FedUpUSA

Archive for the ‘Socialism’ Category

Guest Post on Zero Hedge:

Submitted by Brandon Smith of Alt-Market blog,

In our modern world there exist certain institutions of power. Not government committees, alphabet agencies, corporate lobbies, or even standard military organizations; no, these are the mere “middle-men” of power.  The errand boys.  The well paid hitmen of the global mafia.  They are not the strategists or the decision makers. 

Instead, I speak of institutions which introduce the newest paradigms.  Who write the propaganda.  Who issue the orders from on high.  I speak of the hubs of elitism which have initiated nearly every policy mechanism of our government for the past several decades.  I am talking about the Council On Foreign Relations, the Tavistock Institute, the Heritage Foundation (a socialist organization posing as conservative), the Bilderberg Group, as well as the corporate foils that they use to enact globalization, such as Monsanto, Goldman Sachs, JP Morgan, the Carlyle Group, etc.

Many of these organizations and corporations operate a revolving door within the U.S. government.  Monsanto has champions, like Donald Rumsfeld who was on the board of directors of its Searle Pharmaceuticals branch, who later went on to help the company force numerous dangerous products including Aspartame through the FDA.  Goldman Sachs and JP Morgan have a veritable merry-go-round of corrupt banking agents which are appointed to important White House and Treasury positions on a regular basis REGARDLESS of which party happens to be in office.  Most prominent politicians are all members of the Council on Foreign Relations, an organization which has openly admitted on multiple occasions that their goal is the destruction of U.S. sovereignty and the formation of a “one world government” or “supranational union” (their words, not mine).

However, one organization seems to rear its ugly head at the forefront of the most sweeping mass propaganda operations of our time, and has been linked to the creation of the most atrocious military methodologies, including the use of false flag events.  I am of course referring to the Rand Corporation, a California based “think tank” whose influence reaches into nearly every sphere of our society, from politics, to war, to entertainment.

The Rand Corporation deals in what I would call “absolute gray”.  The goal of the group from its very inception was to promote a social atmosphere of moral ambiguity in the name of personal and national priority.  They did this first through the creation of “Rational Choice Theory”; a theory which prescribes that when making any choice, an individual (or government) must act as if balancing costs against benefits to arrive at an action that maximizes personal advantage.  Basically, the ends justify the means, and moral conscience is not a factor to be taken seriously if one wishes to be successful.

Hilariously, rational choice theory has been attacked in the past by pro-socialist (collectivist) critics as “extreme individualism”; a philosophy which gives us license to be as “self serving” as possible while feeling patriotic at the same time.  In reality, the socialists should have been applauding Rand Corporation all along.

What Rand had done through its propaganda war against the American people was to infuse the exact culture of selfishness needed to push the U.S. towards the socialist ideal.  At the onset of any communist or national socialist society (sorry socialists, but they do indeed come from the same collectivist mindset), the masses are first convinced to hand over ultimate power to the establishment in order to safeguard THEMSELVES, not others.  That is to say, the common collectivist man chooses to hand over his freedoms and participate in totalitarianism not because he wants what is best for the world, but because he wants what is best for himself, and he believes servitude to the system will get him what he wants with as little private sacrifice as possible (you know, except for his soul…).

The psychologist Carl Jung notes in his observations of collectivism in Nazi Germany and Stalinist Russia that most citizens of those nations did not necessarily want the formation of a tyrannical oligarchy, but, they went along with it anyway because they feared for their own comfort and livelihoods.  Many a German supported the Third Reich simply because they did not want to lose a cushy job, or a steady paycheck, or they liked that the “trains ran on time”.  Socialism is by far the most selfish movement in history, despite the fact that they claim to do what they do “for the greater good of the greater number”.

Rand also used Rational Choice Theory as a means to remove questions of principle from the debate over social progress.  Rational Choice propaganda commonly presents the target audience with a false conundrum.  A perfect example would be the hardcore propaganda based television show ‘24’ starring Kiefer Sutherland, in which a government “anti-terrorism” agent is faced with a controlled choice scenario in nearly every episode.  This choice almost always ends with the agent being forced to set aside his morals and conscience to torture, kill, and destroy without mercy, or, allow millions of innocents to die if he does not.

Of course, the real world does not work this way.  Life is not a chess game.   Avenues to resolution of any crisis are limited only by our imagination and intelligence, not to mention the immense number of choices that could be made to defuse a crisis before it develops.  Yet, Rand would like you to believe that we (and those in government) are required to become monstrous in order to survive.  That we should be willing to forgo conscience and justice now for the promise of peace and tranquility later.

This is the age old strategy of Centralization; to remove all choices within a system, by force or manipulation, until the masses think they have nothing left but the choices the elites give them.  It is the bread and butter of elitist institutions like Rand Corporation, and is at the core of the push for globalization.

In my studies on the developing economic disaster (or economic recovery depending on who you talk to) I have come across a particular methodology many times which set off my analyst alarm (or spidey-sense, if you will).  This latest methodology, called “Linchpin Theory”, revolves around the work of John Casti, a Ph.D. from USC, “complexity scientist” and “systems theorist”, a Futurist, and most notably, a former employee of Rand Corporation:

http://www.viennareview.net/vienna-review-book-reviews/book-reviews/john-casti-an-optimist-of-the-apocalypse

Casti introduces his idea of “Linchpin Theory” in his book “X-Events:  The Collapse Of Everything”, and what I found most immediately striking about the idea of “Linchpin Events” was how they offered perfect scapegoat scenarios for catastrophes that are engineered by the establishment.

Linchpin Theory argues that overt social, political, and technological “complexity” is to blame for the most destructive events in modern human history, and it is indeed an enticing suggestion for those who are uneducated and unaware of the behind the scenes mechanics of world events.  Casti would like you to believe that political and social tides are unguided and chaotic; that all is random, and disaster is a product of “chance” trigger events that occur at the height of a malfunctioning and over-complicated system.

What he fails to mention, and what he should well know being a member of Rand, is that global events do not evolve in a vacuum.  There have always been those groups who see themselves as the “select”, and who aspire to mold the future to there personal vision of Utopia.  It has been openly admitted in myriad official observations on historical events that such groups have had a direct hand in the advent of particular conflicts.

For instance, Casti would call the assassination of Archduke Franz Ferdinand of Austria an “X-event”, or linchpin, leading to the outbreak of WWI, when historical fact recalls that particular crisis was carefully constructed with the specific mind to involve the U.S.

Norman Dodd, former director of the Committee to Investigate Tax Exempt Foundations of the U.S. House of Representatives, testified that the Committee was invited to study the minutes of the Carnegie Endowment for International Peace as part of the Committee’s investigation. The Committee stated:

“The trustees of the Foundation brought up a single question.  If it is desirable to alter the life of an entire people, is there any means more efficient than war…. They discussed this question… for a year and came up with an answer: There are no known means more efficient than war, assuming the objective is altering the life of an entire people.  That leads them to a question: How do we involve the United States in a war.  This was in 1909.”

So, long before the advent of Ferdinand’s assassination, plans were being set in motion by globalist interests to draw the U.S. into a large scale conflict in order to “alter the life, or thinking, of the entire culture”.  When a group of people set out to direct thinking and opportunity towards a particular outcome, and the end result is a culmination of that outcome, it is obviously not coincidence, and it is definitely not providence.  It can only be called subversive design.

