“Whatever is true in one form of words, is true in every other form of words, which conveys the same meaning.” – John Stewart Mill
Few and confused are the pundits lauding the vitality of the American economy. Worse still, many and confused are those who offer solutions.
More often than not, situations brought about by the wasteful ineptitude of the state are met with calls for more state involvement, as if a double dose of poison will somehow dilute the effects of its initial involvement. We see this everywhere today, as central banks shackle their present and future citizens with more debt in order to treat a problem caused by just that: too much debt.
We offered a broad-brush overview of the nation’s general trajectory in the Weekend Edition:
“According to the official figures, the national debt currently stands at $14.01 trillion dollars. That’s more than $45,000 per citizen, or almost $127,000 per taxpaying American. If you add in debt held by households, state and local governments and financial institutions, that number (the total US debt) blows out to well over $55.5 trillion, or more than $680,000 per average family. How much in savings does the average family have to offset this amount? $7,918.
“Letting these figures run for a few years,” we continued, “based on their current trajectories, we see that, in 2015, the national debt explodes to over $22 trillion. Per citizen, we’re now looking at close on $70,000, or $184,000 per taxpayer. Total debt, as measured above, has now grown to over $63 trillion and the average family’s share of that stands at nearly three-quarters of a million dollars. Average savings per family, by the way, have now fallen to just $2,791.”
Remarkably, the general consensus on how best to overcome this catastrophic trend invariably involves, in some form or another, additional government intervention and, by extension, spending. The debate appears centered on how best to manage this agent of coercion, the state, rather than on whether we need it at all. Indeed, the mere mention of free-market principals invokes fear, uncertainty and, usually, an abrupt end of the discussion. But look at the facts:
Back in 1903, government spending in the US, expressed as a percentage of total GDP (leaving aside for a moment the spurious nature of that measurement), weighed in at a paltry 6.8%, or $25.9 billion dollars. Although the state’s “mission creep” tended steadily higher over the next couple of decades (with an conspicuous spike circa WWI), that percentage remained in or around the low teens until the Great Depression, when the combined efforts of President Hoover and FDR’s New Deal effectively doubled state involvement. By 1940, government spending accounted for one-fifth (20.14%, or just over $100 billion) of the nation’s GDP. Fast-forward to 2010 and spending by the state had rocketed to over 43% of the nation’s total economic output.
We’ll leave it to the reader to decide whether the nation’s star is today rising or setting, whether her future looked brighter at the beginning of the 20th or 21st century.
Of course, arguments from effect tend to be cumbersome and problematic, due in part to the unreliability (not to mention the sheer volume) of statistics supporting this or that outcome. “Lies, damned lies and statistics,” goes the old saw. For every honest, objective, impartial statistician, there are ten million idiots who believe his lies.
It is perhaps more helpful, therefore, to return to basic, first principals. Such is the politico-doublespeak of our time that it seems fit to remind ourselves once in a while, if not constantly, of the true nature of things.
If, as William Shakespeare assures us, “a rose by any other name would smell as sweet,” then the law of identity to which he refers leaves us with more than just springtime aromas and romantic iambic pentameter. If, as that law states, A really is A (and A only), then we must not forget to apply this cornerstone of logic elsewhere – even, and especially, to those things which omit a decidedly less alluring scent.
With this in mind, let’s revisit the relationship between man and the state that governs him.
The state, by its very nature, is an agent of force. Allen Thornton puts it thus is his essay, Laws of the Jungle:
“What do you think ‘govern’ means? It doesn’t mean ‘suggest’ or ‘implore.’ It doesn’t mean two people sitting down, talking it over, and compromising. ‘Govern’ means ‘force’ and ‘force’ means ‘violence.’”
Concludes Thornton: “When you advocate any government action, you must first believe that violence is the best answer to the question at hand.”
While it is true that a great many individuals voluntarily enable it, that fact remains majority rule does not turn fallacy to truth. It does not morph debt into credit, liability into asset, nor wrong into right. A rose is a rose (“is a rose is a rose”) whether the majority believes it to be so or not. Likewise, acts of force are exactly that, regardless of how many people vote for them and whatever name they are so given.
The expropriation of private property – which in any other domain is punishable by the very institution that holds a monopoly on such an action; the state – is commonly known as theft. Of course, when the state commits such an act, on threat of imprisonment, fine or other use of force, we refer to it by a subtler label: tax. Let us not be confused here. There exist only two possible forms of wealth transfer – one voluntary, the other coercive. One can no more be “voluntarily taxed” as one can be “partially pregnant.” A = A, no more, no less and no other.
Might the problem, therefore, be the agent of force itself – the ever-expanding, increasingly costly, over-reaching arm of the state? And, if so, why are we debating how best to manage it instead of working to rid ourselves of its existence?
To paraphrase that long dead poet: What’s in a name? That which we call force, by any other name still robs us of our liberty.
