As the Greek government slides closer to default because of its crushing deficits and level of debt, more than one American has asked, in light of our huge projected budget deficits, whether the U.S. government could be in that position someday.  Paul Krugman says that the responsible policy for the U.S. to follow is to inflate away our debt, an option not open to the Greeks who are part of the euro zone.  So no, we can avoid a repeat of the Greek tragedy.

We’ve done it before, Krugman says.  After World War II our debt as a share of GDP was larger than Greece’s is now, but a decade later we lowered the debt to GDP ratio thanks to economic growth and, especially, inflation.

The parallel doesn’t exactly hold because the era Krugman refers to in American history was an era of balanced government budgets, whereas Greece is hoping, through austerity measures, to get its deficit below 9% of GDP.

But, there is some truth to Krugman’s story.  The Greeks are stuck with European monetary policy as long as they stay in the euro zone, which prevents them from using inflation to reduce their debt burden.  Meanwhile, there is nothing to stop us from inflating our debt away.

With the national debt in excess of $12 trillion and deficits projected to fall to under $1 trillion (Wow, it’s hard to write such big numbers!), 10 percent inflation would keep the real value of the debt about the same, or maybe even reduce it a bit.

We’ve done it before, and nobody seemed to complain much.  During the 1970s the value of the dollar fell by about half because of inflation, and while people did complain about the inflation, nobody said much about the fact that in effect, by 1980 we defaulted on half the debt we had in 1970.

So, don’t worry about the national debt, or the budget deficit.  But do watch out for inflation.

With the enormous expansion of the welfare state with the passage of Obamacare, C.S. Lewis’s insightful essay on the dangers, dehumanization, and immorality of welfare/therapeutic statism, “Is Progress Possible? Willing Slaves of the Welfare State” (from his book, God in the Dock: Essays on Theology and Ethics) is especially timely and noteworthy.

Here are some excerpts:

Two wars necessitated vast curtailments of liberty, and we have grown, though grumblingly, accustomed to our chains. The increasing complexity and precariousness of our economic life have forced Government to take over many spheres of activity once left to choice or chance. Our intellectuals have surrendered first to the slave-philosophy of Hegel, then to Marx, finally to the linguistic analysts. . . . The modern State exists not to protect our rights but to do us good or make us good—anyway, to do something to us or to make us something. Hence the new name ‘leaders’ for those who were once ‘rulers’. We are less their subjects than their wards, pupils, or domestic animals. There is nothing left of which whole lives are their business.

I write ‘they’ because it seems childish not to recognize that actual government is and always must be oligarchical. Our effective masters must be more than one and fewer than all. But the oligarchs begin to regard us in a new way. . . .

I believe a man is happier, and happy in a richer way, if he has ‘the freeborn mind’. But I doubt whether he can have this without economic independence, which the new society is abolishing. For economic independence allows an education not controlled by Government; and in adult life it is the man who needs, and asks, nothing of Government who can criticise its acts and snap his fingers at its ideology. Read Montaigne; that’s the voice of a man with his legs under his own table, eating the mutton and turnips raised on his own land. Who will talk like that when the State is everyone’s schoolmaster and employer? Admittedly, when man was untamed, such liberty belonged only to the few. I know. Hence the horrible suspicion that our only choice is between societies with few freemen and societies with none.

Again, the new oligarchy must more and more base its claim to plan us on its claim to knowledge. If we are to be mothered, mother must know best. This means they must increasingly rely on the advice of scientists, till in the end the politicians proper become merely the scientists’ puppets. Technocracy is the form to which a planned society must tend. Now I dread specialists in power because they are specialists speaking outside their special subjects. Let scientists tell us about sciences. But government involves questions about the good for man, and justice, and what things are worth having at what price; and on these a scientific training gives a man’s opinion no added value. Let the doctor tell me I shall die unless I do so-and-so; but whether life is worth having on those terms is no more a question for him than for any other man.

