Many a democracy has been upended by excessive government spending - and, unfortunately, America, despite the latest budget agreement, is well on its way to fiscal and, perhaps, democratic collapse. As long as those receiving government benefits are much smaller in number than those paying for the benefits, politicians are more dependent on the taxpayers than on the beneficiaries. But the United States has reached the point at which there are more people receiving government checks than paying income taxes. As the political balance shifts away from taxpayers to recipients, the pressures to increase government spending accelerate until finally the golden goose is fully plucked and the economy collapses. President Obama is the agent and spokesperson for the taxtakers and not the taxpayers, which is why he keeps arguing for tax increases and saying it is only ‘fair' that the rich pay more.

There has been much discussion about whether the Democrats or Republicans gain a political advantage from the debt-ceiling-increase mess. An equally interesting and, perhaps, more important question is who has a vested interest in this financial chaos. First, a few facts: *It is estimated that between Aug. 3 and 31, the U.S. government will receive revenues of approximately $172 billion and have expenses of $307 billion, leaving a deficit for those days of about $135 billion. The revenues will be sufficient to pay Social Security and interest on the debt, but not many of the other obligations. *The 12.4 percent Social Security payroll tax paid by employers and employees goes to buy special-purpose government bonds that are held by the Social Security Trust Fund. The Trust Fund holds about $2.4 trillion in these bonds, so it would be many years before they are exhausted. The only way there would not be enough revenue to cover the Social Security checks is if President Obama decided to spend the money on something else. *Mercatus Institute research fellow Veronique de Rugy has identified an additional couple of trillion dollars of U.S. government physical and trust fund assets that could be legally sold to cover budget shortfalls.  See the section on "Liquidating Existing Assets" in the link.

Have things stopped getting better? Americans had become used to ever-increasing living standards, but there is evidence that for many people, life is not improving. There is also a growing pessimism about the future with surveys showing that Americans do not think their children and grandchildren will be better off. Last week, there was a most interesting discussion between two of the world's leading tech gurus - George Gilder and Peter Thiel - at FreedomFest in Las Vegas. Mr. Thiel argued that, in many areas, progress has stopped or almost stopped.  Mr. Gilder was more optimistic.  Yet both agreed on what the obstacle to progress is.

When I hear politicians say they cannot cut government spending and we must have tax increases, I know they are either corrupt or incompetent. Anyone who has ever been around government agencies knows that they tend to be overstaffed and inefficient compared with operations in the private sector. But we also know that many governments in other countries do a much better job in managing taxpayer dollars than ours. At a minimum, we should demand that our political leaders manage the government they are responsible for as well as other political leaders in these countries manage their governments. President Obama and many of his fellow Democrats say we cannot reduce our debt problem to manageable levels without increasing taxes. I say, why not? Some other countries spend less per capita and yet provide higher levels of government service. Take a look at the chart below.

Beware Greeks bearing debt -- or any other country that has too much of it. Despite ever-increasing government regulation of banks, which often are required to hold government debt as reserves, the systemic risk of a failure in the global financial system is growing rather than diminishing. There are solutions that require less, rather than more, regulation. If you look at the big banks that have been in trouble or the banks that regulators and others worry about being in financial trouble, you will notice that virtually all of them have a corporate form of ownership and are heavily regulated. They also increasingly are being forced to be tax collectors for governments. There is an alternative form of bank ownership that is likely to lead to fewer problems and avoid the "too big to fail" problem, and that is mutual-fund banking.

Former Vice Chairman of the Federal Reserve Alan Blinder wrote an article in the Wall Street Journal this past  week (6/21) attacking Republicans who have said that more government spending will kill jobs. In the same vein, my old friend Bruce Bartlett, a Treasury official in the George H.W. Bush administration, wrote an article attacking former Minnesota Gov. Tim Pawlenty and other Republicans for claiming the Reagan tax cuts paid for themselves. (Note: Mr. Bartlett used to be a supply-side advocate, but in the past few years, he has become an almost full-time Republican basher and, not surprisingly, now writes for the New York Times.) Mr. Blinder, Mr. Bartlett and others of their stripe no longer seem to be able to see beyond the first-order effects of an economic policy. That is why they are always dead wrong.

