Tuesday, January 8, 2013
Creating and sustaining a nation of zombies is expensive.
Large
sections of the US population have been turned into zombies. Retirees.
Medicare dependents. Food stamp recipients. Disabled people. They are
not necessarily bad people. They are not necessarily dishonest or lazy.
But rather than add to wealth,they consume it. And when you have too
many of them,your society consumes more wealth than it produces and you
are on the road to The Downside.
But the
feds are not only creating individual zombies,they are also creating
corporate zombies. An obvious example:“green” energy. Without
subsidies,loan guarantees,tax benefits and direct giveaways,the industry
as we know it would not exist. Nor would the ethanol industry in the
Midwest. Nor the security industry in the Northern Virginia suburbs of
Washington,DC.
The financial industry
too,as we know it,would not exist either. Much of it would have been
swept away in the financial storm of 2008-09. That story is
well-known,but not well understood. Most people believe the authorities
acted heroically,saving the nation from a depression. But what the
authorities really did was to take the public’s money and give it to
cronies on Wall Street in order to prevent them from suffering the
losses they deserved. The government transferred nearly $2 trillion in
various forms from the public purse to the pockets of the financial
industry. With that kind of backing,most of the old investment firms
survived. The new ones that might have replaced them never saw the light
of day.
Industries need to be sustained
by the government when they cannot sustain themselves. This is
practically the definition of “malinvestment” — putting capital and
energy into investments that don’t pay off. When an industry is only
profitable with government backing it means that the industry uses
resources — labor,energy,raw materials — and turns them into finished
products that are worth less than the inputs required to make them. The
more of these zombie industries the government supports,the poorer the
society becomes.
Read More at The Daily Reckoning . By Bill Bonner.
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