By Thomas Sowell
The fact that so many successful politicians are such shameless liars is
not only a reflection on them, it is also a reflection on us. When the
people want the impossible, only liars can satisfy them, and only in the
short run. The current outbreaks of riots in Europe show what happens
when the truth catches up with both the politicians and the people in
the long run.
Among the biggest lies of the welfare states on both
sides of the Atlantic is the notion that the government can supply the
people with things they want but cannot afford. Since the government
gets its resources from the people, if the people as a whole cannot
afford something, neither can the government.
There is, of course, the perennial fallacy that the
government can simply raise taxes on "the rich" and use that additional
revenue to pay for things that most people cannot afford. What is
amazing is the implicit assumption that "the rich" are all such complete
fools that they will do nothing to prevent their money from being taxed
away. History shows otherwise.
After the Constitution of the United States was amended to permit a federal income tax,
in 1916, the number of people reporting taxable incomes of $300,000 a
year or more fell from well over a thousand to fewer than three hundred
by 1921.
Were the rich all getting poorer? Not at all. They
were investing huge sums of money in tax-exempt securities. The amount
of money invested in tax-exempt securities was larger than the federal
budget, and nearly half as large as the national debt.
This was not unique to the United States or to that era. After the British government raised their income tax
on the top income earners in 2010, they discovered that they collected
less tax revenue than before. Other countries have had similar
experiences. Apparently the rich are not all fools, after all.
In today's globalized world economy, the rich can simply invest their money in countries where tax rates are lower.
So, if you cannot rely on "the rich" to pick up the slack, what can you rely on? Lies.
Nothing is easier for a politician than promising
government benefits that cannot be delivered. Pensions such as Social
Security are perfect for this role. The promises that are made are for
money to be paid many years from now — and somebody else will be in
power then, left with the job of figuring out what to say and do when
the money runs out and the riots start.
There are all sorts of ways of postponing the day of
reckoning. The government can refuse to pay what it costs to get things
done. Cutting what doctors are paid for treating Medicare patients is
one obvious example.
That of course leads some doctors to refuse to take
on new Medicare patients. But this process takes time to really make its
full impact felt — and elections are held in the short run. This is
another growing problem that can be left for someone else to try to cope
with in future years.
Increasing amounts of paperwork for doctors in
welfare states with government-run medical care, and reduced payments to
those doctors, in order to stave off the day of bankruptcy, mean that
the medical profession is likely to attract fewer of the brightest young
people who have other occupations available to them — paying more money
and having fewer hassles. But this too is a long-run problem — and
elections are still held in the short run.
Eventually, all these long-run problems can catch up
with the wonderful-sounding lies that are the lifeblood of welfare
state politics. But there can be a lot of elections between now and
eventually — and those who are good at political lies can win a lot of
those elections.
As the day of reckoning approaches, there are a
number of ways of seeming to overcome the crisis. If the government is
running out of money, it can print more money. That does not make the
country any richer, but it quietly transfers part of the value of
existing money from people's savings and income to the government, whose
newly printed money is worth just as much as the money that people
worked for and saved.
Printing more money means inflation — and inflation
is a quiet lie, by which a government can keep its promises on paper,
but with money worth much less than when the promises were made.
Is it so surprising voters with unrealistic hopes elect politicians who lie about being able to fulfill those hopes?