Thirdly, I do not like the pretensions of Government—the grounds on which it demands my obedience—to be pitched too high. I don’t like the medicine-man’s magical pretensions nor the Bourbon’s Divine Right. This is not solely because I disbelieve in magic and in Bossuet’s Politique. [Jacques Benigne Bossuet, Politique tiree des propres paroles de L’Ecriture-Sainte (Paris, 1709).] I believe in God, but I detest theocracy. For every Government consists of mere men and is, strictly viewed, a makeshift; if it adds to its commands ‘Thus saith the Lord’, it lies, and lies dangerously.

On just the same ground I dread government in the name of science. That is how tyrannies come in. In every age the men who want us under their thumb, if they have any sense, will put forward the particular pretension which the hopes and fears of that age render most potent. They ‘cash in’. It has been magic, it has been Christianity. Now it will certainly be science. Perhaps the real scientists may not think much of the tyrants’ ‘science’—they didn’t think much of Hitler’s racial theories or Stalin’s biology. But they can be muzzled. . . .

A hungry man thinks about food, not freedom. We must give full weight to the claim that nothing but science, and science globally applied, and therefore unprecedented Government controls, can produce full bellies and medical care for the whole human race: nothing, in short, but a world Welfare State. It is a full admission of these truths which impresses upon me the extreme peril of humanity at present.

We have on the one hand a desperate need; hunger, sickness, and the dread of war. We have, on the other, the conception of something that might meet it: omnicompetent global technocracy. Are not these the ideal opportunity for enslavement? This is how it has entered before; a desperate need (real or apparent) in the one party, a power (real or apparent) to relieve it, in the other. In the ancient world individuals have sold themselves as slaves, in order to eat. So in society. Here is a witch-doctor who can save us from the sorcerers—a war-lord who can save us from the barbarians—a Church that can save us from Hell. Give them what they ask, give ourselves to them bound and blindfold, if only they will! Perhaps the terrible bargain will be made again. We cannot blame men for making it. We can hardly wish them not to. Yet we can hardly bear that they should.

The question about progress has become the question whether we can discover any way of submitting to the worldwide paternalism of a technocracy without losing all personal privacy and independence. Is there any possibility of getting the super Welfare State’s honey and avoiding the sting?

Let us make no mistake about the sting. The Swedish sadness is only a foretaste. To live his life in his own way, to call his house his castle, to enjoy the fruits of his own labour, to educate his children as his conscience directs, to save for their prosperity after his death—these are wishes deeply ingrained in civilised man. Their realization is almost as necessary to our virtues as to our happiness. From their total frustration disastrous results both moral and psychological might follow.

All this threatens us even if the form of society which our needs point to should prove an unparalleled success. But is that certain? What assurance have we that our masters will or can keep the promise which induced us to sell ourselves? Let us not be deceived by phrases about ‘Man taking charge of his own destiny’. All that can really happen is that some men will take charge of the destiny of the others. They will be simply men; none perfect; some greedy, cruel and dishonest. The more completely we are planned the more powerful they will be. Have we discovered some new reason why, this time, power should not corrupt as it has done before?

In an article in the Wall Street Journal on January 4, 2007, “A World Free of Nuclear Weapons,” national security establishment icons George Shultz, William Perry, Henry Kissinger and Sam Nunn startled many people by calling for a campaign to ban nuclear weapons worldwide in a effort to avoid a new nuclear arms race and the growing possibility of terrorists obtaining nuclear weapons. Understanding the folly that nukes provide defense deterrence in a multipolar world of rogue states and non-state, terrorist organizations, they again reiterated their call one year later in another Journal article, “Toward a Nuclear-Free World.” Additional important figures in academia, government, and the media have worked for many years to advance such a ban along with similar campaigns to ban bio-chemical weapons, land mines, etc. (For example, Independent Institute fellows Robert Higgs and the late Murray Rothbard long called for the banning of all nuclear weapons on both moral and practical grounds, and Institute research analyst Anthony Gregory more recently highlights the need for such a ban here.)

