It has an often repeated axiom that a person can learn a whole lot about a society by how it treats its poor. But just as much can be learned by looking at how that society treats its rich. Indeed, the economic future of the poor – and our nation – will be determined in the coming decades by how we treat the people in this country who create great wealth. It will be determined by our understanding of the so-called rich. And our ability to protect this minority.

It is an unpopular thing to say, I know. Rich people need help? Rich people need to be protected? Rich people a minority? Give me a break. They just seem to keep getting richer!  Regrettably, too many Americans, and far too many intellectuals and politicians, don’t understand these people we call “the rich.” And how it is they got rich in the first place.

Because most of us don’t actually know any of these rich people, we instead experience them in the abstract, through policy debates and statistics, and always through the prism of our own ideological lens. We look at the raw data to state our case either against or for the richest among us. In the end, our view of the rich has much to do about how all of us view “capitalism” itself. Indeed, in that respect, our opinions about the rich are a sort of Rorsach test, revealing more about ourselves than anything else.

To those on The Left who think capitalism creates unfair outcomes, they have statistics to confirm their outlook. It seems absurd on its face that the top 1% of American families own 90% of the nation’s wealth.

Wouldn’t it be possible to contrive an economy that is just as prosperous but with a fairer distribution of wealth? Couldn’t we cap the earnings of the rich at $50 million? Or even $100 million? 

Most defenders of capitalism and free markets say no. They contend that the bizarre inequalities we see are an indispensable part of the processes that create wealth. They imply capitalism doesn’t make sense, morally or rationally, but it makes wealth. So don’t knock it.

What nonsense it all is!  And how little to do with the reality of the rich. And how sad that defenders of the rich – or the rich themselves – can’t come up with a better economic or moral case! Quoting Adam Smith and supply side economists just doesn’t cut it.

So who are the so called rich? As someone who is rich (and would love to be even richer), and has spent a lifetime working with people who create wealth, I thought I’d explain who they are, where they come from, and why we should care about their wealth – and their desire to hold on to it.

To begin, it is not exactly a list of the Who’s Who and Most Likely to Succeed in high school or college, this group of Americans called the rich. They are certainly not the best looking. They didn’t get the highest SAT or ACT scores in high school, they probably weren’t voted most likely to succeed in any yearbook, and they certainly didn’t get where they got through the force of their personalities, charisma or celebrity.

A great number of the richest among us never finished high school, and many who went to college never managed to graduate. That’s because the rich in this country are chosen not by blood, credentials, education, or services to the establishment. The rich are chosen for performance, and for their relentless desire to serve consumers.

The entrepreneurial knowledge that is the crux of wealth creation has little to do with glamorous work, or with the certified expertise of advanced degrees. Great wealth usually comes from doing what other people consider insufferably boring.

The treacherous intricacies of building codes or garbage routes or software languages or groceries, the mechanics of butchering sheep and pigs or frying and freezing potatoes, the murky lore of petroleum leases or housing deeds, the ways and means of pushing pizzas or insurance policies or hawking hosiery or pet supplies or scrounging for pennies in fast-food unit sales, all of those tasks are deemed tedious and trivial.

In short, our rich – America’s best entrepreneurs – perform work that most others spurn.

You need to read the rest of this article -> blackhawkpartners.com

Very important article.

This is a thoughtful critique of the private vs. public control of our air traffic control system. However, it raises some important issues which deserve more attention.

Whenever someone trots out the ‘Profits vs. People‘ line, it is important to recognize this as nothing more than an economically illiterate straw-man. We live in a society of free people, not of slaves.  Therefore, there is no such thing as People versus Profit, rather – they go hand in hand.

In a free society, Profit in not something which necessarily requires the sacrifice of People (as the video above puts it: ‘People before profits’). In fact, Profit is not possible without People – whether workers or consumers. Nor is Profit simply “making money,” though it is almost exclusively discussed this way. (Note that money is nothing more than a representation of value, and a means of easily trading it. Without money – trading would be nearly impossible. I would have to barter hours of web development directly for flight control service, or mexican food, or Wii games, or my mortgage payment, etc.) People trade things they value and produce, (usually represented by money), for things they value more or are incapable of producing. This creates a ‘profit’ for both traders. The one offering the service – turns a profit on the service provide, the other gains a profit from the service rendered. There is no ‘versus’.

