Part 4 in a multipart series examining solutions for our ailing economy, presented by Art Thompson, CEO of The John Birch Society.

One of the cruelest and most misguided ideas for stimulating an economy is to promote government spending as part of any stimulus plan. Its sisters are the tax cut and the tax rebate.

There are only two things that a government can do to stimulate an economy ― one is to cut government spending and the other is to stop government regulation ― then a corresponding tax reduction occurs.

A solid case can be made that we would not be in trouble economically if government would have stayed out of the business of private business.

Our Constitution was written to protect and preserve the rights of the people. No more, no less. Only enough power was delegated to government to ensure these rights. Mark this distinction. The government was not "empowered," but had limited power delegated to it. Delegation means that powers were extended to government but not abrogated by the people; that the people would always retain the power and could recall the power at any time. Once government gets too big, the ability of the people to do the latter becomes increasingly more difficult.

Our Founding Fathers knew that the accumulation of too much power in the hands of the state would ultimately destroy our rights; therefore, government was purposefully limited as to size and scope.

Since the Civil War in particular, the federal government has taken unto itself more and more control over the free enterprise system that has made this country great, economically. The foundation for this greatness was the very idea of freedom of the individual. Once the government started the process of accumulating power, over time the number of economic crises grew and the economy slowed.

It is difficult for people to realize that the economy slowed because it is the economics of the invisible. What could have happened in the way of growth within the framework of total freedom never happened, so it cannot be seen. The many variables that constitute a complex economy and can stimulate the economy, such as new inventions, new services, etc., did not occur, or did not and have not occurred as frequently as they should, because at some point the person who may have thought of or constructed advancements and innovations decided that it was not worth the effort to go ahead due to government barriers. This is the type of slowdown that is unseen – and it happens every day in communist and socialist societies, causing them to atrophy without any stimuli.

In 1929, we had the granddaddy of all panics. The crash really came as the federal government intervened and interfered in the market place, driving America, and the world, into a great depression. The process is being repeated today.

Off the radar of most people is the actual cause of the economic meltdown, although most realize that someone is getting rich off their taxes. And, just as in the 1930s, people in government are accumulating more power unto themselves while others are becoming fantastically rich. Rather than explain further, since the object here is to give solutions based on understanding, we recommend reading The Creature From Jekyll Island, available through www.ShopJBS.org.

Keep in mind, fortunes are rarely lost, they are transferred. No one asks where did the money go? No one asks who got the property of all those from whom it was taken during the depression. The answer to these questions is the real story.

Government spends money by entering into the wealth redistribution business ― taking from some to give to others. This always has a negative effect on the ability and desire of the “some” to get ahead. If the taking is progressive based on income level, it stifles the economy in that it discourages the “some” to want to move into higher tax brackets. This means less ingenuity, less invention, less expansion of business, etc., all of which would have stimulated jobs and the economy.

Redistribution of the wealth also stifles the “others.” Handouts always do, whether in the form of freebies or tax breaks. It suppresses responsibility and increases the size of the numbers on the dole. It also has a very negative effect on politics in that the growing number on the receiving end of government spending have an increasing voting bloc electing those who promise more.

In the end, responsibility — civil responsibility — suffers to the point, sooner or later, in the utter collapse of the economy and the government itself.

History is replete with examples of this fact. It can all be summed up by a clever quote, oft used by Ronald Reagan and probably incorrectly attributed to Lord Woodhouselee (1747-1813) about the fall of the Athenian Republic:

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.

It is obvious that history repeats itself – but it is not history really, it is the frailties of human nature that are the cause of history repeating itself. Since people really do not study history in-depth, and how significant it is to their own lives, they fall for the same lies and distortions, the same policies and programs of the power hungry, over and over again. And those who want power, lust after power, study how to get it.

Inflation is historically a primary tool to this end. Inflation is caused by fiat money spending, money not backed by anything but faith, without intrinsic value.

To create inflation and buy votes, the government spends and spends without a corresponding imposition of a visible tax. But the invisible tax robs people of their wealth and sucks the economy dry; running printing presses day and night hyper-inflates the currency.

Governments may even further exacerbate the problem with a tax rebate, giving money away while indebtedness grows, making themselves look benevolent to the voter.

One day the citizen wakes up and finds the stores empty because the money has no value. No one is willing to produce or sell within a worthless monetary system. This has happened in Germany, Argentina, Zimbabwe, and many other countries in the last century up to the present. And in every case, it has led to totalitarianism.

Once the stores are empty, civil unrest ensues. Irresponsible government collapses, and those with superior organization behind the scenes assume power over those who do not even understand what has happened.

Government spending is bad enough, but when it is connected to a fiat money system, it leads to collapse.

Government must be brought back to Constitutional levels of size and scope. That means reliquishing our far-flung empire and bringing our troops home. It means abolishing every unconstitutional department of the Federal government. It means getting the government out of grant making and funding the arts and sciences. It means no more $700 billion bailouts. It means less regulation and many thousands fewer bureaucrats. It means putting a stop to federal foreign aid. When these things happen, then federal spending will decrease and the resulting distortions on the market will be radically diminished. We, the taxpayers, will have more money in our pockets, and more freedom to use that money.

We will, then, finally be back on the road to freedom, and prosperity.

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