In the economic arena, one might say that the collapse of Lehman Bros. was the “linchpin” that triggered the landslide in the derivatives market which is still going on to this day. However, the derivatives market bubble was a carefully constructed house of cards, deliberately created with the help of multiple agencies and institutions.  The private Federal Reserve had to artificially lower interest rates and inject trillions upon trillions into the housing market, the international banks had to invest those trillions into mortgages that they KNEW were toxic and likely never to be repaid.  The Federal Government had to allow those mortgages to then be chopped up into derivatives and resold on the open market.  The ratings agencies had to examine those derivatives and obviously defunct mortgages and then stamp them AAA.  The SEC had to ignore the massive fraud being done in broad daylight while sweeping thousands of formal complaints and whistle blowers under the rug.

This was not some “random” event caused by uncontrolled “complexity”.  This was engineered complexity with a devious purpose.  The creation of the derivatives collapse was done with foreknowledge, at least by some.  Goldman Sachs was caught red handed betting against their OWN derivatives instruments!  Meaning they knew exactly what was about to happen in the market they helped build!  This is called Conspiracy…

One might attribute Casti’s idea to a sincere belief in chaos, and a lack of insight into the nature of globalism as a brand of religion.  However, in his first and as far as I can tell only interview with Coast To Coast Radio, Casti promotes catastrophic “X-Events” as a “good thing” for humanity, right in line with the Rand Corporation ideology.  Casti, being a futurist and elitist, sees the ideas of the past as obsolete when confronted with the technological advancements of the modern world, and so, describes X-event moments as a kind of evolutionary “kickstart”, knocking us out of our old and barbaric philosophies of living and forcing us, through trial by fire, to adapt to a more streamlined culture.  The linchpin event is, to summarize Casti’s position, a culture’s way of “punishing itself” for settling too comfortably into its own heritage and traditions.  In other words, WE will supposedly be to blame for the next great apocalypse, not the elites…

I might suggest that Casti’s attitude seems to be one of general indifference to human suffering in the wake of his “X-Events”, and that he would not necessarily be opposed to the deaths of millions if it caused the “advancement” of humanity towards a particular ideology.  His concept of “advancement” and ours are likely very different, though.  I suspect that he is well aware that X-Events are actually tools at the disposal of elitists to generate the “evolution” he so desires, and that evolution includes a collectivist result.

With almost every major economy on the globe on the verge of collapse and most now desperately inflating, taxing, or outright stealing in order to hide their situation, with multiple tinderbox environments being facilitated in the Pacific with China, North Korea, and Japan, and in the Middle East and Africa with Egypt, Syria, Iran, Pakistan, Yemen, Mali, etc., there is no doubt that we are living in a linchpin-rich era.  It is inevitable that one or more of these explosive tension points will erupt and cause a chain reaction around the planet.  The linchpin and the chain reaction will become the focus of our epoch, rather than the men who made them possible in the first place.

Strangely, Casti’s theory was even recently featured in an episode of the ABC mystery/drama show “Castle”, called “Linchpin” (what else?), in which a writer turned detective uncovers a plot by a “shadow group” to use the research of the innocent Dr. Nelson Blakely (apparently based on Casti) to initiate a collapse of the U.S. economy by assassinating the ten-year-old daughter of a prominent Chinese businessman, triggering a dump of U.S. Treasuries by China and fomenting WWIII:

http://www.alterna-tv.com/castle/xevents.htm

Now, I think anyone with any sense can see where this is going.  Casti and Rand Corporation are giving us a glimpse into the future of propaganda.  This is what will be written in our children’s history books if the globalists have their way. The fact that Linchpin Theory is featured in a primetime television show at all is a testament to Rand Corporation’s influence in the media.  But, as for the wider picture, are the trigger points around us really just a product of complex coincidence?

Not a chance.

Each major global hot-spot today can easily be linked back to the designs of international corporate and banking interests and the puppet governments they use as messengers.  Casti claims that “X-events” and “linchpins” cannot be accurately predicted, but it would seem that they can certainly be purposely instigated.

The globalists have stretched the whole of the world thin.  They have removed almost every pillar of support from the edifice around us, and like a giant game of Jenga, are waiting for the final piece to be removed, causing the teetering structure to crumble.  Once this calamity occurs, they will call it a random act of fate, or a mathematical inevitability of an overly complex system.  They will say that they are not to blame.  That we were in the midst of “recovery”.  That they could not have seen it coming.

Their solution will be predictable.  They will state that in order to avoid such future destruction, the global framework must be “simplified”, and what better way to simplify the world than to end national sovereignty, dissolve all borders, and centralize nation states under a single economic and political ideal?

Is it the Hegelian Dialectic all over again?  Yes.  Is it old hat feudalism and distraction?  Yes.  But, I have to hand it to Casti and Rand Corporation; they certainly have refined the argument for collectivism, centralization, technocracy, slavery, moral relativism, and false-flag dupery down to a near science…

Zero Hedge

When asked what socialism was, Lenin responded, “The power of the Soviet State and electrification of the country.” Apparently, the leaders of North Korea haven’t made it to that page in the Little Red Book yet.

<— If you believe that the only way a country can have a properly running infrastructure to include roads and energy is through a big, giant government that controls everything… explain this!

In the simplest terms, socialism is defined as “State ownership of the means of production” where every economic action is centrally planned and centrally controlled by the government. In comparison, capitalism is defined as “private ownership of the means of production” where every economic action is controlled by the business owner responding to the demands of the market and not the government.

The US economy is currently a mixed economy of capitalism and socialism that would best be described as fascism, or the marriage of corporations and government. Mussolini said, “This should properly be called corporatism.”

The state of Michigan has determined that it is time to “put all of its chips on green” with a new energy mandate declaring that by the year 2025, 25% of the state’s energy must come from renewable or green energy sources. There are a multitude of reasons ranging from providing clean energy to creating jobs. For an understanding of job creation through government stimulus, read the first part of this article.  click here

The politicians constantly tell the uneducated serfs that the government knows what is best and that we should just listen to their wisdom. We are constantly told that only a government can provide all of these things that could never come about in a market economy. There is just no way! The whole lie is glossed over with Newspeak terms such as Public-Private Partnerships (remember fascism from above) or Government Investment. When was the last time one of these investments sent the people a dividend check? It’s all bull.

As far as government being an investment firm, I would like to withdraw all of my funds and close my account. The Public-Private partnerships are nothing more that the public picking up the tab with the profits remaining private. Considering that so many subsidized firms go bankrupt, the government is the worst investment firm in the world as evidenced here by the number of green energy companies that have gone belly-up and the money that has been flushed down the drain with them. Solyndra is not an isolated incident.

This malinvestment is not restricted to the 20^th and 21^st centuries. In the 1800’s, the common belief was that the only way for railroads to exist was with the full force of the government throwing money at it. James J. Hill built the Great Northern Railroad without a single tax dollar – it was privately financed. Instead of having the army “clear the land,” Hill negotiated rights of way with the Indians and other inhabitants. Hill was able to provide such a great service that his rates were lower than his subsidized (tax eater) competitors. When the subsidized firms were going bankrupt, Hill turned a profit while charging lower rates. The difference between Hill and the others was that he was a market entrepreneur where the others were political entrepreneurs. Hill did the things that the competition was either unwilling or unable to do. They got their financing by sucking up to and cutting deals with their political patrons. Most of them would have been more suited to running dress shops in Boston rather than running railroads. For more on Hill and other market entrepreneurs, click here

Why does the government invest in these companies? Because no investors in their right mind would! Think of a company such as Apple or Microsoft looking for capital investment. Based upon their successes they could probably self-finance, but if they did seek outside funds, they would not have too much of a problem because of their successful track records. The investor would of course do his/her due diligence to make sure that the investment was safe to ensure that the investment was profitable. In order to survive, private investors cannot take many losses. They will go out of business quickly… or seek a government bailout.

