Wednesday, January 13, 2016

The Time Government Spending Was Explained to Johnny Carson on the 'Tonight Show'

Gary North reports:

"Well, that's the news from Lake Wobegon, where all the women are strong, all the men are good looking, and all the children are above average." -- Garrison Keillor
To understand why the welfare state will continue to expand its operations until such time as the Great Default ends it, we must understand Lake Wobegon economics. It is the widespread belief that, with respect to paying the bills run up by the welfare state, everyone will pay less than his fair share.
This was described well in 1974 by James Dale Davidson. I remember the night I saw him on the Johnny Carson show. I still do not know how anyone with so serious a message got on the show. It was probably this show.

Carson asked him to describe how Congress spends money. He said it was like a credit card with no limits. The voters hand this card to all members of Congress. Davidson asked the viewers to imagine what would happen under these repayment conditions? At the end of the year, all of the bills run up by the Congress would be paid equally by each Congressman's district. It didn't matter how much each district received; all of them would pay the same amount. The impulse would be obvious: every Congressman would spend as much as he possibly could in a quest to get more for his district from the federal government than his district paid into the federal government. There would be no restraint on spending. He then said this is close to how Congress operates.

Today, the size of the federal deficit testifies to the accuracy of Davidson's hypothetical scenario.
This is Lake Wobegon economics in action. It is going to bankrupt the West's national governments at some point. They are all going to default. The voters will not call a halt before this day of reckoning because they are true believers in Lake Wobegon economics.


  1. It explains part of it but not all of what. Where is the constituency that says "let's bring in foreigners and throw money at them"?

    1. I believe that constituency works on Capitol Hill and in the West Wing.