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Taking giant steps towards becoming Greece

by Ross Kaminsky / /

In an unusually interesting article considering the source, USA Today reported yesterday that "Private pay shrinks to historic lows as gov't payouts rise".

Quoting from the article:

• Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.

Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

And in the category of a picture being worth a thousand words:

The consequences of this dramatic trend (note that the chart above is only for the last decade. I'm sure going back another decade or half a century would be at least as dramatic) are dire, both politically and economically.

The economics are relatively obvious. There are fewer and fewer taxable privately-earned dollars being used to fund more and more handouts, unemployment benefits, food stamps, and socialized medicine. There is a maxim in economics (which applies equally well to many other things) which is utterly appropriate here: If a trend can't be sustained, it won't be.

Just ask Greece, Ireland, Portugal, and Zimbabwe.

There's a remarkable quote from a liberal in the USA Today article who says "It's the system working as it should." It should be noted that the liberal in question, Paul Van de Water, actually has a Ph.D. in economics. (I looked it up because I figured that anyone who would say what he said probably didn't understand economics...) Unfortunately, he mind has apparently been addled by too many years working for the Social Security Administration and now a leftist think tank. When a guy who's spent years working for Social Security says that a giant financial leech on the private sector means the system is "working", you have to wonder if he's a leech farmer -- which as I write this I find to be quite an apt metaphor for today's Democratic Party.

The idea that a massive increase in taxpayer-funded redistribution of wealth represents a system "working" can only mean that Mr. Van de Water thinks the particular system we live in is socialist, his Keynesian bleatings not withstanding. Perhaps it should come as no surprise that all of the $9,350 of political contributions by Mr. Van de Water during the past two election cycles went to Democrats, including $2,250 to Barack Obama's campaign fund in 2007 and 2008. Amusingly, Van de Water also contributed to one Elwyn Tinklenberg, who tried and failed to unseat Michelle Bachmann (one of the most visible faces of the revival of American conservatism in the GOP and a favorite bogeyman of the left).

The disturbing trend in private versus redistributed income has been exacerbated by the recent recession, which was the implicit part of Mr. Van de Water's still erroneous point, but the trend has obviously existed over the past decade through good economies and bad.

We're far too close to government having to take half, and then all, private sector income to "pay people for being rather than for producing", as the Hoover Institution's David Henderson eloquently put it. If we get much further down this road, we'll be living Atlas Shrugged...and not just the relatively tame first third of the book, but rather the later parts where the productive class goes on strike to avoid the grasping hands of the moochers and the looters.

And this brings us to the political ramifications of the trend: When a majority of people are net receivers of money and/or services from the government, and in the unfortunate circumstance in which we live now in which people who don't pay income taxes are nevertheless allowed to vote themselves money from people who do, we reach a tipping point where a majority of voters have incentive to vote for maximum redistribution.

It's like a group of leeches voting to drain a fatal amount of blood out of their victim, not realizing there is no other source of blood they can reach before they die. I don't know about you, but I'm guessing that leeches don't quite have the brainpower to know when to stop. Actually, to compare Democrat leadership to leeches is unfair -- to leeches. After all, leeches do indeed drop off their source of blood once they've had a decent feed. Democrats are and will continue to "spread the wealth around" until the nation's productive sector, and thus its entire economy, collapses.

We must, if we want to save our nation, reverse this trend that Barack Obama loves and that, to be frank, Republicans have done little or nothing to stop out of fear of annoying the leeches. I have little faith that anything will be done until the financial damage to our nation is so great that it will take more than a generation to recover from. And I have great faith that nothing will be done about this problem as long as Barack Obama is our president because he, like Van de Water, believes that a bleeding private sector means his system is working.