The government does not operate on the profit motive. The government operates on the public opinion and vote purchasing motives. The government does not need to show any results… only the appearance of results. This can easily be done by shifting money around, showing neat graphs, juking statistics, and an endless media onslaught of horizontal enforcement telling us, “The government is doing the right thing.”

The solution

It’s time to take the government out of the equation. It’s time to abandon the idea of central planning and central control of the means of production. It’s time to end the political favoritism granted to political entrepreneurs which is malinvestment at best and money laundering at worst.

Stop the mandates. If something is such a good idea and will be profitable, it does not require a mandate. Mandates and laws can never create an outcome that was not already possible. “If the world is round, can the king declare it to be flat? And if it is flat, can the parliament pass a law that makes it round?” ~St. Thomas More

Stop the social engineering. The purpose of energy companies is to provide energy and turn a profit, not to create jobs. The jobs will come as a byproduct of this economic activity. Let the different types of energy compete on the open market. The best form(s) will win out and provide the best value. It could be coal, solar, natural gas, industrial hemp, or something that has not even been discovered yet. Without an energy source proving itself, we will never really know. Why would we put so much hope into something that is unproven?

Licensing, permits, and regulations must go. The idea that these things protect the consumer and provide safety is nothing but a myth. People can be protected from harm by fully enforcing property rights. If a company contaminates a person’s land, that company should be held liable and make restitution for the loss to the actual victim. Regulations have actually been used by the political entrepreneurs for their own benefit. That’s why they hired the lobbyists to write the regulations and get them passed. Licensing, permits, and regulations serve only one purpose – to keep new actors from entering the market protecting the politically connected existing firms.

There are two ways to make money in the market. 1. Offer a product that people will voluntarily exchange money for, or 2. Use your political connections to cripple your competition with regulations. This was done against Hill in the form of the Interstate Commerce Act of 1887 which enforced minimum pricing regulation, in other words… price fixing.

“When buying and selling are controlled by legislation, the first things to be bought
and sold will be legislators.” ~P J O’Rourke

Intellectual Property laws, meaning patents need to go. Patents are nothing more than a government granted monopoly to engage in commerce and a strict prohibition against everybody else from engaging in the same commerce. An idea is not a physical thing and cannot be considered real property. For a really good explanation of IP laws, see this article.

Stop the exclusivity of markets. Yes, multiple firms can service the same city. It works with every other type of industry. It can and has worked with utility companies in the past. This restriction of the market has eliminated competition and the value that competition brings to the consumer. If monopolies are bad, why do people support them for certain industries? The Myth of Natural Monopoly

Stop the subsidies, stop the government malinvestment, and stop the looting of the taxpayers. The history of subsidies has been horrible at best. The price for some things may be lower at the cash register but the difference is made up from your paycheck. By propping up these dinosaurs, the creativity of the market has been stifled. If these new energy sources are worth their salt, they will distinguish themselves as so. If something is viable, private investors will flock to it. And no, the greedy capitalists that would sell their own mothers for a profit are not keeping new technology off the market to protect Big Oil. If something new came along that was more profitable, those greedy capitalists would sell out the existing firms… for the profits. Greed is good.

The most important thing is for the people to stop believing in The Myth of the State. These politicians are not wise and all-knowing. Most of them are idiots and have little understanding of economics or energy. They do understand lobbyist money, vote purchasing, and appealing to the emotions of the masses. They do not have your best interests at heart.

“How can we blame the free market when we haven’t even tried it yet?”
Franklin D. Roosevelt

A couple of years ago, Spain “put their chips on Green.” They have a 25% unemployment rate. Is that the real meaning of 25 by 25?

Lou – Freedom Feens

It is true that as the financial and economic crises roll on, as more and more disasters accumulate, as more people are thrown into unemployment and suffering that more and more of us will question the fundamentals of our economic system. It is inevitable that many will be drawn to some of the criticisms of capitalism, including Marxism.

The Guardian today published a salutary overview of this revival:

In his introduction to a new edition of The Communist Manifesto, Professor Eric Hobsbawm suggests that Marx was right to argue that the “contradictions of a market system based on no other nexus between man and man than naked self-interest, than callous ‘cash payment’, a system of exploitation and of ‘endless accumulation’ can never be overcome: that at some point in a series of transformations and restructurings the development of this essentially destabilising system will lead to a state of affairs that can no longer be described as capitalism”.

 

That is post-capitalist society as dreamed of by Marxists. But what would it be like? “It is extremely unlikely that such a ‘post-capitalist society’ would respond to the traditional models of socialism and still less to the ‘really existing’ socialisms of the Soviet era,” argues Hobsbawm, adding that it will, however, necessarily involve a shift from private appropriation to social management on a global scale. “What forms it might take and how far it would embody the humanist values of Marx’s and Engels’s communism, would depend on the political action through which this change came about.”

Marxism is a strange thing; it provides a clean and straightforward narrative of history, one that irons out detail and complication. It provides a simplistic “us versus them” narrative of the present. And it provides a relatively utopian narrative of the future; that the working classes united will overthrow capitalism and establish a state run by and for the working classes.

Trouble is, history is vastly more complicated than the teleological narrative provided by dialectical materialism. The economic and social reality of the present is vastly more complicated than Marx’s linear and binary classifications. And the future that Marx predicted never came to fruit; his 19th Century ideas turned into a 20th Century reality of mass starvation, failed central planning experiments, and millions of deaths.

Certainly, the system we have today is unsustainable. The state-supported financial institutions, and the corporations that have grown up around them do not live because of their own genius, their own productivity or innovation. They exist on state largesse — money printing, subsidies, limited liability, favourable regulation, barriers to entry. Every blowup and scandal — from the LIBOR-rigging, to the London Whale, to the bungled trades that destroyed MF Global — illustrates the incompetence and failure that that dependency has allowed to flourish.

The chief problem that Marxists face is their misidentification of the present economic system as free market capitalism. How can we meaningfully call a system where the price of money is controlled by the state a free market? How can we meaningfully call a system where financial institutions are routinely bailed out a free market? How can we meaningfully call a system where upwards of 40% of GDP is spent by the state a free market? How can we call a system where the market trades the possibility of state intervention rather than underlying fundamentals a free market?

Today we do not have a market economy; we have a corporate economy.

As Saifedean Ammous and Edmund Phelps note:

The term “capitalism” used to mean an economic system in which capital was privately owned and traded; owners of capital got to judge how best to use it, and could draw on the foresight and creative ideas of entrepreneurs and innovative thinkers. This system of individual freedom and individual responsibility gave little scope for government to influence economic decision-making: success meant profits; failure meant losses. Corporations could exist only as long as free individuals willingly purchased their goods – and would go out of business quickly otherwise.

