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Posts Tagged ‘spread the wealth around’

What Happens When Progressives Tax (and Spend)

As Rush Limbaugh so rightly pointed out, “No nation has ever taxed itself into prosperity.”

So many people have accepted the argument that progressive taxation is just, necessary, and fair, so I know this article will offend many.  Hopefully it will also make a few people reconsider their acceptance of policy.  Many who are vehemently opposed to socialism, collectivism, and all the other trappings of the centralized corporate state believe that any injustice that might result from a free society would and should be mitigated by a policy of progressive taxation.  The government through its education arm and the politicians through their media arm have used both hands and done a superb job.

It hasn’t only been dumbing down it has also been indoctrination convincing the patient that it makes sense to cut off both legs to keep them from running amuck.  However; as James Madison said, “Knowledge will forever govern ignorance, and a people who mean to be their own governors, must arm themselves with the power knowledge gives. A popular government without popular information or the means of acquiring it, is but a prologue to a farce or a tragedy or perhaps both.”

The easiest thing to do would be to ignore this 800 pound elephant.  As the cop on the block says when something has happened and there is most definitely something to see, “Move along there’s nothing to see here.”  However as the Historian of the Future that would be irresponsible.  For it is in the mass acceptance of this inherently unfair coercive action as fair that the base of democratic irresponsibility forms the basis for the towering structure which is the Progressive State.

For generations this once unconstitutional procedure for wealth distribution has been accepted without question.  This was not always the case.

James Madison, the Father of the Constitution, had some interesting things to say about unequal taxation.  Such as  in his Essay on Property, March 29, 1792, “That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest.”  And “A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species: where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor.”

In Europe which is often the source and first scene of the crime when it comes to the Socialist/Utopian schemes foisted on the uninformed and unsuspecting American public, when progressive taxation was first proposed during the French Revolution the classical liberal Anne-Robert-Jacques Turgot, said, “One ought to execute the author and not the project.”

During the socialist led revolutions of 1848 Karl Marx and Friedrich Engels frankly proposed “a heavy progressive or graduated income tax” as one of the measures by which, after the first stage of the revolution, “the proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeois, to centralize all instruments of production in the hands of the state.” And these measures they described as “means of despotic inroads on the right of property, and on the condition of bourgeois production … measures …which appear economically insufficient and untenable but which, in the course of the movement outstrip themselves, necessitate further inroads upon the old social order and are unavoidable as a means of entirely revolutionizing the mode of production.”

According to John Chamberlain in 1961, “It was Marxian socialism—‘From each according to his abilities, to each according to his needs—which fathered the great attack on proportional tax equity: a ‘heavy graduated income tax’ is a salient feature of the Communist Manifesto of 1848. But the Marxians would have made little headway if non-Marxian economists had not come unwittingly to their support with the theory that ‘it is not equal to treat unequals equally.’ In cases of charity, this is undoubtedly true, but no comprehensive legal system can be reared on a rule which begins by regarding everybody as an exception.”

After these proposals for income redistribution had been dismissed out of hand by economic experts and thinking people as inherently unfair they were smuggled in as supposedly rational arguments based on the need or desire to spread the sacrifice equally.  Those who presented this type of argument were careful to stress that they were not interested in income redistribution and that any progression beyond a modest scale should of course be condemned.  Opponents tried to point out that once the principle of progression was accepted there was no limit to which the progression could be pushed.  These opponents were said to be maliciously distorting the argument and showing a lack of confidence in democratic rule.  Even today the watch word for the advocates of progressive taxation is that everyone should pay their fair share.  This fair share is never defined.

The countries of Europe led by Prussia fell first to this pernicious scam.  In the 1910 and 1913 respectively Great Britain and then the United States bought into the lie that inequality in taxation provides equality in sacrifice.  At first the rates were moderate.  In Great Britain they started at 8.5 % and In America at 7%. However within 30 years the top rates were 97.5% and 91 %.  Within one generation that which its proponents said would never happen and its opponents said was inevitable came to pass.

