Tag: wealth creation

Taxes Have Consequences: A Century of Mistakes, Human Nature, and the Path Forward

I’ve been catching a lot of heat lately for talking about socialism on my podcast, but honestly, I don’t see why it should be controversial at all. The pushback tells me everything I need to know: a whole lot of people have built their entire lives around government paychecks, public-sector benefits, and the steady drip of tax revenue that keeps the whole machine humming. They get defensive because the conversation about taxes hits too close to home. When you point out that the income tax proposal of 1913 was a colossal mistake—one that’s strangled growth, rewarded bureaucrats, and penalized the very risk-takers who drive real prosperity—you’re not just debating policy. You’re challenging the foundation of how they pay their mortgages and fund their retirements. And the data, especially from that outstanding book Taxes Have Consequences: An Income Tax History of the United States by Arthur B. Laffer, Brian Domitrovic, and Jeanne Cairns Sinquefield, backs me up every step of the way. 

Let me take you back to 1913. That single year changed everything. The 16th Amendment was ratified on February 3, giving Congress the power to lay and collect taxes on incomes “from whatever source derived, without apportionment among the several States.” Just months later, the Revenue Act of 1913 imposed a 1 percent tax on incomes above $3,000 (about $90,000 in today’s dollars) with a top rate of 7 percent on incomes over $500,000. It affected maybe 1 to 3 percent of the population at first, and early revenue was tiny—only about $28 million in 1914.  At the same time, the Federal Reserve Act was signed on December 23, creating a centralized banking system that promised stability but, in my view, locked in the same progressive-era thinking that favored administrative control over free markets. Both moves came during the Wilson administration, a time when socialist ideas were swirling globally, and centralized power looked like the future to some. Tariffs and excise taxes had kept federal revenue under 3 percent of GDP before 1913; after the amendment, the door was wide open. By the post-war era, federal receipts stabilized around 17-18 percent of GDP, no matter how high the rates climbed—a pattern economists call Hauser’s Law.  The pie didn’t grow faster just because the government took a bigger slice; people and capital adjusted.

What Taxes Have Consequences lays out so clearly—and what a century of statistics confirms—is that the top marginal income tax rate has been the single biggest determinant of economic fate, tax revenue from the wealthy, and even outcomes for lower earners. The authors divide the income-tax era into five periods of tax cuts and explosive growth and four periods of high rates and stagnation. When rates were slashed—as in the 1920s under Treasury Secretary Andrew Mellon (top rate down to 25 percent), the 1960s Kennedy cuts, the 1980s Reagan revolution, the 1990s, and briefly under President Trump’s 2017 reforms—the economy roared. Investment flooded in, jobs multiplied, and the rich actually paid a larger share of total revenue because the tax base expanded dramatically. In the 1920s, for example, real GDP nearly doubled, unemployment plummeted, and revenues from the top brackets rose even as rates fell. The same pattern repeated in the 1980s: top rates dropped from 70 percent to 28 percent, the top 1 percent’s share of income taxes climbed from about 25 percent to over 37 percent by the late 1990s, and real per-capita GDP growth accelerated. 

Contrast that with the high-rate eras. The late 1910s, the 1930s, the 1940s-1950s, and especially the 1970s saw top rates reach 77 percent during World War I, 94 percent during World War II, and remain north of 90 percent for decades afterward. The book makes a compelling case that the 1932 tax hikes—pushing the top rate to 63 percent amid the Depression—actually deepened the crisis. Revenue from the rich collapsed, investment dried up, and the economy stayed mired until wartime spending and later rate reductions kicked in. During the 1970s stagflation, 70 percent-plus top rates coincided with sluggish growth, high unemployment, and inflation that hammered everyone, especially the working class. Lower earners suffered precisely because the rich weren’t investing or expanding businesses when the government was confiscating the upside. The Laffer Curve isn’t a theory; it’s observable history. Push rates too high, and you cross into the prohibitive range, where behavior changes: less work, less risk, more avoidance, and ultimately, less revenue. 

