How Much Has Been Lost: A Case Study, My Father
March 02, 2009
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In order to understand the scope of our current situation, I think it can be helpful to look at the impact of events on a single, hard working, honest individual over the course of 30 years. I propose to do that in the following blog, using my father as an example. My father is currently a private contractor, offering consulting based on his tremendous expertise in the field of food service distribution. He was forced into this line of work after the Fortune 500 company he worked for imploded in a pyramid of debt and mismanagement. His services continue to be in demand, thankfully, and he just completed a contract with another Fortune 500 company to revamp distribution processes at several of their largest plants. I also care for him very much, and am saddened by the massive losses he has suffered.
My father returned from Vietnam in 1970 with an amputated leg above the knee. After a year in a VA hospital where he learned to walk all over again, he enrolled in college and completed his Bachelor's. The government paid for his school and pays for his disability benefits and medical care. It's not really a fair trade, but it's the best he's going to get. When I asked my father why he volunteered to join the Marines, he responded, "I was going to be drafted into the Army and I didn't want to die." After learning about Chesty Puller's Marines at the Frozen Chosin Reservoir in North Korea, I understood the simple wisdom in that statement.
Following graduation from college, and the birth of a son he never would have dreamed would become an anarcho-capitalist, he went to work for GE, and enrolled in a Master's program. He earned his MBA at night, while my mother waited for him in our only car with me and my brother. He was promoted regularly: to foreman, to warehouse manager, to regional distribution manager, to national distribution manager.
He bought his first house, a two-unit property in the late 1970s. We rented out one flat and lived in the other. His next home in suburbia was purchased on a shrewd discount with a large down payment (large by today's standards - roughly 30%). In the late 90's he moved into the dream condo, again with a large down payment of nearly 35%.
Over the years, it's difficult to consider, but one must look at the amount of opportunities that this man has lost and couple that with the tremendous losses he has taken in the past 2 years. Only then can we get a complete picture of how badly government intervention in the economy, inflationary central banking, and the Welfare State have cost not only him, but also the hundreds or perhaps thousands of people that would have benefited from his confiscated income.
In our recent conversations, we reasonably estimated that my father has payed over $500,000 in direct federal income taxes during his lifetime. We estimated that he had paid an additional $75,000 or so in State taxes and roughly $150,000 in property taxes. We estimated that he paid $60,000 in sales taxes. Take a moment to think back over your lifetime. How much money do you think has been taken for you in taxes? We can't even reasonably estimate other taxes he has paid on dividends and investments or hidden taxes on items like gasoline, and we haven't even considered the possibility that he may not receive full Social Security benefits.
It is possible that my hard working father has paid over $1,000,000 in taxes during his lifetime. All that from a disabled man that many Welfare State proponents would tell you is incapable of competing on an inherently unfair playing field. Hogwash. How many Welfare Babies has my father's success paid for? How many bullets has it bought for the government to enforce economic war in Iraq, Afghanistan, and Central and South America? We could go further with this. We could talk about the Americans with Disabilities Act, and how unemployment among the disabled has risen since its inception. How it unfairly labels all disabled as needing special treatment and how it pits one group of society against another (individualists).
But let's also consider his current losses. Despite living his life in an honest and noble fashion, my bourgeois father has now lost 60% of his retirement fund. His high rise condo has lost 40% of its value (thankfully, he was smart enough to make a large down payment and is not upside down). He has lost an enormous portion of his wealth. He won't tell me the actual number but I know it's several hundreds of thousands of dollars, and possibly more.
Why has it happened? For starters, despite his sound judgment, and shrewd negotiating, the condo he bought at a discount was still purchased during an asset bubble created by the Federal Reserve's inflationary monetary policy. The retirement fund was invested in an economy built on fiat currency and paper money paradise that makes the Socialist Welfare State possible. Unbeknownst to him, and to most Americans, American Capitalism was not Capitalism. It retained some of the features of the Classical Liberal tradition - hard work, consumer driven entrepreneurship - but mixed in was a set of anticapitalist laws and central planning underwritten by a philosophy of a debtor society. The fact that my father never fell for the easy money of the fiat world didn't make him immune from its collapse. If he can be found guilty of anything, it would be a lack of comprehension of the significance of sound money. Had he understood that, I'm sure he would have been heavily invested in precious metals rather than paper. It certainly fits with his disposition.
There are other losses that can't be considered by the "Do Something" crowd. These short-sighted armchair economists and charlatans (some of whom go on to win Nobel Prizes) can only see, as Henry Hazlitt once remarked, the bridge that is built. They can't see the jobs and bridges lost in the transfer of wealth from productive sectors of the economy to unproductive ones. There is no clearer example of this for me than my father. What could he have accomplished with the million dollars or more that has been confiscated from him through taxes, inflation, and the debtor economy? How many productive uses could a man of his caliber put those resources toward? How many jobs could have created? How many people could have benefited from his capital accumulation? In essense, that's what Capitalism is! You can't have Capitalism without Capital. Men like my father, who work hard and save, invest their own money, indicating a longer time preference of return, and build great enterprises.
Instead, look at the men that run our nation and our businesses? What capital do they employ? If any, it's the wealth confiscated from hard working men like my father. Otherwise, their enterprises are built upon a pyramid of debt and phony obligations. They thrive on political influence, and when their schemes fall apart, they use that influence to further wreck our system. And they call that Capitalism? Nonsense!
There is something we can all do about. First, we need to take account of what we have actually lost, not only in paper wealth, but also in opportunities destroyed through wealth confiscation. Second, we need to question every half-truth and lie that the political, business, and intellectual class feeds us daily through the major newspapers and TV networks. Third, we need to start replacing politicians, through peaceful means if possible. Find candidates that support libery and economic freedom. Support them. If there are none, read up on liberty, and run for office. Join meetup groups and social networks. Engage the status quo every day. How many more men like my father are you going to allow to be hampered by the power brokers, central bankers, and economically illiterate socialists? How can you continue to listen to them drone on about helping the unfortunate and needy, when my father is a shining example of how a disabled man can succeed by filling his head with knowledge?
Liberty is choice. Totalitarianism can only come through apathy.
"Everyone carries a part of society on his shoulders, no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle." - Ludwig Von Mises
David in Qatar
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