Wednesday, July 11, 2012

The Rise Of The Entitlement Class

and The Fall Of Democracy

No more free stuff

VICTORIA, BC, Jul 3, 2012/ Troy Media/ – That Germany is almost single handedly providing the funds to bailout their bankrupt country didn’t deter angry Greeks from burning its Chancellor in effigy during last month’s Greek election campaign.

And for a few hours after that election returned parties in favour of staying in the Eurozone, financial markets cheered the news. Then reality set in as investors, realizing that continuing to pour cash into hopelessly dysfunctional Greece would only diminish the Eurozone’s chances of saving other beleaguered members, drove Spain’s borrowing rates to record highs.

The European situation is so bad that near zero yield US Treasury Bills, issued by a country whose debt clock is registering US$15.8 trillion and spinning ahead at over US$1.3 trillion per year, are viewed as a safe haven.

And the chances of slowing down the U.S. debt clock are small indeed. As social program entitlements make up half of expenditures balancing the budget would mean cutting all other expenditures by a staggering 70 per cent. Austrian economist Friedrich Hayek summed up the entitlements problem in his famous book The Road to Serfdom, “If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole”.

My recent column titled The rise of the entitlement class garnered a lot of feedback. One reader forwarded an unattributed piece that put entitlements into perspective. “The folks who are getting the free stuff are mad at the folks who are paying for the free stuff because they can no longer pay for both the free stuff and their own stuff.”

You don’t have to leave Canada to find application for this statement. The ‘takers” turning against the “givers” mentality exists across our country, but nowhere is it more virulent than in La Belle Province, where student protests continue ad infinitum in support of their special brand of free stuff, otherwise known as the “Quebec Model”. NDP Leader Thomas Mulcair demonstrates his own version of being “mad at the folks who are paying for the free stuff” by vilifying Alberta’s resources which fund the lion’s share of Quebec’s $7 billion annual equalization payments. Meanwhile, Quebec’s university tuition fees are half of those paid by Alberta students.
Perhaps it’s not surprising that Quebec’s protesting students and Mulcair share the same mentality. It’s become clear that those paltry tuition increases are just a sidebar for the students’ actual goal of replacing free market Capitalism with government-controlled Socialism. And the NDP is, by its own definition, a Socialist political movement.

Germany’s post-war history provides an instructive comparison of Socialism versus Capitalism. By the time the Berlin Wall came crashing down in 1989, West Germany had risen from the ashes to become the world’s second largest economy, while East Germany was an impoverished economic wasteland. The people shared the same ancestry, including many family members separated by the wall. The difference was command and control subjugation under Socialism versus Capitalism’s freedom of enterprise and innovation. The same phenomenon is being repeated today in China, where relatively small steps toward free market capitalism are lifting hundreds of millions out of abject poverty.

Given that it was just last century when Socialism brought unspeakable poverty and despair to over half of the worlds’ population, how can it be that so many young people want to turn the clock back?

A timeless truth – “Those who don’t learn the lessons of the past are doomed to repeat them” – applies. How many students have been taught those lessons? The reality is our schools and universities not only fail to teach those sad historical lessons, but many teachers and professors actually espouse anti-free enterprise rhetoric. It seems that little has changed since 1944 when Hayek wrote “The younger generation of today has grown up in a world which, in school and press, the spirit of commercial enterprise has been represented as disreputable and the making of profit as immoral . . .”.

This history lesson takes us full-circle to ancient Greece, the cradle of democracy. In 1787, Scottish history professor Alexander Tytler wrote about the fall of the Athenian Republic some 2,000 years earlier:
“A democracy cannot exist as a permanent form of government. It can exist only until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy.”
Gwyn Morgan is a Canadian business leader and director of two global corporations.



  1. Gwyn Morgan is a shill for all those fat-cats sitting on piles of cash who are refusing to pay their fair share of taxes. Why is a supposedly progressive blog serving as a mouthpiece for his ultra-right, Attila the Hun-like, views?

