Magic Words in Politics

by | Apr 14, 2009

China is the largest foreign holder of U.S. government bonds. But, instead of buying more of those bonds as our skyrocketing national debt leads to more bonds being issued, China has been selling some of its U.S. government bonds this year. The Chinese are no fools. They know that all this unbridled spending– even when […]

China is the largest foreign holder of U.S. government bonds. But, instead of buying more of those bonds as our skyrocketing national debt leads to more bonds being issued, China has been selling some of its U.S. government bonds this year.

The Chinese are no fools. They know that all this unbridled spending– even when it is called “investment”– means that inflation is coming. That in turn means that the dollars with which U.S. government bonds will be paid off will be worth a lot less than the dollars with which the bonds were bought.

Governments around the world have played this game for centuries, robbing those who trusted them enough to buy their bonds. Like Bernard Madoff, they call it “investment.”

Inflation also means that all the talk about how higher taxes will be confined to “the rich” is nonsense. Inflation is a hidden tax that takes away the value of money held by everyone at every income level.

Abraham Lincoln once asked an audience how many legs a dog has if you count the tail as a leg. When they answered “five,” Lincoln told them that the answer was four. The fact that you called the tail a leg did not make it a leg.

It is too bad that Lincoln is not still around today. He might emancipate us all from our enslavement to words.

When you call something a “stimulus” package, that does not mean that it actually stimulates. The way individuals, banks and businesses in general are hanging onto their money suggests that “sedative” package might be more accurate.

This is not a new phenomenon, peculiar to this administration. President Bush’s “stimulus” package did not stimulate either. The same was true back in the days of Franklin D. Roosevelt’s “pump-priming” by spending government money to get private money flowing.

The circulation of money slowed down back then the way it has slowed down today.

Some of our biggest political fallacies come from accepting words as evidence of realities. “Rent control” laws do not control rent and “gun control” laws do not control guns.

The big cities with the tightest rent control laws in the nation are New York and San Francisco. The nation’s highest rents are in New York and the second-highest are in San Francisco.

There is a very straightforward explanation for that. Strong rent control laws can bring residential building to a screeching halt. Once politicians have milked the political advantages of passing rent control laws, they have to avoid a backlash if all building of apartments stops.

That leads to an escape hatch in the rent control law. Luxury apartments with rents above a certain level are exempted. That leads to the shifting of resources away from building affordable housing to building housing that is unaffordable.

It is even more painfully obvious that “gun control” laws do not control guns. The District of Columbia’s very strong laws against gun ownership have done nothing to stop the high murder rate in Washington.

New York had very strong gun control laws decades before London did. But the murder rate in New York has been some multiple of that in London for more than two centuries, regardless of which city had the stronger gun control laws at a given time.

Back in 1954, when there were no restrictions on owning shotguns in England and there were far more owners of pistols then than there were decades later, there were only 12 cases of armed robbery in London.

By the 1990s, after stringent gun controls laws were imposed, there were well over a thousand armed robberies a year in London. In the late 1990s, after an almost total ban on handguns in England, gun crimes went up another ten percent.

The reason– too obvious to be accepted by the intelligentsia — is that law-abiding people became more defenseless against criminals who ignored the law and kept their guns.

The same thing applies internationally. We might keep that in mind as the Obama administration pursues the will o’ the wisp of banning nuclear weapons. If that Utopian dream ever came true, those nations naive enough to get rid of their nuclear weapons would be at the mercy of those rogue states who kept theirs.

Cartoon courtesy of Cox and Forkum.

Thomas Sowell has published a large volume of writing. His dozen books, as well as numerous articles and essays, cover a wide range of topics, from classic economic theory to judicial activism, from civil rights to choosing the right college. Please contact your local newspaper editor if you want to read the THOMAS SOWELL column in your hometown paper.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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