 

Capitalism became a world-beater in the 1800’s, when it developed capabilities for endemic innovation. Societies that adopted the capitalist system gained unrivaled prosperity, enjoyed widespread job satisfaction, obtained productivity growth that was the marvel of the world and ended mass privation.

 

Now the capitalist system has been corrupted. The managerial state has assumed responsibility for looking after everything from the incomes of the middle class to the profitability of large corporations to industrial advancement. This system, however, is not capitalism, but rather an economic order that harks back to Bismarck in the late nineteenth century and Mussolini in the twentieth: corporatism.

The system of corporatism we have today has far more akin with Marxism and “social management” than Marxists might like to admit. Both corporatism and Marxism are forms of central economic control; the only difference is that under Marxism, the allocation of capital is controlled by the state bureaucracy-technocracy, while under corporatism the allocation of capital is undertaken by the state apparatus in concert with large financial and corporate interests. The corporations accumulate power from the legal protections afforded to them by the state (limited liability, corporate subsidies, bailouts), and politicians can win re-election showered by corporate money.

The fundamental choice that we face today is between economic freedom and central economic planning. The first offers individuals, nations and the world a complex, multi-dimensional allocation of resources, labour and capital undertaken as the sum of human preferences expressed voluntarily through the market mechanism. The second offers allocation of resources, labour and capital by the elite — bureaucrats, technocrats and special interests. The first is not without corruption and fallout, but its various imperfect incarnations have created boundless prosperity, productivity and growth. Incarnations of the second have led to the deaths by starvation of millions first in Soviet Russia, then in Maoist China.

Marxists like to pretend that the bureaucratic-technocratic allocation of capital, labour and resources is somehow more democratic, and somehow more attuned to the interests of society than the market. But what can be more democratic and expressive than a market system that allows each and every individual to allocate his or her capital, labour, resources and productivity based on his or her own internal preferences? And what can be less democratic than the organisation of society and the allocation of capital undertaken through the mechanisms of distant bureaucracy and forced planning? What is less democratic than telling the broad population that rather than living their lives according to their own will, their own traditions and their own economic interests that they should instead follow the inclinations and orders of a distant bureaucratic-technocratic elite?

I’m not sure that Marxists have ever understood capitalism; Das Kapital is a mammoth work concentrating on many facets of 19th Century industrial and economic development, but it tends to focus in on obscure minutiae without ever really considering the coherent whole. If Marxists had ever come close to grasping the broader mechanisms of capitalism — and if they truly cared about democracy — they would have been far less likely to promulgate a system based on dictatorial central planning.

Nonetheless, as the financial system and the financial oligarchy continue to blunder from crisis to crisis, more and more people will surely become entangled in the seductive narratives of Marxism. More and more people may come to blame markets and freedom for the problems of corporatism and statism. This is deeply ironic — the Marxist tendency toward central planning and control exerts a far greater influence on the policymakers of today than the Hayekian or Smithian tendency toward decentralisation and economic freedom.

Zero Hedge

Now I’ve seen it all.

The USSC upheld Obamacare by, basically, twisting the Constitution into a pretzel, crapping on it, whizzing on that and then eating it.

Finding first that the Commerce Clause bars the government from compelling one to enter into commerce, the analysis then turned to whether there was any way to save the constitutionality of the act.

The justices found one.

They re-interpreted the penalty clause as a tax.

And of course, Congress can levy taxes.

That’s the path taken by this tortured process — a path that could only be dreamed up if someone had already determined the outcome they sought instead of being an independent jurist.

The real surprise, however, is that Chief Justice Roberts, believed to be a strict constructionist on the court, managed to not only agree with this piece of tortured logic he found and constructed it as the opinion is his!

So much for judicial restraint and strict construction!

You really ought to read the dissent that starts on page 127 of the opinion.  Justice Scalia, Thomas, Kennedy and Alito eviscertate the majority, saying in part:

Here, however, Congress has impressed into servicethird parties, healthy individuals who could be but are not customers of the relevant industry, to offset the undesirable consequences of the regulation. Congress’ desire to force these individuals to purchase insurance is motivatedby the fact that they are further removed from the marketthan unhealthy individuals with pre-existing conditions, because they are less likely to need extensive care in the near future. If Congress can reach out and command even those furthest removed from an interstate market to participate in the market, then the Commerce Clause becomes a font of unlimited power, or in Hamilton’s words, “the hideous monster whose devouring jaws . . . spare neither sex nor age, nor high nor low, nor sacred nor profane.” The Federalist No. 33, p. 202 (C. Rossiter ed. 1961).

What little was left of The Constitution died today, June 28th, 2012.

And incidentally, the math on federal health spending coupled with this decision means that by the time a 55 year old man reaches 85 (his life expectancy, roughly) the Federal government will be attempting to spend roughly $15 trillion a year on health care.

(No it won’t, no we won’t get that far, and the detonation of our government on the fiscal side is now assured — or your health care will be sacrificed.  This is mathematics, not politics.)

The Corruption of America

The numbers tell us America is in decline… if not  outright collapse.

I say “the  numbers tell us” because I’ve become very sensitive to the impact this  kind of statement has on people. When I warned about the impending bankruptcy  of General Motors in 2006 and 2007, readers actually blamed me for the  company’s problems – as if my warnings to the public were the real problem,  rather than GM’s $400 billion in debt.

The claim was absurd. But the resentment my work  engendered was real.

So please… before you read this issue, which makes  several arresting claims about the future of our country… understand I am  only writing about the facts as I find them today. I am only drawing  conclusions based on the situation as it stands. I am not saying that these  conditions can’t improve. Or that they won’t improve.

The truth is, I am optimistic. I believe our country is  heading into a crisis. But I also believe that… sooner or later… Americans  will make the right choices and put our country  back on sound footing.

Please pay careful attention to the data I cite. And  please send me corrections to the facts. I will happily publish any correction  that can be substantiated. But please don’t send me threats, accusations  against my character, or baseless claims about my lack of patriotism. If I  didn’t love our country, none of these facts would bother me. I wouldn’t have  bothered writing this letter.

I know this is a politically charged and emotional  issue. My conclusions will not be easy for most readers to accept. Likewise,  many of the things I am writing about this month will challenge my subscribers  to re-examine what they believe about their country. The facts about America today tell a painful story about a country in a  steep decline, beset by problems of its own making.

One last point, before we begin… I realize that this  kind of macro-economic/political analysis is not, primarily, what you pay me  for. You rightly expect me to provide you with investment opportunities –  whether bull market, bear market, or total societal collapse. And that’s what  I’ve done every month for more than 15 years.

But that’s not what I’ve done this month. You won’t  find any investment ideas at all in these pages. This issue is unlike any other  I have ever written.

I’m sure it will spark a wave of cancellations –  costing me hundreds of thousands of dollars. I fear it will spark a tremendous  amount of controversy. Many people will surely accuse me of deliberately  writing inflammatory things in order to stir the pot and gain attention. That’s  not my intention. The truth is, I’ve gone to great lengths throughout my career  to protect my privacy.

I am speaking out now because I believe someone must.  And I have the resources to do it. I am  sharing these ideas with my subscribers because I know we have arrived at the  moment of a long-brewing crisis.

Our political leaders, our business leaders, and our  cultural leaders have made a series of catastrophic choices. The result has  been a long decline in America’s standard of living.