I’ve seen this play out in real time with people I talk to. Just the other day, I was explaining basic economics to some younger folks who were upset they weren’t making enough money. Their lifestyles told the story—video games, complaints, minimal effort. I told them straight: this is a free country. You have twenty-four hours every day. If you’re only pulling in $20,000 a year, maximize the hours. Get a second job, learn a skill, take a risk. Once you get a little capital, that engine starts turning faster. Money makes money, but you have to earn the first bit through productive behavior. The progressive tax system we’ve had since 1913 punishes exactly that ambition. Why grind harder if the government is going to take 37 percent—or more when you add state taxes—just because you succeeded? The book spends chapters on this psychological reality: high earners respond to incentives. They hire lawyers, accountants, and lobbyists. They structure investments to minimize liability. They move. And who can blame them?

Look at the migration numbers today. IRS data from 2022-2023 shows high-tax states hemorrhaging wealth and people. California lost $11.9 billion in adjusted gross income from net out-migration; New York lost $9.9 billion; Illinois lost $6 billion. Meanwhile, no-income-tax states cleaned up: Florida gained $20.6 billion in AGI, Texas $5.5 billion, South Carolina and North Carolina billions more. High earners—those making $200,000 and up—drove most of the shift. Florida’s net gain came disproportionately from wealthy movers, whose average incomes were far higher than those of those leaving. This isn’t random; it’s rational human behavior. People vote with their feet when the “fair share” rhetoric turns into confiscation. The same dynamic happened after California and New York jacked up top rates: businesses and talent fled to Texas and Florida, starving the high-tax states of the very revenue they claimed the rich owed them. 

And don’t get me started on the people who lecture us about “fair share” while enriching themselves in public office. Nancy Pelosi comes to mind immediately. She entered Congress in 1987 with a few hundred thousand in stocks; today her family’s net worth is estimated at north of $280 million, with massive gains from timely trades in tech and other sectors while she sat on committees with insider knowledge. Critics have hammered her for years over this, yet no charges stick because the rules somehow allow it. The rest of us pay accountants to navigate a tax code thicker than a phone book while members of Congress trade on information the public doesn’t have. That’s not wealth creation through risk and ingenuity; that’s parasitic behavior enabled by the very system that claims to soak the rich. The book details how, throughout history, the wealthy have found ways around punitive rates—through capital flight, tax shelters, and reduced effort. Congress critters have a faster, easier on-ramp. 

This brings me to the real heart of the problem: the administrative state and the public-sector workforce that depends on confiscated wealth. I was in Washington, D.C., recently, and the parking garages told the story better than any chart. At 8 a.m., they’re packed—government workers streaming in. By noon? Empty. Half-day culture, cushy benefits, pay scales that often run 20-25 percent above comparable private-sector jobs when you factor in pensions and job security. Federal data show the pay gap persists; total compensation for many federal roles exceeds that of private-sector equivalents, especially at mid- to senior levels. Meanwhile, private-sector risk-takers—the ones who actually grow the economy—get penalized. We’re not funding productive infrastructure or national defense with all this revenue; we’re propping up a class of paper-pushers who enjoy lives the average taxpayer can only dream of. Democrats love to create these jobs and fund them with “progressive” taxes, then act shocked when the rich use every legal tool to protect what they’ve earned. It’s human nature. People who work hard, innovate, and build don’t willingly hand over the fruits of their labor to subsidize easy government gigs. The 1913 experiment assumed otherwise, and a century of data proves it wrong. 

