Archive for November 16th, 2011

I posted a video making this point earlier in the year, and I also posted a version of this joke back in 2010, but here’s another version that’s worth sharing because of the five lessons to be learned at the conclusion.


An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.
It could not be any simpler than that.

There are five morals to this story:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.


I’ll make one final point. There are five morals to the story, but there are dozens of nations giving us real-world examples every day.

Sort of makes you wonder why some people still believe this nonsense?

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Appearances can be deceiving. I saw an article with a blaring headline that warmed my heart: “France’s Sarkozy Eyes Welfare Rethink, Fraud Clampdown.”

Could it be, I thought, that the political elite finally realized that the welfare state was the wrong model? Had they finally realized, as demonstrated by these cartoons, that it was foolish to bribe more and more people to ride in the wagon while raping and pillaging the shrinking number of taxpayers pulling the wagon?

I remembered that the French increased the retirement age to 62 last year, so perhaps that tiny step was the beginning of broader reforms to shrink the burden of government.

These were the thoughts that flashed through my mind as I clicked on the Reuters story, and the first few sentences got me even more excited.

President Nicolas Sarkozy branded welfare fraud a “betrayal” of national principles on Tuesday and said France needed to rethink the way its benefit system was financed in order to ease the burden on employers. The financing of the welfare system, one of the world’s most generous, has become a hot issue ahead of a presidential election next April due to worries about the health of public finances and a parliamentary report pointing to billions of euros being lost every year because of fraud.

But then my dreams of a French renaissance were dashed on the rocks of reality when I discovered that “welfare fraud” in France occurs when taxpayers don’t pay enough, not when able-bodied people have their snouts in the public trough.

“We must have no tolerance for cheaters and fraudsters,” Sarkozy told supporters in the southeastern city of Bordeaux. “Cheating — and I mean stealing from the social security system — is stealing from each and every one of us, and each and every one of you.” …The parliamentary report, published earlier this year, estimated the French state loses 20 billion euros ($27 billion)per year to welfare fraud, much of it due to employers failing to pay social fees for their workers.

In other words, oppressed French businesses and workers are the welfare cheats. To the French political class, welfare fraud occurs not when undeserving people suck at the public teat, but instead occurs when employers and employees resort to the shadow economy to protect jobs.

So what can we learn from this?

Well, we can safely assume that the great 19th-century French economist Frederic Bastiat is rolling over in his grave. Classical liberalism is not enjoying a rebirth in France.

More important, we can probably conclude that France is past the tipping point of fiscal suicide. If you have any French government bonds, sell them now. If you don’t believe me, look at this graphic from the New York Times.

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