Most people have heard the expression, "killing the goose that laid the golden eggs," but many cannot recite the complete story. It goes like this:

A poor farmer one day discovers a glittering golden egg in the nest of his pet goose. At first he thinks it must be some kind of trick. But as he starts to throw the egg aside, he has second thoughts and takes it to an appraiser. The egg is pure gold. The farmer can't believe his good fortune and becomes even more incredulous the following day when he discovers another golden egg. Day after day, upon awakening, he rushes to the nest to find another golden egg. He becomes fabulously wealthy. It all seems too good to be true.

But with his increasing wealth comes greed and impatience. Unable to wait day after day for the golden eggs, the farmer decides to kill the goose and get all the eggs at once. But when he opens the goose, he finds it empty. There are no golden eggs and now there is no way to get any more. The farmer has killed the goose that laid them.

But there is another chapter to this story that goes untold.

Although the farmer rues his decision to kill the goose, he realizes that it is no grave misfortune. After all, he has become fabulously wealthy; he is no longer a poor dirt farmer. His financial future is assured. Although there will be no more golden eggs, there will also be no more poverty. Killing the goose, while unfortunate, does not entail a financial crisis. He will be okay.

This mythical fowl tail describes America's current economy perfectly. Governments, both state and federal, have become a goose that lays golden eggs for America's business community. Our governments have allowed that community to decrease the wages of workers, eliminate relatively high-paying jobs by transferring them to foreign nations where wages are considerably lower, and create an ever growing income gap between workers and corporate officers. These corporate officers have become the mythical farmer, and their greed is killing the goose.

America has become the greatest debtor nation in history. It's now relies on foreign nations for essential products and American foreign policy has denigrated many of these same nations for ages. Because of this denigration, the peoples of these nations hold no affection for the United States. Some economists, domestic and foreign, believe that America is sliding from great power to third-world status. And it is not difficult to see why.

It takes no great smarts to realize that for businesses to prosper, their products and services must be sold. But an impoverished people cannot be prolific consumers, regardless of how cheap products and services are priced. So just as governments can be likened to the goose and the business community to the farmer, the consumer becomes the golden egg, and when he becomes the victim of a flawed business model, no more golden eggs will be forthcoming.

But why should the mavens of business care? In the meantime, they have become fabulously wealthy. Why should Bill Gates or any of his ilk care if America collapses into third-world status? If any of their companies go bust tomorrow, they suffer no severe economic consequences. They can shrug their shoulders as they walk away. Fortune magazine has just published a list of America's worst performing CEOs. They are also some of the wealthiest.

Of course, this consequence is not new; it has happened before, and Americans, at least, were warned about how business practices bring this consequence about by Thomas Jefferson who wrote, "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

On January 17, 1925, when President Calvin Coolidge told an audience of newspaper editors that  “The business of America is business” he made popular a legal form of treason that Americans have suffered under ever since. Our business community not only continues to prove that it can’t govern itself effectively but that a free market economy is a destructive myth.

Yesterday, the Dallas Morning News reprinted a piece on tax policy written by Daniel J. Mitchell, a senior fellow at the Cato Institute, which was originally published in Foreign Policy. Finding anything good to say about this piece is impossible. It should never have been written; having been written, no editor should ever have accepted it for publication; having been published, no permission should ever have been given for its republication. It is a quintessential example of the twiddle-twaddle that passes for scholarship and research in American letters. It belongs in the trash!

Before taking up the piece’s argument, I want to point out the contents of the fourth paragraph: Mr. Mitchell writes, “When we think of tax havens, we tend to imagine yacht-besotted enclaves of shadowy . . . dilettantes . . . laughing about . . . tax loopholes. . . .” I am not certain what the referent of the pronoun “we” is, but I don’t believe that Mr. Mitchell means himself and his friends. The only other alternative that I see is the use of ‘we’ to refer to people in general. If that is the usage Mr. Mitchell has in mind, then the content of the paragraph is not anything he or anyone else could ever know. No thoughtful person would ever presume to know what ‘people tend to imagine when. . . .’ A person who makes such presumptions revels that s/he does not routinely make an effort to distinguish between what can be supported by evidence and what cannot. So although what such persons write cannot be dismissed out of hand, since such dismissals would be ad hominem rejections, what they write must be given careful and acute evaluations.

Now to the argument.