This radical change in the rates and the progressive nature of the tax changed not only the degree but also the character of what was taking place.  This soon became a vehicle for income distribution and nothing more.  Social engineering based on the communist dictum “From each according to his ability to each according to his need.”  This is all based upon the difference between greed and envy.  Greed wants more and will do what is necessary to attain it.  Envy wants what someone else has and will do what is necessary to take it.

To solve the problem of greedy people making more than others, envious people created a system to take what the greedy had earned.

One of the foundation stones of the continuing support by the general non envious public for this institutionalized theft is the belief that the high rates levied on the rich make an indispensable contribution to the total revenue of the nation.  This is an illusion. If all the assets of the rich were expropriated in their entirety they would not cover the profligate spending of the political class.

In 2011 Steve McCann pointed out, “Using the latest statistics from the IRS, in 2004 there were 2.7 million adults with a net worth above $1.5 million.  If the government were to seize all the wealth above the $1.5 million threshold, Washington would realize a one-time windfall of $4.0 Trillion — and no one would again attempt to accumulate wealth.  Assuming it was applied to the national debt (unlikely with the Left in charge as they would spend it) the national debt would only be reduced from$14.5 Trillion to $10.0 Trillion.”  And that would be a once in a lifetime score. Today the debt stands above 18 trillion.

In 2012 John Stossel noted, “If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit. Our national debt would continue to explode.”

According to the non-partisan Tax Foundation’s David Logan, “Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent.”  In any event according to Parkinson’s Law, “The expenditures of the State always rise to meet potential income.”

According to F. A Hayek:

“The real reason why all the assurances that progression would remain moderate have proved false and why its development has gone far beyond the most pessimistic prognostications of its opponents is that all arguments in support of progression can be used to justify any degree of progression.  Its advocates may realize that beyond a certain point the adverse effects on the efficiency of the economic system may become so serious as to make it inexpedient to push it any further.  But the argument based on the presumed justice of progression provides for no limitation, as has often been admitted by its supporters, before all incomes above a certain figure are confiscated and those below left untaxed.  Unlike proportionality, progression provides no principle which tells us what the relative burden of different persons ought to be.  It is no more than a rejection of proportionality in favor of a discrimination against the wealthy without any criterion for limiting the extent of this discrimination.”

  1. R. McCulloch expressed the problem with progressive taxation in this way, “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit.”

When will the insanity of unequal = equal stop? It will never end because there is no ideal rate of progression that can be demonstrated by any type of formula. There is never a reason why “a little more than before” should not always be represented as just and reasonable.

Looking to the end result Alexis de Tocqueville told us long ago, “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”

Hayek assures us that this is not a general attack upon democratic principles.  It is instead the revelation that democracy must be guided by principles or it will founder on the shoals of expediency and the illusion of rationality.

Hayek expressed it well, “It is no slur on democracy, no ignoble distrust of its wisdom, to maintain that, once it embarks upon such a policy, it is bound to go much further than originally intended.  This is not to say that “free and representative institutions are a failure” or that it must lead to “a complete distrust in democratic government, but that democracy has yet to learn that, in order to be just, it must be guided in its action by general principles. What is true of individual action is equally true of collective action except that a majority is perhaps even less likely to consider explicitly the long-term significance of its decision and therefore is even more in need of guidance by principles.  Where, as in the case of progression, the so-called principle adopted is no more than an open invitation to discrimination and, what is worse, an invitation to the majority to discriminate against a minority, the pretended principle, of justice must become the pretext for pure arbitrariness.”

So what’s the answer?  First it should be obvious that the majority should not be able to impose a tax rate that it does not pay.  Secondly the maximum rate of taxation should be tied to the % of the GDP devoted to government.  If the government is absorbing 25% of the economy no rate higher than 25% should be allowed.  If in the case of a war or other national emergency the rate of government cost rises the rate could rise, and when it falls the rate should fall.

