“An autopsy of history would show that all great nations commit suicide.” –Arnold Toynbee
When Lenin uttered the words above he revealed his understanding of the darker side of capitalism: greed unrestrained by morality. In previous posts I laid out some of the evidence that the United States is a nation founded upon Christian values. The danger of subversion of those values is that freedom cannot exist in the absence of morality and responsibility.
When one is analyzing an enemy, the key is to understand how one’s weaknesses can become strengths and how the enemy’s strengths can become weaknesses. The strength of the United States is it’s economy. WWII Japan and Germany discovered this too late and Reagan used this natural strength again in helping to win the Cold War.
Capitalism is our strength but when unrestrained by responsibility and morality, it is a recipe for national suicide. It is the weakness of the strength. When the drive to make money trumps the security of the nation or the responsibility to do that which is right, it follows that those who pursue these profits will act against the security of the nation in the most irresponsible ways. The need to grow profits and the attendant need to expand markets to do so, have led businesses and special interest groups in our country to not only lobby for irresponsible and damaging policies but they have lured many of these companies into acts that are directly responsible for the difficulties that plague our nation today. Loose immigration enforcement, “free” trade, most-favored nation status for China and relaxed export laws for dual-use technologies are all playing a part in the erosion of our nation’s supremacy.
Illegal Immigration and Free Trade
I recently discovered a site that has a plethora of statistics on how illegal immigration is affecting our country. This site reveals frightening details of the impacts to everything from sex crimes, drug crimes and infrastructure to medical care. The disturbing information on this site is readily available to the officials in our government but, too often, they look the other way. Why? The simple fact of the mater is that illegal immigrants represent cheap labor. Democrats and Republicans both look the other way because they have not taken the time to look at the issue and understand why businesses need this cheap labor resource. Neither have they attempted to educate our citizens as to why they are not a viable resource to these firms.
Business profitability is all based on COGS. COGS stands for the cost of goods sold. COGS is the difference between earnings and profits or net and gross. Labor intensive businesses can most readily reduce COGS by utilizing an inexpensive labor force. When it comes down to it, the vast majority of the immigration issues in our nation are a result of COGS and, more specifically, the price of labor—skilled and unskilled.
The price of labor is an amalgamation of wages, taxes and benefits. The benefits include a couple of things that one might not think of: Social Security and Unemployment Insurance. The addition of these two government-mandated benefits, along with the government-mandated minimum wage makes the use of citizens of the United States extremely expensive for unskilled labor-intensive industries. Why does the guarantee of a “living wage”, retirement benefits and a fund to help workers between jobs have such an effect? Because they raise the price labor and therefore of production. This means that these government-enforced benefits cause a direct increase in COGS.
Back in 1994 an agreement called NAFTA went into effect. NAFTA stands for the North American Free Trade Agreement. It is a treaty that created the largest trade bloc in the world and its provisions were intended to level the playing field across borders. Goods produced in Mexico are treated, by law, as though they were produced in the United States or Canada and vice-versa. There are no import or export taxes for goods crossing these borders.
This means that a labor-intensive industry in Mexico has a significant advantage over the same industry in the United States and the advantage was created by our own government! There are two ways to eliminate this advantage: 1) Eliminate the minimum wage and allow the market to set the rate for labor, 2) Open-up our Southern border and allow illegal immigrants to cross the border and work. Since #1 is strongly opposed by our economically uneducated population it would have been political suicide. Thus illegal immigration has been allowed to continue unabated by both parties.
Now that we are opposed to illegal immigration, are we economically educated and willing to implement the second mechanism to eliminate the advantage? No, of course not. This means that one of two things must occur: 1) The industries must acknowledge that they cannot compete and close-up shop or move their business to Mexico, thus eliminating a number of US jobs, loss of tax revenues and overall loss of contribution to the productivity of our country, 2) Find a way to do the work that is not labor-intensive (technology).
The effects of NAFTA on Mexico have created an interesting phenomenon whereby Mexican citizens are incented to come to the United States. Understandably, Unskilled labor-intensive industries such as industrial farming have the largest advantage in Mexico. As one can see from the data available at this link, this has caused movement of population from the cities into the rural areas and has caused an overall decrease in the number of workers with salaried jobs.
Despite what Libertarians and others, not the least of which is the Republican Party, would have you believe, regulation of trade and immigration has nothing to do with the freedom of a people within a country. Under our Constitution the federal government was originally funded by tariffs and is empowered to regulate foreign commerce. In the same Constitution, the Founders prohibited the establishment of unequal market barriers between States and empowered Congress to regulate commerce between the States. There is no question that market barriers are a key part of sovereignty and national security.
Why do I say that? Let’s look at the market principles first: a given market will achieve equilibrium within its boundaries. Making the market larger does produce short term profits and economies of scale but long term, the effect is the same. Thus, having a single, free market, that spans the globe will result in the same equilibrium point that one would achieve within national boundaries in the long term–from a PROFIT perspective, ceteris paribus.
Free trade is also a mechanism of wealth redistribution. The wealth redistribution here is, technically, free as opposed to compulsory. The reality is that in the mid-to-long term it is not free and the effect is that those from wealthy countries end up with less. Also, if one wishes to buy a product not made in the region that produces it most efficiently, one will be out of luck in the mid-to-long term. Saying that the market will correct for this is wishful thinking in many cases. At the very least there will be a period of indeterminate length during which the market pressures will be inadequate to produce results and choice (freedom) will suffer.
We have been pursuing a policy that assumes that we want to be economically equal with Mexico and many other countries while they pursue a policy intended to suck as much wealth out of us as is possible. While we pursue the utopian BS of equality the leadership of many countries such as China are pursuing dominance. We are committing national suicide.