From the founding of the American republic, members of the political class have been caught lying about sex and, no doubt, sex scandals will continue, men (and women) being who they are. There often are demands that those involved resign - and sometimes they do because they are shamed or pushed. Most often, the real damage caused by lies about sex extend no further than to those directly involved, to their families and, at times, to their co-workers and colleagues. Far more damaging are the financial, policy and legislative whoppers told by members of the administration and Congress that adversely affect almost every American. Corporate executives and directors are often forced to resign after making untrue statements about the businesses they oversee and are sometimes subject to both civil and criminal penalties, including jail. Many public officials who engage in far more damaging untruths are rarely forced to resign, let alone face civil and criminal penalties. Is it not time the double standard ended?

Sarajevo, Bosnia-Herzegovina. This is a beautiful place with a tragic history. As Communist Yugoslavia broke up after the fall of the Soviet Union, a Serbian nationalist by the name of Ratko Mladic commanded the Serbian forces that not only killed many residents in Sarajevo, but is said to have conducted the massacre of over 8,000 Bosnian men and boys in the Bosnian city of Srebrenica in July 1995. Mladic was captured in Serbia last week (5/26) and now is in Scheveningen Prison in the Hague, awaiting a war-crimes trial. The evening after the announced capture of Mr. Mladic, there did not appear to be much in the way of celebration that one might have expected in Sarajevo. Many young Bosnians, both men and women, were in the bars and restaurants having a good time as they do on most summer weekends. Good Moslems are not supposed to drink but, even though Bosnia is a majority-Moslem country, most seem to be far from rigorous in following their faith.. As one young Bosnian who had been wounded in the war said to me, "Most of us now are more interested in building our lives than we are following the religion of our ancestors and fighting old grudges."  There's hope now for the Balkans.

Would you think it is smart to create regulations that make it all but impossible for Americans living abroad to get a bank account in the country where they live? Do you think it makes sense to impose regulations and costs on U.S. financial institutions that would drive needed foreign investment out of the United States for the sole purpose of helping foreign governments collect taxes from their own citizens? Last week, the Internal Revenue Service (IRS) and U.S. Treasury held a hearing on a proposed regulation that is so dumb and destructive that people had assumed it was buried for good a decade ago, when it originally was proposed. The Treasury/IRS is embarked on a program that can only be called national economic suicide.

Financial fraud is one or more intentional acts designed to deceive other people and cause them financial loss. Who is the world's greatest financial fraudster? Bernie Madoff? Not even close. The unemployment rate just went up again to 9 percent, and the proportion of the adult population at work continues to fall. These dismal numbers are a result of slow economic growth, which is caused mainly by the world's biggest financial fraudster, who robs businesses and individuals of what is rightfully theirs. The world's biggest financial fraudster is not one person; it is a group composed of those politicians and government bureaucrats who, on a daily basis, ignore the consequences of their actions as they misuse hard-earned taxpayer funds to further their own political or personal agendas. We will call this fraudster the TPHP (for Thoughtless Power-Hungry Politicos). 

President Obama and many other Democrats - and even a few Republicans - claim that the huge deficits the United States is experiencing result from the George W. Bush-era tax rate cuts. Is this true, and must we have a tax rate increase? The short answer is no.  First, a little budget history. In the 40 years prior to the 2007-09 Great Recession, tax revenues as percentage of gross domestic product were remarkably constant, never varying more than 2.3 percent above or below 18.3 percent of GDP.  This fact is all the more remarkable given that the maximum individual income tax rate during this period varied from a low of 28 percent to a high of 70 percent. Federal government expenditures also were remarkably constant during this same 40-year period, never lower than 18.2 percent or higher than 23.5 percent of GDP, and deficits averaged about 2.5 percent. The debt-to-GDP ratio rose and fell during this period and was a manageable 36 percent as late as 2007. Yet, in the past four years, the debt-to-GDP ratio has almost doubled.

Keep this column until April 2013. In the accompanying table, you will see two forecasts for federal debt-related items: the official Congressional Budget Office's forecast (which is close to the Obama administration's) and a pessimistic forecast (mine). No forecast is perfect, but it is likely that I will be closer to the mark than the CBO/administration because my assumptions are more realistic. The Federal Reserve will be under continuing pressure to keep up "quantitative easing," i.e., printing money. This is likely to result in a continuing fall in the dollar, which will cause inflationary pressures to grow, and/or a continuing fall in real wages, as has been the case in recent months. If the administration and Congress were suddenly to reduce spending enough to reduce the deficit from roughly 10 percent of gross domestic product (GDP) to 3 percent, the Fed could stop printing money and inflationary pressures would ease. But that is not going to happen.