For decades, we have papered over these problems with  massive amounts of borrowing. But now, our debts total close to 400% of GDP,  and America is the world’s largest borrower (after being the world’s largest  creditor only 40 years ago)… And the holes in our society can no longer be  hidden…

We’ve reached the point where we will have to fix what  lies at the heart of America’s decline… or be satisfied with a vastly lower  standard of living in the future.

How do I know? How do I statistically define the  decline of America?

The broadest measure of national wealth is per-capita  gross domestic product (GDP). Economists use this figure to judge standards of  living around the world. It shows the value of the country’s annual production  divided by the number of its citizens. No, the production isn’t actually  divided among all  the citizens, but this measure provides us with a fair  benchmark to compare different economies around the world. Likewise, this  measure shows the growth (or the decline) in wealth in societies across time.

So… is America growing richer or poorer based on  per-capita GDP? Seems like a simple enough question, doesn’t it? Is our economy  growing faster than our population? Are we, as individuals, becoming more affluent?  Or is the pie, measured on a per-person basis, growing smaller?

This is the most fundamental measure of the success or  the failure of any political system or culture. Are the legal and social rules  we live under aiding our economic development or holding us back? What do the  numbers say?

Unfortunately, it’s a harder question to answer than it  should be. The problem is, we don’t have a sound currency with which to measure  GDP through time. Until 1971, the U.S. dollar was defined as a certain amount  of gold. And the price of gold was fixed by international agreement. It didn’t  actually begin to trade freely until 1975. Therefore, the value of the U.S. dollar  (and thus the value of U.S. production, which is measured in dollars) was  manipulated higher for many years.

Even today, our government’s nominal GDP figures are  greatly influenced by inflation. The influence of inflation is particularly  pernicious in GDP studies. You see, inflation, which actually reduces our  standard of living, drives up the amount of nominal GDP. So it creates the  appearance of a wealthier country… while the nation is actually getting  poorer.

The only real way to accurately measure per-capita GDP is  to build our own model. The need to build our own tools tells you something important  – the government doesn’t want anyone to know the answer to this question. It  could easily publish data far more accurate than the indexes it puts out. But  government doesn’t want anyone to know. And it wants to be able to say  “those aren’t the real data” when studies like ours produce bad news.

So pay attention to how we built our charts. You can  see for yourself that our data are far more accurate than the government’s  figures. Our data are based on the real purchasing power of the currency, not  the nominal numbers, which are completely meaningless in the real world.

The question we are trying to answer is: What would  per-capita GDP numbers look like, if we used a real-world currency, like gold,  or a basket of commodity prices, instead of the paper-based U.S. dollar? What  would the figures be if we measured GDP in sound money instead of the  government’s funny money?

Here’s how we figured it out. We took the government  numbers for nominal GDP and measured them first against commodity prices, and  later (after it began to trade freely) gold. We used a standard commodity index  (the CRB) up to 1975 and gold post-1975. The result of this analysis shows you  the real trend in U.S. per-capita  GDP, as measured on a real-world purchasing power basis.

Our analysis shows you what’s actually happened to our  real standard of living. The results, we suspect, will surprise even the most  bearish among you.

America is in a steep decline.

Americans Are  Getting Poorer – Fast

Let me anticipate the “official” criticism of  our study. Many people will claim that our numbers aren’t “real.”  They will say that we “mined” the data to produce a chart that showed  a steep decline.

That’s simply not so. All we’ve done is convert the  government’s nominal GDP stats into a fixed currency value that’s based on  real-world purchasing power. The fact is, our data are far more accurate than  the government’s because they represent the real-world experience. That’s why our data are far more closely  correlated to other real-world studies of wealth in America.

Consider, for example, annual sales of automobiles.  Auto sales peaked in 1985 (11 million) and have been declining at a fairly  steady rate since 1999. In 2009, Americans bought just 5.4 million passenger  cars. As a result, the median age of a registered vehicle in the U.S. is almost  10 years.

Our data shows that real per-capita wealth peaked in  the late 1960s. Guess when we find the absolutely lowest median age of the U.S.  fleet? In 1969. At the end of the 1960s, the median age of all the cars on the  road in the U.S. was only 5.1 years. Even as recently as 1990, the median age  was only 6.5 years.

Rich people buy new cars. Poor people do not.

Most important, our data “proves” something I  know many of you have felt or perceived for many years. You’ve seen the decline  of your neighborhoods. You’ve gone years without being able to earn more money  in your job. Or you’ve seen your purchasing power decrease to the point where  you’re now substituting lower-quality products on your grocery list for the  brand-name products you used to buy.

You can see how much harder it is on your children to  find good jobs, to buy good housing or a new car. As a result, few people under  the age of 40 have the same kind of “life story” as their parents.

And because they can’t “make it,” many have decided to “fake it.” The average college  student now graduates with $24,000 in debt… and by his late 20s has racked up  more than $6,000 in credit card debt. Meanwhile, median earnings for Americans  aged 25-34 equals $34,000-$38,000. (Source: Demos.org, “The Economic State  of Young America,” November 2011.)

Can you imagine starting your life out as an adult with  a personal debt-to-income level at close to 100%?  What does this say about the state of our economy? What does this say about the  state of our culture?

Who Suffers Most

It’s not only the young that are having trouble in  America. It is also the old.

Debt levels among households headed by people older  than 62 have been rising for two decades. The average mortgage size for this population is now $71,000 – five times  larger than it was in 1987 (adjusted for inflation), according to William Apgar  of Harvard’s Joint Center for Housing Studies.

Older Americans are also more reliant on credit card  debt than ever before… credit card debt.  From 1992 through 2007 (which is the latest data available) older Americans took on  credit card debt at a faster pace than the population as a whole. According to USA Today, lower- and middle-income  Americans aged 65 and older now carry an average of more than $10,000 in credit  card debt, up 26% since only 2005.

Given average interest rates of 20% for these debts,  it’s a fair bet that these obligations will never be repaid. But they will have  a terrible impact on the standard of living of these older Americans.

What in the heck is going on? Don’t Americans pay off  their mortgages before they retire? Don’t they work hard during their careers,  save, and invest, so they can move to Florida and spend their retirement in  comfort?

Older Americans living with credit card debt! This  doesn’t sound like America, does it? Or maybe it does.

My bet is that most of my subscribers know that  something has gone terribly wrong with America. It’s not easy to figure out how  all of this happened… but you know from your own experiences that these  numbers aren’t wrong. It might not be pleasant to think about… but these  figures paint a sad but accurate picture: America  is not the country it was 40 years ago. These changes are warping our economy,  politics, and culture.

In this month’s issue, I’d like to try to define a few  of the core reasons we’re in this situation. I can’t possibly analyze all the  factors that have led to this decline. But I want to document the growth of  graft in politics. I want to demonstrate – with real facts and examples – how  public company leadership has deteriorated. And I want to document some of the  things that are occurring in the broader society, all of which I believe are  linked to this fundamental decline in our standard of living.

You see, I believe the decline of our country is  primarily a decline of our culture.

We have lost our sense of honor, humility, and the  dedication to personal responsibility that, for more than 200 years, made our  country the greatest hope for mankind. I want to detail some of the factors  that gave rise to the current entitlement society. We have become a country of  people who believe their well-being is someone else’s responsibility.

I’ve labeled these problems: The Corruption of America.