Likewise, the animosity toward the ‘profit motive’ is also illogical. This phrase is often used as a pejorative describing an enterprise making money. But what of the consumer’s ‘profit motive‘ to obtain the service for the cheapest cost? Both parties are negotiating a trade of value. Why is only one seen as profiting, and is thus demonized? As a service provider or producer in a free market – it runs counter to the ‘profit motive’ to do something that is destructive to your customers or the public image of your company. Because a private entity does not have the ability to use force (in contrast with the government, which IS force), it is inherently imperative to, not only, earn your trust and support – but provide something of greater value, than whatever thing of value (money) you would trade for it. If a certain product or service is not of greater value – or if the provider is known to harm its customers, you are free to trade for something else that isn’t harmful and is a better deal. Essentially – you are free to choose to pursue a better trade – one in which you gain a bigger (here comes that ‘evil’ word again…) profit with regard to what you offer to trade. The profit motive is hardly more than the desire to not get screwed over when making a trade.

Consider these thoughts the next time someone attempts to decry Profits, the profit motive, or pushes the false idea that Profits and People are enemies fighting for opposing teams.

One Crucial Distinction About Capitalism

Above I am arguing for capitalism. It is essential to point out that private entities who do use governmental force to compel consumers to trade for their service are not practicing capitalism. Capitalism is free trade, hence -laissez faire.  The power to determine and negotiate value and fairness is on the individual traders. Forced trade is a feature of socialism, communism, and/or fascism. With forced trade, the government (force) is used to increase a private entities influence or bargaining power. For example: Let’s say General Electric is lobbying congress (which they are) for all sorts of things (as is their constitutional right). Among those things is likely a push to pass legislation against incandescent light bulbs in the interest of climate change. Congress then may outlaw these bulbs, and you will be obligated to purchase the new curly florescent bulbs. Obviously, G.E. will profit greatly from this new legislation, even if you buy your new bulbs elsewhere, because the new law will necessarily create an increase in demand. The point is that G.E. will have bargained with the politicians to borrow the government’s monopolistic force to influence the market and raise the value of florescent light bulbs. This is anti-capitalism. 

Perhaps you may argue that you get to vote about the new legislation (usually you don’t, but for the sake of the argument…) – but your decision is either upheld or overruled by the majority of other voters. This is a far cry from actually freely choosing – “I will trade some value, in exchange for something you value more”.

This difference is crucial and must be distinguished, as it is commonplace to blame laissez faire capitalism (free trade) for the faults which are actually aspects of socialism (government sponsored forced trade). Ayn Rand further lays out this distinction in the video below:

Posted via web from Andrew Colclough

The Broken Window

Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass.

A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Two hundred and fifty dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $250 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $250 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.

Bastiat: What is Seen and What is Not Seen

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

1.2
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

1.3
Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

The recent program “Cash for Clunkers” was a direct application of the Broken Window Fallacy. In theory – it sounds like a great way to get old crappy cars off the roads, while stimulating the economy by getting people to purchase vehicles. This was the Seen. But what of the Un-seen?

Posted via web from Andrew Colclough

In reality, scarcity is the cause of many of the difficult choices individuals face. However, governments prefer to find “greedy-bastard” bogeymen to blame. This allows governments to play as saviors rather than as the parasites causing the problems in order to benefit favored constituencies at others’ expense. But government has no power to eliminate scarcity.

Government, beyond its role of defending voluntary arrangements against force and fraud, only makes the effects of scarcity worse. It substitutes decisions by people with worse information and incentives, backed by the power of coercion, for decisions by people with better information and incentives. That is why it is actually government “solutions” that increase the influence of greedy bastards in society. After all, “greedy bastard” is an excellent description of someone who demands power over others without cost or their willing consent; and falsely blames others to gain it.

Socialism’s greatest success is effectively blaming Capitalism for all of its faults.

Now if only I could find a really good scapegoat for all the moronic things I’ve done… Unfortunately, nothing can repel buffoonery of that magnitude. :)

“The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” 
-Thomas Sowell

Posted via web from Andrew Colclough

This is an outstanding economics talk from the Mises Institute, by Art Carden. Carden uses everything from LOST, to WALLE, to Walmart to illustrate core economic concepts like scarcity, opportunity cost, comparative advantage, firms, capital, and voluntary trading (just to name a few).

Sounds dry, right? There are probably more coherent and logical thoughts covered in this relatively short lecture than in every political speech given in the last 10 years combined.

The president is making sense
Ezra Klein and Matthew Yglesias both catch President Obama making sense on the public option:

QUESTION: Wouldn’t that drive private insurance out of business?

OBAMA: Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.

Making Sense? I respectfully disagree. Obama’s answer conveniently leaves out some important economic factors.

President Obama asks, “Why would it drive private insurance out of business?”