Mr. Mitchell tries to make two points. The first is that very high tax rates discourage “saving and investment, stifling economic growth. . . .” But what precisely does this mean? Although not justifiable linguistically, in our fiat-money, inflationary economy, the terms saving and investment have merged. One saves by investing or doesn’t save at all. So what did those who had to pay taxes calculated on very high rates do with their money? Did they spend what they would have invested had rates been lower? If so, they increased consumption which is the main engine behind economic growth in the United States. So how could that have hurt the economy? Did they, perhaps, not spend it all? What, then, did they do with it? Light cigars? No, they surreptitiously hid their excess wealth in foreign tax havens, neither spending nor investing it in America and thereby not only did they do nothing to promote the American economy, in fact they injured it. No one who does that has either his nation or the nation’s people at heart and is therefore a pure scoundrel. Not only does s/he deserve to be taxed, s/he deserves to be deported to the country in which the money is tax-sheltered. I wonder how many Americans would put their money in hidden accounts in Liechtenstein if they had to live there? (I would ask the same question of the principals of those American companies that think India, China, and other low-wage countries are such great places to manufacture products for American consumption. There is thus an analog to the old expression, “Put your money where your mouth is. ”It might read, “Put your body where your money is.” And I wonder whether India or China would tax it.)

But Mr. Mitchell goes on: “Tax havens, by providing a safe refuge for people seeking to dodge confiscatory tax rates, have played a critical role in these positive [loaded adjective which means, in this context, ‘illegal’] developments. Better to get some revenue with modest tax rates, lawmakers have concluded, than impose high tax-rates and lose out.” But I would then ask, why haven’t lawmakers concluded that they should modestly tax all illegal activity, turn a blind eye to the illegality, because it is “[b]etter to get some revenue than lose out?” After all, the two cases are exactly the same in form.

But the second point is the clincher. Mr. Mitchell writes, “High-tax countries complain that jurisdictions such as Lichtenstein enable tax evasion, but this sidesteps the point that lower tax rates and tax reform are a much better way to reduce tax evasion.” I think not. A better way of reducing tax evasion would to “make the punishment fit the crime.”

To reduce the debate about tax policy to a debate about tax evasion is to sidestep the real issue. Taxes are, after all, a government’s only means of financing its activities. The only question that matters is whether taxation raises enough money to pay for the activities that the government deems necessary. Tax-rates don’t matter in the least, since there will always be people who will try to avoid paying taxes. The European nations, which Mr. Mitchell uses as examples, all have deemed it necessary to provide their peoples with extensive social safety nets; ours hasn’t. Those nations know that tax evasion makes accumulating the necessary sums more difficult, and they’re climbing all over Liechtenstein and other tax havens for making tax-evasion easy.

Although the United States has not, perhaps it should. This nation cannot finance the maintenance of its infrastructure, it borrows the money it gives away in foreign-aid and the money needed to fight our wars in Iraq and Afghanistan, it can’t find the money to rebuild New Orleans nor to adequately finance our frayed social safety-net. Worse, it may not ever be able to repay this debt. So although low tax-rates may be good for a financial healthy, creditor nation, they can lead to the nation’s destruction if taxation cannot pay the bills. The European social democracies know that; our government, and their fraudulent advisors in America’s stink tanks apparently do not.

Jonathan M. Feldman, in The U.S. as a "Failed State” (http://www.counterpunch.org/feldman09032005.html), writes, “It's obvious that the New Orleans tragedy has revealed that urban areas, particularly those housing the poor and African Americans, are regarded as disposable by corporate and government elites. . . . The U.S. went into Iraq to "save it" and now can barely save itself. . . . We now must ask ourselves, isn't the U.S. a failed state?” And he obviously believes that the answer is, “Yes.” He goes on to say, ”The solution to this crisis requires several forms of remedial action. One such action would be intervention by a consortia of European States who provided not only economic aid, but some kind of political intervention (in the form of think tanks, grants and other material support) to promote and extend democracy in America.”

Bernard Chazelle, in “The Case for a New Progressive Creed” (http://www.counterpunch.org/chazelle04022008.html) provides a great deal of evidence to support the view of America as a failed state: “By virtually any measure, the United States is the least progressive nation in the developed world.   It trails most of Western Europe in poverty rates, life expectancy, health care, child care, infant mortality, maternity leaves, paid vacations, public infrastructure, incarceration rates, and environmental laws. The wealth gap in the US has not been so wide since 1929. The Wal-Mart founders' family owns as much as the bottom 120 million Americans combined. Contrary to received opinion, there is now less social mobility in the US than in Canada, France, Germany, and most Scandinavian countries. The European Union attracts more foreign students than the US, including twice as many from China. Its consensus-driven polity, studies indicate, has replaced the American version as the societal model to which the developing world aspires.” And he provides these neat comparisons:      

* (a) The US is the world's richest nation; (b) the US outranks only Mexico in child poverty among OECD countries.(28)

* (a) America's GDP per capita is 11 times higher than Sri Lanka's; (b) life expectancy for African-American men is 3 years shorter than for males in Sri Lanka.(29,30)

* (a) African-Americans have been the force behind this country's most influential musical genres; (b) one third of all black men will go to prison at some point in their lives.