The book hammers this point with statistical precision. When top rates are low, the rich bring capital out of hiding, invest it, hire workers, and expand the tax base. When rates are high, they shelter, defer, or produce less. The result? Less overall growth, which hurts everyone. Real per-capita GDP growth averaged around 2 percent across eras, but the booms under low-rate policies lifted lower incomes far more effectively. Poverty fell faster, wages rose, and government actually collected more from the top 1 percent—not because of higher rates, but because of a bigger, more dynamic economy. In 2022, the top 1 percent (incomes above roughly $663,000) earned about 21 percent of income but paid 40 percent of all federal income taxes—an effective rate around 26 percent after deductions. That share has risen over the decades as rates have come down and growth has accelerated. The progressive myth that “the rich get richer and everyone else suffers” ignores how the system actually works. Once you have capital, you can leverage it—but you earned that first pile by outworking and out-risking everyone else. Penalizing success doesn’t create fairness; it creates stagnation. 

President Trump understood this during his first term, and especially in the interregnum before his second term. His tax policies—cutting corporate rates, lowering individual brackets, doubling the standard deduction—aligned with everything we’ve learned since 1913. The 2017 Tax Cuts and Jobs Act delivered exactly the results Taxes Have Consequences predicts: strong GDP growth, record-low unemployment (especially for minorities and low-wage workers), and higher revenue from the top brackets. The rich got richer in absolute terms, but so did everyone else, and the government’s slice of the larger pie increased. That’s the opposite of the socialist collective model, which assumes we can perpetually extract from producers to fund a utopia. Centralized banking and progressive taxation were sold as stabilizers, but they became tools for an administrative state that grows regardless of economic reality. The Federal Reserve’s money creation, paired with endless deficit spending, has only amplified the damage—debt now exceeds GDP, and interest payments alone rival major budget items.

I’m not saying there should be no taxes. A consumption-based system—sales taxes on what people actually use, transaction fees tied to real economic activity—would align incentives far better. Fund highways and services through the people who use them. Let growth compound without the drag of income confiscation. The book shows that broad-based, low-rate systems maximize revenue while minimizing distortion. We’ve tried the Marxist-inspired “from each according to ability, to each according to need” approach for over a century, and it has delivered exactly what human psychology predicts: avoidance, resentment, and slower progress. Younger generations especially need to hear this. Stop waiting for the system to hand you enough; the system was never designed to reward complaints or video-game marathons. Get out there, create value, take risks. The engine only accelerates once you’re in motion.

The backlash I get for saying these things proves the point. People whose livelihoods depend on the status quo—government employees, public-sector unions, politicians who promise “free stuff” funded by someone else’s ingenuity—don’t want the conversation. But facts don’t care about feelings. We have a century of statistics now. The 1913 experiment failed. It fed a monster of debt, bureaucracy, and distorted incentives that neither party has fully dismantled. President Trump’s approach pointed the way forward, and the next decade must be about rethinking the entire process. Repeal or radically simplify the income tax. Reconsider the Federal Reserve’s role in enabling endless spending. Align policy with human nature: reward risk, protect what people earn, and stop pretending government workers deserve 30 percent more compensation for half-day effort while the private sector carries the load.

This isn’t some fringe, scandalous idea. It’s an observable reality documented in Taxes Have Consequences across hundreds of pages of data, charts, and historical analysis. The rich don’t pay their “fair share” under high rates because they’re not stupid—they adjust. The economy doesn’t grow when ambition is taxed into oblivion. And society doesn’t thrive when we build it on the backs of parasites who show up at 8 a.m. and vanish by lunch, all paid for by confiscated wealth. At their core, human beings do not want to slave away so others can live easily. That truth has never changed, and no amount of political spin or election-year rhetoric can repeal it.

As we head into the 2030s, the discussion will only intensify. People are done subsidizing inefficiency. The genie is out of the bottle. If you’ve followed my work, you know I’ve been saying this for years. Subscribe to my blog and business updates—I think you’ll love the deeper dives into these ideas and practical ways to protect and grow what you earn in a world that still rewards the ambitious. The progressive tax experiment of 1913 was a gamble based on flawed psychology and socialist dreams. A century later, we have the receipts. It’s time to learn the lesson and move on.