Raising tax rates as a way to solve the debt problem just doesn’t work.   Looking at the 1950s when the rates were higher than they are today Hayek pointed out, “How small is the contribution of progressive tax rates (particularly of the high punitive rates levied on the largest incomes) to total revenue may be illustrated by a few figures for the United States and for Great Britain.  Concerning the former it has been stated (in 1956) that the entire progressive super-structure produces only about 17 per cent of the total revenue  derived from the individual income tax’-or about 8.5 per cent of all federal revenue,– and that of this half is taken from taxable income brackets up through $16,000-$18,000, where the tax rate approaches 50 per cent (while] the other half comes from the higher brackets and rates.”

When Congress was debating the 16th Amendment to allow for individual income taxes Massachusetts Rep. Samuel McCall stated, “The character of the argument which had been made leads me to believe that the chief purpose of the tax is not financial, but social. It is not primarily to raise money for the state, but to regulate the citizen and to regenerate the moral nature of man. The individual citizen will be called on to lay bare the inner-most recesses of his soul in affidavits, and with the aid of the Federal inspector, who will supervise his books and papers and business secrets, he may be made to be good, according the notions of virtue at the moment prevailing in Washington.”

To paraphrase Parkinson ’s Law, “Government spending always rises to exceed revenues.”

So what happens when Progressives tax?  They tax us into poverty.

AND

Spend us into insolvency.

Dr. Owens’ newest book Colonial American History: The Essential Story is now available at Amazon.com http://www.amazon.com/Colonial-American-History-Essential-Story/dp/1633911349/ref=sr_1_1?ie=UTF8&qid=1420818654&sr=8-1&keywords=colonial+american+history+owens

Dr. Owens teaches History, Political Science, and Religion. He is the Historian of the Future @ http://drrobertowens.com © 2015 Contact Dr. Owens drrobertowens@hotmail.com Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens

Why We Need Capitalists

At one time in America most people were financially independent.  I don’t mean by this that most people were wealthy.  What I mean is that they worked for themselves as opposed to working for someone else as a hired laborer.  People were farmers, or craftsmen, trappers, or frontiersmen.  Thomas Jefferson pictured America as a republic based upon the yeoman farmer.

That day has passed.  Today most people who work are employed by someone and draw a wage. As a matter of fact in America today it is not overstating the matter to say that of those who earn their own living the vast majority are exclusively wage earners.

Combine this with the reality of our modern infatuation with democracy and it is no wonder that the majority of voters continue to elect people who are pro-worker and anti-free enterprise.  This is aptly reflected in our labor laws and the radicalized National Labor Relations Board.  It is also reflected in the progressive income tax, the fact that corporate income is taxed twice, once as income to the corporation and secondly as income when the same money is distributed to shareholders.  It is further manifested in the bewildering array of regulations that spew forth from Washington strangling business in red tape.

The masses of wage earners have fallen prey to the siren songs of demagogues.  These pied pipers point to the visible difference between the rewards earned by those who risk their capital and their personal efforts to start and build an enterprise and those who earn wages to work for those enterprises.  These differences in reward are labeled as unfair.  It is either intimated or stated directly that those who start enterprises and build their bigger reward have done so by taking from those who earn a smaller reward by working for the enterprises they build.

We hear endlessly about a fair deal, a level playing field and building ladders to the middle class.  Government control is offered as a gateway to utopia where those who earn too much give to those who earn too little; from each according to their ability to each according to their need.  The Svengalis of redistribution seek to mesmerize people removed from anything except doing a proscribed task for an agreed upon amount.  They teach that free enterprise is the cause of the unfairness portrayed as America’s legacy.  Our state controlled schools drum the same message into our children until it become to them common sense.  The subservient media sing the same song in movies, on TV and in the news.

