Lies the government told you

by Andrew P. Napolitano

  Today, proponents of rent control justify it as a device to ensure that people who have lived in their apartments for a long time will not be removed due to rising rents in their area. Yet, the rationale behind rent control today is far from sound: It deprives landlords of the right to control the amount they charge to tenants, it acts as a disincentive to invest in real estate, it arbitrarily favors certain groups of people over others, and it allows government—rather than people’s free-market choices—to dictate what people pay for a good in a given neighborhood. It also constitutes a taking since it consists of the government prohibiting owners of private property from putting the property to its highest and best use.

  A proponent of abolishing rent control, pop social scientist Malcolm Gladwell, argued that in New York (where rent control is prevalent), rent control is behind the problem of tax-delinquent landlords. He wrote:

  Right now thousands of buildings in the city are in receivership— either abandoned by landlords or under the tenuous control of the city because their owners couldn’t pay their taxes. Tax-delinquent buildings tend, almost exclusively, to be older buildings, because older buildings tend to have much higher upkeep costs and also tend to have many more tenants with artificially low rents . . . they are the buildings now getting burned down, or run down, or boarded up because rent regulation makes it impossible for landlords to take care of them.24

  Rent control discourages anyone from even going through the grief of being a landlord since the government precludes it from being profitable.

  The government regulation has also had an effect on the interpersonal relationship between landlords and tenants. As a result of these artificially low rents, landlords and tenants will naturally harbor some animosity toward each other. One article describes: “No wonder landlords resent the legalized thieves masquerading as tenants; in turn, the parasites hate their host because he isn’t giving them even more. A couple of landlords have actually killed rent-controlled tenants to end their decades of sponging.”25

  Landlords have also been taken advantage of by wealthy politicians. For example, it was uncovered in 2008 that New York Congressman and rent regulation advocate Charlie Rangel rented several rent-controlled Harlem apartments and combined them into an opulent home. Rangel defended his grand residence on the cheap by claiming that one of his apartments was really his congressional office. The building’s landlord would surely have raised objections to this arrangement if Rangel had not been a powerful politician who could put him out of business.26

  The wisdom gained from this infuriating story is that it is not difficult to make rent control laws (which are supposedly in place to help the poorer members of society keep a roof over their head) advantage the wealthy. One article comments, “Ah, the ironies of rent-control: politicians with a millionaire’s net-worth and second homes in the Dominican Republic collect rent-controlled apartments like stamps while the handicapped squat beneath bridges.”27 While rent control was originally meant only to help wives and children while husbands and fathers were fighting in World War II, it has become an enduring and harmful legacy in some of America’s cities.

  “Temporary” Government Program #3:

  Social Security

  The Social Security program was enacted through the Social Security Act of 1935. Its stated intention was to be a temporary program that would provide financial assistance after retirement. Money was taken from the payrolls of current workers and then redistributed to retirees. Based on this fact alone, it becomes apparent that from the start Social Security was not a temporary program. How could a temporary program take money from you now, and promise to give it back to you later?

  The Social Security system is a hapless cycle and a Ponzi scheme. It is a program rife with poor planning, as FDR and the drafters of it did not predict that the average life span would increase in the future and failed to plan for population surges, like the “baby boom” which occurred shortly after WWII. Today, FDR’s program has left a terrible burden on the federal government’s budget and continues to take money out of the hands of those who earned it. The program has also infantilized America’s seniors by making retirement into an expected social norm, therefore leaving little genuine choice for the aging population.

  Upon its creation, Social Security excluded many women and minorities from receiving its benefits. Typically, only practitioners of certain professions (jobs that were commonly held by white males) were eligible to get financial benefits from Social Security. People in many jobs—such as teachers, nurses, hospital employees, social workers, librarians, domestic servants, railroad workers, farm employees, and government employees—were not required to pay into or able to collect from Social Security. Consequently, the Social Security system tended to discriminate against those classes of people who made lower wages and were not easily able to save for retirement.

  In subsequent years, the types of professions that were included in the financial benefits grew, but unfortunately so did the costs to taxpayers. Only by excluding large groups of blacks from Social Security—a government decision based on race—could FDR get this infantile socialism supported by Southern Democrats in Congress. Nevertheless, Social Security still failed miserably at being even an efficient or equitable socialist program, if there is such a thing. The problem with socialism, according to former British Prime Minister Margaret Thatcher, is that sooner or later the government runs out of other people’s money. Indeed ours has. Because of its immoral, unlawful, unconstitutional structure, almost since its inception, Social Security has needed billions in taxpayer bailouts.

