Friday, June 5, 2009

Bertrand de Jouvenal on the Bush-Obama Bailouts

De Juvenal takes a quote from Rostovtzev's "Social and Economic History of the Roman Empire" (quoted on p. 190 of "On Power"). He may as well be talking about the bailouts, Wall Street and America's special interest economy, courtesy of Democrats and Republicans:

"The reforms of Diocletian and Constantine, by implementing a policy of systematic spoliation to the profit of the State, made all productive activity impossible. The reason is, not that there were no more large fortunes: on the countrary, their build-up was made easier. But the foundation of their build-up was now no longer creative energy, or the discovery and bringing into use new sources of wealth, or the improvement and development of husbandry, industry and commerce. It was, on the contrary, the cunning exploitation of a privileged position in the State, used to despoil peole and State alike. The officials, great and small, got rich by way of fraud and corruption."

De Juvenal remarks:

"All that can be said is that contemporaries get the feeling of progress right through the period in which the state is building up, a feeling comparable to the sense of well-being, which in an economic cycle accompanies the period of high prices. When the process nears its apogee, the more sensitive spirits are assailed by feelings of doubt and dizziness...

"Then the question is heard again whether the egalitarian society, which is the handiwork of the despotic state, is more or less advantageous to the mass of workers than a society of independent authorities..."

The irony about the United States is that in the 1880s and 1890s, before the establishment of the "Progressive" state, immigrants were flocking here at a rate of between 100,000 and over 500,000 per year, real wages were rising at more than 2% per year, and living standards of the common man had doubled in 40 years, between 1849 and 1889. More liberty was enjoyed than anywhere else in history and the savings rate of the average person was increasing rapidly.

In its place, led by the "Progressives" Theodore and Franklin Roosevelt and Woodrow Wilson and the establishment of the Federal Reserve Bank, Americans established a system whereby, since 1970, real wages have declined. In the past 10 years the number of years that the average person has needed to work to pay for a house with 100% of his untaxed wages has doubled from 3.6 years to 7.2 years. America went from a federal income tax of 10% in 1950 to a situation now where tax rates are so punitive that saving is all but impossible, where massive amounts of money are transferred to wealthy clients of the Democrats and Republicans via the Federal Reserve Bank's inflation (which subsidizes the stock and real estate markets at the expense of real wages), and the New York Times tells us that the only problem facing America is that taxes aren't high enough.

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