Invisible Economics: One-sixth of American “income” comes from the government

In his excellent book Economics in One Lesson, Henry Hazlitt stressed the importance of understanding not only the obvious and visible aspects of economics, but also the invisible.  By invisible, he did not mean some kind of mysterious thing that could only be grasped with a kind of Marxian Gnosticism, but rather those things which are perceptible but not exactly screaming for attention, those things which are the second, third, and fourth ripples of a given transaction or situation.  

How slow we human beings are to learn!  Here, via Drudge, comes a story on government benefits, which praises the good results of the various quasi-Socialist rackets which our overlords have enacted.  One line at the end of the story is devoted to a counterpoint, courtesy of an economist at the American Enterprise Institute.  They barely gave him the time of day, and just gave him enough of  a quote to make him sound (most probably unjustly) like nothing more than a crank.  

Here’s what this article does not address:  The “benefit” money that is dispersed by the government to various citizens comes from the other citizens who are productive and who are required to send a percentage of their income to the government.  In other words, this one-sixth of the American “income” is not income at all:  It is simply money that has been taken from the income of others.  The idea that the government “has” money is ridiculous.  Even George W. Bush understood that the money which the government possessed actually belonged to the people.  

This means that these benefits will eventually contribute to our downfall, just like the Fed’s neat trick of doubling the money supply and the fool’s errand of bailing out GM.  Instead of some people going under, many more will go under, if not the entire economy, too.


2 Responses

  1. Ah, the seen and the unseen. Was having a discussion about just this sort of thing today with a very compassionate well-intentioned young man who was not willing to forgo killing people people who refuse the fake solidarity of forcible redistribution.

    There’s an error around this issue in GDP calculations, too. Government spending is added to GDP as if it’s productive activity. At the least, it ought to be subtracted, and perhaps subtracted by some multiple other than 1.

  2. Oh that’s interesting. I didn’t know that this stuff went into GDP calculations. Now I see that those numbers are not only partially, but totally useless!

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