Author: George Noga

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Independence Day 2023

George Noga

Independence Day 2023
We are moving rapidly toward two Americas
GEORGE NOGA
JUL 2, 2023

On this, my eightieth Independence Day, I am privileged to have lived at the best time to be an American – a view widely shared by those of my generation and of all political persuasions. However, my joy is tinctured with despair because, along with my contemporaries, I believe the future will be worse and our children and grandchildren will inhabit a multi-polar, dystopian world of wokism, climate madness, existential debt crisis, lost generation, geopolitical threats and a rapidly approaching decade horribilis. To cap it off, our beloved republic is splitting in two.

silhouette of Statue of Liberty under orange sunset

Twilight of liberty

On Independence Day 2023 America hauntingly resembles Yeats’ Second Coming, his apocalyptic poem about a nation coming apart and foretelling an impending crisis.

Turning and turning in the widening gyre
The falcon cannot  hear the falconer;
Things fall apart; the centre cannot hold.
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed and everywhere
The ceremony of innocence is drowned;
The best lack all conviction while the worst
Are full of passionate intensity.

In years past my regular July 4th posting, mimicking the theme of the movie Independence Day, was my readers’ all-time favorite. The theme was that migration from blue to red states was analogous to the aliens in the movie who, having laid waste to their home planet, plunder Earth and move on to despoil other worlds. Within the past few years, that migration pattern has changed 180 degrees. Now we are seeing moderates and conservatives fleeing blue states for red states. This presents an entirely different set of equally troubling problems for America.

Blue states are where safety, civility, culture and liberty go to die

Blue states suffer from over a half century of toxic progressive governance marked by identity politics, Kafkaesque regulation, sky-high taxes and living costs, forced unionization, crumbling infrastructure and vastly underfunded pensions. They are rife with graft and corruption. Their failed union-run schools are petri dishes for every possible social dysfunction and pathology. Crime is rampant and gun control is uber-strict. There is massive public debt, unfunded liabilities and tanking credit ratings. During the pandemic they locked down businesses, mandated vaccinations, shuttered schools and closed churches, but kept liquor stores open.

Blue states tolerate homelessness, open drug use and human filth and install vending machines with free crack pipes. They release dangerous felons and decriminalize shoplifting, looting and arson while defunding police and eliminating cash bail. They pit people against one another based on race, income, age ethnicity and gender identity. Their stagnating economies are hemorrhaging businesses and tax base along with their most productive citizens. They teach CRT, the 1619 project and encourage young children to question their gender while disrespecting parents. Housing is scarce, dilapidated and costly with rent control and eviction bans. Environmentalism runs amok and climate change wackiness doubles the cost of energy.

Slouching toward red and blue Americas

The point of no return in the blue to red migration may have been crossed in Chicago’s recent mayoral election. I had thought it impossible Chicago could have a worse mayor than Lightfoot, but Brandon Johnson’s victory by 20,000 votes was due to the departure of 175,000 people in the past two years from Cook County. Without that migration, Chicago would have a more moderate mayor.

Red states are becoming redder, blue states bluer and purple states disappearing. Like any vicious circle, it feeds on itself. As conservatives and moderates clamor for the blue state exits (along with their tax base), the remaining population is even more progressive causing blue states to further increase taxes, cut public safety, neglect infrastructure and enact even more wacky laws; that in turn causes even more people to flee and the circle keeps going round and round. The opposite occurs in red states where revenue pours in enabling even more tax cuts and better public services.

The phenomenon described above is illustrated by recent actions by Minnesota and Florida. The Minnesota legislature just enacted ultra progressive laws regarding increased rights for abortion, transgenders, illegal immigrants, felons and others. Meanwhile, Florida just passed laws cutting taxes, creating universal school choice, stopping gender reassignment surgery for children, restricting abortions, expanding gun rights, cracking down on illegal immigration and more.

How does it end?

We are headed for an America divided into two opposing groups of states. Where all this ends is yet unknown – as in The Second Coming, which ends with the question: “And what rough beast, its hour come round at last, slouches toward Bethlehem to be born?”

