Slowed Down For A Reason

Signs of Poor Governance: Is America Becoming One of the Worst?
By Dr. Mark W. Hendrickson

A recent International Monetary Fund research report listed the countries expected to suffer the worst currency depreciation—that is, the worst inflation—this year. Zimbabwe (a mind-boggling 300,000 percent-plus), Venezuela (25.7 percent), Bolivia (15.1 percent), Nicaragua (13.8 percent), and Argentina (9.2 percent) are the top five. What do these countries have in common? You could reply in two ways: 1) they are poorly governed; 2) they are leftist governments, which is simply another way of saying that they are poorly governed.

Indeed, it is difficult to think of any economic indicator that exceeds inflation as evidence that a country is poorly governed. Leftist governments—defined here as regimes unfriendly to private property, private enterprise, and private profits; regimes that constantly seek ways to redistribute wealth from the economically productive members of society to favored political constituencies; and regimes that reject free markets and instead expand government control over economic activity—invariably cripple production while increasing government spending. The inevitable result is inflation.

This is no mere academic discussion. It was less than 30 years ago that inflation in the United States was in the 13-14 percent range. Today, resurgent inflation in the United States is officially listed as 4 percent, but for many Americans, it feels much worse. Is it possible that we might break into the IMF’s list of the top-five inflation-plagued countries in the next year or two? To answer that, we should ask ourselves if we have sound governance or poor governance. Sadly, examples of the latter seem to be proliferating. The following are some examples:

- In just eight years, U.S. federal spending has ballooned from $2 trillion to $3 trillion—a 50 percent increase at a time when the average private income increased only 28 percent.

- At 35 percent, the United States now has the second-highest corporate profits tax in the world—absolute insanity in a time of intense global competition when Congress should be doing everything in its power to help domestic employers compete against foreign companies.

- At a time when formerly communist countries in central and eastern Europe have adopted flat-rate personal income taxes less than 20 percent, and are booming as a result, the United States clings to an outdated Marxian, growth-retarding, class-warfare, graduated income tax, and at least one presidential candidate wants to raise those rates even more.

- Last fall, Congress decided that financial institutions were making too large a profit on student loans, so they mandated lower returns on such loans. As a result, many private lenders have dropped out of the student loan market entirely, and Congress is now trying to bail out such lenders by empowering the Department of Education to purchase student loans directly from private lenders. Where will the Department of Education come up with the necessary funds? From higher tax revenues, of course.

- Congress recently passed a $307-billion farm-subsidy bill. President Bush tried to get Congress to limit subsidies to those making no more than $200,000 per year, but Congress rejected that proposal, paving the way for subsidies to those with annual incomes over $2 million. Some senators solemnly intoned that they were doing this to prevent bankruptcies. Apart from the fact that the centuries-old trend is toward fewer agricultural producers (i.e., farm bankruptcies) as a result of improved efficiencies and economies of scale, and in spite of the fact that many farm prices are at multi-year highs, we should ask why Congress, instead of the marketplace, should decide which businesses survive and which do not? Central planning, anyone?

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No, it is not poor governance although it appears so.

The bald eagle is being placed in a temporary state of holding because she has been moving so fast ahead of her time.

She has been injured significantly due to her carelessness as she tried to accomplish her latest difficult assignment because she overlooked some details and failed to accurately survey the hunting ground and complacently relied on the shorter-range sight of other birds of prey rather than using her own long-range and accurate powerful vision. She and the other raptors listened to and believed the wrong chirping of some songbirds in the ground. With her awesome skills and capabilities, that mistake should never had happened.

If she is left alone unchecked and allowed to continue moving at her own pace, she will miss the correct timing of one of the
difficult tasks she has been assigned to accomplish and then she will fail.

So, unless her beak is temporarily made broken for a while, what else would effectively and significantly slow her down from voraciously devouring those that she considers as her preys?

In her present condition, if she insist and persist on going for her preys, the powerful vision of her eyes is always able to guide her to her preys, the strength of her majestic wings is still very much able to carry her where she wants to go and the sharp claws of her talons can still pierce through the bodies of preys, but all of these awesome power and capabilities will not benefit her to the fullest because she is not yet able to tear and
eat the flesh of her preys with her broken beak.

She can still effectively hunt her preys down but it is the other competing birds that will benefit from her efforts because after all she still is not yet able to eat her catch for the time being. If she goes hunting without eating, in time she could lose strength and could die.

But the day will come when she will be healed of her injury and then she will be set loosed once again that she might do what she used to do, and with greater chance of succeeding.