The answer is simple:

1. Because the government operates outside the market and price system and therefore has the unique ability to artificially set their price below the competitive market (something private insurers do not have the power to do, because their price is determined by supply and demand). Contrary to popular belief, Prices in the free market are not set arbitrarily. This is easily demonstrated by Craigslist. I recently tried to sell a rather ugly southwestern style kitchen table for $200. I actually figured that it probably wasn’t worth that, but I thought I would try it and see if I got any bites. No Response.
   Soon – I lowered the price to $150. Nothing.
   Finally, I lowered it to $100 and I sold it fairly quickly. You can see that I could not sell the table for more than it’s actual real-world perceived value. I didn’t really set the price at $100, rather, low demand for the ugly table did.
2. Also – the government is funded through non-voluntary trading – by taxation, thus has no competition, no bottom line, no incentive, nor any reason whatsoever to function efficiently. Nor do they have any real incentive to provide ‘better health care’ (In a public system – someone in an office, who knows nothing about you, will determine the policy of what is considered ‘adequate’ healthcare based on what – Statistical data?) since you don’t get to choose to pay (essentially, vote with your dollars) for their service. Only the government has the power to force you to pay for their service, whether you want it or not. Private industry has to offer you something you value more than your own money, to earn your business.
3. Finally, the fact that most people falsely perceive government options as “free,” basically guarantees overwhelming popular and political capital for an idea that you cannot choose not to pay for. Even if the actual outcome of such a program is poor, the majority of voters will subscribe to the nice sounding idea that everyone should receive health care. It is, after all, a noble sounding ideal – but unfortunately, when measured against history, or any kind of actual economic cost/benefit results – it fails.

I would expect Paul Krugman, Ezra Klien, Matthew Yglesis, and President Obama to know better, but political capital is so much easier to get excited about, than the, rather, wet blanket that is economic reality. It’s time (yet again) for one of my favorite quotes:

“The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
-Thomas Sowell

You cannot buck economic forces. In my view – they are as consistent and absolute as the laws of Mathematics. Yet they seem to be the first to be disregarded in the face of an idea that sounds really satisfying.

I have written much more extensively on this here: Healthcare: Economic Reality vs. Political Capital

Many thanks to Youtube user brittle13 for posting this full interview (in 5 parts):

President Barack Obama will announce plans on Tuesday for a national fuel-economy and greenhouse-gas standard for automobiles in an effort to give more certainty to car companies as they struggle for survival.
The plan marks the first time there has been a nationwide standard for emissions of greenhouse gasses, and it will require an average mileage standard of 39 miles per gallon for cars and 30 mpg for trucks by 2016.

That’s a dramatic increase from current levels – the White House says the average fuel efficiency for the current model year is just 25 mpg.

- Politico

Interesting proposal, right? I mean, who doesn’t want cars with better fuel efficiency? As it turns out – this is a surprisingly relevant question to be asking. If the majority of people want more fuel efficient cars, why aren’t the auto-makers selling them? In fact, let’s try to answer this question, by first answering several other foundational questions about this proposal. the idea here is simply to think beyond stage one of, “Better Fuel Economy – by Government Mandate.”

First, Economist Thomas Sowell’s big three ‘Must answer’ questions concerning any proposal:

1) Who pays for it?

Mostly, you – the consumer. Of course, the car companies and auto workers will also suffer, as the cost to produce their vehicles is driven up arbitrarily, rather than by market demand. They will have no choice but to raise the prices of their cars, trim back weight and features, and/or take even bigger losses on each car sold. If that seems like a raw deal, it is likely that we all will also be paying (as we currently are) to keep the auto companies in business, if these fuel efficient cars don’t sell.

2) How much will it cost?

The senior administration official said the new standards will add an expected $600 to the cost of an average car, but the White House hopes that increase will be recouped through lower gas costs. The economic models used by the administration required a guess of the price of gas in the year 2016. The figure they used was $3.50 a gallon.

-Politico

Government guessing the price of gas in 2016? This should immediately raise flags, given that last year alone, fuel prices rose to $4.00+ in the summer, and then fell to $2.50 or so, and are now rising again. How the government can possibly make this prediction 7 years into the future with any certainty should be laughable.

Regarding the cost, $600 is the conservative guess by the way. The Washington Post mentioned $1,300 on average, per car.

And let’s not forget the increase in loss-of-life due to lighter, less safe vehicles on the road. (See crash tests below)

3) Will it work?

Well – that’s the real question, now isn’t it? I am not exactly optimistic.