Footnotes

1.  Laffer, Arthur B., Domitrovic, Brian, and Sinquefield, Jeanne Cairns. Taxes Have Consequences: An Income Tax History of the United States. Post Hill Press, 2022.

2.  U.S. National Archives. “16th Amendment to the U.S. Constitution.”

3.  Revenue Act of 1913 historical summaries, IRS and congressional records.

4.  Federal Reserve Act of 1913 documentation.

5.  FRED Economic Data, Federal Receipts as Percent of GDP (historical series).

6.  Tax Foundation and IRS Statistics of Income reports on top 1% tax contributions.

7.  IRS migration data 2022-2023, state AGI flows.

8.  Congressional financial disclosures and OpenSecrets analyses on member wealth.

9.  Bureau of Labor Statistics and Federal Salary Council reports on public vs. private compensation.

10.  Laffer Center summaries and book excerpts on specific historical periods.

Bibliography

•  Laffer, Arthur B., et al. Taxes Have Consequences. Post Hill Press, 2022.

•  U.S. Internal Revenue Service. Statistics of Income historical reports (1913-present).

•  Tax Foundation. Various reports on historical tax rates, migration, and economic growth.

•  Federal Reserve Bank of St. Louis (FRED). Federal Receipts as % of GDP.

•  Congressional Budget Office and Tax Policy Center data on effective tax rates and income shares.

•  OpenSecrets.org and Quiver Quantitative congressional wealth tracking.

•  Bureau of Economic Analysis and BLS employment and payroll data.

This essay reflects exactly what I’ve been saying and living: free markets, personal responsibility, and an honest look at a century of bad policy. The evidence is overwhelming. Now it’s time to act on it.

Rich Hoffman

More about me

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About the Author: Rich Hoffman

Rich Hoffman is an aerospace executive, political strategist, systems thinker, and independent researcher of ancient history, the paranormal, and the Dead Sea Scrolls tradition. His life in high‑stakes manufacturing, high‑level politics, and cross‑functional crisis management gives him a field‑tested understanding of power — both human and unseen.

He has advised candidates, executives, and public leaders, while conducting deep, hands‑on exploration of archaeological and supernatural hotspots across the world.

Hoffman writes with the credibility of a problem-solver, the curiosity of an archaeologist, and the courage of a frontline witness who has gone to very scary places and reported what lurked there. Hoffman has authored books including The Symposium of Justice, The Gunfighter’s Guide to Business, and Tail of the Dragon, often exploring themes of freedom, individual will, and societal structures through a lens influenced by philosophy (e.g., Nietzschean overman concepts) and current events.

The Affordability Crisis: Price increases to fill vacant personalities are the folly of socialism looming in the background

The question of housing affordability has become one of the most pressing socio-economic issues in the United States today. With the average home price reaching approximately $400,000 in 2024, many young families and individuals find themselves priced out of the market. This reality raises a critical question: why does the housing industry continue to prioritize large, expensive homes when market signals clearly indicate a growing demand for smaller, affordable housing options? Historically, the American housing model was built on accessibility. Following World War II, the United States experienced an unprecedented housing boom driven by the GI Bill, which provided returning veterans with low-interest mortgages and educational benefits. Between 1945 and 1960, the average home price increased from roughly $8,000 to $12,000 [1], while median household income rose from $2,400 to $5,600 [2]. These homes were predominantly single-story ranch houses designed to be affordable for working-class families. They featured simple layouts, modest square footage, and efficient construction methods that allowed developers to build entire neighborhoods quickly and inexpensively. This model supported rapid suburbanization and contributed to the rise of the American middle class. By contrast, the late 20th and early 21st centuries saw a shift toward larger homes, often called “McMansions.” In 1980, the average home price was $47,000 [3], but by 2000, it had climbed to $120,000 [4], and by 2020, it had skyrocketed to $320,000 [5]. This escalation far outpaced wage growth, creating a structural imbalance in housing affordability and leaving younger generations unable to enter the market. The cultural and economic forces that once prioritized affordability have been replaced by incentives that reward size, luxury, and perceived status, setting the stage for today’s housing crisis.