  Milton Friedman criticized Social Security for redistributing wealth from the poor to the wealthy. The system winds up making people with large salaries pay a lower percentage of their total income than those making less money. Additionally, richer people tend to have longer life expectancies than poor people because wealthy people can often afford better quality health care and healthier lifestyles. Because the Social Security system pays until death, the wealthy often collect benefits for a longer period of time than do the poor.

  The truth is that the Social Security system is a Ponzi scheme so elaborate and well funded it could make Bernie Madoff blush. Yet, while Madoff spends the rest of his life behind bars, the government is allowed to get away with its nearly identical scheme. Because who is going to put a stop to the government’s theft when the government fails to regulate itself ?

  Through Social Security, the government takes your money, and then gives you an IOU in return. Economist Thomas Sowell exposes Social Security as a pyramid scheme and describes the many problems associated with it:

  Social Security has been a pyramid scheme from the beginning. Those who paid in first received money from those who paid in second—and so on, generation after generation. This was great so long as the small generation when Social Security began was being supported by larger generations resulting from the baby boom. But, like all pyramid schemes, the whole thing is in big trouble once the pyramid stops growing. When the baby boomers retire, that will be the moment of truth—or more artful lies.28

  So, just as in every Ponzi scheme, some people are going to get swindled out of their money. We see this today, as the government is running out of funds while trying to dole out money to the large number of retiring baby boomers. The baby boomers are a generation who paid a great deal of money into the Social Security system, and money was plentiful while they were in the workforce because that generation was so much larger than the one it was supporting. Yet, now, who is going to support the baby boomers? There is no money left to support this large generation of retiring people who contributed to the system in large sums of money. The government keeps pushing their retirement age up, so that it can spread out the relatively small amount of money it has to the vast amount of recent retirees. Social security is supposed to be a rainy day fund for retirees, but now that the rain is pouring, the government is finding the fund is running dry.

  If only the
large population of recently retired citizens were the only problem with Social Security today, but this is one of many problems. Money that comes in through Social Security taxes has often been spent by politicians on endeavors other than funding for the Social Security system.

  What has happened is that the Social Security taxes that were supposed to go into a trust fund have in fact been spent by the politicians. The government bonds turned over to the Social Security system in exchange for this money changes absolutely nothing. These bonds are just claims on future general tax revenues . . . The only purpose served by the bonds is to make numbers look good when the reality is very different . . . Debts are hidden, rather than paid.29

  So, in essence, the government takes our money and uses it not for the purpose it purported, and we will probably never gain that money back. It does not take a criminal mastermind to detect the inherent deception and thievery involved in this situation. The so-called “lockbox” for Social Security that we hear politicians pontificate about has never existed. Instead the government treats Social Security as its slush fund, with insincere promises to pay back more than it stole.

  This is thievery at the highest possible level. In terms of dollars paid, the American Social Security system is the single largest government program in the world. The United States wastes more of our money on Social Security than it does on extremely expensive programs such as national defense or medical programs such as Medicare and Medicaid.30 So, while politicians lie by pretending that our money is safe and that we will someday redeem the IOU, they have quietly orchestrated the biggest swindle of all time.

  FDR’S Legacy of Lies

  While present-day politicians are certainly to blame for trying to sweep the problems of Social Security under the rug while still collecting our money, they are not to blame entirely. There is no easy or fair way out of Social Security, because ending it today means stealing the money of those who paid yesterday. Also, the system has caused the elderly and retired to become a class of dependents, in that they plan their retirements with the expectation that they will be receiving a pension from the government.

  Today’s politicians have been left between a rock and a hard place by the mess bequeathed on them by the Ponzi scheme’s chief founder and principal swindler: Franklin D. Roosevelt. FDR was only able to get Social Security to pass because of the unique political climate during his presidency. Between the lagging economy he made worse, and later the war he manipulated the U.S. into, FDR was able to enact many “New Deal” measures that took (and continue to take) away our property and our freedoms, are unconstitutional, violate basic laws of economics, and are plain damaging to America.

  Social Security is unconstitutional in that it violates the Due Process Clause of the Fifth Amendment, which prohibits the government from taking the property of citizens without due process, meaning, a trial. A scheme in which the government taxes the money we earn, takes it, and gives it to others leaves Americans with no choice in the matter but to surrender their money (property). This is a violation of both our Fifth Amendment rights and our Natural Law rights.

  From a more personal perspective, Social Security has had a profound impact (for the worst) on American culture. Part of growing old in America now involves settling down, retiring, and living off of government money. The government has managed to turn what is for many a healthy, vibrant, and mature stage of life into a reversion where the elderly beg for an allowance from the paternalistic figure of government.