Sure, brand new cars will be required to meet better fuel economy standards by 2016. However, will the auto makers be able to survive, and become profitable again selling them? Only if there is a sufficient demand by auto buyers to cover the required increase in production costs that the auto makers will be forced to shoulder.

Similarly, considering the environmental goals: does creating and buying more vehicles, and disposing of current ones, really achieve a lowering of environmental impact?

Let’s also re-visit my question at the top: Who doesn’t want cars with better fuel efficiency? Apparently, you don’t. Perhaps a better way to frame this question may be – why haven’t more fuel efficient cars been made? The answer is actually so unremarkably boring and simple that most people skip over it, favoring instead vastly more complicated theories, and or corporate conspiracies.

The answer is Price.

Behind all that wild theories, the laws behind the efficient allocation of scarce resources that have alternate uses* (commonly called: economics) still march on, like an unstoppable rebel force.

The basic economic fact is that the market (at current fuel prices) cannot bear the increase in automobile prices (due to higher fuel efficient cars) in a way that would be profitable for auto makers. If it could have, you can bet the automakers would have already jumped on the possibility, as they did briefly last summer when the price of oil peaked (At the time, ‘Green’ cars and Hybrids like the Toyota Prius were all the rage, as were car ads that emphasized M.P.G.). Note that when the price of oil increased, the market responded, and consumers suddenly valued the higher priced Eco-Cars. No government mandate required.

Also, there is the Cost.

Increased fuel efficiency comes with a trade-off, or cost for the consumer: reduced safety. When the consumer considers the value in a vehicle, safety is usually a critical concern. It appears that at current fuel prices, consumers value vehicle safety, over fuel efficiency. And the trade-off for fuel efficiency vs. safety is huge. For instance, here is a Toyota Yaris and a Toyota Camry (note that a Camry is not a big vehicle) in your standard drift-across-the-yellow-line test:

Owned by a Camry!

And here’s the same test for a Honda Fit vs. a Honda Accord (also, not a large vehicle)

Are you going to put your kids in that?

This is the very real cost trade-off that consumers face when they go to purchase a vehicle. The reason that more fuel efficient cars don’t sell is that, at current gas prices, consumers would rather trade the extra cash, for their own life and safety, rather than a couple more miles-per-gallon. If gas prices were to rise again, consumers would automatically and incrementally start placing more value on fuel efficiency.

Central Planning vs. The Free Market

In the end, the heart of this issue illustrates the classic clash of two opposing views over the very real way economic factors function. Namely, that the will of a handful of elected officials can out-smart the will of millions upon millions of consumer, and producer choices.

In this case, The President has decided that fuel efficiency and eco-friendliness are the highest values, regardless of other concerns and costs. The intent of the idea may be noble, and certainly makes for exceptionally good political capital. However, in the end, the will of the consumer, the will of the auto makers, and even the stability of the auto worker’s employment, is traded in the name of eco-friendly cars.

And don’t get me wrong. This isn’t necessarily a knock on Obama. Many politicians jump at the opportunity to score political capital, without thinking beyond stage one. I’m fairly certain that McCain would have been on board with an idea similar to this.

In my opinion, the basic economic mechanisms of the free market, such as Price, Cost, and Supply and Demand, will force the creation of fuel efficient vehicles, and alternate fuel vehicles, when it actually makes economic sense – and without the mandate of any governing body.

Unfortunately, with the current central planning approach, we will have no choice but to bear the hidden costs.

You can read some other perspectives on this issue at: Politico, Time, The Washington Post, Hot Air, Michelle Malkin, The Heritage Foundation, and Steve Milloy’s Blog – just to start.

*The definition of economics, as explained in Basic Economics, by Economist Thomas Sowell

Also, I posted a lecture by Mark on America Alone, which you can watch or listen to here. Or, of course, you can simply order his book and read it yourself.

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Live Free or Die, by Mark Steyn

Mark Steyn, Author of America Alone

My book America Alone is often assumed to be about radical Islam, firebreathing imams, the excitable young men jumping up and down in the street doing the old “Death to the Great Satan” dance. It’s not. It’s about us. It’s about a possibly terminal manifestation of an old civilizational temptation: Indolence, as Machiavelli understood, is the greatest enemy of a republic. When I ran into trouble with the so-called “human rights” commissions up in Canada, it seemed bizarre to find the progressive left making common cause with radical Islam. One half of the alliance profess to be pro-gay, pro-feminist secularists; the other half are homophobic, misogynist theocrats. Even as the cheap bus ‘n’ truck road-tour version of the Hitler-Stalin Pact, it made no sense. But in fact what they have in common overrides their superficially more obvious incompatibilities: Both the secular Big Government progressives and political Islam recoil from the concept of the citizen, of the free individual entrusted to operate within his own societal space, assume his responsibilities, and exploit his potential.