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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Adam Smith Tricentennial

George Noga

Why there is no capitalist manifesto
GEORGE NOGA – JUN 25, 2023

This month is the 300th anniversary of Adam Smith, born June 1723 in Kirkaldy, Scotland. Adam Smith was not the father of capitalism, as he often is called, but the first to articulate its principles. He is known for his invisible hand metaphor explaining how self-interested individuals operate in a system of mutual interdependence and direct economic life more effectively and fairly than government intervention.

a statue of a man standing in front of a building

Adam Smith did not invent capitalism because it evolved organically. No intellectual ever wrote a capitalist manifesto. Capitalism doesn’t require pointy-headed professors to theorize; it just happens naturally. To the eternal pique of liberal elites, no one is capable of controlling capitalism, whereas socialism requires controllers, i.e. the same progressive savants who castigate capitalism. Capitalism is egalitarian and rewards those who best serve sovereign consumers; i.e. their fellow man.

Capitalism evolved in prehistoric times

Capitalism evolved organically. For example, Paleolithic fishermen worked incessantly, spearing just enough fish to survive. Then along came one nascent capitalist who thought of a net. Since neither he nor anyone else had any capital he could borrow, he worked longer hours for months to accumulate enough surplus fish (his capital) to give him time to make a net. With his net he generated a fish surplus to trade for other goods. He also financed others who, in turn, specialized in different skills, with the resultant benefits from the division of labor. Our first capitalist became wealthy, but his capital also made everyone else much better off.

“It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interests.”

In sharp contrast, socialism never has happened organically. All the failed attempts throughout history to achieve Utopia, Xanadu, Zion and Valhalla were spearheaded and financed by some ivory-tower dreamer. That explains, as well as anything, why capitalism always succeeds and why all forms of collectivism always fail.

More Wisdom from Adam Smith

Adam Smith wrote many other pithy statements about economics and capitalism, which continue to have relevance for those of us in the twenty-first century. His point in Wealth of Nations about comparative advantages of trade still resonates.

“By means of glasses and hotbeds, very good grapes can be grown in Scotland and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries.”

Smith’s statements about the role of government also are valid 300 years on.

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice: all the rest being brought about by the natural course of things.”

“To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other is evidently contrary to that justice and equality the (government) owes to all the different orders of citizens.”

“The statesman who attempts to direct private people in what manner they ought to employ their capital would not only load himself with unnecessary attention, but assume an authority which could be entrusted to no council, and which would nowhere be so dangerous as in the hands of a man who had the folly to fancy himself fit to exercise it.”

Perhaps my favorite Adam Smith quote applies (in spades) to today’s virtue-signaling progressives, private-jetting climate alarmists, greenwashing corporations, limousine liberals and their ilk. Adam Smith had their number 300 years ago when he wrote:

“The man who has performed no single action of importance, but whose whole conversation and deportment express the justest, the noblest and most generous sentiments, can be entitled to no very high reward. We ask him, what have you done.”

Adam Smith’s genius lie in being first to clearly explain an economic phenomenon that is as old as our Paleolithic fisherman who first generated an economic surplus. Remember, no one ever wrote a capitalist manifesto because it wasn’t necessary. Unlike all forms of collectivism, capitalism is organic and consistent with human nature. That explains why capitalism and free markets succeed and socialism fails.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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Election 2024 Preview

George Noga

Enduring principles of American politics
GEORGE NOGA
JUN 18, 2023

This is the first of periodic posts about Election 2024. Between now and the election I will offer perspective about the candidates, issues, electoral process, keys to the election and, of course, my fearless forecast of winners and losers. Longtime readers know I have gotten it right most of the time, including Trump in 2016. This post is about why people run for president and some enduring political principles.

a picture of a donkey and a donkey with stars on it

Why run for president?

Have you wondered why so many people, with no realistic chance to win, enter the presidential sweepstakes. It may surprise you that there are many reasons.

  • Positioning for VP or top level appointment. An example is Kamala Harris; Tim Scott also fits in here, although he has an outside chance to grab the brass ring.
  • Positioning for the future. With a strong showing, a candidate might become a strong contender – or even the frontrunner – in the next election cycle.
  • Hoping to catch lightning in a bottle. Every few election cycles a dark horse unexpectedly catches fire; a good example is Herman Cain in 2012.
  • Establishing national bona fides. A little known local or state official may run to get into the national conversation; examples are Mayor Pete and Tulsi Gabbard.
  • Hoping for a cabinet position or ambassadorship. Most long shot candidates fall into this category; Mayor Pete is a good example.
  • Going for the money. The not-so-hidden aim is to get a lucrative lobbying position, mega book deal, or a seven-figure gig on cable television.
  • Vanity and entitlement. Never underestimate the narcissism and solipsism of politicians. They convince themselves the people eagerly await their candidacy. Marianne Williamson fits this bill as does Gavin Newsom should he run.
  • Stalking horse. The classic example is Eugene McCarthy in 1968 who was a stalking horse for Robert Kennedy. Many believe Robert Kennedy, Jr. fits that category today and is a stalking horse for other candidates to enter the race.
  • Trial run. Candidates wish to test their abilities at fund raising, national politics, debates and organizing and running a presidential campaign.
  • Combination. This fits most candidates not likely to win nomination. They are hoping that, if they make a respectable showing, something good will happen.

