Friday, June 27, 2014

How a Country Dies


For those interested, signs or symptoms precede death for a country often as they do for a person. There is a pattern that involves the following: 
1. The Economy 
Economically, people become poorer. It becomes harder to feed a family. Economic growth stalls and then reverses. Work opportunities decline. Disincentives to work rise as government tries to ease the burden on the unemployed and lower skilled. These efforts require more revenues which means higher taxes or debt financing. Disincentives to create jobs are magnified by attempts to address the problem. Higher taxes and other burdens are imposed on the productive making work less attractive. 
The response should not be surprising. Capital flees first. It goes to areas where adequate returns are still available. Jobs are created but not in the host country. Finally a “brain drain” begins. ... 
These conditions characterize the beginnings of the decline. As the decline continues, things get much worse. 
2. The State 
The State is threatened by a decline. Generally it moves into full pretend mode. Three behavioral traits characterize its behavior. The State must convince citizens:
things are not as bad as they seem.
the State is not responsible for the situation.
 the State must do more (grow bigger) in order to solve the problems.
 
Statistics issued by the State are fudged to convey a false image of well-being. Government spending soars in an effort to juice reported economic activity. Much of the spending is unproductive in terms of providing things that would have otherwise been bought. It is also counterproductive to a proper functioning economy as price discovery is disrupted and consumer and investment decisions are based on false signals.
Incentives are  provided to encourage people to live beyond their means.  Debt appears nearly free and readily available. Bubbles occur and then burst. New bubbles are necessary to replace old bubbles. People and businesses are encouraged to make imprudent decisions, all in the attempt to make the economy appear better.
 
The State has one objective and that is to remain in power. Laws and regulations  multiply at ever faster rates. Tyrannical rules and legislation are passed under the pretense of protecting the people against some threat. In reality, these laws are passed to protect the leaders against the public when they finally understand what has been done to them. 
“Bread and circuses” increase to divert peoples attention from the developing problems. Dependency increases reflecting an attempt to placate the masses. A “wag the dog” war or crisis is often used as a means to rally the public against some phony enemy. 
3. Society 
Society becomes coarsens as this process progresses. People increasingly are unable to provide properly for their families. Some desperately turn to unethical behavior, even criminal acts.   Common decency declines. 
... how you must live is increasingly determined. 
Free markets are slowly replaced by a command and control ordering of society. 
Coercion displaces freedom as the coordinating force for society. People increasingly do what they must rather than what they want.
... Society becomes increasingly divided in terms of the “makers” and the “takers.”  As the takers grow in numbers, the makers shrink in numbers. Soon the parasites overwhelm the productive. Society collapses at that point.

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