Guest post by Phil Scott of Wellington’s Foundation for Economic Growth
Ineptocracy [in-ep-toc'-ra-cy] - a system of government where the least capable of leading are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.
Greece springs to mind.
We are not an ineptocracy yet, but we have spent many decades moving in that direction. It seems that nations are either becoming wealthier or poorer. The fact that we are running our economy with paper money makes it very difficult to even tell whether or not we are getting wealthier as a nation. I know that when a nation doubles the unit of money the price of everything doubles and the wages double and everything remains stable as we saw when New Zealand changed from using pounds to using dollars, overnight.
It therefore seems reasonable that if we are increasing our paper money supply by 10% each year then, by and large over a period of time the cost of things will increase by 10% each year as well. Increasing productivity by 1% or 2% may keep costs down but when we look at REAL Estate which is the one REAL asset that we can all recognize we notice that over a period of four decades properties have been going up in price by around 9% or 10% each year, on average.
The value of a house to its owner does not change over time. It is still the same more or less comfortable and secure place to live. But the increase in paper money deludes us into thinking that since our house is now worth a million dollars we must be rich. Not at all. Our wealth has remained stable. It just takes more government supplied paper money to buy things.
Owning a property maintains our wealth. It does not increase it. How then do the Green Party members of parliament justify calling this a "capital" gain and then taxing us if we sell it?
This is just another means of taking wealth from the savers and giving it to the voters for socialism. The net effect is to destroy the middle class and have a society of a few very wealthy people and a vast array of peasants.
We see this problem overseas with the protests in Wall street demanding help for the "99%".
The question is, "How do we solve this problem?"
A study of REAL Economics will provide the answer. Have a read here.