A Nation Of Takers Is A Path Towards Poverty

Wall Street Journal’s Stephen Moore in an Op-Ed suggests that the US is becoming more of a nation of takers than a nation of makers or producers.

Mr. Moore writes (bold emphasis mine)

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida's ratio is more than 3 to 1. So is New York's.

Policy induced bubble cycles, bailouts, subsidies, welfarism, government fostered cartels (banking, military complex, green energy) and the palpable redistribution of power from the markets to the political sphere signifies as a mission creep towards a more socialized society in the US.

For the many statists who sees every imbalances as the fault of China, this clearly is an internally induced economic distortion. In short, the Chinese have little to do with the mistakes of American policymaking.

Chart from Heritage Foundation

And over the years, US politicians have used each crisis as an opportunity to expand government intervention in the name of security. Remember this quote popularized by Rahm Emanuel, "You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think could not do before."

The obvious outcome from the continued pursuit of such policies is likely a transition towards the Philippinization or emerging marketization or simply a material reduction of America’s living standards.

That’s because the welfare state represents an unsustainable model of governance—picking on someone’s pocket is a zero sum game that rewards non-productive agents at the expense of productive agents. Thus the welfare state breeds and nurtures political parasitism.

Ludwig Erhard, Vice-Chancellor and Minister for Economic Affairs of the German, who presided over the post war West German recovery known as the ‘German Miracle’ (Wirtschaftswunder) has this to say of the welfare state (Mises.org) [bold emphasis mine]

In recent times I have frequently been alarmed by the powerful call for collective security in the social sphere. Where shall we get to and how are we to maintain progress if we increasingly adopt a way of life in which no one wants any longer to assume responsibility for himself and everyone seeks security in collectivism? I have drastically described this flight from responsibility when I said that if this mania increases we shall slide into a social order under which everyone has one hand in the pocket of another. The principle would then be this: I provide for someone else and someone else provides for me.

The blindness and the intellectual inertia that are pushing us toward a welfare state can only bring disaster. This, more than any other tendency, will serve slowly but surely to kill the real human virtues — joy in assuming responsibility, love for one's fellow being, an urge to prove oneself, and a readiness to provide for oneself — and in the end there will probably ensue not a classless but a soulless mechanical society.

This process is particularly incomprehensible because, with the spread of prosperity and the growth of economic security, our economic basis becomes increasingly solid; the need to safeguard the achievements from all future dangers overshadows all other considerations. Here there exists a truly tragic mistake, for one meets with an apparent refusal to recognize that economic progress and prosperity based on effort cannot be combined with a system of collective security.

This call for security, which naturally must permit more state intervention, shows up the contradictions contained in this dishonest policy. If the words of these demands are reduced to a simple formula then what is being demanded is no more and no less than a lowering of taxation simultaneously with a greater demand on the public purse.

Politicians can fool MOST people for MOST of the time, but politicians CANNOT fool ALL the people ALL of the time. That’s because the laws of economics ensures that such deception or dishonest policies will be exposed for what they truly are.

Imbalances from unsustainable policies eventually implodes--the MENA political crisis should serve as a concrete example.

At the end of the day, redistributive policies camouflaged by noble intentions delivers the opposite outcome. A nation of takers will eventually drudgingly scuttle under the weight of debt, fiscal deficits and or inflationism.