* (a) The US scoops up more Nobel prizes in medicine than any nation on earth; (b) 18,000 Americans will die this year for lack of health insurance.

But things are really far worse. Not a single political or social institution in America works. The Congress cannot pass effective legislation, the criminal justice and judicial systems routinely convict the innocent, Social Security and Medicare are grossly inadequate and the commercial health insurance system is dysfunctional. The War on Drugs is stalemated. Our borders are sieves.  Immigration control is non-existent; not only is illegal immigration prevalent; many who come here legally merely overstay their visas and no one knows who or where they are. We incarcerate more people per capita than the U.S.S.R. placed in gulags. Only about half of our school children graduate. The university system is open to the stupid wealthy but not the bright poor, and it absolutely fails to instill reverence for truth and goodness in the students it graduates. Scholarships go to athletes who are not scholarly, and scholarly students are graduated with heavy burdens of debt. Our churches instill neither piety nor compassion nor moral behavior. Racism, although perhaps regressing, is still a major denier of civil rights. The infrastructure is in severe disrepair, and the business community can neither manufacture nor market products of high quality. Salesmen regularly argue over who can sell products that don’t work best. Governmental agencies, ostensibly created to protect the public, instead protect the very people Americans need to be protected from. When hazardous products are imported from China, there is a hue and cry but not much action. The Chinese, on the other hand, have banned imports of cheese from Italy because of one batch that was poisoned. The Federal Reserve aids and abets fraudulent financial institutions, and when their fraud is exposed and they are about to collapse, it commits taxpayer dollars to bail them out. The press routinely reports governmental lies and fails to report the news that Americans really need to hear. What the president says is reported even when its significance is no greater than reporting that Leona Helmsley’s now famous dog barked, but the number of Iraqi civilians killed by the American invasion goes unreported.  Whenever Hamas kills an Israeli, we are told about it, but we’re rarely told how many Palestinians have been killed by the Israelis. We’re also never told how much America is borrowing from China and other countries to pay the aid we give to Israel. We’re aiding foreign governments with borrowed money and fighting two wars with it too. Official lying has become a common practice, and documents are classified not to protect national security but the hide the malfeasance of officeholders. And our electoral process is regularly corrupted by its complexity and inefficient practices; yet we have the audacity to criticize other nations for their corrupt practices.

Those are the facts, and the United States of America is, by every definition, a failed state. It is a nation built around an 18^th Century ideology trying to become a 19^th Century empire in the 21^st Century.

Yet no one has isolated the reason for this failure. It is that the American Constitution has been nullified by an end run by non-constitutional institutions that have taken control of the nation—faction, which the Founding Fathers thought they had rendered ineffective, lobbying which is erroneously justified by citing the Constitution’s right of the people to petition the government for the redress of grievances, not advantage, and by the Supreme Court’s decision that makes political contributions a form of speech, thereby making metaphorical interpretation an accepted practice. So much for strict construction!

How could this have happened? After all, the Federalist Papers more than adequately demonstrated the dangers of faction. Why did those in government who succeeded the Founding Fathers ignore entirely their teaching and arguments?, a question which, of course, is impossible to answer. But the way of fixing America is not through the intervention of foreign nations, it lies in merely controlling these three misguided institutions.

Faction is the Dark Vader of constitutionalism. The Founding Fathers wrote into the Constitution what they thought was a system of checks and balances, but when one faction controls all three branches of government, there are no checks and therefore no balances. When the need for money to finance political campaigns is predominant, Congressman are easy marks for the corrupting influences of special interest. The government then ceases to function as one “of the people, by the people, and for the people.” But even controlling the influence of faction, lobbying, and campaign financing is not sufficient. The Congress must change its ways.

Membership in the Congress is predominantly held by members of the legal profession. Not a single one of these attorneys would advise a client to sign a contract without reading all of it’s fine print; yet they routinely vote on legislation they have not read. This practice is absurdly insane! Laws that the Congress produces are so voluminous that no one can be expected to have read them. Certainty and promulgation are necessary characteristics of law if it is to be effective.  But no one who hasn’t read a law can be certain of its provisions, and huge laws can never be adequately promulgated. Being told to obey laws that no one knows the provisions of is an oxymoronic absurdity. Such laws provide the unscrupulous with an infinite number of possible ways to game the system. And indeed the system has been gamed, the Constitution has been subverted, and the result is that America is a failed state.

