Thursday, June 09, 2011

Three Ugly Sisters of Bureaucracy Paint a Bleak Future

When a government is almost exclusively interested in its own growth and self-preservation at the expense of the people and private institutions it is meant to serve, a poisoned stew of dystopia is on the menu for as long as it takes to dismantle that government.
...the fake recovery is vanishing, the dollar keeps falling against anything of real value, and the average guy on the street is realizing limited benefit for his share of the debt and inflation burdens. How is this possible?

I’ve often said that bureaucrats and politicians have an extremely limited playbook consisting of taxation, regulation, and inflation. These three ugly sisters of bureaucracy effectively serve to steal from people, make things more difficult for them, and rob them of their purchasing power… and yet they’re dressed up as solutions instead of problems.

Consider the case of Illinois– the state is completely insolvent and running out of cash quickly. It doesn’t have the luxury of printing its own currency, and is thus being forced to deal with its fiscal reality… much like Greece.

Rather than trying to make their state more competitive in order to attract talent and capital, they’ve opted for the old playbook… starting with taxes...

...$10 trillion in the hole and facing a steep downward trend, the US government is either looking at substantially higher borrowing costs, substantially higher inflation, or both. Investors are getting jittery about loaning money to the United States, so they will either demand a higher return, or the Federal Reserve will hyperinflate the currency to mop it all up.

Regardless of the scenario, Congress will reach deep into this playbook until they chase away every productive citizen and company they can… In fact, it’s already happening.

The number of people renouncing US citizenship has been more than doubling year-over-year for the last several years. Meanwhile, many businesses are moving overseas, or at least focusing on international operations and shifting profits offshore.

It’s easy for companies to move… much more difficult for people who have emotional ties, fear, anxiety, etc. that maintains their geographical inertia. As such, it will ultimately be the individual citizens remaining behind who will be exploited like malnourished milk cows to pay for the destruction. _Simon Black on ZeroHedge

Because government bureaucrats and politicians put themselves (and their cronies) first and their constituents last, they never even consider doing the right thing. Reducing the size of government interference in markets and private decisions -- to allow individuals' assets and economic markets to grow based upon sound and sustainable economic principles -- would give nations such as the US, Greece, and Spain a new lease on life. But government functionaries can no longer do the responsible thing -- even if they wanted to -- because dependency upon government payouts, preferences, and benefits has grown too high for too many people. The riots in Peoria might even come to rival those in Athens or Paris, once government union organisers and other quasi-collectivist groups had time to bus in the shock troops and stir up local government beneficiaries.

In other words, the trend is set in stone, unless responsible citizens and officials collaborate to strip governments of their power to bribe voters and potential rioters with unsustainable phantom assets -- either borrowed or inflated. Because when the three ugly sisters get finished painting the landscape, you will come to envy those who were able to escape the trap in time. Who is John Galt?

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