The Sad Road to Socialism Part II

Today, we will continue with John Loeffler's article titled "The Sad Road to Socialism - What happens When Private Property is No Longer a Right".

The Magic Dragon Isn’t Cute Anymore

Somewhere along the line, the gentle legislators discover that their baby dragon has grown and it’s snarling at them a lot. It wants much food. They’re not controlling it; it’s controlling them. However, in order to retain their prestigious position, ever-increasing sources must be found to feed their growing rapacious raptor.

The food source (tax burden) shifts rapidly downward into the middle class, as the gentle politicians coo that only the rich are being soaked. Concomitant with the increase of taxation, the miracle of hidden taxation through monetary inflation is discovered as central banks print more and more money to allow the good times to continue over and above what direct taxation will allow.

This process of monetary inflation results in debasement of the currency, causing the citizens to work harder and harder and run faster and faster to keep up with the loss of their currency’s value and the concomitant rise of prices. It’s slow at first but accelerates along an insidious exponential path. Ultimately it destroys everything the middle class works for.

Additional reptilian food sources called “revenue streams” are created. More fees, fines, “mitigation payments” and permits are required to do almost anything, driving the cost of doing everything upwards. Coupled with this is a bewildering array of regulation and laws making the business of life more and more difficult to accomplish. Big businesses can absorb this but the middle class ultimately buckles under the strain. The dragon is never satisfied.

Stage 2: Silent War Between Government and Its Citizens

At some point, the unwashed masses suspect their politicians aren’t really gentle any more much less benevolent. This is where a silent war between government and people erupts. It’s a blurry transition through never-never land when the politicians still claim to be gentle but the people sense that they have gone from being protectors of the public good and private property to a plunderers of it; from morality to immorality.

The “Bastiat” transition doesn’t take place all at once but, one by one, members of the working class realize they’re toiling like mad and getting nowhere. What they do make is confiscated in taxes or destroyed in inflation. They have little left over and their life’s savings are being destroyed while the politicians tell them all is just fine, creating cognitive dissonance between the hardship workers experience and the good times the politicians promise.

But those friends of the dragon on the dole still insist the dragon’s intentions are moral, even if its methods are not. As tax rates push ever higher into confiscatory ranges, self-preservation kicks in and the people take defensive action against what they no longer perceive as moral duty but legally-sanctioned plunder. They do this at the same time they pretend the gentle politicians are correct even though they know better.

The rich catch on and move their assets offshore and sometimes themselves out of the reach of the dragon; they expatriate. They have the means to structure their finances in such as way as preserve wealth. Besides, the politicians are frequently among this class so they aren’t about to let the dragon loose on themselves.

Unfortunately, the middle class doesn’t have this option, so it fights the dragon by engaging in evasive maneuvers. Citizens cheat on taxes, and seek to conceal taxable assets. Whenever possible transactions are shielded from the ever-prying eyes of the hungry dragon.

As the ravages of taxation and inflation eat out the middle class’s substance, a vibrant underground economy springs up, utilizing barter, cash, foreign currencies, precious metals or other means to conceal taxable activity. Regulatory laws are flouted as people try to “see what they can get away with.” Often times this underground economy has an organized crime component vis a vis the former Soviet Union.


Tomorrow, we will continue with John's article and find out the scary, unsatiable appetite of the dragon during the second half of Stage Two. Stay tuned ...

Then another sign appeared in heaven: an enormous red dragon with seven heads and ten horns and seven crowns on his heads. His tail swept a third of the stars out of the sky and flung them to the earth. Revelation 12:3-4 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com