economy disintegrates.

The bigger problem we have today is that BOTH PARTIES are doing this, while not working on how to fix the root cause of the problem. Stop borrowing money to give people fish. Stop creating laws for the corporations that give preference to shareholders instead of the employees. Stop laws that allow Corporations that are invasive to the people’s privacy, while using the data to spy on them.

Non-Defense government spending has been growing unabashedly since Woodrow Wilson’s Presidency (the 1920s), who created the “Administrative Government, as shown in the chart below (starting in 1930 at 3%). You don’t need arrows to see what the government is doing — They are keeping more fish for themselves. What do we see that is better for US, the people? Nothing, less fish in our pockets that we can use for goods we need.

Since the 1930s, the government has grown the Civil Servants that work for the “Administrative Government” at an average rate of 28,000 per year to today (for 100 years). Civil servants greatly facilitated the acceleration applied to the economy by serving as the Central Planning Offices of the government. This “Administrative Government’’ as Wilson called it, “will be full of experts in their field, will be progressive, and apply the regulations needed to ensure a fair and balanced application of the law”. Between 1932–1939 Franklin Roosevelt made good use of this with the New Deal Act.

Even though the government collected a surplus with taxes between 1946 and 1950, they did not use the money to reduce the debt. Between 1960–1970, the Government started many new programs to help the poor, improve education, and provide better transportation. There were also programs to fight crime and drug abuse, as well as end racial discrimination. Lyndon B. Johnson took more money from our pockets to increase government spending for Medicare, Medicaid, Head Start, the Food Stamp Act (made it permanent), The Economic Opportunity Act established the Job Corps and the federal studies Program, this added another Central Planning office to the government, the Office of Economic Opportunity” and the great accelerant, the Civil Rights Bill, which is still at work today applying moral laws to enterprises across the country. The Housing and Urban Development Act of 1965 expanded funding for housing programs. The list of programs LBJ created, and all the “Central Planning offices” to carry them out, is extensive beyond the short list above.

Politicians are human, they want to deliver on what they think got them elected. Lyndon B. Johnson, a great leader in Congress, was elected with a super-majority, got an elected Democratic Congress with a super-majority, in part due to the sympathy the Nation had for the assassination of President Kennedy. LBJ passed 28+ major legislation Acts/Bills until the Vietnam war stopped him and left the Presidency, to “allow” someone else to solve that problem. By then, he had completed his “Great Society Plan.” America would have a great future!

He did all that law enacting to fix every social ill this country had, once and for all. LBJ’s “The Great Society Plan,” covered education, healthcare, urban renewal and redevelopment, beautification, and conservation. It continued the War on Poverty. It also created new programs to prevent crime and delinquency. It required the states to meet federally designated minimum commitments, ending around 1983.

We in reality are living through and witnessing the failure of the government to achieve ANY of the social problems the “Super-Majority” government thought they were going to solve. You don’t hear any politician talk about that. They just want to do MORE. the question really becomes, can government legislate morality? Are food stamps to exist forever? will they continue to legislate on bigotry forever? All of these rules and regulations assume we will never succeed at any of it because I have never seen the government tell us, “we are deleting these laws because they are no longer needed.” well maybe one, “bussing of children.” it became an embarrassment for them.

In summary, the Federal Government between 1930 to 2010 grew from 3.0% of the economic output to 16.5% and they spent from 2.7% (with a surplus) to 24% of the economic output (with foreign debt). The last calamity was COVID that sunk us to about 27%. Ignorance drove us to shut down the economy at the beginning of COVID in 2020. This decision, ultimately made by Donald Trump, will go down in history as the single worst economic decision ever.

The “Government” has been like a freight train going downhill without brakes while asking for MORE MONEY! It is like each has had a lobotomy, they keep doing the same things and expecting different results? That, or they think, “WE”, the people, are stupid and helpless to allow them to charge us MORE TAXES! Either upfront or, outback, by creating interminable inflation. It is DEPRESSING!

If you look at the plot above, in 1935 you see that the government was about 10% of GDP. We could say, we had 10% of the economy in the nation’s wagon. The remaining 90% is providing the fuel needed for the economy to go forward and grow. These percentages for the sake of this example, we translate to people — 10 people are in the wagon, 90 people are pulling the wagon.

