Bill Bonner

Government’s role in an economy has never been properly explained. We will have a go at it ourselves. In a word, government betrays the future.

Government is a profoundly reactionary institution. It always favors its current clients – the present generation of taxpayers – over its clients of the future (who don’t pay taxes and don’t lobby). It provides protection against foreign invaders and domestic troublemakers. It also attempts to give its clients protection against the future.

Taxpayers want government to protect their existing assets…their businesses…their claims…their jobs…their franchises against all threats. In the modern world, most of those threats come in the form of economic and technological change. That’s why taxpayers demand subsidies and bailouts. It’s also why they like regulation. Anything that will keep change from diminishing what they’ve got.

A properly-functioning economy, as Schumpeter described it, is a process of incremental growth and also of creative destruction…in which old industries, old technologies and old institutions are blown up by change. This is what people pay their taxes to avoid. The present generation wants the government to “do something” to protect them from this process. It’s why they are perfectly happy to see the government take over the whole economy, if necessary, in order to prevent capitalism from happening.

What’s more, the current generation of retiring taxpayers in all the welfare states hopes to get something it cannot afford – pension and health care benefits above and beyond what it has saved for. How can it do so? Only by borrowing from future revenues – that is to say, by putting a claim on income that has not been earned yet…much of it by people who do not even exist yet. Government, again favoring live voters over those who are dead or unborn, goes along. In the case of the US, the newborn child in 2010 faces about $170,000 worth of bills – his share of the net financial obligations of the federal government.

Good luck getting him to pay up!

Regards,

Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.

Recent Articles

Protect and Serve Thyselves

Ryan Mcmaken

The police operate in their own self-interest, the same as every other human being on the planet. For that reason you cannot rely on your local police department to keep your best interest at heart. As Ryan McMaken explains -- and Ferguson Missouri demonstrates -- your police department’s is not necessarily interested in “protecting and serving you”...


Minerals vs. Marijuana

Douglas French

It might go against conventional thinking, but following the crowd usually makes you miss the real opportunities. At one monetary metal conference recently, the smartest guys in the industry sat down to discuss where these real hidden gems lay. But where does marijuana fall in this debate? Doug French has the scoop...


The Growth of Big Data is Unfathomable

Josh Grasmick

One of the most important trends in the evolution of technology is the advent (and growing importance) of "Big Data." And yet, some people are still confused about what it is - not to mention grossly unaware of just how massive the market for data has become. Today, Josh Grasmick offers an insightful explanation...


4 Ways the Government Is Set to Take Your Money

Byron King

The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...