Some people, in their pursuit of profit, benefit their fellow humans by creating new or better goods and services, and then by employing others. We call such people entrepreneurs and productive workers. Others are parasites who suck the blood and energy away from the productive. Such people are most often found in government. Perhaps the most vivid description of what happens to a society where the parasites become so numerous and powerful that they destroy their productive hosts is Ayn Rand's classic novel "Atlas Shrugged." The just-released movie version is an entertaining, tension-filled struggle between the productive and the parasites who ally themselves with the envious and evil. Go see it - here's the theatre list nationwide . Bad policies come about from the actions of specific people - individuals in Congress and government agencies - not the Congress or the administration as a whole. Washington is filled with people who are more destructive than constructive. It is useful to name some of the most destructive people in the hope that they will either reform or leave.

With apologies to Clint Eastwood, we're facing a real-life version of his famous movie that could be entitled The Responsible, The Timid, and The Ugly. For the past year, the Federal Reserve has been the largest single purchaser of U.S. government securities, buying well more than half of all new debt. The Fed calls this program quantitative easing (QE2), or what normal people would call printing money. The Fed has stated that this program will stop in June. Who is going to purchase all of the new government debt when the Fed stops? The Chinese and other foreign holders of U.S. government debt are well aware of the increasing probability of higher U.S. inflation and the corresponding further decline in the dollar. Since September, the Chinese have been gradually reducing their holdings of U.S. government securities (i.e., becoming net sellers). The Japanese had been net buyers of U.S. government debt, but they also will now likely become net sellers as they will need funds for rebuilding. Again, who will fill the Treasury bond-buying gap left by the withdrawal of the Fed, the Chinese and the Japanese?

"Fiscal crisis hits the states" has become this year's most boring and repetitive headline. But what is largely overlooked is that some states are doing relatively well - such as my home state of Virginia - and are, in fact, balancing their budgets without draconian budget cuts or tax increases. What are the well-managed states doing right and the others doing wrong? And what lessons could those running the federal government learn from the better managed states? The accompanying table shows the rankings of seven of the major states by various organizations.

Last week, Richard Trumka, president of the AFL-CIO, again came out against the pending trade agreements with South Korea, Colombia and Panama, claiming they would cost U.S. jobs.  Yet every respectable economist, from Adam Smith way back in 1776 until the present, has argued the virtues of free trade. Those in the Obama administration continue to waffle on these agreements by catering to the ignorance or deliberate know-nothing stance of their labor and other left-wing supporters. Many of the anti-free-trade types also argue for sourcing things locally. Does any of this make sense? Should we have protective tariffs on pencils? As simple as a pencil is, it contains materials from all over the world (special woods, paint, graphite, metal for the band and rubber for the eraser) and requires specialized machinery. How much would it cost you to make your own pencils or even grow your own food? Trade means lower costs and better products, and the more of it the better.

If your accountant told your family that you are spending 40 percent more than you are earning, and that your borrowing limits have been reached, how would you cut your expenditures? Would you stop buying food and not pay your mortgage and utilities, or would you first cut out entertainment, such as movies, sports events, cultural performances, nice restaurants and vacation trips?  Rational people would do the latter, but government bureaucrats often do the equivalent of the former. This is known as the Washington Monument Ploy, which got its name when a national parks director shut down the Washington Monument and Grand Canyon for two weeks in 1969 to protest budget cuts, rather than cutting administrative costs, deferring maintenance and curtailing new projects. When faced with a need to cut budgets, the Washington Monument Ploy - or stunt - is the political tactic of shutting down the most visible, popular and/or valuable government service while leaving less important and less appreciated government activities untouched.  What needs to be shut down is this extortionist ploy.

Imagine that you have a serious drinking problem, which has caused your job performance to decline. If your doctor said to you, "Don"t stop drinking now, because going sober may cause you discomfort and may not immediately improve your job performance" - while failing to tell you that if you keep drinking, you will become totally dysfunctional and may die - what would you think of your doctor? The U.S. government has a serious overspending problem. If the spending and the resulting deficits are not soon stopped, the U.S. economy will become dysfunctional, and our prosperity and freedoms will disappear. Yet, despite the overwhelming evidence that the government is headed for a debt crisis, there are still a few economists who are saying: "Spend more."  They have a serious economic drinking problem.