At the end of the great society (1983), we had 17 people in the Nation’s wagon and 83 people pulling the wagon. From 1983 to 2008 the wagon ran between 15 and 17 people in the wagon. There was a fast growth spike to 20 people that was later brought down to 17 people in the wagon.

Today we have 27 people in the wagon and we have 73 pulling the wagon. By-the-way we spend 13% in “Central Planning (the Administrative Government)” so, we can put 13 additional people in the wagon for a total of 40 people in the wagon and only 60 working to produce the goods and services we need as a nation.

There is a distinction between Development and Growth that is not well understood in our culture. Russell Ackoff made this distinction, “You can grow without development and, You can develop without growth.” For example, a Cemetery grows but develops nothing; on the other hand, Einstein continued to develop way past he stopped growing. The government only grows, like a cemetery, it develops nothing. We are witnesses to the failure of the LBJ Programs. On the other hand, our economy depends on development. it needs people for that.

As we load more people on the wagon, their work goes to develop nothing. The 40 people on the wagon load the wagon down like a dead weight. The 60 that are pulling the wagon do it slower, so the net result is, the growth rate of our economy is slower, if any. “Central Planning and their programs” are the killers of socialism. This is where all the “experts” reside, they ignore all the experts that are NOT in the government. In reality, the people in the wagon might be higher because, when the “experts” need a “specialty,” they hire them as “contractors.” MANY contractors work for the government. Nobody knows their exact number, however, estimates put them in the millions. All of them are in the wagon too.

People are talking and writing how hard they are working and not getting ahead, or how the economy is growing slow or not at all, and things are growing in price so fast. Think about the government as one person (the sum total of all of us), when they “borrow money” is like us borrowing money to buy a house. It takes a big chunk out of your budget, you are forced to cut things you don't need, you keep your car longer, you “re-plan” your budget. The difference is, the government does NOT do that, they just ask for more. All of these affect your psyque, feeling depressed. If we add a curve to the “Federal Non-Defense Spending” plot we can see the effect the economy has on people. The curves are almost mirrors of each other. Until 1975, people were happy enough. Not so much after that.

Church attendance has fallen dramatically since the 1970s. This has affected all the work people were doing to lift society by their bootstraps. All the charity work we need to do instead of the government, is no longer there. We are our brothers keepers, that has gone by the way of the buggy whip, non-existent. This does two things: it affects us because we do not see how our private contributions are helping the needy, the government does what it wants; it affects those who help the needy, thus the needy go where they are visible, in the streets of the city. This further depresses us.

We are in a vicious cycle that will never end until we fix the core problem — — We need to make government:

• Rethink how they are subservient to the Constitution. (right now they do whatever they want, as if the Constitution did not exist)
• Take ownership of the “Administrative Government.” (right now they are loose cannons aimed at us, the people)
• Demand a Balanced Budget. (we work hard to live within our means, they do too)

On the “Administrative Government,” congress needs to layoff and shutdown those entities that are not essential to run the government (there are more than 432 agencies, it is time to strip out the fat); congress needs to take direct control and ownership of those that are left. Further, we need better laws that improve the environment Corporations create for their employees. large corporations have to include retirement plans and health plans to decrease dependence and eventually kill Social Security and Medicare. Furthermore, provide help to the needy with programs that show results. After all, Corporations are registered legal entities allowed to exist as a person, with the same rights and responsibilities. So far, they have existed only to protect those running the corporation, the rest is “optional.”

If we integrate all the problems, as a Nation today, we have deadly COVID — “COnstitutional Voided IDentity.” To begin with “The Constitution” did not give the government, ANY GOVERNMENT, permission to create a central planning office like we have today. THAT requires an AMENDMENT! For the people to approve. You see, as the great Constitutionalist, Randy Barnett said once, “the Constitution is not the law that governs us. The Constitution is the law that governs those who govern us. They should not be able to change the meaning of the laws that governs them without going through the amendment process, any more than you or I can change the laws they make to govern us, without going through the legislative process.”

We are losing our country because of this subtle distinction.

For the sake of our survival and the survival of our Nation, We need to MAKE them pay attention.