Joel Bowmanfor The Daily Reckoning
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
Thank You! I continually wait to hear plain acknowledgement of these facts in discourse or in print but I never do!
Be careful though, Joel, or you will be blamed for the next public figure to be shot if you keep speaking plainly in this manner.
This was the best contribution to DR you have made since I’ve been a reader, Joel. Bravo.
Well said Joel. This will shed new insight on all who read this.
Great article. Pity that the public at large will not get to hear the message or understand it.
“Fallacy does not turn to truth. Debt does not swing over to credit. Liability does not grow up as asset. Wrong can’t be rectified as right. Grass can’t be named as rose.” Great! Great! Great!. But, bear in mind, truth consists of various grades. It could be superior grade I or inferior grade. Of course, the most valued and sought after one is the purest Truth-235, weapon grade truth.
So, can I top it up, iron can’t be refined to obtain gold? Where is MG? He seems to be disappointed after a little flu of the gold market, lately.
When money matter is concerned, let’s do a cross examination. National debt=14T, funding gap=200T, total debt=55.5T, debt per citizen=45,000, debt per taxpayer=127,000, debt per family=680,000.
Further, QE2 is in flight and QE3 most likely will be in launching pad soonest possible. Hypocrites seems to have walked out of the shadow of their past belief and are now overtly embracing the QE religion. Against the backdrop, if you raise the economic indicator, all commodities will be sucked high. Or, if you lower the economic index, unemployment will be planetwide spread, a contagion.
Collectively, all gold above surface achieves not exceeding 6 trillions. Within the ecologic imbalance of the trillion brothers, could gold remain humble, remain silent, remain sincere for long? Hmmmmmmmm!!!!
Strongly agree, with one exception: most people do not really want to be governed. Otherwise, the use of force would not be necessary. The problem is that the vast majority abhors coercion in personal life, but assumes that there are no alternatives to a state for social organization.
(the total US debt) blows out to well over $55.5 trillion, or more than $680,000 per average family. How much in savings does the average family have to offset this amount? $7,918.
This is obviously false. Debt owed is owed to someone. That someone consideres the debt owed to be his savings.
One man’s debt is another man’s savings.
It is mathematically impossible for average debt to vastly exceed average savings unless much of the debt is owed outside the country.
Not that much of U.S. debt is owed outside the country. Plainly, these figures are wrong.
Debt may be too high, but that does not justify repeating obviously false statistics.
Thank goodness I am here to correct this nonsence.
@ The InvestorsFriend, Thank Goodness Indeed!
Perhaps you should offer your expertise to Helecopter Ben Bernanke, as he has confirmed these [obviously, now that you've debunked it] false reports, leading we ignorant hoi polloi to believe Washington is in debt up to its eyeballs.
I can sleep much better now that you’ve confirmed for me that it just isn’t so.
Nope, no inflation on the horizon for us. It’s all just a dream. “Deficits don’t matter.”
Add my name to those impressed by your article, Mr. Bowman, as your best submission yet. I pretty much ignore any numbers but percentages are timeless for illustrating the cancerous growth of our government. NonsenCe? I don’t think so.
I shouldn’t waste my time but…
One man’s debt could be:
- held by the fed
- held by a bank
- held by a foreign country
- held by a pension fund
- combinations/variations of the above
OR – treating the term ‘man’ in such a generic way as you:
1000 men each with $1000 in savings is very different than 10 with $90100 each and 990 with $100
The average savings didn’t change so all is good right?
What if the 10 are expats?
Include unfunded liabilities as part of debt. A company that follows GAAP has to, but the federal gov’t doesn’t
There is $1,000,000 of debt and unfunded liabilities per US taxpayer. (USDebtClock)dot(org)
How can this NOT end badly?!?!
But if we invent new terms, like “virtual obligations”, then we never need talk about debt again. Problem solved. No I wonder what reality show is on TV at this time.
Re: The possibility of being “voluntarily taxed” – I would submit that state sponsored lotteries are instances in which people pay voluntary taxes.
$680,000 of dollars of debt per family?
And what did the Familys get out of this deal ???
ABSOLUTELY NOTHING !
Taken to the cleaners, as the saying goes.
Folks, you don’t owe one thin dime of debt…the ones who authorized it, are liable.
How did this ever get so bad?? I live in Canada and per capita we are not as bad off as America but we are hurting also!
The question is….is there anyway this can be fixed or are we heading to the Great Depression all over again?
One thing is certain. We must slay this government monster soon, or later we will be doing a lot of slaying.
Considering that 1% of America owns like 40 percent of the entire country……and have benefited from “America” more than the “average” people…..I would argue that since they benefited disproportionally from the American system….they owe disproportionally. For example, those that make 500 times what an average American makes….owes 500 times more of the “national debt” than the average guy.
Could not agree more. In todays political climate of total corruption, our fraudently, elected, representatives have reached a level of arrogance where they either patronize or ignore. These crooks have turned Americans into beggars of loose change.
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