The Europeanization of America
by Richard
Now we must face an idea whose time has come.
Only I wish it hadn’t.
Even if the other guy had won the Presidential election, it would not have made much difference at this point.
If you had to choose the pivotal event that marked the end of the free market economy in this country, it would be the passage of the $700 billion rescue bill.
It was as if the Fed and the Treasury held a gun to their own heads and told Congress that they would shoot if they didn’t get their funding. It sounds like an early Woody Allen movie, the premise of taking yourself hostage and threatening your own suicide to force money from innocent bystanders.
And of course, it worked like a charm.
The token resistance of house Republicans was steamrolled in just four days, as they were unnerved by market reaction to the first vote.
Now….every industry in America has their tin cup out, waiting for their own very special bailout. There is no worse example than the Detroit-three automakers whom I blogged about last week.
My task as wealth manager for my extended family and my clients is to dodge as many bullets as possible…not an easy task as the market economy is being systematically plundered and dismantled. But not an impossible task, either.
The easiest way to navigate a major paradigm shift is to learn from those who have gone down this path before you. As pioneers, they are easily recognized….what with the arrows sticking out of their backs.
Of course, I refer to middle and upper income western Europeans.
Exhausted and broke after World War II, and jumpstarted with our very generous Marshall plan aid, western Europeans focused inward, protected by NATO and the American garrisons in their countries. Their focus was the transition towards welfare democracies, and the insulation and protection of their citizens from economic inequality.
Call it what you will, it was a sharp turn towards statism, with the government dictating terms of universal health care, employment…even mandatory vacation and maternity leave. And in the process it became a beacon to be emulated by left of center policy wonks on our side of the ocean.
The transition on our side was made easier by the credit implosion resulting from the burst real estate bubble, and the execrable behavior of gluttonous executives looting their own companies. They were in no position to protest when the government invited themselves into their capital structure, in a move that Tony Soprano would have envied.
And still…with the heavy hand of government over-regulation, heavy handedness, and industrial policy propping up sclerotic corporations…
Still there are entrepreneurs able to launch new businesses.
When taxes on wages are confiscatory, the most able and alert will shift their focus into equity investments or direct ownership, where they can pile up untaxed long-term capital gains.
The tax collector in the welfare state is always and ever at his levelling, redistributionist task.
The family tax planner and wealth manager must always be one or two steps ahead.
Tell your kids that degree in urban planning is not going to cut it.
This is shaping up to be a very long street fight. And you never bring a knife to a gunfight.
Time to go back to school for your LL.M. in taxation.