Building upon this multipronged barrage of propaganda the worship of democracy kicks in to warp our Republic.  When we combine those who succumb to the collectivist delusion among the wage earners with government workers and those who are living off the dole and we have a solid majority dedicated to restricting freedom to gain security.  A bargain our Founders warned us leads to having neither.

This is where we stand today.  The entrepreneur is looked down upon as a parasite on the economic life of the wage earners.  Entrepreneurs are portrayed in movies, on TV, and by our leaders as grasping schemers who care nothing for the environment or their fellow man, and the only reason they aren’t throwing grandma off the cliff is because someone is watching.  Try to remember the last time Outside of an Ayn Rand novel or movie that you saw capitalists portrayed as anything positive in America.  It is generally believed by the low information voters that the only way people get rich is to steal from the poor.

This is a trap; a trap that swallowed Russia and held it captive for generations, and a trap that impoverished Eastern Europe and turned China into one big internment camp.  Those who spent most of the 20th century sitting in the dirt eating leaves as a result of their campaign against free enterprise have broken their chains and are today the Tigers of East Asia and the power houses made of BRIC.

Entrepreneurs are necessary.  They are the engine that makes the wheels of innovation turn.  They are the ones willing to take a risk.  They will turn away from the guaranteed wage and the benefits all our parents taught us were necessary for a good life.  They are the ones willing to take the chance and hazard their all for something others can’t see.  They are the ones who build the organizations for others to work within. Without them economies stagnate, suffocate, and die.

If the government were to take over every business in America and ensure that every wage earner could continue to earn their daily bread does anyone think this would be the America that we have known?  Does anyone believe it would be the America that grew from thirteen impoverished war weary states on the edge of civilization into the greatest power the world has ever known?  This has been tried before and everywhere it has ever been tried it has failed.  Don’t believe the political savants who tell us this time it will work.  The ones who say they will do it differently and whose every program proves they are doing it the same.

In Russia the government actually took ownership of everything, and then ran it all into the ground.  In Italy and Germany they tried it another way.  They allowed for private ownership but with strict government control.  Here in our American version we are following the Italian and German path with crony capitalism building fortunes on political access.  Our stock market does not move in response to innovation and enterprise it moves in tandem with government policies. The Too-Big-to-Fails make the cronies at the top wealthy as they plunder the assets, buy back the stock, and enrich their friends with options.  All while making sizable campaign donations along the way to those who make it all legal.  Then when the bubbles burst they get bailed out and the tax payers foot the bill.

If we are to survive let alone thrive we have got to open the way for the innovator.  We have got to once again encourage the risk taker, quit punishing success, and stop subsidizing failure.

To give a good day’s work for a day’s wage is an honorable thing. To be a faithful and responsible employee is something we can teach our children.  However without the new energy and markets created by innovative entrepreneurs the system will eventually stop growing.  When the pie stops growing everyone ends up fighting over the size of their piece.  When the pie stops growing and the population keeps growing everyone’s piece must get smaller, except of course for those who do the dividing.

Why do we need capitalists?  So that everyone else can have a job.

Dr. Owens teaches History, Political Science, and Religion.  He is the Historian of the Future @ http://drrobertowens.com © 2014 Contact Dr. Owens drrobertowens@hotmail.com  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens / Edited by Dr. Rosalie Owens

 

Not Worth a Continental

The Federal Reserve System (the Fed) was established in 1913 as one of the cornerstones of the Progressive agenda.  They said it was a way to stop the boom and bust cycle which has always been a fixture of capitalist economies.  The Fed is America’s third Central Bank.  The First and Second Banks of the United States were born out of Alexander Hamilton’s ideas as expressed in his famous Second Report on Public Credit in 1790.  The first bank was allowed to expire and the last was ultimately killed by Andrew Jackson in 1833. Jackson believed the Bank had too great an influence politically and economically.

TheUnited   Statesgrew to become the greatest industrial power on earth in the next eighty years without a central bank.

