Furthest Right

Leap Into Life (#17): Costs Get Passed Down to the Consumer

The Leap Into Life consists of recognizing that the world works according to its own rules and does not exist to make humans feel comfortable. In fact, it relies on comfort being rare so that we keep striving and do not simply bloat out on a beach somewhere with little sandwiches and fruit collage cocktails.

This means that what “everyone” agrees is moral and good most often produces a clash with reality and bad results, which is not a good but bad. With good intentions, humans have destroyed more of themselves than others than they ever have out of negative intent.

Humans enjoy the image of bad guys who want to be evil, but the normal bad guy is part a careerist just doing his job how he was told to do, part opportunist seeking to distinguish himself from the herd, and part weak person who succumbs to laziness or greed.

In a sane view, “evil” consists of the absence of good, or a direction toward improvement but not surrogates like Utopia or Sparta. The criminal and the careerist are both “evil” for not pursuing good, even if one can hide behind public “good intentions.”

Your average human being is not wired to understand this. They do OK with monocausality, where a boy kicks a ball into a window, but bad with slow decay because it requires knitting together actions and constraints to see how things can slowly unravel.

As noted here before, all costs get passed down to the consumer, which means that taxes, regulations, unions, affirmative action, and political instability all translate to a rise in prices that you pay at the counter.

That same average person believes in a fiction which we might call The Money Pot. That is, up there in the sky, waiting for the precipitation of a lottery, legal settlement, or government program, there is a giant pot of money which comes from magic and should go to us.

In their view, any time they pass on a cost to business or tax the rich, those victims simply reach into the money pot and take what they need. Reality: they add this cost to their list of costs on the left side of their ledger, and then raise prices accordingly, which you pay.

This leads to sudden sticker shock after government largesse like we just had with the COVID-19 subsidies and new “woke” civil rights payouts:

I wish someone would report the rate of inflation compared with two years ago. That would help us understand what is happening to our standard of living.

Comparing prices, however, doesn’t take quality into account. Produce and meat are simply not what they used to be. Even when the price hasn’t risen, it is often because vendors are finding ways to control prices at the expense of quality.

All this is on top of the effort to mislead customers by changing the item counts in various packages.

This falls into the same mistake that politicians have made since the dawn of the modern state. Taxes take money out of the economy, prices rise in response, and then the money filters through government to the least productive members of society, who spend it on goods which add no value to the economy.

In this way Biden follows not only Carter but Roosevelt in crashing the economy in the name of social progress. Roosevelt required WW2 to get out of the debt that came, and it took Reagan several years of deregulating and detaxing to bring the economy back from the dead.

The situation we face now is similar to the economy of the 1970s which stagnated by nearly every measure:

The 1970s saw growing federal budget deficits boosted by military spending during the Vietnam War, Great Society social spending programs aimed at fighting poverty, and the collapse of the Bretton Woods agreement.

These issues were compounded by a tripling in crude oil prices as a result of the Arab oil embargo, followed by a near-tripling at the decade’s end as the U.S. embargoed oil from Iran. In November 1979, the price of West Texas Intermediate crude oil surpassed $100 per barrel in 2019 dollars, peaking at $125 the following April. That price level would not be exceeded for 28 years.2

Soaring energy prices fueled a wage-cost price spiral and widespread price hikes across the full spectrum of economic activity. Frequent recessions raised unemployment without cooling inflation. The Federal Reserve focused on propping up growth and was powerless to tame soaring prices. Faced with external economic shocks, policymakers allowed inflation expectations to settle in, discouraging investment.

We hit the same playbook here. Bretton Woods provided early globalism — setting up the International Monetary Fund and the World Bank, in the template of the United Nations — and when it fell, confusion reigned in the markets.

Similarly, oil prices increased because of the political push for Green Energy in the West mainly because it would justify another few decades of nanny state mega-government. The Fed has no idea what to do, and after a brief speculation boom, the economy is moribund.

In addition, the real malaise of the 1960s hit, which was the introduction of socialist-style benefits schemes into a capitalist economy, resulting in permanent malaise in salaries:

But despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.

After adjusting for inflation, however, today’s average hourly wage has just about the same purchasing power it did in 1978, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.

In other words, right after the mid-1960s social welfare programs, affirmative action, Hart-Celler Act, and civil rights push, the economy went into permanent stagnation because the taxes took out money it needed in order to operate.

By making government the centralized command for the economy, we followed the path of the Soviets and Jacobins into a dysfunctional economy where no one can really get ahead. The “rat race” won out with a few decisive acts.

Costs are passed on down to the consumer. This is inverse trickle down theory: while rising value of the economy helps everyone by reducing costs and increasing quality, taking money out for subsidies harms everyone even if they receive a ton of money from government.

We will repeat these patterns until we learn that Leftism is a gateway to the abyss.

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