The fallacy of socialism: it always runs out of other people’s money

Socialist states like California threw in their lot with Obama and advanced a bunch of social welfare programs, subsidized by taxes from the rest of country. Like the way ObamaCare added poor to healthcare through the expansion of Medicaid enthusiastically embraced by Californians. Or how about an initiative for the Homeless using HUD money. This was California’s grand scam, but the majority of the American people do not want to subsidize California socialism, and have voted to downsize the Federal Government instead, leaving California’s finances staring into the abyss. Here is what California can do if it wishes to continue practicing socialism: raise taxes to pay for it. And my guess, those tax hikes will have to be substantial. Another is what the Mexican politicos no doubt want, that California should borrow the money to keep their Ponzi scam going, leaving the next generation to pay it off plus interest. This is of course just another tax that is simply put off into the future, but will come due through reduced spending in the future to service said debt. There is absolutely no example of socialism having succeeded in producing a prosperous society in either North America or South America. In general it has led to fiscal insolvency of the countries that have practiced it–e.g., Venezuela, Puerto Rico, Brazil, Argentina, etc., etc. For all these failed states debt burdens began to outstrip revenues, a harbinger of their collapse. The Federal Government will now do what the California State Government should have done long ago done, rein in its insane expansion of social programs using other people’s money. Yes, the Federal Government is doing the state a favor by forcing it to confront the reality that you cannot have these grand social programs without an equally robust economy, which is impossible in the state because of overregulation, minimum wage schemes, and insane housing prices. The latter is especially important because expensive housing means higher wages for basic rank and file employees to work in the region, thereby making the company (e.g., Toyota, Nissan, American Apparel, etc.) less competitive vis-a-vis foreign companies not burdened by sky high real estate prices. And because many companies do not wish to pay their employees such exorbitant wages to live in the region, many companies (and workers) are exiting the state. Therefore we can rightly see what lax Fed monetary policies amount to: cost push inflation of wages.

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