The persistent trend toward building larger homes is not driven solely by consumer demand but by systemic incentives in the real estate and finance sectors. Developers maximize profits by constructing high-value properties, while municipalities benefit from increased property tax revenues. This dynamic discourages the development of smaller, entry-level homes, even though demographic data suggests that younger generations prefer affordability and functionality over size and luxury. According to recent affordability indices, the ratio of median household income to qualifying income for a median-priced home fell to 0.68 in 2024 [6]. This indicates that homeownership is increasingly unattainable for average earners, reinforcing the argument for a return to smaller, cost-effective housing models. Yet the financial ecosystem—from banks to zoning boards—remains locked into a paradigm that rewards high-margin projects. Mortgage lenders often favor larger loans because they generate higher interest revenue, while local governments prioritize developments that promise substantial tax inflows. These incentives create a feedback loop that perpetuates the construction of oversized homes, even as market demand shifts toward affordability. Furthermore, inflationary pressures and speculative investment exacerbate the problem. Between 2000 and 2024, housing prices grew by more than 230%, while median incomes increased by less than 75%. This disparity underscores the structural imbalance between wages and housing costs, a gap that cannot be bridged solely by traditional market mechanisms. Without intervention, the housing market risks becoming increasingly exclusionary, limiting access to homeownership and eroding the foundation of economic mobility.

Beyond economics, cultural factors play a significant role in shaping housing trends. For decades, the pursuit of status through material possessions influenced consumer preferences, encouraging the construction of larger homes as symbols of success. Golf memberships, luxury cars, and sprawling properties became markers of achievement, reinforcing a cycle of materialism that drove housing design. However, contemporary social values are shifting. Younger generations prioritize experiences, sustainability, and financial flexibility over conspicuous consumption. They are less interested in impressing neighbors with square footage and more concerned with affordability and quality of life. This cultural evolution underscores the need for housing policies and development strategies that align with changing societal norms. Yet the industry has been slow to adapt, clinging to outdated assumptions about what buyers want. Compounding the affordability crisis is the growing influence of institutional investors such as Blackstone, Invitation Homes, and other private equity firms that have acquired tens of thousands of single-family homes across the country. These firms often purchase distressed properties in bulk, outbidding individual buyers with cash offers, and then convert these homes into rental units. This practice accelerates the transition from an ownership-based society to a rental-based one, echoing predictions from the World Economic Forum that “you will own nothing and be happy.” While such statements are controversial, they highlight the structural forces reshaping housing markets globally and the erosion of the American Dream. Institutional investors operate with access to cheap capital and sophisticated financial instruments, enabling them to dominate local markets and set rental prices that further strain household budgets. When ownership becomes unattainable, wealth accumulation stalls, and generational inequality deepens, creating a society increasingly divided along economic lines. The presence of these investors also distorts housing supply, as homes that could serve as affordable entry points for families are removed from the ownership pool and repurposed for profit-driven rental schemes.

