“Thus, after having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”
Alexis de Tocqueville
Almost 200 years ago the historian and political thinker Alexis de Tocqueville first wrote about what has come to be called “soft tyranny” or “soft despotism.” As a democratically elected government becomes more intrusive, controlling greater portions of our daily lives, not with an iron fist, but as a strict school master, our freedom of thought and action is still just as curtailed.
If you think that the actions of the political élites, their allies in money center banks and multinational corporations have your interests at heart, take a look at this graph.
Yes, the powers that be will take care of their own; the public sector will protect their employees until bankruptcy overtakes a city or a nation; the corporations will protect the interests of the unusually valuable gold collar employees, until it is no longer in their interest to continue this practice.
Don’t believe me, just ask my generation about their financial prospects in retirement.
Remember the national debt was doubled to buy that little bump at the end of the graph.
Only three things can be done with debt, individual debt, corporate debt, municipal debt, or sovereign debt. It can be repaid. This is often painful, difficult, and tends to slow down the economy. The debtor can default or declare bankruptcy, or if the debtor nation controls the printing presses, the debt can just be inflated out of existence. The last two options tend to produce economic cataclysms accompanied by blood in the street. We are like a family with parents who have lost their jobs using their credit cards to maintain their current lifestyle pretending that everything is OK.
Corporations do not pay taxes, the salaries of their employees, or the costs of regulatory compliance. All these costs are paid by you, their customers. If you are unwilling or unable to pay these costs, the corporation moves their operations to another country or shuts them down.
Governments and the banks can create money, but they can’t create wealth. No matter how well intentioned or efficient the program, Governments ultimately consume wealth through the entropy generated by the costs of administrative overhead or through the redistribution of wealth that is then consumed rather than invested to create more wealth.
Wealth is created by ingenuity and hard work—Your ingenuity and hard work.
THEY want docile debt slaves and tax donkeys. They don’t want independent free men and women living the life they choose. Look at the evidence. Who benefits from student loans? The schools get their money up front, guaranteed, whether or not the student ever finds a job in her field or even graduates. The banks get their money from Federal guarantees and loans that can’t be discharged in bankruptcy.
Over a trillion dollars a year is spent on advertising intent on convincing you that you can’t live without borrowing money to buy something you don’t need to impress people you don’t know. Why do for profit corporations spend all that money? It works! The average household credit card debt is $15,762. The only kind of debt that is more toxic than credit card debt are loans taken from payday lenders, title lenders, or criminal loan sharks.
Taxes? This year tax freedom day was April 24. If you are an average American you are working 114 days a year for the government. In retirement, I do better. Taxes are still my largest single expense—By Far—but I am receiving a FERS pension and 2/3 of the cost of my health insurance. If you are still working to help pay for these benefits, I thank you. I am also receiving Medicare and my wife is taking early Social Security, but we paid for those two programs. That’s our money.
Sometimes this job gets frustrating. How many times or ways can I say, “Avoid debt like the plague. Spend less than you make. Put the surplus in an insured savings account until you have built up a respectable emergency fund. Pay down your debts in a systematic and ruthless war. Then put the surplus in a mix of low cost index funds and some conservative dividend paying stocks. If you do these things you will be alright.”
Look at that graph again. It is getting harder for the average American high school graduate (or dropout) without any particular skill to make enough to support a family, but it is still possible for them to find financial freedom. It has been demonstrated that a family making $60,000 a year without ever getting a single raise or promotion can still retire with a million dollars in savings.
However, no matter what promises THEY make, it is up to you to make something out of your life. We don’t have any control over the cards life shuffles our way, but we are darn sure responsible for how we play our hand. No matter how bad things are, if you can read these words and understand them, there is something you to make your financial life better. Just do it. Do it today.