One such key voice is Joseph Cirincione who is President of Ploughshares Fund (former Vice President for National Security at the Center for American Progress; former Director for Non-proliferation at the Carnegie Endowment for International Peace). Dr. Cirincione has spoken for the Independent Institute (see here) and hosts the following new video on the important, new campaign to eliminate nuclear weapons worldwide.

While Americans are reckoning the financial impact of President Obama’s healthcare reform initiative on the economy as a whole and on them personally, some of its obvious consequences for labor markets thus far seem to have escaped notice.

In a freely functioning marketplace, the compensation of employees consists of a mix of wages or salaries and “fringe” benefits. The compensation package varies from industry to industry and employer to employer, but in addition to an hourly wage or an annual salary it may include things such as on-the-job training, safety programs that reduce the risk of job-related injuries, paid vacations, time off for federal holidays, short workdays on Christmas and New Year’s Eve, flexible schedules – and health insurance.

All elements of an employee’s compensation package are substitutes for one another. Everything else being the same, an employer who provides a safe and pleasant working environment can offer a lower wage than one whose workplace exposes employees to toxic substances or requires them to perform unpleasant duties. To paraphrase Adam Smith, the job of public executioner is, in proportion to the work done, better paid than any common trade whatever. Economists call such tradeoffs “compensating wage differentials”.

More to the point, employer-paid health insurance became widespread during the Second World War when government-imposed wage and price controls prevented business owners from either hiring or retaining productive employees by raising their pay. Adding health insurance to workers’ compensation packages was doubly advantageous because the benefit was tax-free to employees and employers could lower their own tax bills by deducting from gross income the expense of providing it.

The arrival of ObamaCare means that many businesses no longer will be free to tailor compensation packages optimally. Any company employing 50 or more workers must from now on provide a group health insurance policy whose coverage is not too generous, but that also meet minimum standards to be dictated from Washington. (Depending on the relative lobbying strengths of various healthcare-related special-interest groups, the federal standards may require reimbursement for bariatric surgery, fertility treatments, restless-leg syndrome as well as other exotic – and expensive – health problems.)

ObamaCare’s health-insurance mandate forces employers who do not currently offer that benefit to do so, but it does nothing to make employees worth more to them. In order to hold the cost of compensation constant, profit-maximizing employers may cut workers’ pay or require them to pick up the tab for some or all of their insurance premiums. They might reduce fringes on other margins, such as no longer footing the bill for job-skill acquisition, shortening times for lunch and annual vacations, eliminating scheduled coffee breaks and (Bah, humbug!) making them work on Christmas Eve.

The costs of the mandate will fall most heavily on employees now earning incomes at or near the minimum wage. Since their pay cannot be cut, some will be priced out of jobs altogether if their employer also is required to provide health insurance for them.

Employees – especially younger workers in good health – likewise will be prevented from choosing jobs that pay high wages but do not offer a health insurance benefit they often rationally do not value highly. And they will be forced to pay for coverages they do not need and for which they otherwise would not be willing to pay.

The compensation package heretofore determined in a competitive labor market has resulted from mutually agreeable bargains between employers and employees. Depending on worker preferences over wage and non-wage benefits, employers had incentive to offer mixes of the two that allowed them, at least cost, to attract and retain people in the numbers and skills of which maximized their profits.

At least one element of that package – health insurance – no longer will be subject to negotiation. Labor markets accordingly will be less able to match workers with jobs efficiently. Both therefore will be made worse off. We can thus expect permanently higher unemployment rates and an economy that is less able to adapt to the socialist policy initiatives that still loom on the Obama administration’s agenda.

