Goldman Sachs and Raytheon Make Sure Political Arguments Are Meaningless


Why don't political arguments matter? Because the end result of representative government is always the same.

As an individual, you might disagree with subsidies to major food conglomerates, but I can guarantee you that the food conglomerates have a lot more money to spend on getting politicians to subsidize them than you have on getting them not to subsidize them. This scenario is the same for every other conceivable sector of the economy. When you put it all together, you have a situation where virtually every business in the nation is trying to poke their hands into the collective cookie jar at the same time, with virtually no one spending any money on trying to stop them from doing so. When was the last time you heard of a corporation spending money to prevent another corporation from getting a handout? Do the automakers care if the farmers get a subsidy? Of course not, now the farmers can buy more cars!

You might argue that politicians should create laws that bar corporate sponsorship of campaigns. But this is no different than telling the mafia that it should bar itself from operating in the black market. Why in the world would they ever do that? Because they are highly principled people? You’ll have to excuse me while I roll on the floor in uncontrollable fits of laughter.

The political system, at its core, is about society granting a select group of people the right to initiate force against others on their behalf. Raytheon and Microsoft don’t have an army of tax collectors, but they certainly do have the money to buy off politicians, and then get those politicians to buy their products with tax payer money. The return on investment for political contributions is enormous; just ask Goldman Sachs. For a million dollars in campaign contributions, they benefited to the tune of billions. And on top of that, they got to put all their people into regulatory positions.

The political system is always about forcing people to buy something that they don’t want. If it wasn’t, it wouldn’t be politics, it would be private enterprise. For example, I’ll wager there’s not a lot of single childless people, who don’t plan on having kids, that appreciate having to pay for everyone else’s kids education. You can argue whether public education is good or bad, but there’s no getting around the fact that a lot of people don’t want to pay for it. There’s not a single thing government does which does not follow this pattern.

A system of political representation might work passably well at the level of the city, since cities have limited tax bases, no printing presses and nearby cities create a competitive tax/regulatory market. Further, cities have a much smaller voter base, which allows for far more accountability. On average, there are presently 587,000 people per federal representative in the U.S.

But let’s move on to the financial fundamentals of our present situation. At this point, political arguments truly don’t matter in the slightest. We are way too far gone for any kind of rational policy fix to work. Just during Obama’s presidency alone, each taxpayer has been made responsible for paying back $64,219.88 worth of new government debt. If each taxpayer were forced to pay off the entire debt, each would owe $193,989.72. And that doesn’t count unfunded liabilities. If we count unfunded liabilities, each one owes $1,221,147.51.

Given the obvious fact that America doesn’t have the resources to meet its future financial obligations, its sovereign credit rating is eventually going to be downgraded substantially. And when that happens, interest rates will sky rocket. And when that happens, the state will no longer have the tax revenues necessary to meet the interest payments on its debt obligations. And when that happens, people aren’t going to lend us any money or sell us anything in exchange for our money. They will demand payment in “things,” rather than paper money. And when that happens, our standard of living will drop to that of a third world country.

We don’t produce tradable “things” in this nation anymore; and don’t blame cheap foreign labor for that. Even Paul Krugman comes off sounding like an Austrian economist when it comes to foreign labor markets, and the law of comparative advantage makes it clear that cheap labor abroad does not undermine our ability to produce things here, while still paying a decent wage. The reason why we no longer produce tradable goods here is strictly a function of government regulatory, tax and monetary policy. It has nothing to do with cheap labor abroad.

A currency crisis is inevitable. There is simply no way around it. It’s going to happen at some point.  And when it does, government will be faced with one of two alternatives. It can drastically downsize itself, repeal Medicare, Medicaid, Social Security, student loan funding, home loan guarantees, slash military spending and attempt to salvage some kind of a functional system of governance, or it will print money.

I’m betting they take option number two, because that’s the route the vast majority of states have taken in the past. The end result being a total destruction of the currency system, essentially reducing the American population to a state of barter.  And finally, when our money no longer buys anything, the state will be left unable to pay any of its enforcers and dissolve into nothingness. We can see that either way, the state ultimately is either drastically cut in size or eliminated entirely.

Thus, political arguments truly don’t matter.