The Obama administration's policies are causing Americans to pay far more for gasoline and other fuels than necessary. America is awash in fossil-fuel energy sources with almost 30 percent of the world's coal and 80 percent of the world's oil shale - which contains an estimated three times the recoverable oil reserves of Saudi Arabia. Canada, with its oil sands, has the world's third-highest oil reserves, after the United States and Saudi Arabia. New technologies that enable low-cost natural gas production from shale mean that many countries, including the United States, will have gas for centuries at current production rates. Most countries try to produce oil, gas and coal and sell it on the global market as a way of increasing the real incomes of their citizens, but not the United States. The Obama administration has a hatred of fossil fuels and is determined to reduce their use despite the economic damage.   The President is deliberately making Americans poorer.

If a person pulled a gun on you, demanded your wallet, and then said: "I am going to use 50 percent of your money for good purposes, and I am going to waste and mismanage 30 percent, and the final 20 percent I am going to use for my own pleasure and to pay off my cronies who protect me," would you think the robber should be sent to jail or praised as a public servant? Feel free to alter the percentages in the above example based on your own impressions of how well the government spends your money, remembering that much of the stimulus money went to unions and political allies of Mr. Obama. And note that Thomas Jefferson said, "The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." Unless the advocates of ever-more government spending are exposed for the self dealers and/or socialists they are, the economy and our liberties are doomed.

The president is proposing that the government spend more than $3.7 trillion (his budget "cuts" also contain many spending increases). The terms reckless, irresponsible and mad are inadequate descriptions of what he is proposing. There is evidence that once a government lets its debt/GDP ratio rise more than 90 percent, the economy begins to seriously weaken and government spending starts to spiral out of control as the interest payments on the debt grow faster than the economy. The United States will probably hit the 90 percent threshold within a year (the current level is 68 percent, up from 37 percent in 2008). Greece has already shown the world what happens when the debt/GDP ratio reaches critical levels. Government services, employment and transfer payments are drastically cut because there is no other choice and the economy goes into the tank. Mr. Obama has also proposed a number of tax increases in his budget. Economic growth depends on having sufficient saving, which is put into productive investment to create jobs and technologies. If government is grabbing most of the savings of private individuals and businesses through debt issuance, inflation and taxes, the result is economic stagnation and increasing unemployment. Put on your seat belts because the situation will get worse before the political class will act.

Wildly inaccurate statements from news commentators, financial analysts, politicians and even administration officials have most people believing that if Congress does not increase the debt limit in March, the U.S. government will default on its debt obligations, thus ending the government's ability to borrow. Nonsense.

The big-government crowd claims huge hardships would result from the mandatory spending reductions. Again, nonsense. Spending would only have to be reduced to roughly the 2006 level to avoid an ongoing deficit.

Another widespread myth is that if the government reduces its spending, that will cost jobs.  The fact is that the percentage of adults in the labor force has fallen to its lowest level in three decades even as the government has grown by a quarter in relative size in the past three years.

The destructive myth persists that if only we could get the rich to cease engaging in tax avoidance, which is legal, and stop tax evasion, which is illegal, government would have adequate revenue. The fact is that rich people already pay most of the taxes.

Today (2/02), Ralph Nader wrote in the Wall Street Journal that the government had ripped off the Fannie/Freddie stockholders, of which he was one. What delicious irony that the man who has been telling us for decades to trust the government instead of private business was abused by the government. I wonder if he has learned anything. Another no surprise last week was a report issued by the Congressional Budget Office that the budget deficit is even larger (a mere $1.5 trillion larger) than previously forecast and financial doomsday is getting closer. Again, having learned nothing, President Obama responded in his State of the Union address by proposing more government spending. He seems to be making a real effort to have the collapse occur in his first term. Meanwhile, more reports surfaced about the fact that many state and local governments have not been disclosing relevant information about their finances to their bondholders. Executives in private firms would be fined or sent to jail for similar lapses, but government officials are largely immune to rules that the rest of us must follow.