Principles of American Politics

American political history and tradition are based on principles that have withstood the test of time. They exert an outsized effect on elections and transcend parties, candidates, issues and events. They are ignored only at great peril.

  • America is a center-right country. Forget this principle and you get a Goldwater or a McGovern. The only center-left candidates elected in the past 80 years are Carter, Clinton, Obama and Biden. Carter and Clinton were southern state governors while Obama and Biden ran as unifying centrists.
  • Economics uber alles. Clinton’s mantra “It’s the economy, stupid” was right on track. Voters reward politicians who make them better off.
  • There are no permanent majorities. Demographics, alliances and issues always are in flux. Minority parties adapt; movements, like the Tea Party or Green Party, are subsumed into larger groups. Other than FDR/Truman and reconstruction, no party has retained power for more than 12 consecutive years in the past 230 years.
  • The longer a party is in power, the more likely it is to lose. As noted supra, with few exceptions, no party has retained power more than 3 consecutive terms. Only once in the past 154 years (Reagan/Bush) has a full two-term president been succeeded by a member of his party. Americans understand power corrupts.
  • Incumbency is powerful. In the past 130 years only 3 elected presidents have lost. Americans prefer the fool they know to the devil they don’t.
  • Money is important but not dispositive. Clinton outspent Trump 2 to 1.
  • Polling as we know it is dead. Most polls are skewed to promote one candidate or to suppress the vote of another. Even credible polling organizations can’t get it right due to absence of land lines and voters’ reluctance to respond to pollsters. Real people casting real votes in real elections always trump polls; that’s why the early primaries are so crucial in providing clarity not possible from polling.
  • It is far too early; most Americans don’t focus on elections until after Labor Day. Dukakis led Bush by 17 points in September but Bush won by 7 points. Reagan trailed Carter well into October but won by 10 points and carried 44 states.

     

 

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

 

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Decade Horribilis: The 2030s

George Noga

The next decade will be the perfect storm for America
GEORGE NOGA
JUN 11, 2023

On January 1, 2022 I distributed a post entitled Annus Horribilis in which I wrote that the coming year would contain a phantasmagoria of horrors. My predictions included:

  • Russia invades Ukraine; China and Russia form an entente
  • Iran races toward nuclear weapons and North Korea resumes missile testing
  • The US has double-digit inflation, uncontrolled spending and huge deficits
  • Biden is non compos mentis; his administration, chosen solely on identity, would open the borders, cripple US energy production and promote lawlessness.
Russia and China form an entente

The only major prediction I muffed was that China did not invade Taiwan. Read this post for yourself on our website: www.mllg.us. My 1/1/22 post was the only time in 15 years of blogging I made any such predictions. That I was prescient is not attributable to any special insight or clairvoyance; the predicates were in plain view and many of the dots already were connected. And so it is again for the next decade.

The 2030s will be a perfect storm for America

I derive no pleasure whatsoever from these predictions and hope, against hope, that somehow I am wrong. But again, all the predicates are hiding in plain sight and all the dots are starting to connect – just as they did for 2022.

  • The debt (spending) crisis reaches critical mass and goes thermonuclear. Government no longer can borrow money because it is incandescently obvious to all there will be no repayment. Initially, the Fed will print money, but it will lead to runaway inflation and $100 trillion banknotes. The ensuing Great Debt Crisis will be on a par with the Great Depression and last for a (lost) generation.
  • Social Security and Medicare go bust. This is a no-brainer; even the trustees for these programs warn the funds will run out in the early 2030s. The government will use general revenues to prop up current benefit payments while making significant reductions – mostly applicable to future beneficiaries.
  • Geopolitical risks abound. China, which will have taken Taiwan long before 2030, will be the undisputed hegemon in the Asia-Pacific theater and will replace the US for global leadership. While the US is mired in the throes of its Great Debt Crisis, North Korea may invade South Korea and a nuclear-armed Iran will become the hegemon in the Middle East and threaten Israel. Nuclear proliferation will spread to Japan, South Korea, Saudi Arabia and others.
  • Because of the Great Debt Crisis, the ability to defend the homeland and our allies is severely compromised. America’s greatest strength is a strong economy and ours will be in critical condition. We will be lucky to avoid a major war.
  • The US dollar no longer will be the world’s reserve currency. This greatly exacerbates the Great Debt Crisis and forces Americans to pay more (much more) for most of the products they buy – especially energy.

