Warning: Excess Government

How too much State can lead to serious injury or even death...

(Source: Substack Images)

“Underlying most arguments against the free market is a lack of belief in freedom itself.”

~ Milton Friedman, from Capitalism and Freedom (1962)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

The summer holidays are drawing to a close down here in the southern hemisphere. Slowly, wearily, the denizens of this capital city return to its fair shores. They are bronzed, buff, windswept... and empty-pocketed.

Not unlike their northern, European cousins, the Argentines make for the coast during the sweltering high season. (The mercury topped 100°F yesterday.) And just like the Italians and Spaniards from whom they descend, the Porteños travel in herd formation, with family vacations often including three or even four generations.

Every January, they decamp for the beaches of Cariló or Villa Gesell or Mar del Plata, in the south of Buenos Aires province... or they hop the Rio de la Plata for trendy Punta del Este or José Ignacio in neighboring Uruguay... or, if they are feeling particularly flush, they jet off to the paradisiacal island of Florianópolis (“Floripa”) in Brazil, or further north to one of that country’s sandy white stretches in Bahia, where exclusive resorts shield the well-healed from the hoi polloi.

The fortunes of South America’s largest two economies often diverge, like that most Dickensian of novels, Tale of Two Cities. When one is flying high, the other is scraping by. One zigs left, the other zags right. A reach for freedom here, a lurch for authoritarianism there, and vice-versa.

Right now, for Argentine peso earners, holders and savers, Brazil is comparatively cheap. As faithful readers of these Notes well know, the local peso was the strongest performing (fiat) currency on the planet last year. Brazil’s real, under the stewardship of its crackpot leftist leader, Lula da Silva, is back in the doldrums.

Here’s The Rio Times with the figures...

The Argentine peso has become an unexpected success story in 2024. It has gained 40.1% in value, outperforming all other currencies globally.

This development stands in stark contrast to its regional neighbors, with Brazil’s real losing 13% in the same period. Argentina‘s economic transformation stems from a shift in fiscal policy.

The government’s “zero monetary emission” approach has yielded positive results. A financial surplus of 0.3% of GDP and a primary surplus of 1.5% of GDP in early 2024 have bolstered investor confidence.

We’d happily travel to Brazil just to take a look (on your behalf, of course)... but half the continent is there at present. Another time, perhaps...

Freedom vs Serfdom

Meanwhile, let us return to a question we posed a couple of weeks back: Can the government (any government) make us richer?

The query fell not from the wild blue yonder, dear reader, but from the wagging chins of our political overlords themselves…

One side claims to be able to multiply our individual wealth by more “equitably” dividing it, like The Nazarene on the shore of the Sea of Galilee, doling out loaves and fishes to the hungry masses...

The other reckons it can get the job done by making trading partners abroad pay their “fair share,” protecting “our jobs” and “our industry” through a series of dopey tariffs and protectionist economic policies.

Is either side on the right track? Or are they merely two different paths... leading over the same cliff?

In both cases, it appears that politicians on the so-called “right” and the so-called “left” (a childishly simplistic paradigm, to be sure), are unwilling to let the market do its important work; to discover prices... signal profits... convey information, etc.

It needs overseeing, they claim, and they know just the people to guide the ship.

Is their managerial impulse really grounded in a logical argument against the free market or, as Milton Friedman suggested, merely a “lack of belief in freedom itself”?

In other words, how much meddling is “enough?” How much planning, regulating, corralling... how much taxing, subsidizing, protecting... does a market need to function “properly?”

As far as we know, our political overlords put on their pants (and pant suits) one leg at a time. They are subject to the same temptations, swayed by the same forces of influence, inclined to the same boneheaded moments of unalloyed hubris, as the rest of us.

We find no miracles among their earthly deeds, no acts of inexplicable compassion or omniscience. After all the sound and fury, all the bluster and bombast, we see nothing in their basket but a rotten fish head and a few stale breadcrumbs.

They are but human, to borrow Nietzsche’s words, all too human.

President Trump harkens back to the period from 1870 to 1930, America’s “Gilded Age,” as his guiding light. He claims, at least in part, that it was government interference (in the form of protectionist tariffs) that Made America Great Back Then.

As dear readers know, your editor is skeptical. Where Mr. Trump sees the glory of the state... we see a decided lack of it.

Here, some basic numbers for your consideration...

Government Gone Wild

In 1870, America’s government was a fraction of the size it is today, with just 51,000 employees on the payroll, or roughly 0.13% of the total population (~39 million.)

Today, the US federal government employs over 3 million “workers,” or about 2% of the total population.

To put that another way, as a percentage of the population, there are fifteen times more government workers today than there were a century and a half ago, when the country was at its richest (relative to other nations).

Unsurprisingly, in that same year, 1870, the US national debt was less than $3 billion, about $60 billion in 2025 dollars... or roughly 1/600th of today’s $36.4 trillion outstanding, to which the government adds the equivalent of the entire national debt in 1870... every ten days.

And that 1870 figure came only after diverting resources from the productive economy to wage a costly Civil War. The national debt in pre-war 1860 was $65 million, about 1/1,000th of what it was when the last drop of blood was shed.

The cost of the entire war is estimated at around $5.2 billion (less than a single day’s additional debt in 2025)... plus something like ~750,000 military casualties. Yet another brilliant government program.

Moreover, as Mr. Trump himself acknowledges, American citizens were unmolested by a federal income tax until 1913. That was the year the Revenue Act was signed into law by a powerful contender for the worst president of all time, one Thomas Woodrow Wilson.

The Act established a one percent tax on income over $3,000 (an imposition that affected just three percent of the population), a six percent tax on those earning over $500,000 per year (almost nobody), and a one percent corporate tax.

Minuscule as these rates seem by today’s rapacious standards, it was enough for the state to get its snout in the trough. At 37 percent, today’s top marginal tax rate is more than 500 percent higher than it was in Wilson’s heyday. The corporate tax rate, meanwhile, is up a non-trivial 2,000 percent over the same period.

Hmm...

Might a tiny government, which mostly kept itself to itself and allowed states and local communities to tend their own gardens and sweep their own stoops, have had something to do with America’s dynamic, market-based economy?

Indeed, if meddling, regulating, controlling and interfering in the markets were the road to riches, the United States of America would be the land of milk and honey today.

Instead, like a contestant on The Biggest Loser, she stands on the scales as the world’s single largest debtor, unable even to agree whether trimming one percent of her body fat is critically urgent... or represents an existential crisis.

Stay tuned for more Notes From the End of the World...

Cheers,

Joel Bowman

P.S. Good news, dear readers! From the East to the West… in Americas North and South… from one “End of the World” to another… the message of free markets, free minds and free people is taking hold.

Everywhere, people are beginning to see the mainstream media for the shameless government propagandists they are… and trust in legacy outlets is plumbing historical lows.

A national Gallup poll found that the share of respondents who said their level of trust in the media was “none at all” reached 39%, while those who trusted the media either “a great deal/a fair amount” dipped to just 32%.

A further 29% said they trusted the media “not very much,” meaning 68% of respondents fell into the “not very much/none at all” trust in media segment.

And that was before the ongoing USAID scandal revealed how bought-and-paid-for the mainstream media really is.

Meanwhile, independent sources – such as these humble Notes From the End of the World – continue to reach a larger and more engaged readership than ever. Over the past year alone, our audience has grown to include subscribers in all 50 US states and 137 countries around the world.

Of course, this is only possible through the generous support of our dear Notes members, to whom we are forever grateful. If you enjoy the work we do here, and would like to join our growing community of readers championing free markets, free minds and free people, please consider becoming a member here, today. Cheers!