Failure to address this imbalance has profound social and economic consequences. Young adults delay marriage and family formation because they cannot afford homes. Communities lose stability as homeownership declines, and wealth inequality deepens as property ownership consolidates among institutional investors. Ultimately, the American Dream of homeownership becomes unattainable for a growing segment of the population. The current housing crisis reflects a failure to adapt to evolving market realities and cultural values. Continuing to build large, expensive homes in the face of declining affordability and changing consumer preferences is economically unsustainable and socially detrimental. A strategic pivot toward smaller, affordable housing—akin to the post-WWII ranch-style model—offers a viable solution to restore accessibility to the American Dream. Developers, policymakers, and financial institutions must recognize that the market is in charge, not the egos of those who seek to maximize profit at the expense of social stability. If this shift does not occur, the consequences will ripple across generations, transforming a nation of homeowners into a nation of renters and undermining the very foundation of American prosperity. The time to act is now: by embracing affordability, sustainability, and inclusivity, the housing industry can realign with the values that once made homeownership a cornerstone of American life.  But price increases, as a solution to fill the empty minds of vacant personalities, are the driving force here.  Everyone can’t be rich; they don’t have a mind for it, nor do they want it.  But we have been caught in giving everyone a sense of wealth without them doing the work of wealth, and in the process, we have opened Pandora’s box of illusion that many are perfectly willing to exploit for a short-term gain.  But the cost of those short-term gains is now before us, and it’s wrapped up in this whole affordability debate.  And looming in the background is the mechanisms of Marxism that knew what they were doing all along.  Once people throw in the towel, what will they want?  That’s what has happened in New York with the new communist mayor there.  And behind it all, there is a push to hide from the world the moral bankruptcy of the instigators if what gets ushered in behind the carnage is socialism and government-driven price controls.  When really, what was needed all along were market-driven sentiments of pure capitalism; if only people had listened to those market forces instead of trying to control them.

References:

[1] U.S. Census Bureau. Historical Housing Data, 1945–1960.

[2] U.S. Census Bureau. Median Income Trends, 1945–1960.

[3] National Association of Realtors. Housing Price Trends, 1980.

[4] Federal Reserve Economic Data (FRED). Median Home Prices, 2000.

[5] Federal Reserve Economic Data (FRED). Median Home Prices, 2020.

[6] Housing Affordability Index Report, 2024.

Rich Hoffman

Click Here to Protect Yourself with Second Call Defense https://www.secondcalldefense.org/?affiliate=20707

Ray Dalio Misses the Point: Wealth is created by risk-takers, not a compliant society

The Looted Wealth of China

I enjoy all books.  I like books much better than people in general, even though people write books.  I figure that if someone works hard enough to write a book, they have thought their thoughts through enough to have some respectful consideration.  But I don’t like small talk and just yacking with people over nothing.  If a conversation is not the most epic philosophical consideration in the history of mankind, then I don’t have a lot of use for it.  So instead of wasting time with lots of people talking about nothing, I spend my time reading books, even by people I disagree with, such as Ray Dalio.  He has a new book out, which I pay attention to because I have enjoyed his other works. I’m afraid I have to disagree with Ray Dalio on much, especially this latest offering.  Ray has a lot of problems, he’s a globalist, and he has bet against America with his many billions of dollars, and things aren’t going to work out for him like he thought they were.  I think you’ll find me disassembling this globalist view of the world more and more because, in this global war for which we are all a part, I see the tides changing in favor of an America First agenda.  I just received my membership card to the America First Policy Institute on the same day that I received my monthly magazine for the NRA, and it was a good day for me.  I see great catastrophe for Ray Dalio and his fellow globalist billionaires from where I view the world.  That doesn’t mean I hate Ray.  I actually like him, but just because he has billions of dollars, that doesn’t mean he’s beyond reproach.  His new book was essentially a remake of the grand globalist book I refer to a lot, Tragedy & Hope, which was a globalist point of view of the history of the world. Ray’s book is the same; only he’s trying to sell computer model simulations on human behavior to justify his massive investment into China, which has now pretty much announced itself as an enemy of America.  And people like Ray have been handed the detonator for world destruction, and he’s trying to convince us all why he must push the button.