America in the 2030s

Imagine a world with the USA mired in the 20-year Great Debt Crisis with the loss of social cohesion, breakdown of law and order, bankrupt Social Security and Medicare, the Yuan as the world’s reserve currency and facing multiple geopolitical threats with a greatly depleted defense. What if China, Russia, North Korea and Iran formed a compact and threatened us simultaneously in several different places?

Americans chose to worship false gods

How did America get to such a desperate place? We refused, and continue to refuse, to control our spending; we kicked the can down the road until there is no road left. But, most damning of all, we ignored The Gods of the Copybook Headings¹, i.e. the collective wisdom humans acquired since they first came down from the trees.

We chose instead to listen to the false gods of wokeness, climate madness, identity politics and lawlessness. They (politicians) promised us it would be different this time; they promised us the moon was Stilton. They promised us the real problem was white supremacy. They promised us we could spend without restraint, worship on the altar of climate madness and wokeness and let criminals go free.

Throughout the ages, whenever men have worshipped false gods, inevitably the Gods of the Copybook Headings, with terror and slaughter, return!

1        Poem: The Gods of the Copybook Headings by Rudyard Kipling, October 1919.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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Debt Ceiling Legerdemain

George Noga

Debt ceiling drama was nothing but maskirovka

GEORGE NOGA – JUN 4, 2023

The debt limit negotiations were all sound and fury signifying nothing. The ending of this melodrama was known for a long time. The media, with hyperbole and hysteria, breathlessly flogged a possible default to sluice up their ratings; but there never was any real risk of default. The worst that could have happened was a brief technical default on interest payments – and even that was extremely farfetched.

white concrete dome museum
Photo by Louis Velazquez on Unsplash

There never would be default on any principal for the obvious reason that new debt could be issued in the same amount as the maturing debt without exceeding the debt limit. Insofar as interest is concerned, the federal fisc has over $400B coming in each month whereas interest on the debt usually is around $65B. The US could pay interest on the debt and still have $335B left over. The Treasury also could pay Social Security of $1 trillion per month and have $235B remaining for other expenses.

The ending was precisely as I wrote in my April 23, 2023 post entitled “Debt Limit Kabuki”. It is available on my website: www.mllg.us and on Substack.

“In the end, everyone gets what they want. The debt ceiling is suspended and phony spending cuts are touted. Americans are beguiled into believing we are on a sounder fiscal trajectory. Everyone claims victory and government goes back to business as usual.”

The so-called spending cuts are nothing but smoke, mirrors and prestidigitation. Of the claimed $2 trillion in cuts over 10 years, none are real. Real cuts in current spending are strictly symbolic; they are infinitesimal and inconsequential. All the phantom cuts are based on future arbitrary spending baselines. Moreover, the ersatz cuts apply only to discretionary non-defense spending (DNDS), which is less than 14% of federal spending; the other 86% continues to increase at a high rate.

Trajectory of the deficit is unchanged

Federal spending next FY will increase $500B or 8% even if DNDS is frozen. That’s because entitlements and mandatory spending will increase at least 5% and interest on the debt will skyrocket by $300B or 60% to over $800B. The deficit will remain at $1.5T and likely will increase to $2.0T – and that assumes no recession. This means the deficit will increase y $3T to $4T over the next two years subject to the so-called spending cuts. Some cuts! Freezing the DNDS reduces the putative FY23 deficit only from what was projected – and that is not a real cut, but legerdemain.

As noted, interest on the debt increases $300B next year alone due to sharply higher interest rates and the issuance of new debt at current interest rates to replace maturing debt carrying much lower interest rates. There is $6 trillion of treasury debt maturing soon and it will cost $200B more in annual interest to replace. The other $100B comes from new debt. Because there is $31T of total debt, this same calculus of $200B increases in interest costs will repeat each of the next few years. Within one year, interest on the debt will exceed spending on defense, medicare and DNDS – i.e. running the government. Soon interest alone will top $1T per year.

The skunk at the garden party

About the only favorable thing that can be said about the debt ceiling deal is that it is (barely) better than nothing. Anyone who looks at the numbers in this post will see there is no escape. The only way to change the trajectory of the deficits is to make immediate, large and real spending cuts and to sustain them for a decade or more.

