Well on the way, head in a cloud, the man of a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make. And he never seems to notice, but the fool on the hill, sees the sun going down, and the eyes in his head see the world spinning round. I have been writing these blog posts for years and am amazed that I have never used this as an opening song. But I guess I had to wait until now, when the fools on the hill are so plentiful. Writen (and sung) by Paul McCarntney, but credited to the Lennon–McCartney, the song was released on the Beatles 1967 album Magical Mystery Tour. While the lyrics describe a fool, according to McCartney, the fool was misunderstood by others and was actually wise.
Unfortunately, the fools on the Hill today are not wise, though in many cases they may be misunderstood by others. Depending on what side of the aisle one sits on, they may support, or despise the current Administration and many of its actions. But the current battle going on – well on the Hill – over the current $3.5 trillion reconciliation package is for all intents and purpose, an exercise in economic insanity.
The package, which has its genesis in the so-called green new deal dreamed up by the six socialist members of congress (Senator Bernie Sanders of Vermont, Representative Danny K. Davis of Illinois, Representative Alexandria Ocasio-Cortez and Jamaal Bowman of New York, Representative Rashida Tlaib of Michigan, and Representative Cori Bush of Missouri) and supported by a remarkable 101 co-sponsors in the House, is at worst an outline for the elimination of the market economy, and at its best … well there is no best.
This is not a political statement on my part. The simple fact is that the kind of socialist utopia being pushed by these 6 very vocal members of Congress and their allies, is not only on its surface unsound, but at its core something to be terrified of. It truly shocks me that someone with the political depth that Nancy Pelosi has, would in any way support this monstrosity.
The underlying core of the current reconciliation package is a slate of new entitlements that would make it unnecessary for much of the American population to work. It stems from a phrase in Karl Marx’s Critique of the Gotha Program (1875) where he states, In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!
But Marx was a heck of a lot smarter than folks like Bernie Sanders and Cori Bush. He understood that a society could not support a population of free riders until such time as technology and social organization had substantially eliminated the need for physical labor in the production of things, where labor has become not only a means of life but life’s prime want. In such a society, people would work in the absence of a social mechanism compelling them to do so because work would have become a pleasurable and creative activity.
In the real world – at least the one that we all occupy today – stuff simply does not grow on trees, and the Chinese are not going to work for free forever. This means that for each to have according to their needs, there would have to be compulsion to produce. In the Soviet Union there was a running joke that went they pretend to pay us and we pretend to work. In a society of entitlements there would be almost no incentive to work, and the lack of production would lead to either massive inflation, substantial shortages, or in most cases both.
The reconciliation bill is dominated by new entitlement programs that discourage work. These include
an extension of monthly child tax credit payments, universal pre-K, free college tuition, paid family leave and expanded childcare. Medicare would add dental, hearing and vision benefits to its coverage. This is added to a 25 percent increase in SNAP (food stamp) benefits, and existing subsidies for housing, telecommunications services and medical care.
There is a lot of other stuff in the bill, that are designed to destroy small businesses, capital accumulation and investment, but it is the elimination of incentives to work and the creation of a dependent society that will have the largest long term economic effects.
Not only does this, as Senator Susan Collins said, break the connection between work and a brighter future, it will create an economic system that is very similar to that found in Cuba.
I visited Cuba just before the instigation of the government-imposed ban on world travel and found it to be an extremely interesting society. Not because it was particularly oppressive, but because it was not. Sure there are no democratic freedoms, laws are politically enforced, and propaganda is rampant, but there are not soldiers on every corner, people can (and do) freely talk to American visitors, and there is still a Caribbean joie de vivre in the air. But there is no economy since there is no capital.
There are many individual entrepreneurs who are supported by capital from abroad. It costs as much as $80,000 to purchase one of the 1950s cars that serve as taxis for tourists, and those with them can make considerable fortunes. There are independent mechanics who keep ancient automobiles, appliances and other capital equipment in repair. These people can McGuyver anything. And there are hundreds of small home-based tourist stores, bars and restaurants where people operate these small businesses from half of their shipping container (yes shipping container) or shipping container sized apartment.
But the lack of capital means that there is little to no production on the island. Any factories in operation were expropriated back in 1959. The Bacardi distillery still makes excellent rum. And you know it’s the Bacardi distillery because it says so right on front – nothing has been painted since 1959. There are virtually no retail stores even in Havana, and people line up for hours to get their rations of rice, beans, maybe a chicken and maybe a tomato. Soap, feminine hygiene products, even clothing are difficult to find. Infrastructure is a mess, and buildings are crumbling out of neglect.
Oh, and for those who think that this green new deal will be environmentally friendly, with no capital to invest, Cuba is an amazingly polluted place. Garbage is simply thrown into open landfills on the edge of town, and every city – every city – has a massive power plant right in the middle spewing out smoke and smog.
It takes four factors to produce stuff. Labor is an important one, but so too are land (natural resources), capital and management. The latter two simply do not exist in modern socialist systems. Venezuela is no different, nor is North Korea – they are just more repressive. If American society is to go down this road, just like in Cuba, the existing capital will soon be either exhausted or stolen, and production will begin to shut down.
A pie cannot be distributed to anyone if nobody is baking, and if those promoting this agenda don’t understand that they truly are fools on the hill, and they will see the sun going down on the American experiment.