Established in 1913, the Federal Reserve is America’s central bank.  It is semi-independent/semi-public depending on which role is needed to justify its actions.  It is run by a board of seven Governors.  These Governors are nominated by the president and confirmed by the Senate.  Led by a Chairman who is also appointed by the president and confirmed by the Senate these eight people control a system of twelve Regional Federal Reserve Banks which have numerous branches throughout theUnited States. The Fed can expand or contract the money supply in many ways.  They print money both physically and digitally, they set interest rates, they can loosen or tighten the regulations for lending, and they can purchase debt from the Treasury.  Most of these measures are neither understood nor noticed by the general public.  This helps build and maintain the impression of a mysterious institution behind a curtain pulling levers and pressing buttons secretly controlling the economy.  In many ways this impression is correct

Ben Bernanke is the current Chairman of the Federal Reserve.  Some believe that this is the most important post in the United States because the Federal Reserve controls our economy through its control of the money supply.  Mr. Bernanke acquired the nickname Helicopter Ben from a speech he delivered in 2002 entitled, “Deflation: Making Sure “It” Doesn’t Happen Here.”

In this famous speech he said, “The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand – a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers. Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending–namely, recession, rising unemployment, and financial stress.”  This is a well stated summation of the problem of deflation.

As a defense against the ravages of deflation the future Chairman of the Federal Reserve never actually said he would drop money from a helicopter.  What he said was, “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”  Which was coupled by later analysts and pundits with the statement, “A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.”

In the popular imagination this has been shortened into the oft misquoted belief that he said he would get in a helicopter and drop bales of money to combat deflation.

The collapse of the Housing Bubble in 2008 brought the American economy to a standstill and threatened to escalate into a systemic collapse of major banks and other financial institutions.  To stop the wheels from coming off the commercial cart the politicians reacted with unusual speed and vigor.  George Bush famously said, “I’ve abandoned free market principles to save the free market system” when he advocated and passed the Troubled Asset Relief Program (TARP) which was designed to buy mortgage backed securities in an effort to inject money into the American banking system and thus restart the economy.  This 700 Billion dollar fund (later resized to 475 Billion) was eventually used instead to bailout major banks, AIG, and buy GM and Chrysler with only 22 billion ever going to buy toxic assets.

This was followed by President Obama’s stimulus bill which cost another 800 billion and was supposedly designed to kick start the economy by providing jobs.  The Congressional Budget Office eventually evaluated that these shovel-ready jobs cost 4.1 million each.  But then again as our President later joked, “Shovel-ready was not as shovel-ready as we expected.”

Spending government money to prime the economic pump cannot work.  The government doesn’t produce anything.  It must either take the money out of the economy through taxation taking from the productive for the benefit of the unproductive or print the money thus causing inflation.  All the government can do is redistribute wealth; it does not create it.  And when the government is in the business of picking winners and losers we all lose freedom, liberty, and opportunity.

Inflation is a rise in the general level of prices related to an increase in the volume of money and the resulting loss of value of currency.   The Progressives didn’t invent inflation.  The Obama Administration isn’t the first to resort to inflation to keep the ball rolling without the pain of tax increases.  America was born in inflation.  During the Revolution one of the greatest problems was how to finance the war.  America was effectively blockaded by the massive British fleet and unable to trade with the rest of the world.  So the government printed the money they needed, and printed and printed and printed until the money was effectively worthless coining instead of wealth the shameful saying, “Not worth a Continental.”  These early ancestors to our dollar were eventually redeemed at 100 to 1.

Helicopter Ben has already overseen two rounds of monetary inflation referred to by the mysterious name of Quantitative Easing (QE) which is a fancy way of saying the Fed floods the banks with money.  The staggering size of these have only now begun to come to light showing that since the 2008 collapse the Fed has flushed more than 16 trillion dollars out of the pockets of taxpayers and into the hands of banks and corporations both foreign and domestic designated by the Federal Government as too big to fail.  That is more money in four years than the entire national debt which has taken 236 years to accumulate and QE 3 is on the way.