Obama’s man in Afghanistan has made an amazing admission of guilt to, dare I say, complicity in officially sanctioned murder. General Stanley McChrystal has said the following:

We have shot an amazing number of people, but to my knowledge, none has ever proven to be a threat.

Now, if the General would take the next logical step of calling for us to withdraw from the Afghan disaster, he might actually go down as a true hero in the annals of military history.

We hold these Truths to be self-evident; that through the beneficent hand of government, Society (50%-plus-one) ought to

1. Provide money solely to public education. History shows that public schooling does not discriminate based on color, creed, or ability.

2. Provide health care — paid for and regulated by the federal government but only available for sale within state borders. It is important to preserve “States Rights,” something southern Democrats taught us prior to 1964, but we have forgotten.

3. Provide “Money for Nothing” if a person cannot otherwise afford a house. See: “Dire Straits–Mortgage Theory.”

4 Secure against risk: let risk takers buy homes. If they lose money, the rest of us in the Village will aid our brothers and sisters by relieving them of their debt and declaring it a Year of Jubilee.

5. Take on $15 trillion in “bad” housing debt because this is the right thing to do. Hate the debt, love the debtor. See: “Fannie Mae and Freddie Mac–Nationalization.”

6. Provide free college education to everyone, according to desire and not ability. If one college graduate adds to the economy, then all of those who attend college will “grow the economy.”

7. Penalize unpatriotic savers. Impose a reverse-usury law capping the interest earned at one percent.

8. Keep interest rates low to benefit borrowers, the overworked masses of this Great Republic.

9. Make debt tax deductible and savings taxable–that will deter savers from their wicked ways.

10. Tax only the rich.

11. Issue money freely, backed by the labor of future generations. After all, the young receive a free education and the promise of future benefits. See “Contract between Generations.”

12. Print money if foreigners and our own parasitic rich will not lend at affordable rates. See “Weimar Republic, Economic Miracle.”

Postscript: “printing money” is a disloyal phrase invented by the rich in days when their numbers were far greater than they are today. Henceforth, “quantitative easing” will be used in all state-approved K-12 textbooks and all colleges receiving federal funds.

13. Publish a Dictionary of Politically Correct Language to be used in schools, government, and any entity receiving federal funds either directly or indirectly.

14. Publish civics texts stating the obvious: Society, through the beneficent instrument of government, knows best. To declare otherwise is akin to undermining parental authority. See “Family Values,” “Good Government.”

15. Never admit failure. Our democracy is an “experiment” that will grow as Society grows. I will defer to Society in all respects. As a great Italian leader put it: “everything for the state, nothing outside the state, nothing against the state.”

16. Coordinate 51 governments in the public interest. Complexity is necessary to make individuals realize they cannot ascertain the Big Picture. If governments conflict, individuals must wait for the ruling of the Highest Court in the Land, even if waiting takes a lifetime. What is one man’s life compared to the just rule of Society?

17. Punish companies that make “obscene profits” (exceeding zero). They are evil and ought to be regulated to the “maximum extent of the law.”

18. Require that individuals do the “responsible” thing by mandating Acts Benefiting the Common Good. If an individual cannot pay for the required act, then their parents or employer must pay. See “Childhood–Birth to 26 years.”

19. Teach that it takes a village to care for its children. Remember: we are all children of the State.

20. Tax those who do selfish things: work too hard for themselves, save for themselves, invest for their future, prosper on their own.

21. Separate Church and State. For example, “taxation is the price of civilization” will replace “In God We Trust” on our currency. What has God got to do with money? Render your money unto Caesar, not God.

22. Limit business influence in Society. We are fallen creatures and, if Society did not force us to be Good, then we would seek only our personal interests, which we do not truly know because of corporate influence. See “Advertising and Lobbying–Manufacturing Consent.”

Our founding fathers said all of this far more eloquently in their famous July 4, 1776 “Declaration” and the “Living Constitution” that followed.

We, the next generation, must maintain our Dependence for posterity.