As is apparent from the debt limit kabuki, that is politically impossible – actually, it’s worse than impossible; it’s politically radioactive. The necessary cuts will be made only in the midst of an economic meltdown when Americans are in such a panic they will go along with anything that offers them a glimmer of hope.

Simply to freeze the debt ratio at its present level of around 100% would require an immediate cut of $900B, or over 20% per year across the board – including Social Security, Medicare, Medicaid and mandatory spending (pensions). And that does not solve the problem; it just keeps it from getting worse.

At the risk of being the skunk at the garden party, the debt ceiling deal is cause for dread – not congratulations. America has passed the point of no return and the beginning of the Great Debt Crisis is only a matter of time. It is Checkmate!

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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How To Abolish Public Employee Unions

George Noga

Public sector unions violate Article IV of the US Constitution
GEORGE NOGA – MAY 28, 2023

Public employee unions are one of the greatest, if not the greatest, dangers to our American democracy. This post provides a roadmap for abolishing them. First, some background. Not that long ago public unions did not exist and there was universal agreement they had no place in government. None other than FDR said:

“Government employees should realize that the process of collective bargaining cannot be transplanted into the public service. It has insurmountable limitations when applied to public employees. The very nature and purpose of government make it impossible.”

Even the union movement agreed collective bargaining had no place in government. Labor leaders viewed unions as a vehicle for workers to get a larger share of the profits they helped create. However, public employees do not generate profits. The AFL-CIO stated government workers have no rights except to petition Congress.

The dam broke in 1959 when Wisconsin allowed collective bargaining. Since then, public sector unions have metastasized and have taken effective control over governments and are unaccountable to voters; this is their Achilles heel.

The Constitution guarantees a “Republican form of government”

Article IV, Section 4 states: “The United States shall guarantee to every state in the union a Republican form of government.” There is a compelling argument that public sector unions violate this guarantee. The drafters of the Constitution did not define “Republican”. There has been jurisprudence on this point (defining Republican) over the years, including in the Federalist Papers. I have read all the relevant case law and there is no concise definition put forth by the courts directly on point. Based on my reading of the Federalist Papers and the relevant jurisprudence, I believe there is consensus that a Republican form of government is one in which:

  • The power of government resides in the people – directly or indirectly
  • The people elect representatives and give them power to serve their interests
  • Representatives represent everyone, i.e. provide for the common welfare
  • No control or special treatment is to be given to a favored class

Public unions subvert a Republican form of government

Public sector unions violate each and every one of the above characteristics of a Republican form of government. In many cities and states (primarily deep blue ones) unions exercise effective power over elections, schools, criminal justice and any other issues unions deem vital. During Covid, teachers’ unions shut down schools for years at the behest of unions and in direct opposition to the wishes of citizens. Their control of elections is particularly nefarious. They spend vast amounts of money and manpower to alter elections. Moreover, their funds are derived via one-sided collective bargaining with the same officials they put in office.

Elected officials are beholden to public sector unions and place unions’ interests ahead of those of the people they are elected to serve. They are not providing for the common welfare and unions are a favored class. Public unions’ political activity raises prima facie constitutional issues. Elected officials occupy a position of public trust and have a fiduciary duty to serve the public; this duty is in direct conflict with public sector unions. In many places, the machinery of American democracy is firmly in the clutches of powerful public sector unions. The iron-fisted grip of public unions is impervious to the electoral process and must be fixed by the courts.

It’s time for a constitutional challenge

It’s long past time to break the unholy and corrupt grip of public unions over our democracy. To be sure, it won’t be a slam dunk; but the roadmap presented in this post shows one way it can be done. Readers may judge for themselves the strength of a constitutional challenge as presented herein. What other choice do we have?

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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EMP Attack on America

George Noga

The Chinese spy balloon was a wakeup call to America
GEORGE NOGA – MAY 21, 2023

 

  Chinese spy balloon over America

The Chinese spy balloon saga brought to mind a subject I last wrote about in 2017, an EMP (electromagnetic pulse) attack on the USA. An EMP attack is the most lethal and least understood threat known to mankind. Since I last wrote about it, the threat has metastasized and our political leadership (both parties) has failed to take action to prevent an EMP attack, to limit the damage or to recover quickly.

EMP Attack Could Kill 300 Million Americans

An EMP bomb emits a high-intensity burst of electromagnetic (gamma ray) energy. Without getting hypertechnical, the pulse would knock out all power and electronics and cause irreversible damage to electrical transmission lines and any equipment with digital or electronic components and render them incapable of repair.