While running for office and telegraphing his distributive goals Mr. Obama said we need to spread the wealth around. Chairman Bernanke has said the government can produce as many U.S. dollars as it wishes at no cost.  However, no matter what these two wannabe puppet masters may believe there is no free lunch.  In their insolated ivory-tower gated community world they may never have to pay the tab for their misguided attempts to create wealth with the wave of their hand.  Those of us who work for a living who live in the world of family budgets will.  The money we earn will be worth less and less and less until it is worthless.  The money we have saved will lose value day by day.  Someday people may not say, “It’s not worth a Continental.” They may instead say, “It’s not worth a dollar.”

The problem with getting older is you can remember when what we now pay at the pump was a car payment, and what we now pay for groceries was a house payment.  The central-planers behind the curtain in OZ may tell us there is no inflation, but our eyes and our wallets tell us something else: the truth.

Dr. Owens teaches History, Political Science, and Religion for Southside Virginia Community College.  He is the Historian of the Future @ http://drrobertowens.com © 2012 Robert R. Owens drrobertowens@hotmail.com  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens

 

If I Wanted to Make America Prosperous Again

First, I would ask myself how did our ancestors build America from an agricultural colony on the edge of civilization into the number one manufacturing and commercial nation the world had ever known.

Why reinvent the wheel if round ones still roll?

The early American colonies of the British were founded based upon the economic ideas of Mercantilism.  Governmental regulation of industries, trade, and commerce characterized Mercantilism as every aspect of the economy was utilized for national policy. This was especially true with foreign trade, which was determined more by national aims rather than individual or local interests.

The definition of wealth began to change in the sixteenth century.  During the Middle Ages, wealth was defined by the amount of productive land a nation possessed.  As transportation, especially by sea, improved so did the ability to conduct foreign trade bringing with it an increase in the amount of cash generated by that trade.  The definition of wealth came to be the amount of cash a nation possessed.  Therefore every nation sought to have a favorable balance of trade.  They also sought to develop monopolistic type environments wherein they provided their own raw materials thus avoiding imports which meant money flowing out and fostering the export of finished goods raising the level of money flowing in.  Defining wealth as the accumulation of cash, the nations ofEurope desired to conduct foreign trade on a larger scale, and they began looking for foreign sources of gold, silver, and raw materials.

This brings us to the British effort to developNorth Americaas a source of wealth.

The Chesapeake colonies ofVirginia andMaryland were the first successful British colonies in what was to become theUnited States of America.  Though the initial colonists came looking for gold they soon learned that prosperity came not from a shovel but instead from a plow.  It was tobacco that primed the pump and lifted the colonies from a burden to a benefit for the mother country.  After years of mounting expenses for the British and years of starvation for the colonists the cultivation of tobacco brought prosperity. Virginia’s production of tobacco grew from 200,000 pounds in 1624 to 3,000,000 pounds in 1638 overtaking the West Indies as the number one supplier of tobacco for all of Europe thus boostingBritain’s balance of trade.

The cultivation of tobacco fostered a plantation system based upon indentured and slave labor.  A gentrified class of great planters sought to replicate the social structure of Britain with a small number of very rich ruling a large number of small land holders who prospered to a certain extent but never enough to challenge the status quo.  The wretched poor ofBritainwho had come to theChesapeakecolonies to find a better life did find more opportunity and the ability to advance from the landless poor to the ranks of yeoman farmer.  However, there was little opportunity to enter the ranks for the gentry which became a type of American nobility.

New England, because of the soil, the climate, and the fact that there was no major cash crop that grew well in the area, did not lend itself to large plantations.  Most farmers were operating at a subsistence level.  If they did generate a surplus it was in crops that were not easily transported across the ocean, and they were also crops that could be grown inEnglandand were not needed as imports.