Cherry blossoms in

Washington bathe frightful deeds

in springtime beauty.

—

Firms too big to fail

savor scent of roses from

Treasury’s garden.

—

No systemic risk

too dark a cloud for Congress

to make darker still.

—

Government jobs cause

illusion of revival –

mirage in desert.

—

Big banks take their ease

in fields of new-sown clover.

Fine friends ease worries.

—

Dear Leader’s voice like

thunder in hot afternoon.

Storm comes very soon.

—

Bernanke stays calm.

He has proper “tools” to curb

deluge we now dread.

—

River flows smoothly

toward renewed opulence;

then the cataract

I had missed Anthony Gregory’s great post here when I wrote my piece for Lew a few days ago — but it seems everyone is noticing that it is about power — and fear — their fear of losing power! Government resources will be directed at those “enemies” foreign and domestic that threaten the guys in power. What I’m discovering is the creatively designed foreign wars (my interest area) are far less important than the domestic ones. The domestic resistance is what can change government, shrink it, and from the standpoint of existing rulers and politicians, utterly destroy their world, their known context, and their careers. There is indeed a governing class in America — it is incestuous, and as the cracks in the firmament are popping up everywhere, it is very frightened. Frightened like a cornered bear, but without the dignity. It’s Easter weekend, when every Christian is thinking about (whether they know it or not) state paranoia, conspiracy, and use of force against the greater power of peaceful resistance and truth. Bottom line, I like what Anthony said about a “silver lining” (Emma Goldman, et al.) and I anticipate many more as we deal with the coming collapse of the American empire.

When I saw that an anarchist website was urging its members to “crash” the tea party movement, my first thought was that they might perform a worthy service. The anarchists would be in an excellent position, for example, to expose the statist orientation of many tea partiers on war and immigration. Unfortunately, the main complaint of the “anarchists” is that the tea partiers are too anti-government! In its call to arms, the website warns:

If the tea party movement takes over this country they will really hurt poor people by getting rid of social programs like food stamps, unemployment benefits, disability benefits, student aid, free health care, etc.

Last October I went to my doctor for a routine physical and he asked me if I wanted to get a flu shot.  I have never gotten a flu shot and told him I didn’t want one this time, but with all the publicity about the H1N1 epidemic, because I am a classroom teacher who is exposed to lots of people, and because I had planned to attend several conferences in the Fall, I told him I’d like to get the H1N1 vaccine.  Sorry, he told me, I wasn’t eligible.  So, I went without.

Now I read in this article that less than half the doses of the vaccine that were bought by the government have been administered, and that health officials anticipate that many of the unused doses will have to be discarded because they are approaching their expiration dates.

Now, anybody who wants the vaccine can get it, but like many people, I’m figuring the big threat never materialized, the biggest risks are probably behind us, and I don’t want it anymore.  Of course, people with attitudes like mine are the reason there is now a surplus, much of which will be wasted, of a vaccine that was rationed six months ago so that I couldn’t get it when I wanted it.

The article quotes a World Health Organization official saying, “Could we have made decisions better?  Could we have considered things a different way at the time?  We, along with many others, are asking the same kinds of questions of ourselves and each other.”  And a Centers for Disease Control official in the US said, “Did we do as well as we would have liked to?  No, not at all.”

I’m not faulting anyone at WHO or CDC for not having the foresight to make the right decisions on rationing the vaccine.  We already know that central planning is notoriously inefficient as a method of allocating resources, and this is another example.  But I will fault the people who thought that government planning rather than market allocation was the best way to distribute the vaccine in the fist place.

Government planning has never been a good way to allocate resources.  Didn’t we figure that out after the collapse of the Berlin Wall and the demise of the Soviet Union?  Here’s an example where health care was rationed and unavailable to some even as a surplus was produced that will be wasted.  Is there any reason to think that this won’t become more common as government becomes increasingly involved in the administration of our health care system?