A single EMP weapon could kill 90% of Americans. Airplanes would fall from the sky. Vehicles with electronic components (after 1972) would stop. Water and sewer lines, electrical transmission lines and petroleum pipelines would fail. Food and fuel would run out. There would be no electricity, computers or communications.

The EMP blast would not kill many; the deaths would come from mass starvation. Cities maintain only a 3-day supply of food. The rule of law would be replaced by the law of the jungle. Few Americans would even know what happened.

How an EMP Attack Would Work

A suitcase-size EMP weapon could be smuggled into the USA on a container ship and placed on a river barge that travels to a place near the geographical center of the country. It could be launched by a weather balloon and detonated at the altitude calculated to wreak the most damage. It would not be immediately known who was responsible. Nuclear fuel emits a signature that can reveal where it was processed.

In 1962 the USA conducted a secret ionospheric nuclear test above Johnston Island which is 900 miles from Hawaii. Although this occurred in the era before electronics and computers, the effects were felt in Hawaii. At the instant of the blast, radios blacked out, telephones quit working and streetlights failed. And this was over 60 years ago in a test not designed for an electromagnetic pulse attack.

In the aftermath of an EMP attack, America would be a third world country with a population of under 50 million. We would be vulnerable to occupation by potential enemies. In the Forstchen trilogy (see infra) about an EMP attack, Mexico invades and reclaims all of the American southwest. It would take many years to recover as nearly all replacement equipment would need to come from abroad.

North Korea, Iran and Terrorists

The NoKos already have an EMP weapon and some of their missile tests have been rehearsals for an EMP attack. Iran soon will have one, as its nuclear program is closely aligned with the NoKos. It is not farfetched for terrorists to acquire such a device. EMPs are the quintessential asymmetrical weapon as our adversaries could inflict vastly more damage and they are less dependent on modern electronics.

Why is the USA so Vulnerable to EMP?

The most important role of government is protection from external threats. Yet, aside from some military sites, nothing in America is protected from EMPs. If we hardened our electrical grid and other critical infrastructure and stored backup equipment at all vulnerable sites we could recover quickly. Furthermore, a high level of preparedness would deter any possible enemies from launching an EMP attack.

I don’t know what such protection would cost, but it can’t be much north of $100 billion – a tiny fraction of what we have spent on Ukraine – and infinitesimally less than we have spent on Covid, the Inflation Reduction Act and climate madness. Our political class consternates over transgender sports rather than addressing an eminently preventable and existential threat to 300 million Americans. The Chinese spy balloon was a wakeup call to America and we hit the “snooze” button.

Note: William Forstchen wrote a popular trilogy about an EMP attack on America. Also, an NBC miniseries “Revolution” depicted the USA 15 years after an EMP attack.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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Tale of Two Islands

George Noga

Both had revolutions in 1959
GEORGE NOGA – MAY 14, 2023

 

I continually search for new ways to highlight the blessings of liberty (both political and economic) and the evils of collectivism in all its many manifestations. Nothing puts this into as sharp relief as the Tale of Two Islands from 1959 to 2023.

Revolutions occurred on two islands in 1959. Both countries were mountainous, less than 25% arable and relied on sugar exports. Both faced large, powerful and hostile enemies, separated by less than 100 miles of ocean. In both cases, their enemies cut off diplomatic and economic relations and threatened military invasions. However, one of the island nations was way ahead of the other in terms of health, education, income and nearly all other metrics of national well-being.

The country you likely are familiar with is Cuba, which in 1959 had nominal GDP of $2.0 billion and a population of 7 million, resulting in per capita GDP of $286. In 1959 the communist revolution led by Castro took over and abolished both political and economic freedom. Prior to its revolution, Cuba was far more prosperous than the other island; its GDP per capita was double that of the other island.

The second island nation is Taiwan. In 1959 its nominal GDP was $1.6 billion and its population 11 million, equating to per capita GDP of $145. In 1959 Taiwan underwent an economic revolution, adopting capitalism and a market economy. In the early 1970s Taiwan also had a political revolution – becoming a liberal democracy.

Fast forward to 2023. Cuba has GDP of $110 billion, a population of 11.3 million and (nominal) per capita GDP of $9,700, ranking 75th in the world. Out of 176 countries ranked, Cuba’s index of economic freedom ranks 175th in the world; only North Korea is worse. Taiwan has GDP of $900 billion and a population of 24 million for per capita GDP of $37,500 placing it 30th highest in the world. Its freedom index is 4th best in the world, much higher even than the USA which ranks 25th.