    What brings modern democracy into crisis is this sort of pandering to the new elite whose sense of self-worth and self-entitlement truly boggles the mind. Not since the Gilded Age have we seen such self-absorption. The public should know where that ended up: unbelievable greed based on rampant exploitation led to domestic and international conflict -- and eventually to war followed by a deeply flawed peace treaty and another round of exploitation which in turn was followed by more international conflict.

    It took the broad progressive movement to set the stage for genuine human betterment and to strike a much better balance between labour and capital. Its time to restore a proper balance and to modify trade deals based on the exploitation of foreign labour and the ecological health of underdeveloped areas of the globe.

    That's the road to a more prosperous and peaceful world -- not Mr. Morhan's absurd nostrums based on a fictional reading of the past and sources which couldn't even begin to contemplate let alone anticipate the nature and complexity of the modern world.

  2. Anonymous....if that is your real name.

    Is there anything factually wrong with Mr. Morgans observations of some current events unfolding in Eurpoe and our own Quebec?
    You reference the balance between labour and capital. How does the balance between non-union labour, ie: average Joe taxpayer and those public union labour contracts equate with your world view?
    Who are the new elite you say Morgan is pandering to?

  3. Facts, you say? Where to start? Germany's post-war rise was considerably pumped up by the Marshall Plan. And West Berlin became an enormously subsidized showcase. Mr. Morgan overlooks some pretty key facts in comparing east and west.

    More could be said about his selection of facts and a critique of his simplistic view of history could be greatly enlarged upon. But this is not the place. My chief point is that Morgan is not a credible independent observer. He looks at history through his own highly-blinkered eyes.

    And the poor Alberta subsidizing Quebec line, well if one's idea of a country is 10 little fiefdoms, then it is poor Alberta right now. But not always. There was a time when the Maritime provinces actually sent relief trains to poor Alberta -- when it was indeed poor and ravaged by the dust bowl that coincided with the Great Depression. There were no equalization grants in those days.

    Contemporary Alberta is actually one of the spoiled brats of Confederation. It likes to preach but it runs a very bad show on behalf of Gwynn Morgan's ilk. That's another discussion but just one little indicator of how the students of Alberta are being ripped off: Instead of reasonable tuition fees that would and should befit the most wealthy province in Canada, they pay sky-high fees because the government refuses to tax the oil industry properly. That's right: when an expert panel pointed out that Alberta's royalty regime was the lowest in North America and recommended stiff increases, the government soon capitulated to Mr. Morgan's Big Oil pals, and income that should and could have immediately gone to areas like education was instead foregone.

    When it comes to the analysis of history, one should always consider the historian. The same holds for the analysis of journalism. Consider the source: Mr. Gwyn's point of view --his ultra-right bias -- is well known.

  4. Anonymous (if that is your real name)

    I would guess it is safe to assume your view of world history and current day facts are filtered through some highly left-thinking blinkered eyes?

    As for considering the analysis of history you present, it is difficult to consider the historian, when they choose to remain Anonymous. :^)

    As for whether Alberta students have been ripped of by higher tuition fees, I would venture to guess that the amount collected via sales taxes in the other provinces more than adequately balances the scales.

  5. The reason for remaining anonymous is obvious: the blogger in chief will always insist upon the last word. Who wishes to debate on such terms? Construct a proper debating forum and anonymity is no longer requred.

    But since you asked, it doesn't take someone with a "left" perspective to challenge Mr. Gwynn's outlook. Take Peter Lougheed for example. Or Joe Clark. The contemporary Conservative Party and its friends have drifted over to the American conservative right, leaving some good people behind. Which is to say, they've drifted to the far right.

    As for your comment about sales taxes, I'm not sure what you are trying to say. But the absence of even a modest sales tax in Alberta is just another reason why the wealthiest province in Canada performs in a rather mediocre way when it comes to public services.

    Alberta's students truly are being ripped off by the new, smug, "entitlement class" -- Mr. Gwynn should perhaps be elected class president.


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