Do you think your tax dollars should be used to fund organizations that advocate higher taxes on American citizens? Well, that is exactly what has been happening. The new Republican-controlled House of Representatives, in addition to reducing big, wasteful and unnecessary spending, also needs to go after and defund those programs and activities that are downright destructive. Here's a handful of examples:

It is hard to make sense of the world without adequate information and the words to explain fundamental concepts. Some good news for the new decade is that the level of economic literacy is rising, thanks in part to tools being developed at free-market think tanks around the world. Americans in particular have several new tools to evaluate how their tax money is being used and how much they are being forced to spend on what. There is now a successful a global collaborative effort to increase economic literacy across the planet and reduce miscommunication. Everyone will have the same understanding of what specific economic terms and concepts mean available on cell phones or iPads. Meanwhile, U.S. think tanks have been building tools so Americans can more readily understand where their tax dollars are going and how much they are paying for specific government programs.

For a change, there is some good news. The double-dip recession that some of us had feared if Congress raised taxes on the most productive people has been avoided for the moment, and as a result, many forecasters have increased their growth estimates for 2011 to more than 3 percent. But the country needs sustained growth rates above 3.5 percent to bring down unemployment in a reasonably rapid way. More good news is that the unsustainable increase in federal government spending is likely to be curtailed because of the efforts of the House Republicans and one man in particular, Rep. Paul D. Ryan, Wisconsin Republican, the new head of the House Budget Committee. Mr. Ryan is a fine economist and a man of courage who understands the real world. His committee will take on both entitlement spending and discretionary spending, and the committee recommendations are likely to be passed by the House. Unfortunately, the still Democrat-controlled Senate will lack the courage and will continue to deny the reality of what needs to be done.

America is the story of people arising from adverse circumstances, achieving great success and helping others along the way. If you like stories about overcoming adversity - and who doesn't? - I have a suggestion for a last-minute Christmas stocking stuffer or a great gift to brighten the New Year for someone. It is the just-published autobiography "Up from the Projects", by the influential and even revered economist Walter E. Williams. Mr. Williams is perhaps best known for being a substitute host for Rush Limbaugh. He has been substituting for Mr. Limbaugh since 1992 because, he says, as a professor of economics, it gives him the biggest classroom in America. How does a 6-foot, 5-inch black man born in inner-city Philadelphia well before the civil rights movement and raised by a single mother become one of the country's best-known conservative/free-market/libertarian economists, head of a leading academic economics department and an adviser to presidents?

Never has the expression "What planet are these people from?" seemed more appropriate than when it refers to the actions of the majority of Democrats in the House of Representatives this week on the proposed tax bill "compromise." In the real world, their choice is that they either vote for the compromise, which means no one will suffer a tax increase as of Jan. 1, or that everyone will have a huge tax increase. Also, the lowest wage earners will see a 50 percent jump in their tax rates, from 10 percent to 15 percent. The main point of the House Democrats' pique is that some "rich" Americans may be able to avoid having more than 50 percent of their incomes confiscated by the government and that those people's heirs may not have to pay a 55 percent tax on their inheritance if the compromise bill passes. President Obama and his left-wing friends keep telling us that the "rich," meaning any family whose combined income is more than $250,000 annually, can "afford" to pay more. "Afford" is an interesting term in that it refers to the ability to pay but denotes nothing about the willingness of the person to pay or the justice in making the person pay.

he Federal Reserve is supposed to maintain the value of the currency and keep the banking system sound and stable - which it has not done (more on that below). Yet, in 1978, Congress passed the Humphrey-Hawkins Full Employment Act, which, in part, also gave the Fed some explicit responsibility for maintaining full employment but did not provide the tools to do so. The Fed does have the tools to increase or decrease the money supply, which means it can control the rate of inflation or deflation. However, the Fed has done a poor job of maintaining the value of the currency, as the dollar is now worth only about one-twenty-second of its 1913 value. The Fed also was supposed to maintain a sound and stable banking system; however, since the Fed was created in 1913, bank failures have been at a higher rate than during the pre-Fed period. Despite its record of failure, the Fed (as noted) was given the additional responsibility to maintain full employment. Washington operates differently from the real world, where failures are punished. In Washington, failure deserves a promotion.

Here's the essay question for today's exam, class:  Are Members of Congress and their staffers the ultimate insiders, making money off advance economic knowledge?  Discuss. Stock or commodity trading on "inside information" has been illegal since the early 1960s. Yet there is one group that frequently has access to nonpublic information that can greatly affect stock prices, to the extent of making or breaking a company or even an industry, and these "insiders" are considered exempt from prosecution by the Securities and Exchange Commission (SEC). The insiders I refer to are members of Congress and their staffs. They have prior knowledge about which companies or industries will or will not be "bailed out," have their taxes raised or lowered, be subject to costly new regulations or exempted from such regulations, receive government contracts, etc. However, because the members of Congress and their staffs do not obtain their information from employees of the companies affected, they are not considered insiders.