This tale of two islands illustrates the differences between freedom and capitalism versus tyranny and collectivism. Moreover, the GDP data for Cuba are suspect and Cuba’s true rank is likely one of the lowest in the world. Take home pay, according to most sources, is less than $100 per month. Cuba remains a brutal dictatorship filled with political prisons that engage in torture. Even its vaunted health care system is a failure. Cuban doctors botched Fidel’s treatment and doctors from Spain had to be flown in. Infant mortality is the worst in Latin America and is based on forced abortion of risky pregnancies and on not counting underweight births.

In 1959 Cuba’s per capita GDP was twice Taiwan’s; now it is 4 times lower, a swing of 800% – and the real data are far worse. But numbers alone do not tell the full story. The juxtaposition of Cuba and Taiwan from 1959 to the present is one of freedom versus repression, prosperity versus stagnation and hope versus desperation. Cuba today is a nihilistic society where 35% of pregnancies are aborted. It reveals the depth and breadth of the human and economic disaster wrought by collectivism.

Che Guevara may continue to adorn the tee shirts of clueless youth. Useful idiots, in and out of the media, may continue to offer encomia; but the Cuban people, when the regime finally crumbles, will render final judgment. Castro statues will be felled, murals will be defaced and the truth about the incalculable poverty and suffering of the Cuban people will be outed.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

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Cabbages, Kings, VATs and IRAs

George Noga

Uncle Sam is coming for your IRA

GEORGE NOGA – MAY 7, 2023

My last post (April 30) about the spending crisis showed the government would need $900B in 2023 to stabilize the Debt/GDP ratio at around 100%. The national debt held by the public is $25T, soon to be $30T. Not uncoincidentally, US retirement assets including IRAs, 401(k)s and pensions total $30T – more about this infra.

When the spending crisis attains critical mass in a few years, the government, facing the mother of all crises, will desperately seek honeypots; after all, why let a ginormous crisis go to waste? After racking my brain, I can identify only three honeypots big enough to matter; these are retirement assets, a carbon tax and a VAT.

Raising Tax Rates and Cutting Costs Won’t Work

First, we must eliminate the two most obvious honeypots – higher marginal income tax rates and less spending; neither is big enough . The income tax is organically incapable of raising more revenue because of Hauser’s Law, which states that income tax revenue, regardless of tax rates, always is 18% of GDP – marginally higher or lower during booms and busts. Whether tax rates are 92% as they were in the 1950s, or 28% as they were under President Reagan, the government collects the same 18% of GDP. Note: Hauser’s Law works because people adjust their behavior as tax rates change.

It is possible to cut spending, but not near enough to come close to freezing the debt ratio. Reductions of $900B are needed and the only way to get there by cutting costs is to savage Social Security, Medicare and most other government programs. To realize savings of $900B would require 30% across-the-board cuts in all programs including Social Security and Medicare, excepting only defense and interest on the debt.

Value Added Tax (VAT)

For a VAT to raise $900B, the rate would have to be around 20% and would cost $7,000 per year per household. Since lower-income households likely would be exempt, the effective cost would exceed $10,000 per year per affected household. Politicians have proposed VATs before. Paul Ryan’s Roadmap contained a VAT as did Herman Cain’s 9-9-9 plan; one of those nines was a VAT – and those were putatively conservative Republicans. If you think a VAT is farfetched, think again. Politicians like VATs because they are stealth taxes, embedded in everything we buy.

Carbon Tax

A carbon tax, part of a cap and trade scheme, comes with political advantages. It also is a stealth tax, passed on to consumers by utility companies. It can be touted as a way to combat global warming and it can be targeted at higher income cohorts for class warfare. A carbon tax can start out small and easily be ramped up.

IRAs, 401(k)s and Pensions

The biggest (by far) honeypot is pension assets. The Secure Act got the camel’s nose under the tent by requiring annuities be offered in all retirement plans – a precursor to mandatory annuitization, whereby government seizes IRAs in exchange for a government annuity. Think this is farfetched? Poland, Hungary, Ireland, Bulgaria and France, through one artifice or another, have seized money from pension assets. In the end, Uncle Sam, like Willy Sutton, must go where the money is; that’s your IRA.

Putting it All Together

As the nation is rent amidst the chaos and anarchy of the spending crisis, Americans will be of a mindset to go along with any government actions offering hope. Likely there will be a combination of actions such as listed below. Remember, it must amount to at least $7,000 for every household, every year with no ending point.