In most of the developed world, the state has gradually annexed all the responsibilities of adulthood—health care, child care, care of the elderly—to the point where it’s effectively severed its citizens from humanity’s primal instincts, not least the survival instinct. Hillary Rodham Clinton said it takes a village to raise a child. It’s supposedly an African proverb—there is no record of anyone in Africa ever using this proverb, but let that pass. P.J. O’Rourke summed up that book superbly: It takes a village to raise a child. The government is the village, and you’re the child. Oh, and by the way, even if it did take a village to raise a child, I wouldn’t want it to be an African village. If you fly over West Africa at night, the lights form one giant coastal megalopolis: Not even Africans regard the African village as a useful societal model. But nor is the European village. Europe’s addiction to big government, unaffordable entitlements, cradle-to-grave welfare, and a dependence on mass immigration needed to sustain it has become an existential threat to some of the oldest nation-states in the world.

And now the last holdout, the United States, is embarking on the same grim path: After the President unveiled his budget, I heard Americans complain, oh, it’s another Jimmy Carter, or LBJ’s Great Society, or the new New Deal. You should be so lucky. Those nickel-and-dime comparisons barely begin to encompass the wholesale Europeanization that’s underway. The 44th president’s multi-trillion-dollar budget, the first of many, adds more to the national debt than all the previous 43 presidents combined, from George Washington to George Dubya. The President wants Europeanized health care, Europeanized daycare, Europeanized education, and, as the Europeans have discovered, even with Europeanized tax rates you can’t make that math add up. In Sweden, state spending accounts for 54% of GDP. In America, it was 34%—ten years ago. Today, it’s about 40%. In four years’ time, that number will be trending very Swede-like.

But forget the money, the deficit, the debt, the big numbers with the 12 zeroes on the end of them. So-called fiscal conservatives often miss the point. The problem isn’t the cost. These programs would still be wrong even if Bill Gates wrote a check to cover them each month. They’re wrong because they deform the relationship between the citizen and the state. Even if there were no financial consequences, the moral and even spiritual consequences would still be fatal. That’s the stage where Europe is.

America is just beginning this process. I looked at the rankings in Freedom in the 50 States published by George Mason University last month. New Hampshire came in Number One, the Freest State in the Nation, which all but certainly makes it the freest jurisdiction in the Western world. Which kind of depressed me. Because the Granite State feels less free to me than it did when I moved there, and you always hope there’s somewhere else out there just in case things go belly up and you have to hit the road. And way down at the bottom in the last five places were Maryland, California, Rhode Island, New Jersey, and the least free state in the Union by some distance, New York.

New York! How does the song go? “If you can make it there, you’ll make it anywhere!” If you can make it there, you’re some kind of genius. “This is the worst fiscal downturn since the Great Depression,” announced Governor Paterson a few weeks ago. So what’s he doing? He’s bringing in the biggest tax hike in New York history. If you can make it there, he can take it there—via state tax, sales tax, municipal tax, a doubled beer tax, a tax on clothing, a tax on cab rides, an “iTunes tax,” a tax on haircuts, 137 new tax hikes in all. Call 1-800-I-HEART-NEW-YORK today and order your new package of state tax forms, for just $199.99, plus the 12% tax on tax forms and the 4% tax form application fee partially refundable upon payment of the 7.5% tax filing tax. If you can make it there, you’ll certainly have no difficulty making it in Tajikistan.

New York, California… These are the great iconic American states, the ones we foreigners have heard of. To a penniless immigrant called Arnold Schwarzenegger, California was a land of plenty. Now Arnold is an immigrant of plenty in a penniless land: That’s not an improvement. One of his predecessors as governor of California, Ronald Reagan, famously said, “We are a nation that has a government, not the other way around.” In California, it’s now the other way around: California is increasingly a government that has a state. And it is still in the early stages of the process. California has thirtysomething million people. The Province of Quebec has seven million people. Yet California and Quebec have roughly the same number of government workers. “There is a great deal of ruin in a nation,” said Adam Smith, and America still has a long way to go. But it’s better to jump off the train as you’re leaving the station and it’s still picking up speed than when it’s roaring down the track and you realize you’ve got a one-way ticket on the Oblivion Express.

