By Dr. Mark W. Hendrickson
FrontPageMagazine.com | Tuesday, June 10, 2008
A recent International Monetary Fund research report listed the countries expected to suffer the worst currency depreciation—that is, the worst inflation—this year. Zimbabwe (a mind-boggling 300,000 percent-plus), Venezuela (25.7 percent), Bolivia (15.1 percent), Nicaragua (13.8 percent), and Argentina (9.2 percent) are the top five. What do these countries have in common? You could reply in two ways: 1) they are poorly governed; 2) they are leftist governments, which is simply another way of saying that they are poorly governed.
Indeed, it is difficult to think of any economic indicator that exceeds inflation as evidence that a country is poorly governed. Leftist governments—defined here as regimes unfriendly to private property, private enterprise, and private profits; regimes that constantly seek ways to redistribute wealth from the economically productive members of society to favored political constituencies; and regimes that reject free markets and instead expand government control over economic activity—invariably cripple production while increasing government spending. The inevitable result is inflation.
Comment: The USA is heading into the biggest credit contraction since the Great Depression which was caused by Hoover and Roosevelt that both raised taxes which turned a recession into a Great Depression. If the next administration raises business and income taxes into the 2009 to 2011 years then a hyper inflationary depression will be the result. It may already be a fait accompli; congress is pushing windfall tax legislation against the US oil industry. Only the US congress would answer the country’s need for more oil and gas and for lower energy costs by legislation to reduce oil and gas and further drive up energy costs. As the credit crisis accelerates expect more of the same. Some congressmen are already making references to the government taking over the US oil industry; have we already forgotten the poverty that socialism brought to Eastern Europe and Russia. Note that those countries, now capitalist, have low taxes. Russia has a low flat rate income tax. The USA has the highest corporate taxes of any country in the world; it seems to be trying to kill the goose that layed the golden egg.