Something sat wrong with me on Tuesday night, as President Obama told the story about a Minneapolis couple that struggled to regain economic footing in the New American Economy. His story sounded like the America I used to know … not the America that now exists.
His anecdote spoke obliquely to poverty in America, and directly to the point Obama sought to make that “everyone who makes the effort” can succeed.
I believe that. The problem is, as the facts show, America no longer believes that. The only reason Obama and his socialist minions in the Democratic Party talk about people like the Minneapolis couple is because doing so allows them to continue pushing a failed, 60-year-old agenda that has turned America into Europe.
It never should have come to this in America. That it has speaks to a revolutionary redirection in our country that has reached a point of no return and that ultimately must take more money from your pocket in the coming years.
Where It All Went Wrong
America was never meant to be a Welfare State. It’s not in our historical DNA.
We simply picked up a very bad habit from Europe.
Europe grew up amid landed gentry, kings and nobility and feudal social economies that stretched over centuries. Social and economic mobility were sorely constrained. Poverty was rampant, and a belief system emerged widely across the Continent that poverty was a function of birth, not effort. Seeing no path to economic security, Europeans starting with the various revolutions of the 19th century began pushing for government to build safety nets (which governments ultimately saw as a means of quelling revolts and buying support).
Despite our European immigrant heritage, America grew up without the same aristocratic history — no kings, no nobility, no feudalism. Americans were not locked in place economically or socially. We saw opportunity everywhere and grew up believing, as Obama noted, “everyone who makes the effort” can succeed. Poverty in America, therefore, was a function of effort (or lack thereof), not birth. If you fell into poverty, you busted your butt to work yourself out of poverty. You relied temporarily on the charity of others to help see you through a rough patch, but no self-respecting American would ever think of building their livelihood around government handouts — because government handouts were meaningless and because doing so meant that you were … a loser.
That all changed in 1964, with two of the greatest social failures in American history: President Lyndon Johnson’s “War on Poverty” and his “Great Society.” Both were largely sops to the boisterous Civil Rights movement and government’s feelings of historical guilt. Through the establishment and expansion of food, housing, health care and income-assurance programs, both set the tone for the entitlement mentality that defines modern America.
Those who fell into poverty no longer felt an incentive to strive for something better to pull themselves up. They grew accustomed to life on the dole. It was easier than working.
Which is exactly where we stand today.
Back before Johnson committed America to an entitlement mindset, the country’s then-existing collection of social-welfare programs cost less than a quarter of federal spending. Today it’s between 60% and 70% — and growing — and that doesn’t account for the outsized costs of the bureaucracy necessary to manage the many programs.
And that’s where our problem as a country — and, more specifically, our problem as American taxpayers — is rooted so deeply.
At this stage of the game, half a century into the bureaucracy and vested interests built up around the business of poverty and entitlements — we are too far down the road to turn back now. Worse, with 159 million Americans receiving some form of government income — interesting comparison: that’s more than the entire U.S. workforce (148 million) — too many people are receiving too much free money for the population as a whole to willingly agree to change the system. The system will only change when, as happened in Sweden in the 1990s, the system collapses of its own weight.
Odds are, that day is coming.
Americans as a group have, sadly, come around to the European belief that poverty is an accident of birth, beyond their control … and that, therefore, it is up to the state, through redistribution of society’s cumulative wealth, to remedy the shortcomings of biology. They will insist on ever-greater government largess — universal healthcare is just the beginning; free college tuition and paid sick leave (two of Obama’s newest initiatives) will push America even farther down the road to a tax-heavy, European-style social economy.
Recipients won’t care where the money comes from, just that it comes from somewhere … for free. But nothing government does is ever free. Government either takes the money it wants from you and me (reducing the productive capacity of the economy), or it prints the money it needs, debasing the currency in the long term and eroding the value of our savings.
Odd segue, but it’s one of the reasons gold is so valuable. It’s quiet, untaxed wealth. You can’t avoid taxes on your income … but you can protect your wealth against future, invasive asset taxes by hiding out in gold.
American Exceptionalism once meant something. But how can we claim exceptionalism now when we’re following directly in the footsteps of European views of poverty and welfare? We’re no longer exceptional. We’re European, with an American accent.
Until next time, stay Sovereign …
Jeff D. Opdyke
Editor, Profit Seeker