These problems manifest themselves in different ways  across institutions in all parts of our society. But at their root, they are  simply facets of the same stone. They are all part of the same essential  problem.

The corruption of America isn’t happening in one part  of our country… or in one type of institution. It is happening across the  landscape of our society, in almost every institution. It’s a kind of moral  decay… a kind of greed… a kind of desperate grasp for power… And it’s  destroying our nation.

Henry Paulson and Jon Corzine - formerly of Goldman Sachs

The Ethos of  ‘Getting Yours’

Americans know, in their bones, that something terrible  is happening. Maybe you can’t articulate it. Maybe you don’t have the  statistics to understand exactly what’s going on. But my bet is, you think  about it a lot.

For me, a poignant moment of recognition came this  month.

Bloomberg news published an article based on  confidential sources about how Henry Paulson, the former CEO of Goldman Sachs  and the Republican U.S. Treasury secretary during the financial crisis, held  a secret meeting with the top 20 hedge-fund managers in New York City in late  July 2008. This was about two weeks after he testified to Congress that Fannie  Mae and Freddie Mac were “well-capitalized.”

I knew for a fact that what Paulson told Congress  wasn’t true. I wrote my entire June 2008 newsletter detailing exactly why  Fannie and Freddie certainly had billions in losses that they had not yet  revealed to investors – $500 billion in losses, at least. There was no question  in my mind, both companies were insolvent – “zeros,” as I explained.

And yet, in front of Congress, the U.S. Treasury  secretary was saying exactly the opposite. Either I was a liar… or he was.

Then… only a few days later… what did Paulson tell  those hedge-fund managers?

He told them the same thing I had written in my  newsletter. He told them the opposite of what he’d said publicly to Congress. He told these billionaire investors  that Fannie and Freddie were a disaster… They would require an enormous,  multibillion-dollar bailout… The U.S. government would have to take them  over… And their shareholders would be completely wiped out.

Here you had a high-government official, explicitly  lying to Congress (and by extension, the general public), while giving the real  facts to a group of people who represented the financial interests of the  world’s wealthiest folks. The story didn’t come to the public’s attention for two years.

This was the most outrageous example of graft and  corruption I have ever seen. Certainly it involves more billions of dollars in  misappropriated value than any other similar story I can recall. These managers  had the risk-free ability to make tens of billions of dollars, if not hundreds  of billions, by using derivatives to capitalize on what they knew was the  imminent collapse of the world’s largest mortgage bank. Who picked up the tab?  You know perfectly well. It was you and me, the taxpayers.

(One of the investment managers present at this meeting  was Steve Rattner, who by that point was already deeply involved in another bit  of graft, his efforts to bribe New York state pension-fund managers for large  investments into his hedge fund, from which he earned perhaps as much as $100  million. He later settled the charges for a mere $10 million shortly after  Andrew Cuomo was elected governor of New York.)

The Bloomberg story… about a crooked Treasury  secretary handing a room full of crooked billionaires inside information worth  billions of dollars… hardly caused a ripple. As far as I know, no actions are  being planned against Henry Paulson or any of the hedge-fund managers involved.  No other major media outlet picked up the story. I saw nothing about it from  the Department of Justice or the Securities and Exchange Commission.

What does that say about our country when even the most  egregious kind of corruption – involving hundreds of billions of dollars – is  simply ignored?

It seems like everyone in our country has lost his moral  bearing, from the highest government officials and senior corporate leaders all  the way down to schoolteachers and local community leaders. The ethos of my  fellow Americans seems to have changed from one of personal integrity and  responsibility to “getting yours” – the all-out attempt, by any means  possible, to get the most amount of benefits with the least amount of work.

You can see this in everything from the lowering of  school standards (revising the SAT) to the widespread use of  performance-enhancing drugs in professional, college, and high school sports.  Cheating has become a way of life in America.

I have an idea about how this happened… about the  root cause of this kind of corruption and why it was inevitable, given some of  the basic facts regarding how we’ve organized our government and our  corporations.

Let me show you the numbers – the hard facts – behind  what’s happened to our country…

The Corruption of  Politics

I’ll start with one of the biggest factors in the  decline of our civilization – the link between welfare, education, crime, and  politics.

It is routinely alleged in national political debates  that something is fundamentally unfair and un-American about the huge  “wealth gap” between the poorest Americans and the wealthiest. Some  politicians like to argue that the poor never have a real shot at the American  dream, and as a nation, we owe them more and more of our resources to correct  this injustice. Most important, it is alleged that only the government has the  resources to correct this inequality.

This is a dangerous notion…

First, it promotes the idea of entitlement. Entitlement  is a fairly new idea in the American political lexicon – perhaps because most  of our nation’s wealth is still fairly new. The American idea of entitlement  argues that because you were born into a rich society, other people owe you  something. The idea has become pervasive in our culture. It underlies the basic  assumptions behind the idea of a “wealth gap.” Implicit is the  assumption that successful Americans haven’t rightfully earned their wealth…  that in one way or another, they’ve taken advantage of the society and have an  obligation to give back most of what they’ve “taken.”

As you’ll see, I believe the idea of entitlement lies  at the root of many of our most serious cultural problems.

The more obvious problem is the idea that the  government is responsible for fixing the “wealth gap.” But the  government has proved wholly ineffective at dealing with poverty in America.  The data is nearly conclusive that government efforts are far more likely to be  the cause of the wealth gap than the solution.

The simple fact is, the government has to take  resources from someone before it can dole them out to others. And this act of  taking turns out to be economically destructive. It reduces the market’s  incentives for entrepreneurs. The more you take from the productive members of  society, the less productive they become. That’s the primary lesson of the  history of socialism. Yet… many of our political leaders seem oblivious to  this iron law of human nature.

Consider a simple analysis that compares the  unemployment rate with the size of the federal government’s spending, as  measured against GDP. (We created this chart after reading a similar analysis   at  Mark Perry’s excellent financial blog, Carpe Diem.)

As you can see in this chart, the larger the government grows as a  percentage of our economy, the higher unemployment rises. The more government, the less opportunity. These figures are  similar when studied comparatively across many different countries.

We also know from decades of experience that little of  the government’s funding for the poor will ever reach those who are actually in  need. Instead, these kinds of socialist policies end up sending billions of dollars into  the hands of unions, “community organizers,” and other sponsors of  the Democratic Party. This tightens their political control of America’s inner  cities, which have become the source of our country’s most intractable social  problems.

Believe me, I have reams of data and decades of case  studies for these conclusions. But before we get to my  proof, I want you to simply assume that what I’m saying is 100% correct. Assume  most of the government’s social spending ends up corrupting the politics of the  inner city. Assume these efforts actually make the “wealth gap”  larger. Assume these policies and the politicians who sponsor them are actually  creating a society of complete dependence, where the spread of ignorance has  created entire generations of people who aren’t educated enough to know they’ve  been enslaved by their own leaders.

If these things  are true, if my conclusions are exactly right, what would America’s poorest  communities look like today?

It has now been almost 50 years since the start of the  War on Poverty, President Lyndon Johnson’s program to radically increase  domestic welfare spending. These programs and their various spinoffs have been  at the center of Democratic politics ever since. In fact, if you compare  speeches about these programs from the mid-1960s until today, you will find the  verbiage never changes. Obama is merely echoing the same calls for “social  justice” that Robert Kennedy used in his ill-fated 1968 campaign for  president.