This climatic and environmental adversity did not condemn New England to being a poor relation to the Chesapeakenobility.  Instead the New English diversified, innovated, and used individual enterprise to not only match but to surpass Chesapeake and every other colony in the British Empire.  Those who settled New England were Puritans who sought to purify the Anglican religion of ceremony and return it to what they saw as the simplicity of early Christianity.  They did not believe that good works brought salvation but they did believe that salvation brought good works.  Therefore they sought to occupy their time with productive activity to glorify God through their labors.  This was a manifestation of what the sociologist Max Weber later called , “The Protestant work ethic.”  Whatever you choose to call it, it was this drive to succeed no matter what the adversity that led the New English to look beyond the soil, beyond the climate and to the opportunity.

First they exploited the fisheries of the Northeast.  In 1641 the New English caught 600,000 pounds of fish much of which was exported toBritain.  By 1645 they were catching more than 6,000,000 pounds per year employing more than a thousand men on 440 ships.  They came to dominate the fish trade shipping not only toBritainand its empire but also toSpain,Portugal, the Azores, Madeira, and theCanary Islands.

By the end of the 1600s the merchants of the New English coast began to circle the globe trading the fish, surplus crops, and lumber of their area to all parts of theBritish Empire.  They became such shrewd traders that soon American ships were carrying trade from one colony to another even when the cargo didn’t originate inNew England.  This secondary carrying trade generated a growing profit that in turn rebounded in a number of ways.  The increased profits brought home financed increased industry and growth at home, and it also spawned a shipbuilding industry which exploited the vast resources of the northern forests.

Between 1674 and 1714 the New English built more than 1200 ships, totaling more than 75,000 tons.  By 1700 there were fifteen shipyards inBostonwhich produced more ships than all the rest of the British colonies combined.  OnlyLondonhad more shipyards.  This was a significant engine of economic growth.  To build one 150 ton merchant ship required as many as 200 workers, mostly skilled craftsmen.  The shipyards also supported the growth of numerous enterprises to supply their needs such as saw mills, smithies, barrel makers, sail makers, iron foundries, and rope makers. In addition, the farmers of New England benefited by feeding the craftsmen, supplying the ships, and providing the timber.

By 1700Bostonwas the third city of the Empire behind onlyLondonandBristoland the New English shippers were earning freight charges for carrying produce and material that was neither produced, shipped to, or shipped from their home colony.  The enrichment of the area spread prosperity far beyond the sphere of shippers, sailors, and their sundry suppliers.  According toBoston’s shipping register for 1697-1714 over 25% of the adult males inBostonowned shares in at least one ship.

All of these linkages produced an economy filled with diversification and development as opposed to the stratified monoculture of theChesapeakecolonies.

These trends continued as time went on leading to the industrial North eventually overwhelming the agricultural South.  The expansion and growth ofAmericawas based upon a foundation of hard work and innovation born of adversity.  Finding themselves in a hard place Americans found a way to prosper and grow like a young plant reaching for the sun.  Freed from the rigid restraints of the home country and then guaranteed freedom by the constitution and the limited government it providedAmericasurged to the front ranks of nations.

Today, America labors under self-imposed adversity.  We are in the grip of an oppressive Progressive Movement that after 100 years of incremental advance is poised to transform America from what she has always been into what they want her to be.  America has traditionally been a constitutionally limited Republic operating on democratic principles providing individual liberty and economic opportunity.  The Progressives envision America as a centrally-planned highly regimented social democracy where the wealth is spread around from each according to their abilities to each according to their needs .

If I wanted to makeAmericaprosperous again I would take off the self-imposed shackles of a central government on steroids, stop imposing new regulations, and reduce taxes everywhere on everyone.  Then I would stand back and watch our economy takes off like a rocket and we take our place beside our ancestors as free people with economic liberty and a will to succeed.

Dr. Owens teaches History, Political Science, and Religion for Southside Virginia Community College.  He is the Historian of the Future and the author of the History of the Future @ http://drrobertowens.com © 2012 Robert R. Owens drrobertowens@hotmail.com  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens