by John Hawkins | June 2, 2009 10:16 am
“Those who cannot learn from history are doomed to repeat it.” — A corruption of a quote by George Santayana
Not so long ago, Argentina ran up a crushing debt. Eventually, when it become clear that Argentina was unable to pay, it led to an economic collapse in that country that made the Great Depression look like a birthday party.
In our nation, on a daily basis, we’re borrowing staggering amounts of money with no real consideration of how it’ll be paid back. Some people just assume we’ll eventually raise taxes high enough to make up the difference, but even in liberal California, the people just decisively rejected tax hikes that would have paid for less than a third of their massive deficit this year.
Yet nationally, not only is Obama on track to run a 1.8 trillion dollar deficit, we already have an 11 trillion dollar debt with which to contend. Given the unpopularity of tax hikes, the resistance to spending cuts in Congress — and that both Medicare and Social Security are scheduled to start going into the red in the next few years — how do you close an 11 billion dollar plus gap that Obama is adding to faster than any President since FDR?
There’s an obvious answer to that question: we will print more money. That’s what they did in the Weimar Republic after WWI. How did it work out? It led to an economic crush that was so devastating it set the table for the rise of Adolph Hitler.
Could the economic consequences eventually be that calamitous here? Unless something changes, it seems all too possible. Even today, we’re having so much trouble selling our debt that the Federal Reserve has been forced to buy it up in increasingly larger quantities. Unless something changes, within a few years, our nation’s AAA credit rating could be gone, which would make the costs of servicing our debt explode — and the more money the government prints to fix the problem, the less the money in your pocket will be worth. It’s a vicious cycle, one that ruins people and nations.
Then there’s our unsustainable, top-heavy tax structure. While the top 25% of income earners pay 86% of the income tax burden, roughly 40% of Americans pay no income tax at all. On top of that, our corporate income tax is the 2nd highest in the world. The response to this isn’t to even out the playing field; it’s to rail against the people paying their fair share and everyone else’s besides. Despite the tremendous tax burden these people and corporations already shoulder, they are publicly derided at every opportunity when they protest that the government is already taking too much of the money that they’ve earned.
There have been numerous historical examples of how destructive these sort of policies are, but one of the most poignant cases in modern history has unfolded over the last few years in Zimbabwe. At one time, that country was referred to as “the Bread Basket of Africa,” but now it’s one of the worst basket cases on a continent full of them. Why? Because Robert Mugabe targeted the rich, successful white farmers in that nation. When he took their land from them and gave it to his supporters and the poor, the people cheered — but after the hated rich fled the country, the smiles turned to tears as their economy collapsed and people started starving in the streets.
The confiscatory taxes Obama wants to impose would create the same effect on a lesser scale in this country and things are sure to get even worse in the coming years, as our debt continues to pile up, unless we change the way our tax code is structured. In the era of globalization, one of the dangers of overtaxing the rich and multinational corporations is that they may simply move elsewhere to help safeguard their wallets. It has already begun happening and the problem is practically guaranteed to worsen as Obama tries to use America’s most successful citizens and companies as a piggybank to pay for his massive expansion of government.
Last but not least, there’s much debate about what caused the decline of the Roman Empire. That’s because its downfall took place over a long period of time and there was no one apocalyptic event that brought that great empire to its knees.
There were a number of factors that played a significant role in their slow motion demise. Much of their political leadership became chronically arrogant and incompetent, they lost control of immigration, they were militarily overstretched, and the people were overtaxed. Every one of those conditions exists in our own nation and it should worry us considerably.
As history has often shown, the challenges a great nation faces often come out of left field and therefore, resilience in the face of significant setbacks is crucial. In the case of the Roman Empire, the same civilization that was able to demolish its enemies in Carthage, even after suffering twenty years’ worth of defeats at the hands of Hannibal, eventually no longer had the stamina to deal with mere barbarians of the sort their ancestors had been keeping in check for centuries.
If America had a military setback as great as Pearl Harbor was for us in World War II and then had to fight a war against truly formidable adversaries, would we have the willpower and the capacity to see it through? Would this nation still have the steely reserve needed to win another Cold War or have we grown too soft and timid as a people? If this country took another economic blow on top of the housing disaster that we’ve already faced, could we come back from it given how much debt we have?
America is a super power like no other than has ever existed, but we are foolishly ignoring the lessons of history and the price we will pay for it over the next few decades will likely be much starker than most Americans imagine.
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