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CNS News...
Our Nation’s Future
By Walter E. Williams
May 29, 2012
Our nation is rapidly approaching a point from which there’s little
chance to avoid a financial collapse. The heart of our problem can be
seen as a tragedy of the commons. That’s a set of circumstances when
something is commonly owned and individuals acting rationally in their
own self-interest produce a set of results that’s inimical to
everyone’s long-term interest. Let’s look at an example of the tragedy
of the commons phenomenon and then apply it to our national problem.
Imagine there are 100 cattlemen all having an equal right to graze
their herds on 1,000 acres of commonly owned grassland. The rational
self-interested response of each cattleman is to have the largest herd
that he can afford. Each cattleman pursing similar self-interests will
produce results not in any of the cattlemen’s long-term interest —
overgrazing, soil erosion and destruction of the land’s usefulness.
Even if they all recognize the dangers, does it pay for any one
cattleman to cut the size of his herd? The short answer is no because
he would bear the cost of having a smaller herd while the other
cattlemen gain at his expense. In the long term, they all lose because
the land will be overgrazed and made useless.
We can think of the federal budget as a commons to which each of our
535 congressmen and the president have access. Like the cattlemen, each
congressman and the president want to get as much out of the federal
budget as possible for their constituents. Political success depends
upon “bringing home the bacon.” Spending is popular, but taxes to
finance the spending are not. The tendency is for spending to rise and
its financing to be concealed through borrowing and inflation.
Does it pay for an individual congressman to say, “This spending is
unconstitutional and ruining our nation, and I’ll have no part of it; I
will refuse a $500 million federal grant to my congressional district”?
The answer is no because he would gain little or nothing, plus the
federal budget wouldn’t be reduced by $500 million. Other congressmen
would benefit by having $500 million more for their districts.
What about the constituents of a principled congressman? If their
congressman refuses unconstitutional spending, it doesn’t mean that
they pay lower federal income taxes. All that it means is constituents
of some other congressmen get the money while the nation spirals toward
financial ruin, and they wouldn’t be spared from that ruin because
their congressman refused to participate in unconstitutional spending.
What we’re witnessing in Greece, Italy, Ireland, Portugal and other
parts of Europe is a direct result of their massive spending to
accommodate the welfare state. A greater number of people are living
off government welfare programs than are paying taxes. Government debt
in Greece is 160 percent of gross domestic product. The other
percentages of GDP are 120 in Italy, 104 in Ireland and 106 in
Portugal. As a result of this debt and the improbability of their ever
paying it, their credit ratings either have reached or are close to
reaching junk bond status.
Here’s the question for us: Is the U.S. moving in a direction toward or
away from the troubled EU nations? It turns out that our national debt,
which was 35 percent of GDP during the 1970s, is now 106 percent of
GDP, a level not seen since World War II’s 122 percent. That debt, plus
our more than $100 trillion in unfunded liabilities, has led Standard
& Poor’s to downgrade our credit rating from AAA to AA+, and the
agency is keeping the outlook at “negative” as a result of its having
little confidence that Congress will take on the politically sensitive
job of tackling the same type of entitlement that has turned Europe
into a basket case.
I am all too afraid that Benjamin Franklin correctly saw our nation’s
destiny when he said, “When the people find that they can vote
themselves money, that will herald the end of the republic.”
Read this and other articles at CNS News
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