No, foreign intervention can not change things. What’s needed is seriousness on the part of Americans. As long as we allow factionalism and its consequences to endure, as long as we allow the Congress to enact legislation that is ineffective even in form, the nation’s future will be grim. Unfortunately seriousness does not appear to be a characteristic of American culture.

Yves Smith  (http://www.globalstrategywatch.com/independent-insight/990e5c20df26aa346d093495f659e026/) writes, “I've been meaning to discuss how increased income disparity is bad for economic growth, because in the end you wind up with insufficient labor income to fund consumption . . . and too much capital chasing too few investment opportunities. . . . It turns out I was beaten to the punch by nearly 50 years [since]. . . former Fed chairman Marriner Eccles . . . links the consumption shortfall directly to a shift in wealth towards the top. And some of the other patterns of the Twenties, such as debt-fueled growth, are worryingly familiar.” Strange how Robert Reich and other economists should be pointing this out now, especially since the shift in wealth towards the top and debt-fueled growth have been going on for at least three decades. What good are  economists who don’t raise policy issues before their disastrous effects happen?

What Fed chairman Eccles described are simple mathematical results. An economy, regardless of the economic theory that governs it, consists of workers employed by enterprises that produce goods and services for sale either domestically or internationally. The value of the products and services sold must equal the sum of the wages paid to workers, the overhead of the enterprises, and their profits. If all the products and services are sold, the sum of the incomes of the buyers must equal or surpass the value of the products and services, for if the sum is less, the products and services could not have been bought (unless the shortfall were met by borrowing), in which case the economy would have to shrink. If the shortfall were met by borrowing, the future incomes of the buyers would have to be sufficient to both buy additional products and services and service the debt. The result is that in the absence of growing wages, buyers will eventually reach a point where they can neither continue their levels of consumption nor service their debt, and the economy ceases to function.

The American economy has been characterized over the past several decades by policies that were bound to produce this result. First American companies shifted a great deal of manufacturing offshore. Second, they created conditions designed to hold down wages. Third, they made borrowing easy but expensive.

The first of these made consumption the economy’s driving force (perhaps 70% of the economy is consumption driven.) If the borrowing had not been made easy, consumption, and the economy as a whole, would have collapsed because of the restraint on wage growth that resulted from the second policy. But given that restraint, the debt assumed by consumers had to eventually reach a level that made it unserviceable. The only possible result of these policies is an economic collapse.

That economists could not have foreseen this consequence is incredible.

The Dallas Morning News printed a piece by Susan Jacoby who recently published “The Age of American Unreason.” She writes that, “Americans are in serious intellectual trouble—in danger of losing our hard-won cultural capital to a virulent mixture of anti-intellectualism, anti-rationalism, and low expectations.” Her specific bête noir is video, and although there is much evidence to suggest that she is correct, her analysis is shallow.

There is little doubt that technology has contributed to the dumbing-down of America. The first assault may have come with the hand-held calculator which has almost extinguished Americans’ knowledge of arithmetic, not to mention higher mathematical disciplines. But technology in itself is not the monster. When technology becomes commercial, it becomes available to everyone—saints and sinners, decent people and scoundrels. It’s the old story about guns which don’t kill people; the people who use them do. And so it is with all technology.

What can we do to stop people from using guns to kill other people? Some suggest that we take the guns away, which if feasible, might work, but it isn’t. Some unscrupulous people will find ways to get guns to other unscrupulous people and the killing will go on. Smuggling and black markets are, after all, common forms of economic activity.

The only alternative is to reform people. What’s needed is serious and comprehensive moral and civility training. But societies today have abandoned that task.

It was once assumed that the place for such training was the family at home. But the institution of the family has been weakened if not destroyed by economic conditions and cultural changes. Today, parents themselves are just as apt to be scoundrels as others, and scoundrels cannot be expected to teach morality and civility.

The churches sometimes like to claim the moral arena, but they have not seriously promoted morality and civility either. In a Christian society, the morality is not a priority of churches, salvation is. And as someone once said, the promise of forgiveness and salvation guarantees bad behavior.

The upshot of all of this is that morality and civility are taught nowhere anymore, and people everywhere have become uncivilized and immoral. When we put guns and any other kind of technology in the hands of such people, the result cannot be other than bad.

The advance of technology cannot be stopped, not even retarded, and unless we get serious about morality, there is little hope for America or anywhere else.

Dumbing people down is easy; the hard part is smartening them up, and unfortunately beating the technology beast will not help, because that ass does not respond to whipping.