“Indolence,” in Machiavelli’s word: There are stages to the enervation of free peoples. America, which held out against the trend, is now at Stage One: The benign paternalist state promises to make all those worries about mortgages, debt, and health care disappear. Every night of the week, you can switch on the TV and see one of these ersatz “town meetings” in which freeborn citizens of the republic (I use the term loosely) petition the Sovereign to make all the bad stuff go away. “I have an urgent need,” a lady in Fort Myers beseeched the President. “We need a home, our own kitchen, our own bathroom.” He took her name and ordered his staff to meet with her. Hopefully, he didn’t insult her by dispatching some no-name deputy assistant associate secretary of whatever instead of flying in one of the bigtime tax-avoiding cabinet honchos to nationalize a Florida bank and convert one of its branches into a desirable family residence, with a swing set hanging where the drive-thru ATM used to be.

As all of you know, Hillsdale College takes no federal or state monies. That used to make it an anomaly in American education. It’s in danger of becoming an anomaly in America, period. Maybe it’s time for Hillsdale College to launch the Hillsdale Insurance Agency, the Hillsdale Motor Company and the First National Bank of Hillsdale. The executive supremo at Bank of America is now saying, oh, if only he’d known what he knows now, he wouldn’t have taken the government money. Apparently it comes with strings attached. Who knew? Sure, Hillsdale College did, but nobody else.

If you’re a business, when government gives you 2% of your income, it has a veto on 100% of what you do. If you’re an individual, the impact is even starker. Once you have government health care, it can be used to justify almost any restraint on freedom: After all, if the state has to cure you, it surely has an interest in preventing you needing treatment in the first place. That’s the argument behind, for example, mandatory motorcycle helmets, or the creepy teams of government nutritionists currently going door to door in Britain and conducting a “health audit” of the contents of your refrigerator. They’re not yet confiscating your Twinkies; they just want to take a census of how many you have. So you do all this for the “free” health care—and in the end you may not get the “free” health care anyway. Under Britain’s National Health Service, for example, smokers in Manchester have been denied treatment for heart disease, and the obese in Suffolk are refused hip and knee replacements. Patricia Hewitt, the British Health Secretary, says that it’s appropriate to decline treatment on the basis of “lifestyle choices.” Smokers and the obese may look at their gay neighbor having unprotected sex with multiple partners, and wonder why his “lifestyle choices” get a pass while theirs don’t. But that’s the point: Tyranny is always whimsical.

And if they can’t get you on grounds of your personal health, they’ll do it on grounds of planetary health. Not so long ago in Britain it was proposed that each citizen should have a government-approved travel allowance. If you take one flight a year, you’ll pay just the standard amount of tax on the journey. But, if you travel more frequently, if you take a second or third flight, you’ll be subject to additional levies—in the interest of saving the planet for Al Gore’s polar bear documentaries and that carbon-offset palace he lives in in Tennessee.

Isn’t this the very definition of totalitarianism-lite? The Soviets restricted the movement of people through the bureaucratic apparatus of “exit visas.” The British are proposing to do it through the bureaucratic apparatus of exit taxes—indeed, the bluntest form of regressive taxation. As with the Communists, the nomenklatura—the Prince of Wales, Al Gore, Madonna—will still be able to jet about hither and yon. What’s a 20% surcharge to them? Especially as those for whom vast amounts of air travel are deemed essential—government officials, heads of NGOs, environmental activists—will no doubt be exempted from having to pay the extra amount. But the ghastly masses will have to stay home.

“Freedom of movement” used to be regarded as a bedrock freedom. The movement is still free, but there’s now a government processing fee of $389.95. And the interesting thing about this proposal was that it came not from the Labour Party but the Conservative Party.

That’s Stage Two of societal enervation—when the state as guarantor of all your basic needs becomes increasingly comfortable with regulating your behavior. Free peoples who were once willing to give their lives for liberty can be persuaded very quickly to relinquish their liberties for a quiet life. When President Bush talked about promoting democracy in the Middle East, there was a phrase he liked to use: “Freedom is the desire of every human heart.” Really? It’s unclear whether that’s really the case in Gaza and the Pakistani tribal lands. But it’s absolutely certain that it’s not the case in Berlin and Paris, Stockholm and London, New Orleans and Buffalo. The story of the Western world since 1945 is that, invited to choose between freedom and government “security,” large numbers of people vote to dump freedom every time—the freedom to make your own decisions about health care, education, property rights, and a ton of other stuff. It’s ridiculous for grown men and women to say: I want to be able to choose from hundreds of cereals at the supermarket, thousands of movies from Netflix, millions of songs to play on my iPod—but I want the government to choose for me when it comes to my health care. A nation that demands the government take care of all the grown-up stuff is a nation turning into the world’s wrinkliest adolescent, free only to choose its record collection.

