Angus MacDonald
I can remember when there was much talk of the Republic of the United States as a censure of those who talked of Democracy. We were not founded as a democracy; the Founding Fathers believed that history gave no record of a successful democracy. Perhaps the little cantons of Switzerland are an exception, but they are so small their example is not relevant. Aristotle talked of democracies but did not think well of them. He defined democracy as rule by the majority, which may mean rule by a mob or a consensus for dictatorship. "A country must respect the wealthy and the poor, as the neglect of either will bring a country to ruin," said Aristotle more than two thousand years ago. It is sad we neglect wise men.
Our Founding Fathers despised sectarian bitterness that began in the first Congress of the country. Washington thought it a disgrace, as did John Adams. Both men suffered extraordinary abuse, which ended only with their death, when they were lionized. Washington and Adams thought men could be rational and avoid an unbalanced government by a sound constitution and a restricted government: two houses, one representing the people as a whole, and a smaller group which could censure excesses by the house of the people; an independent judiciary to ensure that politicians did not become contemptuous of law; and a strong executive which would be responsible for the conduct of the country. The president could only do what Congress approved but he had the power to veto what he thought unwise.
The Constitution of the United States made this country a republic, not a democracy. The present universal talk of the need to make the world safe for democracy is a repudiation of our traditions and a false hope. Character weaknesses destroy democracy. The various tribes of Islam have been formed by different theories of the proper descendants of Mohammed!
Being the world's superpower and being entangled the world over with people who fight each other, along with us, our advice should not be about becoming democracies, but the necessity of good behavior. We should encourage men to do something useful, like making shoes, or building homes. That is how Europe emerged from feudalism and founded the modern world. Men did what was helpful to their neighbors. Civilized countries still do this, and this is capitalism.
The new Democratic majority in Congress is anxious to deliver on its promise to change what has been wrong the last six years, and I hope they do. What they plan, however, is not clear. According to the "Tuesday Group," a group of "centrist" Republicans that has been outlining possible action, the goal is to have an economy that "works for the people." That was the goal of the Communists and is the pledge of all dictators. Capitalism is the friend of the people and we should admit the obvious. Specifically, the Tuesday Group advocates raising the minimum wage, lowering the price of drugs, and supporting a drug plan direct from Medicare. This is the voice of the people they say.
Addison Wiggin and Bill Bonner make the following observations in their book, Empire of Debt:
The United States will owe foreigners $8 trillion by the end of 2008.
The trade deficit with China in 2005 was $162 billion. Because of subsistence-wages in China, we have lost three million manufacturing jobs. In 2005 we spent $185 billion on Chinese manufactures. At the same time American businessmen have invested almost $4 billion in Chinese manufactories, looking for a profit from cheap labor and helping to bury America.
Our lack of common sense on the national level is equaled by personal folly. The average American household has $8,000 in credit card debt. For every $19 Americans earn, they spend $20.
The National Debt has $36 trillion dollars in outstanding loans. At 5 percent interest, debt service payments are $1.8 trillion. If our creditors demand payment we are done because we don't have the money to pay our obligations.
In 1945 the American dollar replaced sterling, a safe haven in times of economic or geopolitical unrest, as the most favored currency of central banks. The dollar replaced gold because of the latter's severity. Now, however, the dollar is in trouble because of the failure of the United States to live within a budget. Individuals and central banks don't want to hold dollars and are turning to the euro or the Brazilian real and the Chinese yuan . Jim Rogers suggests people invest in agricultural commodities: coffee and soybeans. "The price of agricultural commodities is more than 95 percent below their all-time highs when adjusted for inflation." These radical suggestions are of poor value. We must solve the problem and preserve the vitality of America. The euro is collapsing because it does not represent accurately the problem of the differing nations in the European Union, as Milton Friedman warned. The Chinese yuan is in trouble. The Chinese currency is undervalued purposely so it can overturn the economies of other nations.
When former Federal Reserve Chairman Paul Volker and former Treasury Secretary Robert Rubin say there is a crisis, we are stupid not to pay attention. "It's incredible people have gone on so long holding dollars," Volker said. "At some point, you will get a situation where people have had enough." Rubin pointed out the government is just five years away from rapid acceleration of spending on the nation's entitlement programs as millions of baby boomers start to retire. The government must address the problem now.
We have to decrease government spending. Allowing politicians to spend money is asking drunks to sponsor cocktail parties. An increase of taxation to pay the mortgage will increase unemployment and decrease investment activity. There is only a handful of politicians with economic prudence and citizens should realize the fact and insist on change.
Our national debt results not only from the excitement of politicians spending someone else's money but from the global economy. Everyone dumps on the U.S. and the popular theory is that this is a benefit. We get cheaper goods. So we do, but we also lose jobs. To live by a service economy is nonsense. A service economy is good only when you have something to serve. An economy is dependent on things. You don't make money playing bridge but by growing potatoes. We invented the service industry with computers, but computer knowledge is easy to export and India is now the leader in the field, and at cheaper rates than Hollywood.
According to Alan Tonelson, a research fellow at the U.S. Business & Industrial Council Educational Foundation, the largest losses in the United States have been in aircraft, and aircraft parts, including engines; telecommunications equipment; pharmaceuticals; navigation and guidance instruments; machine tools; ball bearings; turbines for power plants; farm and construction equipment. I suspect that the loss of jobs in the United States and other countries is much larger than the items listed by Professor Tonelson.
China has a population of around 1.3 billion. The rural population of 23.85 million does not have adequate food or clothing. The total of the population who are poor is at least 200 million. The country is doing what it can but it must do more than rely on welfare. It should turn from promoting exports to manufacturing for the needs of its citizens. That is what made Europe and the United States wealthy and is the only way for any country.
The world is engaged in trade wars, and the United States is the guinea pig. Americans show their true colors at football games. They come in droves and are excited, full of energy and goodwill, without rancor. Looking at the world, and hearing of the horrors of other countries, they give their shirts to help and are pleased to do so. Much of the time they are used. We give away billions, and politicians in recipient countries are blessed while their own citizens are as poor as before.
What shall we do? First and foremost we have to cut spending and live within a budget we can afford. I do not want to criticize President Bush, and believe history may see much in his presidency that is noble, but there is no doubt he has continued the wild spending of the last forty years. Spending under George Bush has grown faster than any administration since Nixon and Ford.
Second, like it or not, we have to be a part of the universal trade war. We repudiate taxation as a method to reduce our debt. We cannot afford taxation, as it means poverty for all, and great hardship for the working class. We must impose tariffs on imports. Economists have calculated "a 25 percent tariff on all non-oil imports would cut the trade deficit in half and generate enough new tax revenue to balance the federal budget." Any tariff program would have to be selective according to our need to preserve manufacturing, but a remedy has to be made to solve the present unbalance.
Following this advice would not only correct our financial mistakes and restore our reputation as the financial bastion of the world but illustrate decent republican government rather than democracy, the rule of the mob. *
"Character may be manifested in the great moments, but it is made in the small ones." -Phillips Brooks
The quotes following each article have been gathered by The Federalist Patriot at: http://FederalistPatriot.US/services.asp.
