Sixty Years of Chains
By Mark D. Isaacs
The New American, September 21, 1992
Stop the FTAA!

A recent article in the New York Times noted that although "President Bush has presided over three and a half years of unusually slow economic growth ... his staff had been encouraged by studies showing that voters are influenced heavily by how the economy does in the six months before Election Day." The problem is that continued dismal economic news indicates that the economy is not likely to rebound at a significant rate before the November election.

Private economists warn that rather than improving, the economy is pulling a replay of last year when after a brief burst during the spring, it lost steam. Economist Jack Albertine states that "the manufacturing sector, once the proud engine of growth, in the American economy is barely breathing."

How can the lack-luster economy of the last four years be explained? It has not been caused by some mysterious cosmic force, by the collapse of Soviet communism, by Michael Milken's greed, or by Dan Quayle's misspelling of the word "potato." The explanation is really quite simple.

The State and Society


In 1935, social critic Albert J. Nock wrote a book entitled Our Enemy the State, in which he identified a simple principle that few today seem willing or able to grasp. Nock argued that the state is not society, and society is not the state. Society consists of free and voluntary creators and producers who manifest themselves in the realms of art, culture, industry, and commerce. The state, on the other hand, argued Nock, is nothing more than a legitimized gang of organized criminals who use the force of law to benefit themselves and their associates. Thus, the collective enemy of a free and voluntary society is the modern interventionist welfare state. The state produces no wealth of its own. It is a parasite which, if allowed to remain unchecked, will severely handicap -- perhaps even destroy -- its "host" society.

Nock's analysis goes a long way toward explaining why the American economy has been flat in recent years. Consider these blatant encroachments by the parasitic state:

• The federal income tax, instituted in 1913 by the 16th Amendment, was sold to the American public as a tax on the wealthy. At first only the very affluent were forced to file returns and the revenue collected was relatively insignificant. As late as 1934, income taxes accounted for as little as 14.2 percent of federal receipts. Today, personal income taxes account for 44 percent of the $1,516.7 billion federal budget.

The income tax distorts private sector production, violates property rights, invades the financial privacy of citizens, and hamstrings private sector prosperity. Despite much touted "tax reforms" since 1980, Americans during fiscal 1993 will pay an estimated $622.8 billion in individual and corporate income taxes. This record figure is projected to reach $829.3 billion in fiscal 1997.

• Social Security taxes also divert billions from society to the state. During fiscal 1993, Uncle Sam will collect an estimated $446.7 billion in Social Security taxes and contributions. By fiscal 1997 this will jump to a projected $569.9 billion.

• The Federal Reserve acts as the central bank of the United States. The Federal Reserve destroys the purchasing power of the dollar, distorts interest rates, drives the business cycle, and bestows special privileges to large member banks. Without a doubt the Fed does more economic harm to private savers and investors than any other agency.

• Minimum wage laws make it illegal to employ certain marginal workers at the free-market rate. For nine years the federal minimum wage remained unchanged at $3.35 per hour. During this time, unemployment for teenagers (marginal workers) decreased dramatically as the real value of the minimum wage declined.

The federal minimum wage was raised to $3.80 in April 1990, and to $4.25 per hour in April 1992. This amounted to a 27 percent increase. Not surprisingly, teenage unemployment has now jumped to 23.6 percent.

• According to a study by Thomas D. Hopkins of the Rochester Institute of Technology, environmental, social, economic, and process regulation currently costs the private sector from $430 to $562 billion annually. Regulations do not create jobs and new business opportunities; they destroy jobs and act like a tax.

Freeing the Giant


The net effect of this arsenal of interventions, taxes, and regulations is the restriction and hampering of the wealth-producing private economy. Considering the size and scope of the negative economic power exerted by the federal government, it is a wonder that the private economy is not worse off than it is!

Because of the interventionist policies of government, our economy amounts to a powerful giant kept in chains. Since the 1930s, the parasitic socialist welfare state has fed virtually unchecked -- during both Democrat and Republican Administrations -- on the "host" can society.

To free this giant, Americans must first realize that socialism at home is just as destructive to the American economy as communism and socialism have been to the Cuban, Chinese, Eastern European, and Russian economies.

The potential of a free-market economy is unlimited. We have the investment capital, the skilled workers, the managerial talent, the transportation, and the infrastructure to trigger the biggest economic boom the world has ever seen. All that is hindering the American economic giant is 60 years of federal chains. Yet, both Governor Clinton and President Bush propose to jump start the economy via jobs programs and other government remedies in order to solve a problem that government created in the first place.

When Americans see the state for what it is -- a force destructive to society -- they will demand less government control and an end to government intervention and manipulation. With an unchained American private sector the prosperity potential is exciting and inevitable.


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