  • Enact a VAT at a modest teaser rate and then rapidly jack up the rate
  • Attack pension assets, such as requiring a portion be invested in government bonds, capping the size of accounts and forced annuitization
  • Pass a (cap and trade) carbon tax that will cause power bills to skyrocket
  • Make small, mostly cosmetic and back-end loaded, spending cuts
  • Raise Social Security age to 70, convert Medicare to a premium support model

Sadly, it won’t be enough; at best, it buys us a few more years. Even if we find the $900B to freeze the ratio, we have not solved the problem; we have merely stopped it from getting worse. Moreover, the added taxes will gravely harm economic growth; we will be caught up in a vicious circle. America will become a no-growth European-style welfare state; our country will be forever changed and our children and children’s children will be relegated to lives of quiet desperation.

 

Thanks for reading More Liberty – Less Government!

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com

MLLG

Spending Crisis Truths

George Noga

                                                                   

The crisis is not economic; it is moral

Spending Crisis Truths

GEORGE NOGA – APR 30, 2023

Much has been written about America’s debt crisis, including by me. I prefer to call it a spending crisis because, absent runaway spending, the deficits and debt would disappear. This post strips away all the superfluous background noise and distills all you need to know about the spending crisis into a few unassailable truths.

Truth #1: America Passed the Point of No Return

When Titanic first hit the iceberg, passengers barely noticed. The ship remained afloat for 4 more hours, but its fate was sealed; there was no way to unhit the iceberg. So it is with the spending crisis. America hit the Debt/GDP iceberg sometime during the past few years when the ratio neared 100% on its way to the moon. As with Titanic, life may appear normal for a while, perhaps even for years; but our fate is sealed. During the thousands of years governments have borrowed money, none with a debt ratio above 100% have recovered without calamity and a lost generation.

Truth #2: Few Understand the Seriousness of the Problem

Only an infinitesimal segment of Americans know what is coming. The spending crisis will not hit home until it affects their daily lives. We are far past possible bromides such as a balanced budget amendment or debt ceiling limitation.

Some economists suggest freezing the Debt/GDP ratio at its current level; however, they have not done the math. To freeze the ratio means debt cannot increase faster than GDP, which is forecast to grow at 2%. That means debt could increase only 2%, or no more than $500B. The CBO estimates the 2023 deficit at $1.4 trillion; meaning spending would have to be slashed $900B to limit the debt increase to $500B, i.e. to freeze the ratio. The entire budget for non-defense discretionary spending is $900B, meaning such spending would have to be cut 100%, and that is merely to freeze the ratio, not to lower it. Raising taxes could plug part of the gap, but that would hurt the economy and slow GDP growth, meaning the spending cuts then would have to be even more that $900B – a vicious circle.

Truth #3: Great Pain Inevitable

No matter what comes, the crisis is existential – to invoke a vastly overworked term. As shown supra, freezing the ratio would mean $900B in cuts (or tax increases) now. If we wait until the US no longer can borrow to finance the deficit, it will be worse by an order of magnitude. The ensuing crisis will have dire geopolitical consequences as well as likely social unrest as Social Security, Medicare and countless other government programs are scaled back or eliminated. There would be no borrowing capacity in event of a natural disaster or war. Even a debt default would not provide much relief as future spending still would have to be brought into balance.

Truth #4: Debt Limit Determined by Markets Not Congress

In the end, Congress is irrelevant. The real US debt limit is determined by markets. When there are no buyers for government debt, the jig is up. It is possible markets already have begun to speak. Foreign governments are now net sellers of US debt and high interest rates may, in part, be attributable to an added default risk premium.

Truth #5: If Something Can’t go on Forever, It Won’t

The spending crisis is a poster child for the above quote from economist Herb Stein. As shown supra, it is impossible even to freeze the ratio. That means it is destined to get worse each year until it goes into a death spiral.

Truth #6: Crisis is Moral – Not Economic

I call it a spending crisis, but at its heart it is a moral crisis. Americans chose – whether consciously or unconsciously matters not – to take from our children and our grandchildren rather than to control our spending. We refused to make tough choices, falsely believing we could buy social peace. We elected politicians who promised us the moon was made of Stilton and whose favorite exercise is kicking cans down the road. We chose – and are continuing to choose – to condemn our progeny to a dystopian Clockwork Orange future.

Worst of all, we stole from future generations, not to save America from natural disaster, world war or Armageddon, but to pay for a perpetual party, which continues unabated today even as Americans whistle past the graveyard.

© 2023 George Noga
More Liberty – Less Government, Post Office Box 916381
Longwood, FL 32791-6381, Email: mllg@cfl.rr.com