But besides the soaring rhetoric, besides the promise  of a “chicken in every pot,” what have these programs actually  achieved? The wholesale destruction of urban communities across America,  communities that are overwhelmingly African American. If the intention of these  programs had been to destroy black communities, you could have hardly done more  damage than the last 50 years of Democratic policy.

I don’t think most Americans realize how dangerous  these communities have become or the toll they take on our country as a whole.  That’s primarily because talking about this problem is seen as racist. That’s  complete nonsense. The victims of these policies are primarily black people.  Trying to help them restore dignity and independence to their communities isn’t  a racist goal. It’s humanitarian.

And let me offer a prediction… Sooner or later, the  people in these communities are going to finally point their finger at the  politicians who’ve lied and pandered to them for decades, all while stealing  from them at every turn. When that moment comes, having a track record of  correctly speaking out about the real nature of these problems will be a  valuable political asset.

No, I’m not running for office… I’m just trying to  buck-up the politicians who I know read this letter. They need to get out in  front of this issue.

Let me give you some of the numbers that define the  enormous scope of these problems.

According to the NAACP, Texas taxpayers spent $175  million in 2009 to imprison residents from a small part of Houston – only 10  zip codes out of 75. Thus, people from neighborhoods that are home to only  about 10% of the city’s population account for more than 33% of the state’s  entire $500 million annual prison spending. These neighborhoods are  overwhelmingly poor and African American.

In Pennsylvania, taxpayers will spend $290 million in  2009 to imprison residents from just 11 of Philadelphia’s neighborhoods,  representing about 25% of the city population. On this relatively small urban  area, the state will spend roughly half its $500 million prison budget. These neighborhoods are overwhelmingly poor and  African American.

In New York, taxpayers will spend $539 million to  imprison residents from only 24 of New York City’s 200 different neighborhoods.  Only 16% of the city’s population lives in these areas, but they will account  for nearly half of the  state’s  $1.1 billion prison budget. These  neighborhoods are overwhelmingly poor and African American.

America has many problems… but these neighborhoods  represent more than a society in decline. Life  in these places reflects a complete collapse of Western civilization. What’s happening in these communities? A breakdown of the family and the  resulting collapse of the school system. What you have left is crime – violent  and political.

In Detroit, only 27% of the black male students in the  school system graduate from high school. This  is not a racial problem: Only 19% of the white male students graduate from  those same schools. What’s causing this problem? A complete breakdown of  society. When communities can no longer teach their children the most basic  academic skills, such as reading, math, history, literature, and economics…  what future can we expect? And what kind of society do you expect after several  generations of total ignorance?

These problems are still found primarily in urban  areas, but they are spreading across the country. In Pinellas County, Florida,  only 21% of black male students graduate from high school. In Palm Beach  County, Florida, you find a similar number. Likewise Duval County, Florida…  and Jefferson Parish, Louisiana… and Charleston County, South Carolina. In  Nebraska, only 40% of black male students graduate from high school. In Nevada,  only 45%. In New York state, only 25%.

What opportunities are available in America to people  without even a basic education? The New York Times reports almost 70% of  black males without a high school diploma are unemployed in the United States.

In many predominantly black, urban communities, the  actual unemployment rate is close to 100% for young dropouts. Given these  figures, it isn’t surprising that many of these people end up in jail.

According to various studies, black males who dropped  out of school by age 16 are four times more likely to end up in jail than those  who remained in school. Crime is literally all they know. Likewise, a black  youth whose mother was a high school dropout is 88% more likely to end up in  jail. These are the two primary reasons nearly one in 11 adult black men are  either in jail or on parole.

How did this all happen? How did we end up with expensive schools that can’t  teach? How did we end up with young mothers who aren’t married? How did we end  up with entire generations of people who won’t – and probably can’t – work in  the labor force? How did we end up with a skyrocketing prison population? The  prison population in America has soared from less than half a million people in  1980 to more than 2.5 million people today. More than 7 million adults are in  prison or on parole in the United States. We  have an incarceration rate that’s seven times higher than any other industrialized  nation.

The land of the free?

Let’s ask the most basic question: What has the  gigantic increase in welfare spending and education spending done for the  underclass of America? It seems apparent that growth in federal spending has  caused far more harm than good. When you study these neighborhoods, what you  find is a horrifying story that’s been repeated, generation after generation  since the early 1960s. It’s a story of families who have been destroyed by  their dependency on the state.

The truly extraordinary part is that all  these  things happened after these  neighborhoods began voting and electing their own (typically black and  Democratic) leadership. The socialism they voted for themselves led most  directly to the destruction of their communities. It was their own mayors, ward  leaders, and congressmen who chose this path for these communities.

Let me show you one case study – Detroit.

How Socialism Came  to America… and Destroyed  Detroit

In 1961, the last Republican mayor of Detroit, Louis C.  Miriani, lost his re-election bid. He probably would have lost to anyone who  ran against him because he was known to be a crook. He later served 10 years in  prison for tax evasion.

The man who defeated him, Jerome Cavanagh, was a  Democrat. He ushered in a new kind of politics in Detroit. Cavanagh, who was  white, got elected by promising to give Detroit’s African American population  the civil rights they deserved. But he didn’t stop there. Seeing the political  advantage to serving this community’s interests, he did all he could to bring  government benefits and government spending to Detroit’s black community.

Cavanagh brought socialism to Detroit.

Mayor Cavanagh was the only elected official to serve  on President Johnson’s Model Cities task force. The program was modeled after  Soviet efforts to rebuild whole urban areas in Eastern Europe. At the time,  this centralized approach to urban development was proclaimed as an advantage  to the Soviet system, something that could give them an edge in the Cold War.

Detroit received widespread acclaim for its leadership  in the program, which attempted to turn a nine-square-mile section of the city  (with 134,000 inhabitants) into a “Model City.” To help finance the  effort, Cavanagh pushed a new income tax through the state legislature and a  “commuter tax” on city workers. He promised the mostly poor and black  residents of the Model City area that the rich would pay for all of these  benefits. He bought their votes with taxes they didn’t have to pay.

It was classic American socialism.

More than $400 million was spent on the program – and  that was back when quarters still had actual silver in them. The feds and  Democratic city mayors were soon telling people where to live, what to build,  and what businesses to open or close. In return, the people received cash,  training, education, and health care.

But they didn’t like being told what to do… or how to  live. Not surprisingly, the Model Cities program was a disaster for Detroit.  Within five years, it had helped trigger a complete breakdown of civil order  and the city’s population began to rapidly decline.

On July 23, 1967, police attempted to break up a  notorious “blind pig” in the heart of the new Model City. Blind pigs  were after-hours clubs that featured gambling and prostitution. They were part  of the black culture of Detroit, with many having been in operation since the  Prohibition period. The community tolerated these establishments – but the  political leadership didn’t want any blind pigs in the new Model City area.

On this particular night, at this particular club, the  community was celebrating the return of two Vietnam War veterans. More than 80  people had packed into the club. The police decided to arrest everyone present,  including the two war vets. This outraged the entire neighborhood, which began  to riot. The scene turned into the worst race riot of the 1960s.

