14 February 2009


The huge expansion of government we are now seeing may have profound consequences for the future. The debt will have to be paid by taxpayers, who are a shrinking portion of the population. As direct money transfers, services, and jobs provided by the government expand, resources are drawn out of the private sector. We will reach a point where those receiving money and support from the government or working for the government will outnumber those who do not. Those dependent on the government will be able to vote themselves continuing benefits at the expense of others in the private sector. This means that a minority of the population will be supporting a majority, which will require higher taxes and make work in the private sector all the more futile. Then the number of productive citizens will decline further while the unproductive increase. This would be disastrous and ultimately lead to social chaos and collapse. The stimulus package puts us closer to that tipping point than ever. Many expenditure commitments will be difficult to undo in the future, so all we can do is our best to make sure that the “temporary” increase in government will in fact remain so, lest the tipping point be reached.

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