Vilfredo Pareto, an Italian economist, explained back in 1906 why our country is in trouble today. This is from his book Manual of Political Economy:
Suppose that in a country of thirty million people, someone proposes a new law that would tax each citizen one dollar a year, and give that money to 30 selected families. Every year, each of the thirty million taxpayers would lose one dollar, while 30 selected families would each gain a million. The two groups would react very differently to this proposal.
The 30 families who would become millionaires would not rest by day or night. They would pay newspapers to support the new law, and drum up support from all quarters. They would give money to “friendly” politicians.
On the other hand, the thirty million other citizens would be much less active. A great deal of money is needed for an election campaign. It is impossible to collect a few cents from millions of taxpayers. A few people would have to make substantial contributions. But who would pay more money to stop a corrupt law, than he would pay if the law were passed?
When election day comes, similar difficulties arise. The 30 would-be millionaires would put campaign workers in every district to persuade voters that their modest plan is not only good and necessary, but patriotic as well! If necessary, they would lay out cash to get the votes needed. . .
In contrast, the voter who would lose only one dollar a year – even if he knows what is happening – would not bother to give up a picnic in the country, annoy useful or congenial friends, or get on the wrong side of government officials. The outcome is never in doubt: The 30 families who would get the $30 million dollars would win hands down!
These schemes were very rare in America when Pareto wrote his book in 1906. Back then, most Americans demanded nothing from their government but freedom, and they paid almost nothing in taxes. Yet we enjoyed far more wealth and volunteered more of our time and money to charity than any other people in history.
Our state and federal constitutions were taken seriously. Our New Jersey State Constitution of 1844 clearly stated that state government could not borrow money without voter approval. It clearly stated that state government had to tax everybody equally and not make special laws that only applied to a few selected people. Since 1947, we amended that State Constitution many times. We also appoint State Supreme Court judges who ignored it completely.
Today, we have all sorts of laws that give all sorts of tax breaks, rebates and “PILOT” (Payment In Lieu of Taxes) programs to all sorts of special groups of people. We have all sorts of “Authorities” and “economic development” loopholes that create “public-private partnerships”. All levels of government routinely give insiders financing and zoning law changes that invite waste, fraud, and abuse.
At the Federal level, our Supreme Court has routinely ignored the limitations of Article I, Section 8 since the 1930s.
America is today is very much like the sick democracies of Europe that Pareto descried in 1906. Within 30 years, most of them collapsed into Communism, Fascism (National Socialism), or some form of socialism. Pareto lived. In less than a year (Of the Wall Street Bailouts of 2008 and 2009), our government spent roughly $2 trillion to bail out failed private businesses. It signed contracts to spend $25 billion more.
Note: When this article was published in 2010, the U.S. government debt had just exploded to $12 trillion. It was $35 trillion in 2025).
These bailouts were a giant robbery that destroyed the savings and retirement plans of most Americans to enrich a handful. However, it was praised by all the TV networks, newspapers, and financial “experts”. It was supported by George Bush Republicans and Obama and Clinton Democrats, just as Pareto predicted.
Pareto’s model also sheds light on the “public service” of Ted Kennedy and his family. In the past, men of great wealth, like billionaire steelmaker Andrew Carnegie, gave away their fortunes to help the poor. Carnegie built free libraries and concert halls.
But “helping the poor” gave the Kennedy family more wealth and power than ever! How? The Kennedy tax-exempt “charities” advanced the political careers of family members. Then these family members used their political power to fund those “charities” with government grants and “donations” from big corporations that wanted special treatment from the government.
The well-funded Kennedy “charities” also gave high paying jobs, and generous travel allowances to the dozens of Kennedy children and grandchildren. This avoided the estate and inheritance taxes that limited inherited wealth in other families.
The most successful private business owned by the Kennedys was a giant commercial real estate project in Chicago, home of the Barack Obama political machine.
When the Titanic sank, 1,600 people drowned because they never got in the lifeboats. They believed their ship was too big and hi-tech to sink — until it was too late.
When this article was published in 2010, very few Americans believed it was possible for the United States to collapse. When this article was edited in 2025, most Americans believe it is very possible.
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