  Before “retirement” was institutionalized by Social Security, there was no such thing as a stage of life where people were left to grow old in the lonely isolation of their living rooms or in Florida. It used to be that the living standards of older people were upheld through a variety of sources: employment income, savings, and help from children.31

  One article by Mises Institute writer Dale Steinreich describes the harms that came with the invention of retirement:

  Retirement is among the most economically wasteful and socially destructive institutions created by government. The most experienced and knowledgeable workers are bumped from productive employment to the world of golf courses, bingo parlors, and TV watching. . . . Retirement punted older people out of the active community of enterprise, where they are most needed for both their skills and their positive cultural influence. They have also been marginalized in society at large, so that young people tend not to interact with them on a daily basis.32

  Indeed, the elderly community has become the butt of many cruel and demeaning jokes in our society, and much of this has to do with FDR’s harmful legacy of lunacy.

  All of the programs highlighted in this chapter stemmed from the federal government’s attempts to gain more power so that it could exert more control over the people. These supposedly “temporary” government programs have also left lasting effects on the American economy, American people, and our ability to be free. The role of the federal government, however, is to stay out of our lives, not to set up programs to dominate us, correct every wrong, address every social need, and lie about it.

  Lie #10

  “I’m from the Government,

  and I’m Here to Help.”

  In a 1988 speech, President Ronald Reagan declared, “There seems to be an increasing awareness of something we Americans have known for some time: that the ten most dangerous words in the English language are, ‘Hi, I’m from the Government, and I’m here to help.’”1 That day, there was laughter when a convivial Reagan uttered the words to the Representatives of the Future Farmers of America. As is usually the case, there’s a morsel of truth within humor. Or, in this case, a big chunk of truth.

  President Reagan followed up by explaining, “. . . we need to look to a future where there’s less, not more, government in our daily lives. It’s that philosophy that brought us the prosperity and growth that we see today.” In that speech, Reagan put forth his best effort to debunk the monstrous myth that the government is here to help us. The federal government has trumpeted its ability to intervene during disasters and in times of emergency but, more often than not, the result is an explosion of federal power, wasted resources, frustrating red tape, and not much else.

  Washington’s fondness for creating new bureaucratic departments in response to perceived domestic problems often makes those problems much worse. If it was not such a humanitarian disaster, the federal government’s response to Hurricane Katrina in Louisiana and Mississippi in the summer and fall of 2005 would provide an almost comic example of conflicting orders, crippling bureaucracy, and inept political appointees that led to a major American city being transformed into a third-world scene of death, squalor, and chaos. From natural disasters to recalls of food and drugs once touted as safe and tested by the FDA, to staging phony press conferences, it seems the feds never defuse problems, and only spread fear and confusion. And when people are afraid and confused, they often let the government get away with telling them what to do because they don’t know what else to do.2 Perhaps the federal government is so bad at doing these things because it is institutionally incapable and constitutionally barred from these functions.

  FEMA: Federal Emergency

  Mismanagement Agency

  In 1979, President Jimmy Carter merged several disconnected aid groups into one large agency, thereby creating the Federal Emergency Management Agency (FEMA). Yet, the new system proved to be disorganized and chaotic from the beginning. In 1985, after facing fraud allegations, FEMA Director Louis Giuffrida resigned. In 1989, after the agency’s poor handling of Hurricane Hugo in South Carolina, Senator Fritz Hollings (D-SC) commented that FEMA was the “sorriest bunch of bureaucratic jackasses I’ve ever known.”3

  Conceptually, FEMA makes no sense. Why should the federal government oversee rescues from natural disasters? Wouldn’t it be more appropriate to leave these matters up to state and local governments who better understand the needs of their own people and land? As I said in my article, “Franklin Delano Bush”:r />
  If a state government is not prudent, and a natural disaster strikes, why should American taxpayers bail it out? That would provide no incentive for prudence in the future. Why should American taxpayers cover for the blatant failure of Louisiana politicians to be prudent with tax dollars? The federal government’s debt is exponentially larger than Louisiana’s.4

  There is no lawful basis for FEMA. And as is demonstrated throughout this chapter, FEMA is a disaster in and of itself, and repeatedly fails in its mission to help out the victims of natural disasters.

  Several occasions arose over the years where FEMA was caught unprepared and lacking an appropriate response to disaster. Under the Clinton Administration, FEMA expanded and became a pit for taxpayer dollars. After 9/11, President Bush brought FEMA under the Department of Homeland Security, switching its focus from rescue to preventing terrorism. Yet, this change in the agency’s concentration left the country vulnerable to imminent natural disaster against the possibility that there could be another terrorist attack. This shift in gears, the incompetent leadership, and the inefficient bureaucratic red tape primed FEMA for the mess it caused after Hurricane Katrina.