Treating variables as constants is a sign of a damaged brain. In the real world, almost any action taken by government is going to cause a behavioral response - and often one that is not intended. Wise people think through what is likely to happen with any given action. Unfortunately, the ongoing lame-duck Congress and the administration are again demonstrating the shortage of wise people. Many Democrats, including many lame ducks, are still demanding that tax rates for entrepreneurs be increased under the absurd claim that not to do so will "cost" the government "almost $2 trillion over the 2011-20 period" in lost tax revenues. To believe these bogus numbers that the Joint Tax Committee staff and the administration put out about the revenue loss, one needs to believe these variables are constant:

Was our great financial crisis caused by greedy and reckless bankers and Wall Street players?  Or by a broad range of individuals, financial institutions and governments who became less risk-averse and prudent?  Or by government housing policies that brought on the housing bubble and mismanaged the risks? Without waiting for the evidence, many in the political class, and particularly those on the left, immediately bought into the argument that the financial crisis was caused by greed. This view of the cause provided much of the political energy behind the passage this year of the Dodd-Frank Act, also known as the financial reform act. Peter J. Wallison, a former general counsel of the U.S. Treasury and now a fellow at the American Enterprise Institute (AEI), has debunked this argument, conclusively showing in a study that Barney Frank's government housing policies caused the crisis.

The U.S. Department of Education was created with the primary stated goal of increasing students' test scores, but test scores for 17-year-old American students have remained essentially flat since 1970. The department's budget has grown to a whopping $107 billion this year. Per pupil, taxpayer-financed education spending (adjusted for inflation) has risen by more than 200 percent since 1970 (and 150-plus percent since 1980). Clearly and unambiguously, the department deserves a grade of F.

The employees and bureaucrats at Education have been rewarded for failure each year by ever-increasing budgets, which give them more control of state education departments and local school boards. If you reward failure, you tend to get more of it, and if you reward success, you tend to get more successes. Thus, it is no surprise that test scores have not improved.

Suppose Congress said to the department, "We are going to cut your budget and payroll by 20 percent per year until test scores start improving, and if they have not substantially improved within five years, the department will be dust." What do you think would happen to test scores?

How many times have you heard the president and the congressional Democrats say Americans who make less than $200,000 a year have not had, and will not have, any of their taxes increased? Unfortunately, it is not true, and it is likely to become a whole lot worse.

The 111th Congress has already enacted $352 billion in net tax increases and may, in the upcoming lame-duck session, enact the largest tax increases in history, which will hit every man, woman and child - as well as every business in America.

The president and most congressional Democrats have been claiming they will make sure no one making less than $200,000 per year will face a tax increase when all of the "Bush tax cuts" expire on midnight Dec. 31. Given they have not been truthful about the tax increases they already have enacted, why should anyone believe these new claims?

If Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and their fellow members of Congress were children, what might they have done?

Children like to spend other people's money on themselves and their friends without thinking about how it was earned and the hard work that went into earning it. A childlike mind might believe in the fantasy that you can take money from the pocket of someone who worked hard to earn it, give it to someone who didn't earn it and that, magically, everyone will be better off. A fully developed, mature brain would understand that voting to enact laws without having read or understood them was irresponsible and likely would lead to bad consequences

Free-market democracy cannot succeed if those who hold elective office act and vote like children. We can do better.

Mankind seems to be programmed not to remember the reasons for economic success and failure - and these lessons seem to need to be relearned every few years. The normal course of events is for free and prosperous economies (particularly under democracies) to move toward less freedom - more government spending, taxation and regulation - until the burden of government brings growth to a halt or near-halt.

In 1900, Australians enjoyed the highest per-capita income in the world. But then they retreated behind high tariff walls in a misguided attempt to protect manufacturing industries, created a judicial-based wage-determination system as a way to redistribute income in the name of fairness and engaged in excessive economic regulation. All of those measures slowed economic growth and reduced Australia's global per-capita income standing from No. 1 to No. 14.

Will Australians regain their economic footing before they allow themselves to fully re-embrace statism and end up with the disastrous policies of the Obama administration? The jury is out. But, President Obama is perhaps useful to the extent that his policies serve as a bad example for the rest of the world.