And don’t be too sure you’ll get to choose your record collection in the end. That’s Stage Three: When the populace has agreed to become wards of the state, it’s a mere difference of degree to start regulating their thoughts. When my anglophone friends in the Province of Quebec used to complain about the lack of English signs in Quebec hospitals, my response was that, if you allow the government to be the sole provider of health care, why be surprised that they’re allowed to decide the language they’ll give it in? But, as I’ve learned during my year in the hellhole of Canadian “human rights” law, that’s true in a broader sense. In the interests of “cultural protection,” the Canadian state keeps foreign newspaper owners, foreign TV operators, and foreign bookstore owners out of Canada. Why shouldn’t it, in return, assume the right to police the ideas disseminated through those newspapers, bookstores and TV networks it graciously agrees to permit?

When Maclean’s magazine and I were hauled up in 2007 for the crime of “flagrant Islamophobia,” it quickly became very clear that, for members of a profession that brags about its “courage” incessantly (far more than, say, firemen do), an awful lot of journalists are quite content to be the eunuchs in the politically correct harem. A distressing number of Western journalists see no conflict between attending lunches for World Press Freedom Day every month and agreeing to be micro-regulated by the state. The big problem for those of us arguing for classical liberalism is that in modern Canada there’s hardly anything left that isn’t on the state dripfeed to one degree or another: Too many of the institutions healthy societies traditionally look to as outposts of independent thought—churches, private schools, literature, the arts, the media—either have an ambiguous relationship with government or are downright dependent on it. Up north, “intellectual freedom” means the relevant film-funding agency—Cinedole Canada or whatever it’s called—gives you a check to enable you to continue making so-called “bold, brave, transgressive” films that discombobulate state power not a whit.

And then comes Stage Four, in which dissenting ideas and even words are labeled as “hatred.” In effect, the language itself becomes a means of control. Despite the smiley-face banalities, the tyranny becomes more naked: In Britain, a land with rampant property crime, undercover constables nevertheless find time to dine at curry restaurants on Friday nights to monitor adjoining tables lest someone in private conversation should make a racist remark. An author interviewed on BBC Radio expressed, very mildly and politely, some concerns about gay adoption and was investigated by Scotland Yard’s Community Safety Unit for Homophobic, Racist and Domestic Incidents. A Daily Telegraph columnist is arrested and detained in a jail cell over a joke in a speech. A Dutch legislator is invited to speak at the Palace of Westminster by a member of the House of Lords, but is banned by the government, arrested on arrival at Heathrow and deported.

America, Britain, and even Canada are not peripheral nations: They’re the three anglophone members of the G7. They’re three of a handful of countries that were on the right side of all the great conflicts of the last century. But individual liberty flickers dimmer in each of them. The massive expansion of government under the laughable euphemism of “stimulus” (Stage One) comes with a quid pro quo down the line (Stage Two): Once you accept you’re a child in the government nursery, why shouldn’t Nanny tell you what to do? And then—Stage Three—what to think? And—Stage Four—what you’re forbidden to think . . . .

Which brings us to the final stage: As I said at the beginning, Big Government isn’t about the money. It’s more profound than that. A couple of years back Paul Krugman wrote a column in The New York Times asserting that, while parochial American conservatives drone on about “family values,” the Europeans live it, enacting policies that are more “family friendly.” On the Continent, claims the professor, “government regulations actually allow people to make a desirable tradeoff-to modestly lower income in return for more time with friends and family.”

As befits a distinguished economist, Professor Krugman failed to notice that for a continent of “family friendly” policies, Europe is remarkably short of families. While America’s fertility rate is more or less at replacement level—2.1—seventeen European nations are at what demographers call “lowest-low” fertility—1.3 or less—a rate from which no society in human history has ever recovered. Germans, Spaniards, Italians and Greeks have upside-down family trees: four grandparents have two children and one grandchild. How can an economist analyze “family friendly” policies without noticing that the upshot of these policies is that nobody has any families?

As for all that extra time, what happened? Europeans work fewer hours than Americans, they don’t have to pay for their own health care, they’re post-Christian so they don’t go to church, they don’t marry and they don’t have kids to take to school and basketball and the 4-H stand at the county fair. So what do they do with all the time?

Forget for the moment Europe’s lack of world-beating companies: They regard capitalism as an Anglo-American fetish, and they mostly despise it. But what about the things Europeans supposedly value? With so much free time, where is the great European art? Where are Europe’s men of science? At American universities. Meanwhile, Continental governments pour fortunes into prestigious white elephants of Euro-identity, like the Airbus A380, capable of carrying 500, 800, a thousand passengers at a time, if only somebody somewhere would order the darn thing, which they might consider doing once all the airports have built new runways to handle it.