Ray and the gang, let’s call them the “Davos Crowd,” essentially believed that the global economy would shift into China.  They know the globalist’s game; corporations have a quarterly mandate to always show increases to their shareholders and to everyone’s point of view, America was a saturated market.  There are only 300 million people in America, and they can all only buy so many cars, tennis shoes, and hamburgers.  So the globalists want new markets to exploit that ever-present need for upward trends of profit forecasts, and places like Africa, India, and China look like that next untapped well.  While doing media for his new book, Ray himself has said that China has over 1 billion people increasing in median income year by year.  That is where the expanding middle class is, not in America, so that has been the focus of investors like Ray. America’s middle class is dying because many of the jobs that made it up have been transferred to places like China and the minds of people like Bill Gates, Ray Dalio, and Michael Bloomberg, the billionaire class, that is an investment into a bigger house.  The middle class in America can only grow so much.  But there are many more opportunities for wealth generation in China among a larger country with a much larger population, 3-1.  So that is why the markets of the world turned toward China for the next great gold rush of expanding markets.  Only, there is a problem.  China is a communist country, and these billionaires have been caught tampering with global politics by using Karl Marx’s philosophies to move market value from one place to another, leaving behind the criminal underclass to control all their wealth as the curtain everyone sees.  And now they’ve all been caught, and the sentiment is flipping back to America.  What China did with the coronavirus in partnership with Dr. Fauci and the NIH was reprehensible.  It was much worse than when Japan bombed Pearl Harbor, and now China is a villain to the world, and all the investments that people like Ray have made there are in jeopardy. 

You have to understand wealth creation, which I explain extensively in my own book, The Gunfighter’s Guide to Business.  The middle class is not a finite creation.  Wealth just doesn’t happen, as Ray often alludes to in his books when he talks about the cycles of civilization.  Wealth is made from risk, and when a nation produces lots of risk-takers, then it can be said to be wealthy.  When a nation produces many compliant people, as China does because of their communist government, you will have perpetual stagnation.  There is currently an expanding middle class in China because that wealth drives it to be stolen from American capitalism.  It’s just money that was moved to a bigger balloon, but the wealth generated is finite; it’s limited to the air in the balloon.  What makes the air is risk; what expands wealth is not compliance and order, the way all corporations would love it to be, but in reckless investment for the gain of capital off innovation and diligence.  Inventors don’t stay up all night writing code or inventing a new concept so they can turn it over to the state for redistribution.  They want to get rich, just as people will sit at a poker table and gamble on a pot of money, hoping to win it.  The game generates wealth because it inspires risk to win it.  Elementary economic stuff, but it’s what’s missing in Ray’s books, his graphs on human nature and the history of the world, and all those like him in the billionaire class who obviously feel guilty about their own wealth and aren’t sure they deserve so much power over others because of it.

China’s rise to power is over; their trajectory to be the new example of markets is deflating as we speak.  Oh, sure, many governments still think China is the future, but they don’t understand the basics of wealth creation even though they may be personally wealthy themselves.  America is a culture of risk, and that is why it has been and will continue to be wealthy. America’s wealth is not present because of policy, politics, philosophy.  A centralized authority can’t control it.  It’s not something that is managed by the global Davos crowd. They’d love to control it, to loot off it, to ride it for their ease and comfort.  But stealing America’s wealth and giving it to China as they have been doing from behind the face of governments won’t make China wealthy and expand their middle class in the same way it did in America.  Because to create wealth, you must have risk and ambition unleashed in a free market and society.  And China isn’t and will never be free.  The number of people happy with a car, a house, a spouse, a few kids, and an iPhone that can track you in everything you do is not enough for many people.  And for the people it is enough are not the types who make extraordinary wealth.  So when Ray puts up his computer models about human behavior to justify billions of dollars in investments he has made into China, he is always missing the most critical thing in a society that wishes to be wealthy, that there are plenty of risk-takers who are willing to stay up all night and work through the weekends to invent a new market.  And it is with them, and only them, that an expanding middle class is born, and there are people to buy hamburgers, go to amusement parks, and buy tennis shoes.  Centralized authority always kills wealth, and in this case, Ray and his friends will lose many billions in their gamble against America for the great nothing of China’s rise to power.

 

Rich Hoffman

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