It Feels So Good

By Robert Ringer

In response to my ongoing discussion of a deflationary depression versus an inflationary depression, some readers have asked if a “soft landing” might still be possible. I guess the answer to that question depends upon how you define soft landing.

If by soft landing you mean that we will somehow muddle through, things will calm down on their own, and we will not experience a great deal of pain, the answer is no. (For a detailed explanation of this, see my article “Is It Too Late, Part VI.”) But if your definition of soft landing is an economy that declines one step at a time, without a great deal of anarchy and violence, I would say that such a scenario is possible.

There are a number of complex factors at play here, but let’s begin with the most obvious one: human nature. Was it Groucho Marx who first told that old joke about a man standing on the street corner, hitting himself over the head with a hammer? When asked why in the world he would inflict such pain on himself, the guy answered, “Because it feels so good when I stop.”

Yes, it’s silly, but it reminds me of just how adaptable human beings are. Metaphorically speaking, we, as a people, hit ourselves over the head with a hammer quite often, but we have become immune to the pain. We seem to have the uncanny ability to get used to bad circumstances.

Which is why, in the past, most producers continued to create wealth even when their taxes rose to draconian levels. During World War II, the top tax rate reached 94 percent, and it remained at 91 percent until 1964. With such astronomical tax rates in effect, it’s amazing that we survived. However, I believe that the fact that we were involved in three wars during that time (WW II, Korea, and Vietnam) had a lot to do with producers staying the course.

But even without having war as a rationale, I believe people will get used to a lower standard of living once resignation sets in — provided the drop isn’t too fast. What we’ve had recently is a very big drop in many areas of our economy in a very short period of time — especially in the stock market — so, right now, folks are in somewhat of a state of shock.

Many are talking about postponing retirement — or not retiring at all. Cutting back on, or completely eliminating, vacations will follow. Then, the four nights of entertainment a week they’ve been enjoying will go by the wayside … followed by high-priced tickets to sporting events … and so on.

It all depends on how fast and how far government pushes the socialist envelope — one step at a time. Every new bailout, every new regulation, every new tax will cause a tectonic downward shift in the stock and bond markets, the marketplace in general, and the standard of living of most Americans. One step at a time, government intervention will drag our economy downward.

But to the extent major government interference and blunders are spread over a longer period of time, Americans will adapt to a progressively lower standard of living. It’s not really muddling through; it’s muddling downward — in stages — one step at a time, and giving people a chance to catch their collective breath and adapt to the next lowest level.

If you’re thinking gradualism, you’re right. It has worked like magic for the U.S. Government for at least a hundred years, and it could once again protect politicians against outright rebellion. By contrast, a quick and total deflationary collapse would not be peaceful, because, unlike 1929, a huge percentage of today’s population has a deeply ingrained entitlement mindset.

But what about producers? Won’t they quit producing? You probably never thought you’d hear me say this, but I believe they will keep producing even if they have to share ever-larger pieces of their pie with non-producers. At some point, however — and no one knows exactly what that point is — producers will escape to Galt’s Gulch. It may not be a physical place, as in Ayn Rand’s Atlas Shrugged, but, one by one, they will simply stop producing. And if things get too bad, many will simply expatriate.

The truth be known, Americans have adjusted to a gradual shift toward Marxism for decades … arguably since at least 1913. But we have been oblivious to it, because the rest of the world has been subsidizing our false standard of living. And here at home, Barney Fraud & Pals got most of the public to indulge in the fantasy that everyone should own a home — even if they couldn’t afford to.

In any event, as perverse as it may sound, a gradual lowering of the living standards of most Americans will be more harmful over the long term than a rapid and complete collapse of the U.S. economy. As an analogy, remember that immediately after 9/11, a vast majority of Americans were fighting mad and the general tone was patriotic.

The radical Islamic threat is far greater today than it was after 9/11, but because there have been no further major attacks on U.S. soil, “the war on terrorism” is no longer a high priority. Americans have gotten used to the idea that terrorists are spread throughout the country, pretending to be everyday citizens.

The point is that everything, no matter how damaging it may be to our well-being, becomes normal to us over time. An abused woman comes to believe her situation is normal. A kid who is bullied in school comes to believe his situation is normal.

I’m afraid that if we keep hitting ourselves over the head with the hammer of a staggered collapse of our economy, Americans, one step at a time, will get used to a lower standard of living, the result being that they will come to think of each new level as normal. Which is why, if it’s important to you for your children and grandchildren to live better than you’re living today, you should pray for things to unravel quickly — followed by a successful Liberty-Education Revolution.

Without the latter, it goes without saying that the final curtain will come down on America’s Grand Experiment in Freedom.