“Give people plenty and security, and they will fall into spiritual torpor,” wrote Charles Murray in In Our Hands. “When life becomes an extended picnic, with nothing of importance to do, ideas of greatness become an irritant. Such is the nature of the Europe syndrome.”

The key word here is “give.” When the state “gives” you plenty—when it takes care of your health, takes cares of your kids, takes care of your elderly parents, takes care of every primary responsibility of adulthood—it’s not surprising that the citizenry cease to function as adults: Life becomes a kind of extended adolescence—literally so for those Germans who’ve mastered the knack of staying in education till they’re 34 and taking early retirement at 42. Hilaire Belloc, incidentally, foresaw this very clearly in his book The Servile State in 1912. He understood that the long-term cost of a welfare society is the infantilization of the population.

Genteel decline can be very agreeable—initially: You still have terrific restaurants, beautiful buildings, a great opera house. And once the pressure’s off it’s nice to linger at the sidewalk table, have a second café au lait and a pain au chocolat, and watch the world go by. At the Munich Security Conference in February, President Sarkozy demanded of his fellow Continentals, “Does Europe want peace, or do we want to be left in peace?” To pose the question is to answer it. Alas, it only works for a generation or two. And it’s hard to come up with a wake-up call for a society as dedicated as latterday Europe to the belief that life is about sleeping in.

As Gerald Ford liked to say when trying to ingratiate himself with conservative audiences, “A government big enough to give you everything you want is big enough to take away everything you have.” And that’s true. But there’s an intermediate stage: A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the position European governments find themselves in. Their citizens have become hooked on unaffordable levels of social programs which in the end will put those countries out of business. Just to get the Social Security debate in perspective, projected public pension liabilities are expected to rise by 2040 to about 6.8% of GDP in the U.S. In Greece, the figure is 25%—i.e., total societal collapse. So what? shrug the voters. Not my problem. I want my benefits. The crisis isn’t the lack of money, but the lack of citizens—in the meaningful sense of that word.

Every Democrat running for election tells you they want to do this or that “for the children.” If America really wanted to do something “for the children,” it could try not to make the same mistake as most of the rest of the Western world and avoid bequeathing the next generation a leviathan of bloated bureaucracy and unsustainable entitlements that turns the entire nation into a giant Ponzi scheme. That’s the real “war on children” (to use another Democrat catchphrase)—and every time you bulk up the budget you make it less and less likely they’ll win it.

Conservatives often talk about “small government,” which, in a sense, is framing the issue in leftist terms: they’re for big government. But small government gives you big freedoms—and big government leaves you with very little freedom. The bailout and the stimulus and the budget and the trillion-dollar deficits are not merely massive transfers from the most dynamic and productive sector to the least dynamic and productive. When governments annex a huge chunk of the economy, they also annex a huge chunk of individual liberty. You fundamentally change the relationship between the citizen and the state into something closer to that of junkie and pusher—and you make it very difficult ever to change back. Americans face a choice: They can rediscover the animating principles of the American idea—of limited government, a self-reliant citizenry, and the opportunities to exploit your talents to the fullest—or they can join most of the rest of the Western world in terminal decline. To rekindle the spark of liberty once it dies is very difficult. The inertia, the ennui, the fatalism is more pathetic than the demographic decline and fiscal profligacy of the social democratic state, because it’s subtler and less tangible. But once in a while it swims into very sharp focus. Here is the writer Oscar van den Boogaard from an interview with the Belgian paper De Standaard. Mr. van den Boogaard, a Dutch gay “humanist” (which is pretty much the trifecta of Eurocool), was reflecting on the accelerating Islamification of the Continent and concluding that the jig was up for the Europe he loved. “I am not a warrior, but who is?” he shrugged. “I have never learned to fight for my freedom. I was only good at enjoying it.” In the famous Kubler-Ross five stages of grief, Mr. van den Boogard is past denial, anger, bargaining and depression, and has arrived at a kind of acceptance.

“I have never learned to fight for my freedom. I was only good at enjoying it.” Sorry, doesn’t work—not for long. Back in New Hampshire, General Stark knew that. Mr. van den Boogard’s words are an epitaph for Europe. Whereas New Hampshire’s motto—”Live free or die!”—is still the greatest rallying cry for this state or any other. About a year ago, there was a picture in the papers of Iranian students demonstrating in Tehran and waving placards. And what they’d written on those placards was: “Live free or die!” They understand the power of those words; so should we.