The problem with economics is that attempting to discern choices is extremely complex. People will do things to themselves, economically speaking, that are not intelligent at all (i.e. lack of savings), despite the assumptions required for theoretical economic understanding. While the effect is on an individual or a small group it is not a problem. When the effect is on a nation there is a problem that involves both questions of sovereignty and sometimes questions of national security.
In my opinion the radical free-traders are just as bad as the Keynesians and nearly as bad as the socialists. When you combine Keynesian economic theory with radical free trade and socialism you get massive debts and huge deficits along with high unemployment. It is a vicious cycle and we are several “swirls” in.
Let’s discuss the impact of Keynesian economics on our nation. The foundation for the modern financial system of the United States started in 1933, March 9, 1933 to be exact, during the 73rd Congress and was instituted pursuant to the authority of the President under the War and Emergency powers in the Constitution. A Senate Committee, in 1972, stated in its report “Since March the 9th, 1933, the United States has been in a state of declared national emergency.”. The election of FDR and the willingness of the masses to give him unprecedented power resulted in this complete re-ordering of the financial system. His manipulation of the Supreme Court allowed it to continue to this day.
The new system was linked to precious metals, except for short periods of de-linking, until 1972 but was not directly based on them—a direct violation of Article I, Section 10 of the Constitution. The new system, as recorded in law and in the Congressional Record, used mortgages to secure the currency. Mortgages are given out by banks, banks use the mortgage to buy credit from the Federal Reserve, the Fed uses mortgages to secure external national debt sales. The entire system has been a Keynesian system since that day. The Keynesian debt bubble was institutionalized and the first unexpected result was inflation–which is actually currency devaluation. The politicians like to call it price inflation, though, to make it seem like the fault of the companies as opposed to monetary devaluation which is caused by the government’s monetary policies.
Remember: this was the fault of both parties. This all started in 1933 and each government thereafter has had the opportunity to change back to the previous, non-Keynesian (Smith for example) system of original economics. None of them have done it. Until this is done, we will continue to have the rollercoaster ride of the Keynesian system and massive levels of external debt. The key thing to remember about external debt is that the value of the external debt instruments is directly tied to the wealth production capacity of the people and companies of the United States. Any assault on that profitability has a direct affect on the value of external debt instruments and on the international value of the dollar.
NAFTA, coupled with the Crop Reduction Program, now called the Conservation Reserve Program, have decimated a large portion of our country’s food production capabilities. Where I grew up, there wasn’t a farmer around that wanted it said that he was on the government payroll. Now, there are a lot fewer farmers and the primary income for the region is government assistance. Not only do they no longer farm the amount of land they used to, they often have neither the knowledge nor the equipment to farm even if it were to become profitable to do so.
Illegal immigration, NAFTA, redistribution of wealth, paying farmers to not grow food, deficit spending, massive national debt and Mexican and Chinese manufactured goods stacked on every shelf of every store in America. Shall we continue down this road? What happens if we cannot pay the holders of our external debt? If we continue to redistribute the wealth of the United States via free trade and through policies that have world socialism as their basis will we ever be able to pay our debt? How do we preserve the ability to create what we need here in the United States? If we do not and we can’t repay our debt and the world decides that we no longer have any credit how will we obtain the essentials? If we keep sending our jobs overseas how can we collect the taxes necessary to pay our debt? How do we retain the knowledge of how to produce these things ourselves?
How do we fix it? Repeal NAFTA and drop out of the WTO and GATT. Learn economics. Establish a secure border and make illegal entry a dangerous enterprise with severe penalties. Prosecute business owners who knowingly or unknowingly employ illegals. Lower taxes and raise tarriffs. Charge both import and export taxes and apply them to our debt until it is gone. Eliminate national minimum wage mandates and Social Security. Enhance the current 401(k) legislation and incent folks to save money. Withdraw our military from all foreign countries and arm our allies with the best weapons we can produce–but retain the ability to turn them off or make them less useful. Get the federal governmnet out of education and eliminate Unions for non-manual labor enterprises. Fire up voucher systems to promote school choice and eliminate tenure for faculty of publicly funded universities. Eliminate the federal Department of Agriculture, Department of Education, the NEA, the Department of Commerce and every other federal organization not overseeing Constitutionally-mandated areas.
Many would say that these positions are too extreme. I would say that the positions we have occupied are too extreme and the proof is plain for all to see. We need to return to Constitutional government and sane economic policies. We can’t afford the extravagances of socialism and free trade. We can’t afford to have inept faculty and schools that are machines of indoctrination and control because we can’t afford to have uneducated citizens. We can’t afford to secure the world and we can’t afford to not secure our borders.
Educate yourselves! Time is running short. If you do not learn the answers to these questions now, you may never have the opportunity to do so. I know you are busy–we all are–but the reality is that we have been asleep for too long. We have become the ignorant mass that the elitists always believed we were. They speak words that are popular and we go back to sleep. They tell us “Just vote Republican” and having pulled the lever for a party line vote we go home feeling that we accomplished something.
I tell you we have accomplished NOTHING except to slowly allow ourselves and our children to be turned into slaves. We may have already lost the opportunity to reverse the decline but we won’t know until (or unless) we try. Voting for a party will NEVER solve these problems. They are too awash in corporate, foreign and interest group donations. They have sold us at the behest of these entities for the benefit of those pursuing riches at any price. They will not relinquish power voluntarily.
In the knowledge that a child had been born that was possibly the Son of God, Herod the Great didn’t search for Him so that he could surrender his power. Instead he hunted Him and even killed every child aged 2 and under trying to eliminate this threat to his power. This is the nature of power. This is the nature of mankind.
Wake up Americans, or be smothered in your sleep.