Mish claims the road back to prosperity is shared sacrifice. He must have been blinded by the points in the specific article he was referring to and did not think through his argument.
What, in what proportion, is to be shared by whom, and on what schedule? To believe this can be figured out, and summarized in the slogan "shared sacrifice" is to be as obtuse as the people who got us in this mess in the first place. Mish is not obtuse.
Mish quotes from an interview that gets at the heart of the matter:
Right now, the four main components of the federal budget are Social Security, Medicare, Defense and interest payments on the debt.
Hang on, we have an immediate problem not contemplated by that list: misallocation of private wealth.
So there are two problem areas, overinvestment in public debt, misallocation in private debt. The flip side is the unstable distribution of assets and wealth. Here the government has no problem, because it can always commandeer private property, using violence if necessary. It is private property where the pain is felt, and whence government wealth and incomes are derived. So the problem is entirely within the sphere of government policy, the pain is entirely within the sphere of private property.
Now the patterns of laws in the United States prefer the concentration of wealth in the hands of the few as it militates against new wealth creation. Yes, one big culprit is the federal reserve system, but the other is the fractional reserve laws and the problem if usury being protected in law. (Usury, like gambling, should not be outlawed, but the usury portion of loans, like gambling debts, ought not be enforceable in the law. But that is another day...)
So to this idea that we can get out of this mess by shared sacrifice. What is it that we are suppose to share? What is the sacrifice? Is it we need to work more for less? Get less than promised when we began pitching in to the above systems? Die earlier so we are less of a burden? Hard to say what is contemplated.
But what is clear is that shared sacrifice means that Social Security, Medicare, Defense and interest payments on the debt, all failed government policies, is what is to be supported by our sacrifice.
We are on the path where bailouts and regulations will continue, all in the name of “shared sacrifice” and each program will have winners and losers, spiraling downward, where each attempt at sharing alienates ever more people... so we will need a strong man to fix problem. It will get so bad that we will need a “strong man”, a fuhrer, to lead us out of the problem.
We’ve opened the way for the US Military to take over and provide the strong man necessary to save our country. Count on it.
How to redistribute without requiring a strong man?
The Amish are exempt from Social Security, so let’s learn from the Amish and get rid of it. Medicare has ruined medicine, so let’s go back before Medicare in the 1960’s to when we had doctors who care. Let’s follow the constitution on defense and save trillions. And let’s repudiate interest payments, and return the principal.
That ends the failed government policy problem. But that still does not solve the problem. Our system promotes the misallocation of private wealth.
Everyone holds exactly the assets and liabilities they gained during the boom that the failed system allowed. One’s balance sheet perfectly reflects one’s praise or blame. By returning to free markets, and property rights, those who have ill-gotten gains will have a hard time keeping them.
For example, if we had respect for property rights, and a deleveraging of anti-market regulations, Goldman Sachs would find it simply does not have enough employees to keep track of all of its assets.
Goldman Sachs has trillions in assets under its control, and protected by a anti-free market collection of laws and regulation. Among those trillions in assets is title to a hotel in Bakersfield, California, from which they mulct the profits while enjoying a tax write-off..
We have in the free market property rights a system called adverse possession. One may take ownership of a piece of property, say a hotel, after a period of time, say ten years, as long as your use is exclusive, notorious, adverse among other elements, it is yours.
So say the employees of that hotel form a corporation, or a soviet, or whatever, and stop sending money to Goldman Sachs. Say 100,000 such assets did so. Goldman Sachs would never get around to challenging all of the adverse possessions, so most would in time transfer to the adverse possessors.
A speculator with one condo too many is going to lose it. Prices will fall. Economy will recover. Country’ll grow.
In precisely the measure the bad laws allowed Goldman Sachs to arrogate wealth unto itself, the undoing of those laws would redistribute the wealth into exactly the right hands.
So enough of this talk of “shared sacrifice.” What we need is a return to freedom, and stop propping up failed policies and those who fail under that system.
To return to prosperity we must return to a natural economy, not fix the unnatural things.
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