As my friend Doug Casey likes to say about the War on  Poverty, “The poor lost.”  The violence killed more than 40 people and left more than 5,000 people  homeless. One of the first stores to be looted was a black-owned pharmacy.  The largest black-owned clothing store in the city was also burned to the  ground. Cavanagh did nothing to stop the riots. (He claimed a large police  presence would make matters worse.) Five days later, President Johnson sent in  two divisions of paratroopers to put down the insurrection.

The situation destabilized the entire city. Most of the  people who could afford to leave did. Over the next 18 months, 140,000 upper-  and middle-class residents – almost all of them white – left the city.

And so, you might ask… after five years of  centralized planning, higher taxes, and a fleeing population, what did the  government decide to do with its grand experiment? You’ll never guess…

Seeing it had accomplished nothing but failure… The  government expanded the Model City program with 1974′s Community Development  Block Grant Program. Here again, politicians would decide which groups (and  even individuals) would receive state funds for various “renewal”  schemes. Later, big business was brought into the fold. In exchange for various  concessions, the Big Three automakers “gave” $488 million to the city  for use in still more redevelopment schemes in the mid-1990s.

What happened? Even with all of their power and all of  the money, centralized planners couldn’t succeed with any of their plans.  Nearly all of the upper- and middle-class citizens left Detroit. The poor fled,  too. The Model City area lost 63% of its population and 45% of its housing  units from the inception of the program through 1990.

Even today, the crisis continues. At a recent auction  of nearly 9,000 seized homes and lots, less than one-fifth of the available  properties sold, even with bidding starting at $500. You literally can’t give  away most of the property in Model City areas today. The properties put up for  sale represented an area the size of New York’s Central Park. Total vacant land  in Detroit now occupies an area the size of Boston. Detroit properties in  foreclosure have more than tripled since 2007.

None of this is surprising. It’s exactly what you’d  expect to see given the implementation of a socialist scheme like a Model  Cities’ program. Quite simply, coercion doesn’t work for economic development.  You cannot tax yourself into prosperity.

It might buy votes… but sooner or later the voters  will realize all that’s been promised was a lie. Won’t they?… Maybe not.

You see, the failure of the Model Cities program and of  the War on Poverty wasn’t surprising. What is surprising is that every  single mayor of Detroit since 1961 has been a Democrat. And extremely  liberal, black politicians have filled almost every major political office in  the city since the mid-1960s.

For example, John Conyers, Jr. has represented most of  Detroit’s worst neighborhoods since 1965. Today, Conyers is the  second-longest serving congressman in the House. And his election track record  could be described as “Putin-esque.” Conyers doesn’t merely win all of his election campaigns… He wins by  margins that aren’t explainable in a normal, two-party system.

He defeated Republican Robert Blackwell in 1964,  getting 84% of the vote. He was re-elected 13 times in a row from that  district, all with a greater margin of  victory than 85%. Ironically, the district was so ill-served by his  socialistic policies that about half of the people moved away. The population  losses led to redistricting. From then on, his margin of victory has fallen…  to “only” around 80%.

These election results don’t seem reasonable, do they?  They aren’t. By controlling the state legislature in Michigan, the Democrats  are able to draw the congressional districts in a way that guarantees them  almost permanent control. It’s no different than what despots do all over the  world. They hold an “election.” But it’s only for show.

And what do the Democrats do with this power? They push  a form of American socialism. This political system features transfer payments,  government jobs, and lucrative government contracts to voters in exchange for  political support – and in many cases, outright bribes. They do all of these  things under the cover of “progressive” politics and “social  justice.”

But if you brush away the veneer, what you find is a  history of abuse of power, corruption, and outright bribery. Conyers himself  was found guilty of several minor ethical violations in 2006 – mainly of using  his staff as personal servants, forcing them to babysit and chauffer his  children. In 1992, he was one of the most egregious abusers of the House  Banking scandal. He wrote 273 bad checks and left his account overdrawn for  nine months. But that’s all small-time graft compared to how things really work  in his office and in his district.

How do I know? Well… just ask yourself where Conyers’  wife sleeps today.

Monica Conyers, the wife of the second-longest tenured  congressman in the United States, sleeps in a federal prison in West Virginia.  She pled guilty to bribery in June 2009. She is serving a 37-month sentence  for accepting $60,000 in bribes as the president pro tempore of the Detroit  City Council. And yet… and yet… Conyers won re-election handily in  2010.

How is that possible?

These kinds of people and their political philosophy  have destroyed what was once America’s fourth-largest city. There is almost  nothing left of what was the capital of America’s industrial heartland. It’s  not hard to understand what has happened. When you start taxing people at  extremely progressive rates to pay for socialist “benefits”… when  you start telling them which schools their children must attend… when you  start giving jobs away to people based on political patronage, race, or  anything other than ability… you quash human freedom, you create dependency.  And you deter capital and investment… which bogs down productivity and economic  growth. If continued for long enough, it leads to social collapse.

And Conyers is hardly an anomaly. Just look at those  same blighted districts in Houston and Philadelphia…

In Houston, most of the city’s worst neighborhoods in  terms of high-school graduation rates and crime are found in Texas  Congressional District 18, where Democrats have won every election since the  district was created through re-zoning in 1972. In 1994, Sheila Jackson Lee won  the seat by promising to deliver more federal benefits to her constituents…

To appreciate the sterling representation the Honorable  Ms. Jackson Lee provides, consider this… In 2010 in bizarre remarks before  Congress, she demanded the government recognize victory in Vietnam. You can try  to figure out what she’s talking about here.  She also alleged racism on the part of her fellow  members of Congress who were voting against raising the debt ceiling. Don’t  believe it? View for yourself.

In Philadelphia, Chaka Fattah represents the worst parts  of the city, Pennsylvania’s 2nd Congressional District. The 2nd District is the  fifth-most Democratic Congressional District out of the 435 in Congress (and  the most Democratic outside of New York) based on the consistency and margin of  Democratic victories. A black Democrat has held the seat since 1963.

Among Chaka Fattah’s political highlights is his  economically illiterate plan to implement a 1% surcharge on all financial  transactions and transfers in lieu of all other forms of tax. This ill-fated  plan, which hasn’t gotten a single co-sponsor, ignores everything we know about  actual human behavior. (If you implemented such a cost to financial  transactions, the viability of those transactions would be destroyed and they  wouldn’t occur.)

Fattah’s other notable political position is his  support for convicted cop killer Mumia Abu-Jamal. Mumia’s case has been a cause  célèbre for years. The details of his endless appeals are tedious… just  know the evidence presented against him is overwhelming. And the Fraternal  Order of Police has consistently campaigned against Fattah’s re-election over  his support of Mumia.

The larger point is… These districts are among the  most blighted in our nation. Society has broken down there to a horrible  degree. Opportunity has vanished… Crime is rampant… Dependency on the state  is the norm. The leadership in these communities should be the most  scrutinized, their elected positions among the most contested. And yet, they  are the safest seats in Congress. The  officials dominance goes  unchallenged.

Why haven’t these policies and these leaders been  dropped – even after they’ve pled guilty to outright bribery? You would think  having experienced enough failure, having lived through horrible riots,  terrible crime, total economic collapse, brazen corruption… that sooner or  later, the voters in Detroit (and many other cities in America) would come to  their senses. But that’s not what happened. Instead, these systems have  continued to fail up to the point of total collapse. It is as if one part of  our society decided to run off the cliff… and then continued to do so for decades.

Why? Why did this happen? Why does it continue to  happen?

Read the rest at Stansberry Research