The other day,
I ridiculed Niall Ferguson's new book,
the Great Degeneration, which claimed to be about the "causes of our stationary state," i.e., Western economic stagnation, in which he devoted a total of seven lines to the actual cause of the current Western economic standstill, before launching into four chapters of hand waving about institutional degeneration, a cause for concern perhaps, but laughable as an explanation of why China and many other Third World countries boom while unemployment and social unrest swell throughout the West. Here, then, I put Ferguson straight as to the West's relative economic decline.
First, though, Ferguson's only reference to the actual causes of Western decline:
In the United States, the wider debate is about globalization, technological change, education and fiscal policy. Conservatives tend to emphasize the first and second as inexorable drivers of change, destroying low-skilled jobs by "offshoring" or automating them. Liberals prefer to see widening inequality as the result of insufficient investment in public education, combined with Republican reductions in taxation that have favored the wealthy.
Amazing, really, that anyone could claim to have the explanation of Western economic decline without further reference the destruction of jobs by offshoring and automation.
The bit about liberals preferring to see Western economic stagnation as the result of poor education and low taxes, is, in fact, irrelevant. Liberals are globalists, who naturally, therefore, seek explanations for the destructive consequences of their policies that exculpate them from blame while at the same time promoting policies that line their pockets. High taxes and more government spending on welfare, healthcare, and education mean more jobs for the educated middle class that fill the ranks of the bureaucracy in jobs so well paid that government towns such as Washington, DC, Ottawa, Ont., and Brussels, the EU capital, are now among the wealthiest jurisdictions in the West.
But let's consider in terms of basic economics why Western economies have stagnated or begun to shrink:
What does it take for an economy to grow? More production, obviously.
And what does it take to increase production? More demand, obviously.
And what does it take to increase demand? More income, obviously.
Yes, in the short run, debt comes into it. If folks go deeper into debt, they can consume more, which is one reason why central banks have fought the current depression by keeping interest rates at something close to zero.
But in the long-run debt has to be repaid, so increasing debt or discouraging debt deleverage is no solution to Western economic decline.
So the answer to the question of how to end Western economic stagnation is simple. It is to increase incomes.
Less simple, is the question of how?
A stupid liberal idea to increase incomes is to do it by government fiat: which is to say by imposing minimum wage laws. All Western governments have done this in the face of the obvious fact that a minimum wage law either denies work to those whose labor is worth less than the minimum wage or it compels them to work in the unregulated underground economy, where they receive neither the minimum wage nor the protection of workplace health and safety standards.
Another stupid liberal idea is to pay people, millions and tens of millions of them, not to work. These are people receiving unemployment pay, sick pay, maternity pay, disability benefits and welfare. In addition, are millions of elderly people who, choosing to retire earlier than necessary, receive non-contributory retirement or old age pensions or other benefits.
Because all these sources of income, which we will refer to collectively as welfare, tend to make not working more attractive than working, they increase the number of people who could work and gain income for themselves who opt instead to live at the expense of the taxpayer, with the result that total spendable income of society as a whole is reduced.
A third stupid liberal idea is to keep people of average and even less than average intelligence in school for decades, which constitutes another form of welfare, inasmuch as the taxpayer funds the educational infrastructure and much of the running cost. Furthermore, by keeping young people out of the workforce where they would gain work experience that would enhance their earnings potential, it lowers their life-time earnings.
So what to do?
First,
abolish the minimum wage.
Second,
abolish welfare.
Third,
introduce a tax-department-administered income supplement for those who are employed but who earn
less than what used to be the minimum wage.
Two things will result.
First, every worker unable to get a job at minimum wage will now find
work at a lower wage, which will, nevertheless, net them an income
equal to something like the now abolished minimum wage.
Second, employers in the West will now be on something closer to a level playing field, in terms of wages, with companies in Asia and Africa, where manufacturing wages
are on average less than 5% of those in the West.
What will it cost?
Less, almost certainly, than the welfare programs to be abolished, which have huge overhead costs, but with the following benefits.
It will eliminate the social costs of unemployment, including much crime, drug abuse, loss of work skills, mental illness, and social unrest.
It will lead to the creation of thousands, tens of thousands and hundreds of thousands of small businesses, as the creation of a cheap labor resource once again makes it possible for people in the West to make shoes and shirts, computers and car parts for one another, rather than importing them from the sweatshops of the Third World.
And it will release tens and hundreds of thousands of able and educated people now unproductively employed in the welfare bureaucracy into the market economy where many will demonstrate the entrepreneurial talent to create businesses employing those who were formerly unemployed and unproductive wards of the state.
The net result will be an increase in GDP and an increase in income with which the addition to GDP can be consumed.
But liberals are determined that you will never understand this, for the increasingly demoralized peoples of the West are targeted for extinction as racial, cultural and religious communities, to be replaced by a mongrelized globalized workforce without attachment to, or even knowledge of, the Western tradition of freedom and civil rights.
See also:
CanSpeccy: End Welfare Now
CanSpeccy: When a Pair of Hands Is No Longer Worth a Living Wage
CanSpeccy: How to End the Depression Now
Daily Mail: US Birthrate Hits All-Time Low
