The Declining Wealth of America
An article from Forbes echoes a similar report amongst American media: according to the government, the wealth of the American people is now at the same level of twenty years ago. This decline has come about for a single reason. The cause has many names (“the recession,” “the economic meltdown,” or simply “the economy”), but its cause can be traced back to a single reason– a lack of faith in the free market.
The markets rise and fall, no one denies that. Even in a case without government, markets will still rise and fall. Causes of this could range widely from natural disasters to war and plague. But deeply exploring these natural occurrences, though of some interest, will ultimately not provide answers to the matter at hand.
It has been determined, then, that economic ups and downs are going to happen. And, while the severity of them may varying, government involvement in the economy makes things universally worse. This is why the wealth of Americans has fallen back twenty years.
What was the cause of all this economic trouble? For this, one must go back several years to the “bursting” of the housing bubble. Many look at the “burst” and point to the sub-prime mortgage crisis. But, to truly see the cause, one must go even further back than this. Many of Progressive opinions believe that “everyone should own a house.” Due to this idea—and with a little help from Barney Frank—the government bullied banks into making loans that they would normally never make (due to the fact that the borrowers would not be likely to pay the loans back). Nothing magical happened, and everything had to crash at some point. Still, this is not the direct cause of the economic trouble, but evidence for something deeper. As the economist Robert P. Murphy notes, the Austrian business cycle theory—often ridiculed by nearly all “mainstream” economists—was proven correct again by the housing bubble. In other words, the direct cause of the economic recession, and the subsequent decline in wealth, was due to government tampering with the interest rates. This, in turn, affected the money supply.
It should be apparent that, from the beginning, the government bears responsibility for the economic recession’s roots. These economic troubles were not caused by a natural disaster (like one seen in Japan) or war, but by tampering with the market. Though, this is not all.
The housing bubble burst several years ago, yet the American people have still experienced a decline in wealth. There is much more to this problem that just examining the housing bubble.
Taxation is key; the American people are robbed through our current policies. If we are to take the words of Frederic Bastiat as true, then we must also look at taxation from a different aspect— the “unseen” impact. Because of this, the people have their property taken and the government has more money and power.
Have some Americans lost fortunes due to their own mistakes or because of pure chance? Of course, no one can dispute this. As with markets rising and falling, it is merely something that will happen. But, consider the economic impact that government has had upon the economy of the United States in relation to businesses eroding or failing. Also consider the impact that government has had upon the wealth of the citizenry in aspects apart from mere business. In this way, taxation and the overall economic conditions apply.
Yet the economic troubles still are not over. Our nation still is not prospering. And why is this? Is it a failure of the free market? Certainly not. It is the perpetual failure of the economics of intervention in the markets and the opposite of freedom. Having workers build more freeways will be as productive as having a national program where workers are digging holes, then proceeding to fill the holes they just dug.
The government has overstepped its boundaries; let’s decrease its size, thus increasing the value of our currency, which is crucial to economic prosperity in the long run.
America’s decline in wealth is not a mystery. It is not akin to the disappearance of the Maya, nor of crop circles. There are many explanations for this decline in wealth. For the left, the explanation shall be the typical “The rich are getting richer, and the poor are getting poorer.” Whether this is the case is not the main issue. The government has aided in this decline in wealth through their policies and market interventions. Was Bernie Madoff’s ponzi scheme thought less severe—or, not even an issue at all—when he destroyed the wealth of clients who were “rich”? If one answers “no” to this question, then why is it any different with the government?